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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 10, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
WELLS ALUMINUM CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 3354 35-1139550
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation Classification Code Number) Identification No.)
or organization)
809 GLENEAGLES COURT, SUITE 300
BALTIMORE, MARYLAND 21286
(410) 494-4500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-------------------
MICHAEL S. NELSON, ESQ.
KRAMER, LEVIN, NAFTALIS & FRANKEL
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 715-9100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the registration statement becomes effective and all
other conditions to the exchange offer (the "Exchange Offer") pursuant to the
registration rights agreement (the "Registration Rights Agreement") described
in the enclosed Prospectus have been satisfied or waived.
If any of the securities being registered on this Form are to be 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>
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PROPOSED
AMOUNT MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER NOTE OFFERING PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 1/8% Series B Senior Notes due
2005.............................. $105,000,000 100%(1) $105,000,000(1) $31,818.18
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</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(f)(2) under the Securities Act of 1933.
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>
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 PRELIMINARY 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.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JULY 10, 1997
WELLS ALUMINUM CORPORATION
OFFER TO EXCHANGE ITS 10 1/8% SERIES B SENIOR NOTES DUE 2005
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR
ANY AND ALL OF ITS OUTSTANDING
10 1/8% SERIES A SENIOR NOTES DUE 2005
($105,000,000 PRINCIPAL AMOUNT OUTSTANDING)
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 1997 (AS SUCH DATE MAY BE EXTENDED, THE "EXPIRATION
DATE").
Wells Aluminum Corporation ("Wells" 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 an aggregate of up to $105,000,000 principal
amount of 10 1/8% Series B Senior Notes due 2005 (the "New Notes") for an
identical face amount of the outstanding 10 1/8% Series A Senior Notes due
2005 (the "Old Notes" and, with the New Notes, the "Notes"). The terms of the
New Notes are identical in all material respects to the terms of the Old
Notes except that the rights relating to the exchange of Old Notes for New
Notes and the restrictions on transfer set forth on the Old Notes will not
appear on the New Notes. See "The Exchange Offer." The New Notes are being
offered hereunder in order to satisfy certain obligations of the Company
under a Registration Rights Agreement dated as of May 28, 1997 (the
"Registration Rights Agreement") between the Company and Merrill Lynch & Co.
(the "Initial Purchaser"). 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 unrelated to the Company, New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold, and otherwise transferred by a holder thereof (other than a
holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act of 1933, as amended (the "Securities Act")), without
compliance with the registration and the prospectus delivery provisions of
the Securities Act, provided that such New Notes are acquired in the ordinary
course of such holder's business and such holder has no arrangement with any
person to participate in or is engaged in or is planning to be engaged in the
distribution of such New Notes.
Interest on the New Notes will be payable semi-annually on June 1 and
December 1 of each year, commencing December 1, 1997. The New Notes will
mature on June 1, 2005. The New Notes are redeemable, in whole or in part, in
cash, at any time after June 1, 2001, at the option of the Company, at the
redemption prices set forth herein, plus accrued and unpaid interest, if any,
to the redemption date. In addition, at the option of the Company, up to
33 1/3% of the aggregate principal amount of the New Notes originally issued
may be redeemed prior to June 1, 2000 at a price of 110 1/8% of the principal
amount thereof, together with accrued and unpaid interest, if any, to the
redemption date, with the net proceeds of one or more Public Equity Offerings
(as defined herein) of the Company; provided that at least $65 million of the
aggregate principal amount of the New Notes remain outstanding following such
redemption. In the event of a Change of Control (as defined herein) of the
Company, the Company will be required to make an offer to repurchase all or
any part of each holder's New Notes at a cash purchase price equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of purchase. In addition, the New Notes will be redeemable, at the
option of the Company, in whole or in part, after a Change of Control at a
redemption price calculated pursuant to a formula described herein. See
"Description of New Notes."
The New Notes will be senior unsecured obligations of the Company, will be
senior in right of payment to all existing and future subordinated
indebtedness of the Company, will rank pari passu in right of payment with
all other existing and future senior indebtedness of the Company and will be
effectively subordinated in right of payment to all existing and future
secured indebtedness of the Company as to the assets securing such
indebtedness. As of March 30, 1997, on a pro forma basis after giving effect
to the Recapitalization, the Company would have had no indebtedness
outstanding other than the Notes. See "Description of New Notes."
The Company will accept for exchange from an Eligible Holder any and all
Old Notes that are validly tendered prior to 5:00 p.m., New York City time,
on the Expiration Date. For purposes of the Exchange Offer, "Eligible Holder"
shall mean the registered owner of any Old Notes that remain Transfer
Restricted Securities, as reflected on the records of The Bank of New York,
as registrar for the Old Notes (in such capacity, the "Registrar"), or any
person whose Old Notes are held of record by the depository of the Old Notes.
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date. For purposes of the Exchange Offer,
"Transfer Restricted Securities" means each Old Note until the earliest to
occur of (i) the date on which such Old Note is exchanged in this Exchange
Offer and entitled to be resold to the public by the holder thereof without
complying with the prospectus delivery provisions of the Securities Act, (ii)
the date on which such Old Note is registered under the Securities Act and is
disposed of in a shelf registration statement, if applicable, or (iii) the
date on which such Old Note has been distributed to the public pursuant to
Rule 144 under the Securities Act or by a broker-dealer pursuant to the plan
of distribution described herein. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer and will
pay all the expenses incident to the Exchange Offer. If the Company
terminates the Exchange Offer and does not accept for exchange any Old Notes,
it will promptly return the Old Notes to the holders thereof. See "The
Exchange Offer."
Each broker-dealer that receives New 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 New 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 New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. Any broker-dealer that acquired Old
Notes directly from the Company and not as a result of market-making
activities or other trading activities, in the absence of an exemption from
the registration requirements of the Securities Act, must comply with such
registration requirements and the prospectus delivery requirements of the
Securities Act in connection with any secondary resales of New Notes received
in exchange for such Old Notes. The Company has agreed that it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "The Exchange Offer" and "Plan of Distribution."
Prior to this Exchange Offer, there has been no public market for the
Notes. To the extent that Old Notes are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Old Notes could be adversely
affected. If a market for the New Notes should develop, the New Notes could
trade at a discount from their principal amount. The Company does not
currently intend to list the New Notes on any securities exchange or to seek
approval for quotation through any automated quotation system. There can be
no assurance that an active public market for the New Notes will develop.
The Exchange Agent for the Exchange Offer is State Street Bank & Trust
Company (formerly known as Fleet National Bank).
SEE "RISK FACTORS" BEGINNING ON PAGE 13 HEREIN FOR A DISCUSSION OF CERTAIN
RISKS THAT SHOULD BE CONSIDERED BY ELIGIBLE HOLDERS IN EVALUATING THE
EXCHANGE OFFER.
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.
The date of this Prospectus is , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement (which
term shall include any amendments thereto) on Form S-4 under the Securities
Act with respect to the securities offered by this Prospectus. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, to which reference is hereby made. Each
statement made in this Prospectus referring to a document filed as an exhibit
or schedule to the Registration Statement is qualified in its entirety by
reference to the exhibit or schedule for a complete statement of its terms
and conditions, although all of the material terms of the Company's contracts
and agreements that would be material to an investor have been summarized in
this Prospectus. In addition, upon the effectiveness of the Registration
Statement filed with the Commission, the Company will be subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith the Company will file
periodic reports and other information with the Commission relating to its
business, financial statements and other matters. Any interested parties may
inspect and/or copy the Registration Statement, its schedules and exhibits,
and the periodic reports and other information filed in connection therewith,
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices located at Citicorp Center, 500 W. Madison
Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of such materials can be obtained at
prescribed rates by addressing written requests for such copies to the Public
Reference Section of the Commission at its principal office at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. The
Commission also maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants. The
Commission's Web site can be accessed on the World Wide Web at
http://www.sec.gov. The obligations of the Company under the Exchange Act to
file periodic reports and other information with the Commission may be
suspended, under certain circumstances, if the New Notes are held of record
by fewer than 300 holders at the beginning of any fiscal year and are not
listed on a national securities exchange. The Company has agreed that,
whether or not it is required to do so by the rules and regulations of the
Commission, for so long as any of the Notes remain outstanding it will
furnish to the holders of the Notes, and if required by the Exchange Act,
file with the Commission all annual, quarterly and current reports that the
Company is or would be required to file with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act. In addition, for so long as any
of the Old Notes remain outstanding, the Company has agreed to make available
to any prospective purchaser of the Old Notes or beneficial owner of the Old
Notes in connection with any sale thereof the information required by Rule
144A(d)(4) under the Securities Act.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENT
HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS FILED BY THE
COMPANY, INCLUDING EXHIBITS TO SUCH DOCUMENTS, ARE AVAILABLE TO ANY
REGISTERED HOLDER OR BENEFICIAL OWNER OF THE OLD NOTES UPON WRITTEN OR ORAL
REQUEST AND WITHOUT CHARGE FROM WELLS ALUMINUM CORPORATION, 809 GLENEAGLES
COURT, SUITE 300, BALTIMORE, MARYLAND 21286, ATTENTION: CHIEF FINANCIAL
OFFICER. TELEPHONE REQUESTS MAY BE DIRECTED TO THE COMPANY AT (410) 494-4500.
IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY SUCH REQUEST SHOULD
BE MADE BY , 1997.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OR SOLICITATION WITH RESPECT TO ANY SECURITY OTHER THAN THE SECURITIES
OFFERED HEREBY OR AN OFFER TO OR SOLICITATION OF ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN
OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise indicated, industry data
contained herein is derived from publicly available industry trade journals,
reports and other publicly available sources, which the Company has not
independently verified but which the Company believes to be reliable, and
where such sources were not available, from Company estimates, which the
Company believes to be reasonable but which cannot be independently verified.
All capitalized terms used in this Prospectus without definition are defined
as set forth below under the caption "Description of New Notes -- Certain
Definitions."
THE COMPANY
Wells Aluminum Corporation ("Wells" or the "Company") is a leading
extruder, finisher and fabricator of aluminum products. For the years 1994
through 1996, over 92% of the products sold by the Company were engineered
and manufactured according to individual customer specifications, and include
custom designed extrusions and fabricated parts and assemblies. In addition
to mill finished extrusions (extrusions which have neither been painted nor
anodized), the Company's operations include painting, anodizing (an
electrolytic process which finely etches the surfaces of an extrusion
providing a hard coat which may contain color) and fabrication, which enables
the Company to provide its customers with assembly-ready components. Wells
also operates its own casting facility for aluminum billet, enabling the
Company to manage its internal billet requirements as well as to recycle its
scrap for use in its extrusion operations. The Company's network of plants
consists of seven facilities in six states in the midwestern and southeastern
United States. These plants contain 12 extrusion presses and are located to
meet various regional demands; minimize transportation costs; balance
production requirements among plants, affording more flexibility and higher
utilization; and provide single source reliability to large customers.
Through its regional plant system in the Midwest and Southeast, the
Company is able to produce a broad range of extruded, finished and fabricated
products used by its approximately 800 customers in the manufacture of their
end products. Approximately two-thirds of the Company's 1996 sales in pounds
were made to customers that have been customers of the Company for more than
10 years. The Company sells its products primarily to the building and
construction (for both new construction and replacement), transportation and
consumer durables industries. These products include: (i) door and window
components, commercial entrance doors and patio doors for the building and
construction market; (ii) school bus windows and components for truck cabs,
truck trailers, delivery vans, recreational vehicles and automotive
accessories for the transportation market; (iii) components for home and
office furniture, golf carts and pleasure boats for the consumer durables
market; and (iv) heat sinks and components for lighting fixtures for the
electrical and equipment market. For the twelve months ended March 30, 1997,
the Company sold 142.1 million pounds of aluminum extrusions, generating net
sales of $225.7 million, net earnings of $9.1 million, and EBITDA of $24.8
million.
COMPANY STRENGTHS
VALUE ADDED FINISHING AND FABRICATION. The Company provides a wide variety
of value added finishing and fabrication services, including painting,
anodizing, bending, cutting, milling, welding and assembly. Approximately 58%
of the Company's gross sales in 1996 included some degree of value added
processing, which provided Wells with a higher profit margin than the profit
margin for mill finished extrusions. The Company's ability to provide
finished components that are ready to be included in a customer's
manufacturing process enables the Company to better satisfy the needs of, and
expand its business with, existing customers as well as to attract additional
customers. In addition, the Company has broad expertise in product and die
engineering, enabling the Company to assist customers in utilizing extrusions
or fabricated components and assemblies and in creating complex extrusions to
replace several separate parts. For example, the Company has provided
engineering analysis as part of the redesign of an industrial vehicle
suspension, has assisted with the redesign of a boat deck in order to reduce
both the
1
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number of separate parts and customer assembly time, and is collaborating
with a manufacturer of light weight boat trailers on its conversion from
steel to aluminum.
LONG-TERM RELATIONSHIPS WITH DIVERSE CUSTOMER BASE. Over 66% of the
Company's sales in pounds in 1996 were made to customers that have been Wells
customers for over 10 years. Such strong relationships may decrease the
Company's exposure to volume reductions that may occur in a recession since
customers may be more likely to reduce volume from their less favored
suppliers. The Company's customers operate in many industries, including
building and construction, transportation, and consumer durables, and in a
broad range of markets within each industry. The diversity of its customer
base provides a foundation of experience on which the Company can build in
order to expand into new markets. For example, a fabrication technique
(coining) developed by the Company for the high-end office furniture market
has also found application with customers manufacturing pleasure boats,
increasing the Company's business in that segment. In addition, the Company's
familiarity with the quality, documentation and scheduling disciplines of
truck and automotive customers has facilitated entry into other industrial
markets.
REPUTATION FOR QUALITY PRODUCTS AND SERVICE. A 1995 survey of a broad
range of extrusion purchasers commissioned by the Company confirmed the
Company's reputation as a high quality extruder. For each of the past five
years, less than one percent of the Company's products have been rejected or
returned by customers. The Company believes that as a result of its ability
to provide a high level of service and quality products at competitive
prices, the Company is typically its customers' first or second choice to
provide aluminum extruded products. The quality of the Company's products
plays a key role in customer growth, retention and recapture. For example,
the Company has recaptured the business of a major truck trailer
manufacturer, which had switched to a lower priced supplier, despite the fact
that Company's prices are higher than those offered by the other supplier.
The Company has just become the sole supplier for a customer producing
pleasure boats after committing to a "zero defect" program and fulfilling
this program in three months. A customer in the storm door market has
indicated that the Company's defect rate is 80% less than that of its
competitors.
STRATEGIC NETWORK OF FACILITIES. The Company's seven plants in the
Southeast and Midwest are located near most of the Company's customers, which
minimizes transportation costs and helps generate collaborative relationships
between key Wells and customer personnel. The Company's ability to shift
production among its plants allows Wells to more efficiently meet the
requirements of its customers. The existence of a core fabrication capability
at or adjacent to each extrusion plant and of painting and anodizing
capabilities at several locations within the Company's network provides an
advantageous mix of services for customers in the most cost effective manner.
Because of this network of plants, the Company is well positioned to take
advantage of the current industrial trends of outsourcing and just-in-time
inventory management. For example, Wells is providing daily shipments of
extrusions to a major manufacturer of golf carts and utility vehicles so that
such customer can keep its inventory at a minimum yet support its
manufacturing requirements. The Company is also providing daily shipments of
components and assembled parts to a major truck manufacturer to coordinate
with and satisfy its daily assembly line requirements.
EFFECTIVE MANAGEMENT OF ALUMINUM PRICE FLUCTUATIONS. For the years 1994
through 1996, approximately 60% of the Company's cost of sales reflect the
cost of aluminum, its principal raw material. The Company focuses on
recovering the cost of aluminum in the sales price charged to its customers
in order to maintain profit margins. This is accomplished either by passing
cost increases through to customers by systematic market indexed sales
pricing or by fixing the cost of metal by hedging against committed fixed
price sales. The Company, however, does not engage in speculative hedging. In
addition, the Company maintains its inventory at levels consistent with its
operating needs (35 days on hand) through centralized purchasing and
logistics. The market price of aluminum was extremely volatile over the three
year period ending December 31, 1996, while the Company's EBITDA (excluding
any LIFO adjustments) remained relatively stable despite such price
fluctuations, due to the Company's effective pricing management.
2
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BUSINESS STRATEGY
The Company's objective is to capitalize on its strengths through the
implementation of its business strategy which includes the following
principal elements:
ENHANCE LONG-TERM CUSTOMER RELATIONSHIPS. The Company is committed to
enhancing its relationships with its customers by tailoring its business
approaches and systems to specific customer needs in order to improve quality
and performance. To that end, the Company utilizes a sales organization
comprised primarily of Company-employed representatives having broad
extrusion experience. Their responsibility is to create effective account
development strategies and to orchestrate the Company's manufacturing,
engineering and management resources to better serve the Company's long-term
customers. To expand its customer relationships beyond the traditional
sales/purchasing function, the Company has recently created
sales/engineering/manufacturing teams to address more substantive issues with
its customers. For example, the Company has begun a program with one customer
to create linked ordering and inventory management systems in order to better
support that customer's growth. The Company has also set up focus groups to
improve the shop-floor operations of a customer and is working with another
customer to overhaul its order-through-billing process. In addition, the
Company reserves manufacturing capacity across its plant network to retain
and increase business from long-term accounts.
INCREASE VALUE ADDED CONTENT. The Company can generate higher profit
margins and differentiate itself from its competitors by increasing the value
added content of its extrusions. On a per pound basis, for example, the
painting of a mill finished extrusion can increase the plant margin by 100%;
fabrication of a mill finished extrusion can increase the plant margin by
200-800%, depending upon the complexity of the process. Customers have an
incentive to purchase more value added products because the use of such
products reduces the number of vendors needed and order lead times, and
reduces operating costs and overhead by outsourcing internal operations. Over
88% of extrusion purchasers included in a survey commissioned by the Company
in 1995 indicated a need for finished and fabricated extrusions. The Company
is well-positioned to satisfy increased demand for value added services due
to its wide spectrum of finishing and fabrication capabilities, its diverse
manufacturing experience throughout its plant network, and its strong
technical service capabilities.
TARGET NEW APPLICATIONS AND MARKETS. The Company also strives to grow its
business by developing new opportunities for aluminum extrusion and
fabrication. The Company seeks out applications with multi-year life cycles
in markets where the use of aluminum enhances performance due to its light
weight, resistance to corrosion and cost advantages, capitalizing on its
detailed knowledge of design requirements and objectives within specific
industries. Over the past five years, the Company has built significant
volumes in such market niches as school bus windows, where the Company
estimates that it commands an 80% share of the market; high-end office
furniture, where the Company is a valued supplier to four of the leading
office furniture manufacturers; and industrial fixturing-guarding systems,
where the Company serves the three leading suppliers in the market.
IMPLEMENT STRATEGIC CAPITAL INVESTMENTS. The Company's capital
expenditures strategy, pursuant to which the Company is planning to spend
$3.5 million annually through 2002, is to expand capacity, improve
productivity and increase value added capabilities principally by upgrading
its equipment rather than purchasing new equipment. The Company expects that
these investments will be financed by excess cash flow from operations. The
Company plans to upgrade and modernize two extrusion presses each year for
the next five years, which is expected to increase extrusion capacity by 10%
per press. In addition, the Company plans to upgrade and modernize certain
equipment at its casting facility, which will expand capacity by 5% and
improve the quality of billet cast, and also to expand capabilities in its
fabrication facilities. During the last two years, the Company has
successfully increased its casting capacity by 15% and the capacities of two
of its extrusion presses by an average of 11% without the acquisition of new
equipment.
3
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ISSUANCE OF THE OLD NOTES
The outstanding $105.0 million principal amount of 10 1/8% Series A Senior
Notes due 2005 (the "Old Notes") were sold by the Company to Merrill Lynch &
Co. (the "Initial Purchaser") on May 28, 1997 (the "Closing Date") pursuant
to a Purchase Agreement, dated as of May 20, 1997 (the "Purchase Agreement"),
between the Company and the Initial Purchaser. The Initial Purchaser
subsequently resold the Old Notes in reliance on Rule 144A under the
Securities Act and other available exemptions under the Securities Act on or
about May 28, 1997. The Company and the Initial Purchaser also entered into a
Registration Rights Agreement, dated as of May 28, 1997 (the "Registration
Rights Agreement"), between the Company and the Initial Purchaser, pursuant
to which the Company granted certain registration rights for the benefit of
the holders of the Old Notes. The Exchange Offer is intended to satisfy
certain of the Company's obligations under the Registration Rights Agreement
with respect to the Old Notes. See "The Exchange Offer -- Purpose and
Effects."
The Old Notes were issued under an indenture, dated as of May 28, 1997
(the "Indenture"), between the Company and State Street Bank & Trust Company
(formerly known as Fleet National Bank) as trustee (in such capacity, the
"Trustee"). The New Notes are also being issued under the Indenture and are
entitled to the benefits of the Indenture. The form and terms of the New
Notes will be identical in all material respects to the form and terms of the
Old Notes except that (i) the New Notes have been registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof, and (ii) holders of New Notes will not be, and upon the consummation
of the Exchange Offer, Eligible Holders of Old Notes will no longer be,
entitled to certain rights under the Registration Rights Agreement intended
for the holders of unregistered securities. The Exchange Offer shall be
deemed consummated upon the delivery of the Company to the Exchange Agent
under the Indenture of New Notes in the same aggregate principal amount as
the aggregate principal amount of Old Notes that are validly tendered by
holders thereof pursuant to the Exchange Offer. See "The Exchange Offer --
Termination of Certain Rights" and "--Procedures for Tendering" and
"Description of New Notes -- General."
The proceeds received by the Company from the issuance of the Old Notes
were used to repay certain existing indebtedness of the Company, to make a
Distribution (as defined herein) and to pay certain fees and expenses
associated with the issuance of the Old Notes. See "The Recapitalization."
There will be no proceeds to the Company from any exchange pursuant to the
Exchange Offer.
4
<PAGE>
THE RECAPITALIZATION
The offering of the Old Notes, the repayment of indebtedness outstanding
under the Old Credit Facility (as defined herein in "The Recapitalization"),
the retirement of the Subordinated Notes (as defined herein in "The
Recapitalization") and the entering into of the New Credit Facility (as
defined herein in "The Recapitalization") were part of an overall
recapitalization of the Company. Indebtedness outstanding under the Old
Credit Facility was, and the Subordinated Notes will be, repaid from the net
proceeds of the offering of the Old Notes. Concurrently with the issuance of
the Old Notes, the Company entered into the New Credit Facility. As part of
the Recapitalization, upon the issuance of the Old Notes, the Board of
Directors of the Company made the Distribution, pursuant to which the Company
paid a special cash dividend to the holders of its common stock and settled
existing employee stock options, and repurchased, and may continue to
repurchase, shares of common stock held by certain stockholders.
The following table sets forth the estimated sources and uses of funds for
the Recapitalization assuming the Recapitalization occurred on May 28, 1997.
See "Management's Discussions and Analysis of Financial Condition and Results
of Operation -- Liquidity and Capital Resources."
<TABLE>
<CAPTION>
AMOUNT
--------------
(IN THOUSANDS)
<S> <C>
SOURCES OF FUNDS:
Notes offered hereby ................. $105,000
--------------
Total Sources of Funds.............. $105,000
==============
USES OF FUNDS:
Repayment of Old Credit Facility (a) $ 21,164
Retirement of Subordinated Notes (b) 16,303
Distribution ......................... 61,706
Working capital ...................... 1,177
Estimated fees and expenses (c) ...... 4,650
--------------
Total Uses of Funds................. $105,000
==============
</TABLE>
- ------------
(a) Includes $172 relating to interest expense.
(b) Includes $244 relating to prepayment penalty and $1,059 relating to
interest expense through July 15, 1997. The Subordinated Notes will be
repurchased on July 15, 1997 at a price of 101.625%. Until such time,
the proceeds of the issuance of the Old Notes to be utilized for this
purpose have been set aside in an escrow account and invested in
government securities and commercial paper.
(c) Includes a fee of $500 to GGvA (as defined below) for financial
advisory services in connection with the Recapitalization.
Since its acquisition in 1987, the Company has been controlled by The
Fulcrum III Limited Partnership and The Second Fulcrum III Limited
Partnership (collectively, "Fulcrum III"), of which Gibbons, Goodwin, van
Amerongen ("GGvA") is the sole general partner. After the Recapitalization,
all of the shares owned by Fulcrum III will be transferred to a new
partnership of which GGvA will be the sole general partner. In connection
with that transfer, GGvA will offer to purchase from the existing limited
partners of Fulcrum III their interests in the capital stock of the Company
owned by Fulcrum III. To the extent this offer is accepted, the interest of
GGvA in the new partnership owning the capital stock of the Company will be
increased and GGvA will continue to control the Company. After the
Recapitalization, senior management of the Company will own approximately 17%
of the Common Stock of the Company on a fully diluted basis.
5
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer ............ The Company is offering, upon the terms and
subject to the conditions set forth herein
and in the accompanying letter of
transmittal (the "Letter of Transmittal"),
to exchange its 10 1/8% Series B Senior
Notes due 2005 (the "New Notes," and, with
the Old Notes, the "Notes") for an identical
face amount of the outstanding Old Notes
(the "Exchange Offer"). As of the date of
this Prospectus, $105.0 million in aggregate
principal amount of the Old Notes is
outstanding, the maximum amount authorized
by the Indenture for all Notes. As of
, 1997, there were registered
holders of the Old Notes, which held $105.0
million of aggregate principal amount of the
Old Notes. See "The Exchange Offer -- Terms
of the Exchange Offer."
Expiration Date ............... 5:00 p.m., New York City time, on
, 1997, as the same may be
extended. See "The Exchange Offer --
Expiration Date; Extension; Termination;
Amendments."
Conditions of the Exchange
Offer ........................ The Exchange Offer is not conditioned upon
any minimum principal amount of Old Notes
being tendered for exchange. However, the
Exchange Offer is subject to certain
customary conditions, which may be waived by
the Company. See "The Exchange Offer --
Conditions of the Exchange Offer."
Accrued Interest on the Old
Notes ........................ The New Notes will bear interest at a rate
equal to 10 1/8% per annum from and
including their date of issuance. Eligible
Holders whose Old Notes are accepted for
exchange will have the right to receive
interest accrued thereon from the date of
original issuance of the Old Notes or the
last Interest Payment Date, as applicable,
to, but not including, the date of issuance
of the New Notes, such interest to be
payable with the first interest payment on
the New Notes. Interest on the Old Notes
accepted for exchange, which accrues at the
rate of 10 1/8% per annum, will cease to
accrue on the day prior to the issuance of
the New Notes. The interest rate on the Old
Notes may increase under certain
circumstances if the Company is not in
compliance with its obligations under the
Registration Rights Agreement. See
"Description of New Notes -- General."
Procedures for Tendering Old
Notes ........................ Each holder of Old Notes wishing to accept
the Exchange Offer must complete, sign and
date the Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein,
and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together
with the Old Notes and any other required
documentation to the exchange agent (the
"Exchange Agent") at the address set forth
herein. Old Notes may be physically
delivered, but physical delivery is not
required if a confirmation of a book-entry
of such Old Notes to the Exchange Agent's
account at The Depositary Trust Company
("DTC" or the "Depositary") is delivered in
a timely fashion. By executing the Letter of
Transmittal, each holder will
6
<PAGE>
represent to the Company that, among other
things, the New Notes acquired pursuant to
the Exchange Offer are being obtained in the
ordinary course of business of the person
receiving such New Notes, whether or not
such person is the holder, that neither the
holder nor any such other person is engaged
in, or intends to engage in, or has an
arrangement or understanding with any person
to participate in, the distribution of such
New Notes and that neither the holder nor
any such other person is an "affiliate," as
defined under Rule 405 of the Securities
Act, of the Company. Each broker or dealer
that receives New Notes for its own account
in exchange for Old Notes, where such Old
Notes were acquired by such broker or 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 New
Notes. See "The Exchange Offer -- Procedures
for Tendering" and "Plan of Distribution."
Guaranteed Delivery Procedures. Eligible Holders of Old Notes who wish to
tender their Old Notes and (i) whose Old
Notes are not immediately available or (ii)
who cannot deliver their Old Notes or any
other documents required by the Letter of
Transmittal to the Exchange Agent prior to
the Expiration Date (or complete the
procedure for book-entry transfer on a
timely basis), may tender their Old Notes
according to the guaranteed delivery
procedures set forth in the Letter of
Transmittal. See "The Exchange Offer --
Guaranteed Delivery Procedures."
Acceptance of Old Notes and
Delivery of New Notes ........ Upon satisfaction or waiver of all
conditions of the Exchange Offer, the
Company will accept any and all Old Notes
that are properly tendered in the Exchange
Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The New Notes
issued pursuant to the Exchange Offer will
be delivered promptly after acceptance of
the Old Notes. See "The Exchange Offer --
Procedures for Tendering."
Withdrawal Rights ............. Tenders of Old Notes 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."
The Exchange Agent ............ State Street Bank & Trust Company (formerly
known as Fleet National Bank) is the exchange
agent (in such capacity, the "Exchange Agent").
The address and telephone number of the
Exchange Agent are set forth in "The
Exchange Offer -- Exchange Agent."
Fees and Expenses ............. All expenses incident to the Company's
consummation of the Exchange Offer and
compliance with the Registration Rights
Agreement will be borne by the Company. The
Company will also pay certain transfer taxes
applicable to the Exchange Offer. See "The
Exchange Offer -- Fees and Expenses."
7
<PAGE>
Resales of the New Notes ...... Based on interpretations by the staff of the
Commission set forth in no-action letters
issued to third parties, the Company
believes that New Notes issued pursuant to
the Exchange Offer to an Eligible Holder in
exchange for Old Notes may be offered for
resale, resold and otherwise transferred by
such Eligible Holder (other than (i) a
broker-dealer who purchased the Old Notes
directly from the Company for resale
pursuant to Rule 144A under the Securities
Act 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 Eligible Holder is acquiring the
New Notes in the ordinary course of business
and is not participating, and has no
arrangement or understanding with any person
to participate, in a distribution of the New
Notes. Each broker-dealer that receives New
Notes for its own account in exchange for
Old Notes, where such Old Notes were
acquired by such broker as a result of
market-making or other trading activities,
must acknowledge that it will deliver a
prospectus in connection with any resale of
such New Notes. See "The Exchange Offer --
Purpose and Effects" and "Plan of
Distribution."
DESCRIPTION OF NEW NOTES
The Exchange Offer applies to $105.0 million aggregate principal amount of
Old Notes. The terms of the New Notes are identical in all material respects
to the Old Notes, except for certain transfer restrictions and other rights
relating to the exchange of the Old Notes for New Notes. The New Notes will
evidence the same debt as the Old Notes and will be entitled to the benefits
of the Indenture under which both the Old Notes were, and the New Notes will
be, issued. See "Description of New Notes."
Notes Offered ................. $105,000,000 aggregate principal amount of
10 1/8% Series B Senior Notes due 2005.
Maturity Date ................. June 1, 2005.
Interest Payment Dates ........ June 1 and December 1 of each year,
commencing December 1, 1997.
Optional Redemption ........... The New Notes will be redeemable at the
option of the Company, in whole or in part,
in cash, at any time on or after June 1,
2001, at the redemption prices set forth
herein, together with accrued and unpaid
interest, if any, to the date of redemption.
In addition, at the option of the Company,
up to 33 1/3% of the aggregate principal
amount of the New Notes originally issued
may be redeemed prior to June 1, 2000 at a
price of 110 1/8% of the principal amount
thereof, together with accrued and unpaid
interest, if any, to the redemption date,
with the net proceeds of one or more Public
Equity Offerings of the Company; provided
that at least $65 million of the aggregate
principal amount of the New Notes remain
outstanding following such redemption. See
"Description of New Notes -- Optional
Redemption."
8
<PAGE>
Change of Control ............. Upon the occurrence of a Change of Control,
each holder of New Notes will, subject to
the limitations described herein, have the
right to require the Company to purchase all
or a portion of such holder's New Notes at a
cash purchase price equal to 101% of the
principal amount thereof, plus accrued and
unpaid interest, if any, thereon to the date
of purchase. In addition, the New Notes will
be redeemable, at the option of the Company,
in whole or in part, after a Change of
Control at a redemption price equal to the
sum of (i) the outstanding principal amount
thereof, plus (ii) accrued and unpaid
interest, if any, to the redemption date,
plus (iii) the greater of (x) 1.0% of the
outstanding principal amount of the New
Notes and (y) the excess of (A) the present
value of the required interest and principal
payments due on such New Notes, computed
using a discount rate equal to the Treasury
Rate (as defined) plus the Applicable Spread
(as defined), over (B) the outstanding
principal amount of the New Notes. See
"Description of New Notes -- Purchase of New
Notes Upon a Change of Control."
Ranking ....................... The New Notes will be senior unsecured
obligations of the Company and the
Indebtedness represented by the New Notes
and the payment of principal of, premium, if
any, and interest on the New Notes, will be
senior in right of payment to all existing
and future subordinated indebtedness of the
Company, will rank pari passu in right of
payment with all other existing and future
senior indebtedness of the Company and will
be effectively subordinated in right of
payment to all existing and future secured
indebtedness of the Company as to the assets
securing such indebtedness. As of March 30,
1997, on a pro forma basis after giving
effect to the Recapitalization, the Company
would have had no indebtedness outstanding
other than the New Notes.
Certain Covenants ............. The Indenture (as defined herein) pursuant
to which the New Notes will be issued will
contain certain covenants, including, among
others, covenants with respect to the
following matters: (i) limitation on
indebtedness; (ii) limitation on restricted
payments; (iii) limitation on certain
transactions with affiliates; (iv)
limitation on disposition of proceeds of
asset sales; (v) limitation on liens; (vi)
limitation on transfer of assets; (vii)
limitation on guarantees by subsidiaries;
(viii) limitation on sale and leaseback
transactions; (ix) limitation of dividends
and other payment restrictions affecting
subsidiaries; (x) limitation on subsidiary
capital stock; and (xi) restrictions on
mergers, consolidations or the sale of all
or substantially all of the assets of the
Company. See "Description of New Notes --
Certain Covenants."
Use of Proceeds ............... There will be no proceeds to the Company
from any exchange pursuant to the Exchange
Offer. The net proceeds to the Company from
the sale of the Old Notes were used to fund
the Recapitalization.
9
<PAGE>
Absence of a Public Market for
the New Notes ................ The New Notes will be new securities for
which there is currently no established
trading market. Although the Initial
Purchaser has informed the Company that it
currently makes a market in the Notes, it is
not obligated to do so, and any such
market-making may be discontinued at any
time without notice, at its sole discretion.
Accordingly, there can be no assurance as to
the development or the liquidity of any
market for the New Notes. The Company does
not intend to apply for listing of the New
Notes on any securities exchange or for
quotation through the Nasdaq National Market
or any other quotation system.
RISK FACTORS
See "Risk Factors" beginning on page 13 for a discussion of certain
factors which should be considered by Eligible Holders evaluating the
Exchange Offer.
10
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER POUND AMOUNTS)
The following table sets forth summary historical and pro forma financial
data with respect to the Company for the periods ended and as of the dates
indicated. The summary historical financial data for the five years ended
December 31, 1996 are derived from the audited financial statements of the
Company. The summary historical financial data for the three month periods
ended March 30, 1997 and March 31, 1996 are derived from unaudited financial
statements of the Company included elsewhere in this Prospectus. Such
unaudited financial statements, in the opinion of the Company's management,
include all adjustments necessary for the fair presentation of the financial
condition and the results of operations of the Company for such periods and
as of such dates. Operating results for the three months ended March 30, 1997
are not necessarily indicative of the results of operations that may be
expected for the year ended December 31, 1997. The summary pro forma
financial data give effect to the Recapitalization as if it had occurred as
of the first day of the respective period. The summary pro forma balance
sheet and financial data do not purport to represent what the Company's
operating results or financial condition would actually have been had the
Recapitalization in fact occurred as of such date or to project the Company's
financial condition for any future period or as of any future date. This
information should be read in conjunction with the financial statements of
the Company and the notes thereto appearing elsewhere in this Prospectus,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Selected Financial Data."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1992 1993 1994 1995 1996
---------- ---------- ---------- ---------- ----------
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C>
Net sales .................................... $151,314 $155,401 $197,991 $232,555 $228,161
Cost of sales ................................ 129,366 130,128 168,810 194,414 191,206
---------- ---------- ---------- ---------- ----------
Gross profit ................................. 21,948 25,273 29,181 38,141 36,955
Selling, general and administrative expenses . 12,886 13,536 14,536 16,211 15,877
---------- ---------- ---------- ---------- ----------
Operating profit ............................. 9,062 11,737 14,645 21,930 21,078
Interest expense ............................. 9,226 8,487 8,443 7,087 5,176
Income taxes ................................. 799 1,697 3,016 6,262 7,059
---------- ---------- ---------- ---------- ----------
Earnings (loss) before extraordinary loss and
cumulative effect of accounting change (a) $ (963) $ 1,553 $ 3,186 $ 8,581 $ 8,843
========== ========== ========== ========== ==========
OTHER FINANCIAL DATA:
EBITDA (b) ................................... $ 12,783 $ 15,658 $ 24,651 $ 23,406 $ 22,285
Capital expenditures ......................... 553 1,977 1,512 1,054 2,589
Depreciation and amortization (c) ............ 3,721 3,921 4,455 4,006 3,539
OTHER DATA:
Pounds of product shipped .................... 118,352 123,069 148,970 137,779 138,380
EBITDA per pound ............................. $ 0.108 $ 0.127 $ 0.165 $ 0.170 $ 0.161
Average aluminum market price per pound ...... $ 0.576 $ 0.541 $ 0.688 $ 0.875 $ 0.725
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 31, MARCH 30,
1996 1997
----------- -----------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales .................................... $57,769 $55,337
Cost of sales ................................ 49,472 47,194
----------- -----------
Gross profit ................................. 8,297 8,143
Selling, general and administrative expenses . 4,062 3,774
----------- -----------
Operating profit ............................. 4,235 4,369
Interest expense ............................. 1,441 1,167
Income taxes ................................. 1,240 1,358
----------- -----------
Earnings (loss) before extraordinary loss and
cumulative effect of accounting change (a) $ 1,554 $ 1,844
=========== ===========
OTHER FINANCIAL DATA:
EBITDA (b) ................................... $ 4,574 $ 7,063
Capital expenditures ......................... 647 272
Depreciation and amortization (c) ............ 880 911
OTHER DATA:
Pounds of product shipped .................... 32,104 35,836
EBITDA per pound ............................. $ 0.142 $ 0.197
Average aluminum market price per pound ...... $ 0.765 $ 0.755
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
MARCH 30, 1997
-------------------
<S> <C>
PRO FORMA FINANCIAL DATA (D):
EBITDA (b)............................... $24,774
Cash interest expense (e)................ 10,631
Ratio of EBITDA to cash interest
expense................................. 2.33x
Ratio of total indebtedness to EBITDA ... 4.24x
</TABLE>
(continued on following page)
11
<PAGE>
<TABLE>
<CAPTION>
AS OF MARCH 30, 1997
-------------------------
ACTUAL AS ADJUSTED (D)
--------- ---------------
<S> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Cash................................... $ 1,164 $ 3,763
Working capital........................ 15,955 22,124
Inventories............................ 20,312 20,312
Property, plant and equipment, net .... 26,381 26,381
Total assets........................... 114,296 122,030
Total indebtedness..................... 35,185 105,000
Total stockholders' equity (deficit)... 36,316 (24,753)
</TABLE>
- ------------
(a) Earnings (loss) before extraordinary loss and cumulative effect of
accounting change excludes an extraordinary loss of $1,092 (less
applicable income taxes of $698) on the refinancing of debt in 1994 and
a cumulative effect of accounting change for income taxes in 1993 of
$618.
(b) EBITDA is defined as earnings before interest expense, income taxes and
depreciation and amortization and excludes non-cash LIFO income or
charges and extraordinary items. In addition, pro forma EBITDA excludes
compensation expense to be incurred by the Company in connection with
the settlement of employee stock options and bonuses pursuant to the
Recapitalization. EBITDA reported above excludes LIFO charges (income)
of $0, $0, $5,551, ($2,530), ($2,332), ($541) and $1,783 during the
years ended December 31, 1992, 1993, 1994, 1995 and 1996, respectively,
and for the three months ended March 31, 1996 and March 30, 1997,
respectively. EBITDA should not be considered in isolation or as a
substitute for net income, cash flows from operations, or other income
or cash flow data prepared in accordance with generally accepted
accounting principles or as a measure of a company's profitability or
liquidity. In addition, although the EBITDA measure of performance is
not recognized under generally accepted accounting principles, it is
widely used by companies as a measure of operating performance because
it assists in comparing performance on a relatively consistent basis
across companies without regard to depreciation and amortization, which
can vary significantly depending on accounting methods (particularly
where acquisitions are involved) or non-operating factors such as
historical cost bases. Because EBITDA is not calculated identically by
all companies, the presentation herein may not be comparable to other
similarly titled measures of other companies.
(c) Amortization does not include amortization of debt issuance costs of
$550, $334, $474, $570, $495, $124 and $136 during the years ended
December 31, 1992, 1993, 1994, 1995 and 1996, respectively, and for the
three months ended March 31, 1996 and March 30, 1997, respectively.
(d) Presented as though the Recapitalization had occurred at the beginning
of the period presented for financial data or as of the date presented
for balance sheet data.
(e) Reflects the interest expense from the debt incurred necessary to
effect the Recapitalization and excludes the interest expense from the
debt repaid pursuant to the Recapitalization. Pro forma cash interest
expense assumes that the Notes bear an interest rate of 10.125%.
12
<PAGE>
RISK FACTORS
Prospective purchasers of the New Notes should carefully consider the
following risk factors, as well as the other information contained in this
Prospectus, before making an investment in the New Notes. This Prospectus
contains statements which constitute forward looking statements. These
statements appear in a number of places in this Prospectus and include
statements regarding the intent, belief or current expectations of the
Company or its officers primarily with respect to the future operating
performance of the Company. Prospective purchasers of the New Notes are
cautioned that any such forward looking statements are not guarantees of
future performance and involve risks and uncertainties, and that actual
results may differ materially from those in the forward looking statements as
a result of various factors. The accompanying information contained in this
Prospectus, including the information set forth below, identifies important
factors that could cause such differences.
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE INDEBTEDNESS
Following the Recapitalization, the Company will be highly leveraged. As
of March 30, 1997, after giving pro forma effect to the Recapitalization, the
Company would have had $105 million of indebtedness outstanding, consisting
of the Old Notes. See "Capitalization."
The significant indebtedness to be incurred as a result of the
Recapitalization will have several important consequences to the holders of
the New Notes, including, but not limited to, the following: (i) a
substantial portion of the Company's cash flow from operations must be
dedicated to service the Company's indebtedness, and the failure of the
Company to generate sufficient cash flow to service such indebtedness could
result in a default under such indebtedness, including under the New Notes;
(ii) while the Company has a $15 million revolving credit facility, the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or other purposes may be
impaired; (iii) the Company's flexibility to expand, make capital
expenditures and respond to changes in the industry and economic conditions
generally may be limited; (iv) the New Credit Facility (as defined herein)
and the Indenture will contain, and future agreements relating to the
Company's indebtedness may contain, numerous financial and other restrictive
covenants, including, among other things, limitations on the ability of the
Company to incur additional indebtedness, to create liens and other
encumbrances, to make certain payments and investments, to sell or otherwise
dispose of assets, or to merge or consolidate with another entity, the
failure to comply with which may result in an event of default, which, if not
cured or waived, could have a material adverse effect on the Company; and (v)
indebtedness under the New Credit Facility will be at variable rates of
interest, which will cause the Company to be vulnerable to increases in
interest rates. See "Description of New Credit Facility," "Description of New
Notes" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
The ability of the Company to satisfy its obligations pursuant to such
indebtedness, including pursuant to the New Notes and the Indenture, will be
dependent upon the Company's future performance which, in turn, will be
subject to management, financial, business, regulatory and other factors
affecting the business and operations of the Company, some of which are not
in the Company's control. If the Company is unable to generate sufficient
cash flow to meet its debt obligations, the Company may be required to
restructure its debt, reduce or delay capital expenditures, sell assets or
obtain additional financing. If the Company could not satisfy its obligations
related to such indebtedness, substantially all of the Company's long-term
debt could be in default and could be declared immediately due and payable.
The New Credit Facility will be secured by inventory, accounts receivable
and other like assets, and by a pledge of capital stock of any subsequently
acquired or organized subsidiaries of the Company (although such subsidiaries
will be required to guarantee the New Notes in such circumstances) and the
New Notes will be effectively subordinated to any indebtedness under the New
Credit Facility as to the assets securing the New Credit Facility.
13
<PAGE>
CUSTOMERS IN CYCLICAL MARKETS
Demand for the Company's products is subject to changes in general
economic conditions that affect its customers' markets. For example, sales to
the building and construction markets (approximately 49% of pounds sold in
1996) follow the trends in residential and commercial construction, while
sales to the transportation market (approximately 20% of pounds sold in 1996)
are driven by trends in the automotive, truck and other vehicle manufacturing
industries. Such industries have experienced recessionary or slow growth
conditions for substantial periods in the past and may experience such
recessionary conditions at the same time in the future. Adverse economic
conditions in such industries may have a material adverse effect on the
Company's financial condition and operations.
COMPETITION
The aluminum extrusion industry is fragmented and highly competitive. The
Company's competitors include primary aluminum producers that have extruding
operations, regional multi-plant extruders and small local extruders.
Competition is generally based upon price, delivery time, quality, service,
and specialty engineering/design/production capabilities. The Company
believes that the extrusion industry offers only moderate barriers to entry,
and extrusion presses and other capital equipment are readily available on
the open market. Although the Company is aware of no significant recent
entrants, there can be no assurance that new entrants will not increase
competition in the aluminum extrusion industry, which could materially
adversely affect the Company. Competition could adversely affect the
Company's operating results by forcing it to reduce its prices or incur
additional costs. A decline in the demand for aluminum extrusions could
result in a greater decline in the prices for the Company's products in light
of the high fixed costs and capacity of the aluminum extrusion industry. Some
of the Company's competitors have greater financial and other resources than
the Company. See "Business -- Competition."
Other materials, such as vinyl and rolled steel, may be used as
substitutes for aluminum extrusions in certain markets and under certain
circumstances. An increase in the use of substitutes for aluminum extrusions
could have a material adverse effect on the financial condition and
operations of the Company. See "Business -- Competition."
PRICING OF RAW MATERIALS
The Company's principal raw materials, primary aluminum ingot and aluminum
scrap, are subject to extensive price volatility. During the period January
1, 1992 through December 31, 1996, the average Midwest U.S. transaction price
(the "MWTP") for primary aluminum has ranged from approximately $.50 to $1.00
per pound. For the month of March 1997, the MWTP was approximately $.80 per
pound. In 1996, aluminum represented 65% of the Company's total production
costs.
The Company manages its exposure to volatility in aluminum prices either
by tying the purchase price of its raw materials to the MWTP at a fixed
spread and passing any increase in the MWTP through to its customers or by
hedging the fixed price on its purchases of raw materials through
simultaneously entering into forward sales contracts with its customers. It
is the Company's policy not to engage in speculative hedging activity. Any
increase in the price of such raw materials could have an adverse effect on
the Company's operations and financial condition if the Company is unable to
pass such increases through to its customers or does not effectively hedge
against such price changes. See "Business -- Raw Materials."
SOURCES OF RAW MATERIALS
The Company purchases all of its raw materials (other than internally
generated scrap) from outside aluminum suppliers. Pursuant to a supply
agreement (the "Venalum Agreement") with CVG Industria Venezolana de Aluminio
C.A. ("Venalum"), the Company purchases primary aluminum (ingot and billet)
from Venalum; this contract represents approximately 60-65% of the Company's
aluminum requirements purchased from outside suppliers. Venalum currently
owns approximately 20% of the outstanding shares of the Company's Common
Stock. The Company believes that the terms of the Venalum Agreement are no
less favorable to the Company than would be obtained in an arms' length
transaction. The Venalum
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Agreement is scheduled to expire in December 1997, but may be extended based
upon negotiations between the Company and Venalum. There can be no assurance
that the Venalum Agreement will be extended. If the Venalum Agreement is
terminated, there can be no assurance that the Company can enter into a new
supply agreement upon the same or more favorable pricing terms. The loss of
certain of the rights and benefits provided under the Venalum Agreement could
adversely affect the Company's business. In addition, without a long-term
supply contract, any limitation in the supply of primary aluminum or aluminum
scrap could have a material adverse effect on the Company's operations and
financial condition. See "Business -- Raw Materials" and "Certain
Transactions."
ENVIRONMENTAL MATTERS
The Company is subject to extensive and evolving federal, state and local
environmental and land use laws and regulations, which have become
increasingly stringent in recent years as a result of greater public interest
in protecting and cleaning up the environment. These laws and regulations
affect the Company's business and operations in many ways. See "Business --
Environmental Matters."
In the ordinary course of its business, the Company may become involved in
a variety of legal and administrative proceedings relating to environmental
matters. These may include proceedings by federal, state or local agencies
seeking to impose civil or criminal penalties on the Company for violations
of such laws and regulations, or to impose liability on the Company under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
("CERCLA") or comparable state statutes, or to revoke or deny renewal of, or
place limitations on, a permit necessary for the lawful operation of the
Company's business.
Certain of the Company's manufacturing facilities have been in operation
for several decades and, over such time, these facilities have used
substances and generated and disposed of wastes which are or may be
considered hazardous. For example, certain of these facilities have in the
past stored or disposed of wastewater treatment sludge in on-site ponds,
lagoons or other surface impoundments. Although the Company believes that
these facilities are in substantial compliance with current environmental
laws and regulations applicable to such storage and disposal activities, it
is possible that additional environmental issues and related matters may
arise relating to such past activities which could require additional
expenditures by the Company, some of which could be material.
The Company cannot predict what environmental legislation or regulations
will be enacted in the future, how existing or future laws or regulations
will be administered or interpreted or what environmental conditions may be
found to exist. Enactment of more stringent laws or regulations or more
strict interpretation of existing laws and regulations could require
additional expenditures by the Company, some of which could be material.
DEPENDENCE ON KEY PERSONNEL
The Company considers its management to be an important business strength
of the Company. See "Business -- Company Strengths." If for any reason, a
number of such key personnel do not continue to be active in management
without appropriate replacements being hired, the Company's operations could
be materially adversely affected.
CONTROL BY PRINCIPAL STOCKHOLDER
GGvA is the sole general partner of Fulcrum III which currently owns
approximately 61% of the outstanding shares of the Company's common stock. As
a result, GGvA controls the Company and has the power to elect a majority of
the directors of the Company and to control all matters submitted to the
stockholders of the Company, including approving business combinations
involving the Company. See "Principal Stockholders." After the
Recapitalization, all of the shares owned by Fulcrum III will be transferred
to a new partnership of which GGvA will be the sole general partner. As a
result, GGvA will continue to control the Company.
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CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control at any time, the Company will
be required to offer to repurchase each holder's New Notes at a price equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase. There can be no assurance that the
Company will have the financial resources necessary to repurchase the New
Notes upon a Change of Control. In addition, the requirement to repurchase
the New Notes upon a Change of Control may discourage persons from making a
tender offer for or a bid to acquire the Company. See "Description of New
Notes -- Purchase of New Notes Upon a Change of Control." In addition, a
Change of Control may constitute a default under the New Credit Facility. See
"Description of New Credit Facility."
ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES
The New Notes will be new securities for which there is currently no
established trading market, and none may develop. The Initial Purchaser has
indicated to the Company that it has made a market in the Notes, as permitted
by applicable laws and regulations, but it is under no obligation to do so;
and such market-making could be discontinued at any time without notice, at
the sole discretion of the Initial Purchaser. In addition, such market-making
activities may be limited during the Exchange Offer or the pendency of the
Shelf Registration Statement, if it is filed. Accordingly, no assurance can
be given that an active trading market for the New Notes will develop or, if
such a market develops, as to the liquidity of such market. Following the
Exchange Offer, the Company does not intend to list the New Notes on any
securities exchange or to arrange for the New Notes to be quoted on the
Nasdaq National Market or other quotation system. If the New Notes are traded
after their initial issuance, they may trade at a discount from their initial
offering price, depending upon prevailing interest rates, the market for
similar securities, the performance of the Company and certain other factors.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Old Notes as set forth in the legend thereon
as a consequence of the issuance of the Old Notes pursuant to exemptions
from, or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old
Notes may not be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register the Old Notes under the Securities
Act. New Notes issued pursuant to the Exchange Offer in exchange for Old
Notes may be offered for resale, resold or otherwise transferred by Holders
thereof (other than any such holder which 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 such New Notes are acquired in the ordinary course of such
holders' business and such holders have no arrangement with any person to
participate in the distribution of such Notes. Each broker-dealer that
receives New 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 New 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 New Notes received in
exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that it will make this Prospectus
available to any such broker-dealer for use in connection with any such
resale. See "Plan of Distribution." However, to comply with the securities
laws of certain jurisdictions, if applicable, the New Notes may not be
offered or sold unless they have been registered or qualified for sale in
such jurisdictions or an exemption from registration or qualification is
available and is complied with. To the extent that Old Notes are tendered and
accepted in the Exchange Offer, the trading market for untendered and
tendered but unaccepted Old Notes will be adversely affected.
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THE EXCHANGE OFFER
PURPOSE AND EFFECTS
The Old Notes were sold by the Company on May 28, 1997 to the Initial
Purchaser, who resold the Old Notes to "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act) and other institutional
"accredited investors" (as defined in Rule 501(a) under the Securities Act).
In connection with the sale of the Old Notes, the Company and the Initial
Purchaser entered into a Registration Rights Agreement dated as of May 28,
1997 (the "Registration Rights Agreement") pursuant to which the Company
agreed to file with the Commission a registration statement (the "Exchange
Offer Registration Statement") with respect to an offer to exchange the Old
Notes for New Notes within 45 days following the closing date of the Old
Notes. In addition, the Company agreed to use its best efforts to cause the
Exchange Offer Registration Statement to become effective under the
Securities Act and to issue the New Notes pursuant to the Exchange Offer. A
copy of the Registration Rights Agreement has been filed as an exhibit to the
Exchange Offer Registration Statement.
The Exchange Offer is being made pursuant to the Registration Rights
Agreement to satisfy the Company's obligations thereunder. For purposes of
the Exchange Offer, the term "Eligible Holder" shall mean the registered
owner of any Old Notes that remain Transfer Restricted Securities, as
reflected on the records of State Street Bank & Trust Company (formerly known
as Fleet National Bank) as registrar for the Old Notes (in such capacity, the
"Registrar"), or any person whose Old Notes are held of record by the
depository of the Old Notes. The Company is not required to include any
securities other than the New Notes in the Exchange Offer Registration
Statement. Holders of Old Notes who do not tender their Old Notes or whose
Old Notes are tendered but not accepted would have to rely on exemptions from
registration requirements under the securities laws, including the Securities
Act, if they wish to sell their Old Notes.
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties unrelated to the Company, the
Company believes that the New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by any holder of such New Notes (other than a person that is an
"affiliate" of the Company within the meaning of Rule 405 under the
Securities Act and except as set forth in the next paragraph) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary
course of such holder's business and such holder is not participating and
does not intend to participate, and has no arrangement or understanding with
any person to participate, in the distribution of such New Notes.
If any person were to be participating in the Exchange Offer for the
purpose of distributing securities in a manner not permitted by the
Commission's interpretation, (i) the position of the staff of the Commission
enunciated in interpretive letters would be inapplicable to such person and
(ii) such person would 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 New Notes for its own
account in exchange for Old Notes, where such Old 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 New Notes. See "Plan of Distribution."
The Exchange Offer is not being made to, nor will the Company accept
surrenders for exchange from, holders of Old 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. Prior to the
Exchange Offer, however, the Company will use its best efforts to register or
qualify the New Notes for offer and sale under the securities or blue sky
laws of such jurisdictions as is necessary to permit consummation of the
Exchange Offer and do any and all other acts or things necessary or advisable
to enable the offer and sale in such jurisdictions of the New Notes.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, the Company will accept any
and all Old Notes validly tendered prior to 5:00 p.m.,
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New York City time, on the Expiration Date (as defined below). The Company
will issue up to $105,000,000 aggregate principal amount of New Notes in
exchange for a like principal amount of outstanding Old Notes which are
validly tendered and accepted in the Exchange Offer. Subject to the
conditions of the Exchange Offer described below, the Company will accept any
and all Old Notes which are so tendered. Holders may tender some or all of
their Old Notes pursuant to the Exchange Offer; however, the Old Notes may be
tendered only in multiples of $1,000. See "Description of New Notes."
The form and terms of the New Notes will be the same in all material
respects as the form and terms of the Old Notes, except that (i) the New
Notes will be registered under the Securities Act and hence will not bear
legends restricting the transfer thereof and (ii) because the New Notes will
be registered, holders of New Notes will not be, and upon the consummation of
the Exchange Offer, Eligible Holders of Old Notes will no longer be, entitled
to certain rights under the Registration Rights Agreement intended for the
holders of unregistered securities.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of the State of Maryland or 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. Old Notes which are not tendered for exchange or are tendered but
not accepted in the Exchange Offer will remain outstanding and be entitled to
the benefits of the Indenture, but will not be entitled to any registration
rights under the Registration Rights Agreement.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent for the Exchange Offer. The Exchange Agent will act as agent
for the tendering holders for the purposes of receiving the New Notes from
the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Eligible Holders who tender Old 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
Old 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; EXTENSION; TERMINATION; AMENDMENTS
The Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1997, subject to extension by the Company by notice to the
Exchange Agent as herein provided. The Company reserves the right to so
extend the Exchange Offer at its discretion, in which event the term
"Expiration Date" shall mean the time and date on which the Exchange Offer as
so extended shall expire. The Company will notify the Exchange Agent of any
extension by oral or written notice and will make a public announcement
thereof, 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 (i) to delay accepting for exchange any Old
Notes for any New Notes or to extend or terminate the Exchange Offer and not
accept for exchange any Old Notes for any New Notes if any of the events set
forth below under the caption "Conditions of the Exchange Offer" shall have
occurred and shall not have been waived by the Company by giving oral or
written notice of such delay or termination to the Exchange Agent, or (ii) to
amend the terms of the Exchange Offer in any manner. Any such delay in
acceptance for exchange, extension or amendment will be followed as promptly
as practicable by public announcement thereof. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material
change, the Company will promptly disclose such amendment in a manner
reasonably calculated to inform the holders of Old Notes of such amendment,
and the Company will extend the Exchange Offer for a minimum of five business
days, depending upon the significance of the amendment and the manner of
disclosure to the holders of Old Notes, if the
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Exchange Offer would otherwise expire during such five business-day period.
The rights reserved by the Company in this paragraph are in addition to the
Company's rights set forth below under the caption "Conditions of the
Exchange Offer."
TERMINATION OF CERTAIN RIGHTS
The Registration Rights Agreement provides that, subject to certain
exceptions, in the event that (i) the Exchange Offer Registration Statement
is not filed with the Commission on or prior to the 45th calendar day
following the date of original issue of the Old Notes, (ii) the Exchange
Offer Registration Statement is not declared effective on or prior to the
130th calendar day following the date of original issue of the Old Notes,
(iii) the Exchange Offer is not consummated or, if an Exchange Offer has not
been consummated, a Shelf Registration Statement is not declared effective,
in either case, on or prior to the 165th day following the date of original
issue of the Old Notes, or (iv) if an Exchange Offer has been consummated,
any required Shelf Registration Statement is not declared effective on or
prior to the later of (A) the 165th day following the date of original issue
of the Old Notes and (B) the 90th day following the date the Company becomes
obligated to file a Shelf Registration Statement (each such event referred to
in clauses (i) through (iv) above, a "Registration Default"), the interest
rate borne by the Old Notes shall be increased by one quarter of one percent
per annum upon the occurrence of any Registration Default, which rate will
increase by an additional one quarter of one percent each 90-day period that
such additional interest continues to accrue under any such circumstance,
with an aggregate maximum increase in the interest rate equal to one percent
(1%) per annum. Following the cure of all Registration Defaults the accrual
of additional interest will cease and the interest rate will revert to the
original rate.
Holders of New Notes will not be and, upon consummation of the Exchange
Offer, Eligible Holders of Old Notes will no longer be, entitled to certain
other rights under the Registration Rights Agreement intended for holders of
Transfer Restricted Securities. The Exchange Offer shall be deemed
consummated upon the occurrence of the delivery by the Company to the
Registrar under the Indenture of New Notes in the same aggregate principal
amount as the aggregate principal amount of Old Notes that are tendered by
holders thereof pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING
Only an Eligible Holder of Old Notes may tender such Old Notes in the
Exchange Offer. To tender in the Exchange Offer, an Eligible Holder 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, together with the Old Notes (unless such tender is being effected
pursuant to the procedure for book-entry transfer described below) and any
other required documents, to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date.
Any financial institution that is a participant in the Depositary's
Book-Entry Transfer Facility System may make book-entry delivery of the Old
Notes by causing the Depositary to transfer such Old Notes into the Exchange
Agent's account in accordance with the Depositary's procedure for such
transfer. Although delivery of Old Notes may be effected through book-entry
transfer into the Exchange Agent's account 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 or confirmed by the Exchange Agent at its addresses as set forth
under the caption "Exchange Agent" below prior to 5:00 p.m., New York City
time, on the Expiration Date. DELIVERY OF DOCUMENTS TO THE DEPOSITARY IN
ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
The tender by an Eligible Holder of Old Notes will constitute an agreement
between such holder and the Company in accordance with the terms and subject
to the conditions set forth herein and in the Letter of Transmittal.
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The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the Eligible Holders. Instead of delivery by mail, it is recommended that
Eligible Holders use an overnight or hand delivery service. In all cases,
sufficient time should be allowed to assure delivery to the Exchange Agent on
or before the Expiration Date. No Letter of Transmittal or Old Notes should
be sent to the Company. Eligible Holders may request their respective
brokers, dealers, commercial banks, trust companies or nominees to effect the
tenders for such holders.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Issuance
Instructions" or "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 by a
member of a signature guarantee program within the meaning of Rule 17Ad-15
under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal or any Old 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.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance and withdrawal of tendered Old 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 Old Notes not properly tendered or any Old Notes the Company's acceptance
of which might, in the judgment of the Company or its counsel, be unlawful.
The Company also reserves the right to waive any defects, irregularities or
conditions of tender as to particular Old 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
Old Notes must be cured within such times as the Company in its sole
discretion shall determine. Although the Company intends to request the
Exchange Agent to notify holders of defects or irregularities with respect to
tenders of Old Notes, neither the Company, the Exchange Agent nor any other
person shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects
or irregularities have been cured or waived. Any Old 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 the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion
(subject to limitations contained in the Indenture) (i) to purchase or make
offers for any Old Notes that remain outstanding subsequent to the Expiration
Date and (ii) to the extent permitted by applicable law, to purchase Old
Notes 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 Eligible Holder will represent to the Company that,
among other things, the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business by the person receiving
such New Notes, whether or not such person is the holder and that neither the
Eligible Holder nor any such other person has an arrangement or understanding
with any person to participate in the distribution of such New Notes and that
neither the Eligible Holder nor any such other person is an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company. If the holder
is a broker-dealer that will receive New Notes for its own account in
exchange for Old Notes that were
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acquired as a result of market-making activities or other trading activities,
such holder by tendering will acknowledge that it will deliver a prospectus
in connection with any resale of such New Notes.
GUARANTEED DELIVERY PROCEDURES
Eligible Holders who wish to tender their Old Notes and (i) whose Old
Notes are not immediately available, or (ii) who cannot deliver their Old
Notes and other required documents to the Exchange Agent or cannot complete
the procedure for book-entry transfer prior to the Expiration Date, may
effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Eligible Holder, the certificate
number(s) of such Old Notes (if available) and the principal amount of Old
Notes tendered together with a duly executed Letter of Transmittal (or a
facsimile thereof), stating that the tender is being made thereby and
guaranteeing that, within three business days after the Expiration Date,
the certificate(s) representing the Old Notes to be tendered in proper
form for transfer (or a confirmation of a book entry transfer into the
Exchange Agent's account at the Depositary of Old Notes delivered
electronically) and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) Such certificate(s) representing all tendered Old Notes in proper
form for transfer (or confirmation of a book-entry transfer into the
Exchange Agent's account at the Depositary of Old Notes delivered
electronically) and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within three business days
after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will
be sent to Eligible Holders who wish to tender their Old Notes according to
the guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date,
unless previously accepted for exchange.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the Expiration Date, and prior to acceptance for exchange thereof by the
Company. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the
Depositor in the same manner as the original signature on the Letter of
Transmittal by which such Old Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient
to have the Trustee with respect to the Old Notes register the transfer of
such Old Notes into the name of the person withdrawing the tender, and (iv)
specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. All questions as to the validity, form
and eligibility (including time of receipt) of such withdrawal notices will
be determined by the Company in its sole discretion, whose determination
shall be final and binding on all parties. Any Old Notes so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer,
and no New Notes will be issued with respect thereto unless the Old Notes so
withdrawn are validly re-tendered. Any Old Notes which have been tendered but
which are not accepted for exchange or which are withdrawn will be returned
to the holder thereof without cost to such holder as soon as practicable
after withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Old Notes may be re-tendered by following one of the
procedures described above under "Procedures for Tendering" at any time prior
to the Expiration Date.
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CONDITIONS OF THE EXCHANGE OFFER
In addition, and notwithstanding any other term of the Exchange Offer, the
Company will not be required to accept for exchange any Old Notes tendered
for any New Notes and may terminate or amend the Exchange Offer as provided
herein before the acceptance of such Old Notes, if any of the following
conditions exist:
(a) Any action or proceeding is instituted or threatened in any court or
by or before any governmental agency or regulatory authority with respect
to the Exchange Offer which, in the sole judgment of the Company, might
materially impair the ability of the Company to proceed with the Exchange
Offer or have a material adverse effect on the contemplated benefits of
the Exchange Offer to the Company; or
(b) There shall have occurred any change, or any development involving a
prospective change, in the business or financial affairs of the Company,
which in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Company; or
(c) There shall have been proposed, adopted or enacted any law, statute,
rule or regulation which, in the sole judgment of the Company, might
materially impair the ability of the Company to proceed with the Exchange
Offer or have a material adverse effect on the contemplated benefits of
the Exchange Offer to the Company; or
(d) There shall have occurred (i) any general suspension of, shortening
of hours for, or limitation on prices for, trading in securities on the
New York Stock Exchange (whether or not mandatory), (ii) a declaration of
a banking moratorium or any suspension of payments in respect of banks by
Federal or state authorities in the United States (whether or not
mandatory), (iii) a commencement of a war, armed hostilities or other
international or national crisis directly or indirectly involving the
United States, (iv) any limitation (whether or not mandatory) by any
governmental authority on, or other event having a reasonable likelihood
of affecting, the extension of credit by banks or other lending
institutions in the United States, or (v) in the case of any of the
foregoing existing at the time of the commencement of the Exchange Offer,
a material acceleration or worsening thereof.
The foregoing conditions are for the sole benefit of the Company and may
be asserted by the Company regardless of the circumstances giving rise to
such conditions or may be waived by the Company in whole or in part at any
time and from time to time in its sole discretion. If the Company waives or
amends the foregoing conditions, the Company will, if required by applicable
law, extend the Exchange Offer for a minimum of five business days from the
date that the Company first gives notice, by public announcement or
otherwise, of such waiver or amendment, if the Exchange Offer would otherwise
expire within such five business-day period. Any determination by the Company
concerning the events described above will be final and binding upon all
parties.
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitation may be
made by telecopy, 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 Company may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by
them in forwarding copies of this Prospectus, Letters of Transmittal and
related documents to the beneficial owners of the Old Notes and in handling
or forwarding tenders for exchange. The Company will pay the other expenses
to be incurred in connection with the Exchange Offer, including fees and
expenses of the Trustee, accounting and legal fees and printing costs.
22
<PAGE>
The Company will pay all transfer taxes, if any, applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however,
certificates representing New Notes or Old Notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be issued
in the name of, any person other than the registered holder of the Old Notes
tendered, or if tendered Old Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax
is imposed for any reason other than the exchange of Old 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.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The exchange of the Old Notes for the New Notes in the Exchange Offer
should not constitute an exchange for federal income purposes. Consequently,
(i) no gain or loss should be realized by a U.S. Holder upon receipt of a New
Note; (ii) the holding period of the New Note should include the holding
period of the Old Note exchanged therefor and (iii) the adjusted tax basis of
the New Note should be the same as the adjusted tax basis of the Old Note
exchanged therefor immediately before the exchange. Even if the exchange of
an Old Note for a New Note were treated as an exchange, however, such an
exchange should constitute a tax-free recapitalization for federal income tax
purposes. Accordingly, a New Note should have the same issue price as an Old
Note and a U.S. Holder should have the same adjusted basis and holding period
in the New Note as it had in an Old Note immediately before the exchange. As
used herein, the term "U.S. Holder" means a person who is, for United States
federal income tax purposes, (i) a citizen or resident of the United States;
(ii) a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof; or
(iii) an estate or trust the income of which is subject to United States
federal income taxation regardless of its source.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Generally, Eligible Holders (other than any holder who is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act) who
exchange their Old Notes for New Notes pursuant to the Exchange Offer may
offer such New Notes for resale, resell such New Notes, and otherwise
transfer such New Notes without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided such New Notes
are acquired in the ordinary course of the holders' business, and such
holders have no arrangement with any person to participate in a distribution
of such New Notes. Each broker-dealer that receives New Notes for its own
account in exchange for Old Notes, where such Old 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 New Notes. See "Plan of Distribution." To comply with
the securities laws of certain jurisdictions, it may be necessary to qualify
for sale or register the New Notes prior to offering or selling such New
Notes. Upon request by Eligible Holders prior to the Exchange Offer, the
Company will register or qualify the New Notes in certain jurisdictions
subject to the conditions in the Registration Rights Agreement. If an
Eligible Holder does not exchange such Old Notes for New Notes pursuant to
the Exchange Offer, such Old Notes will continue to be subject to the
restrictions on transfer contained in the legend thereon and will not have
the benefit of any covenant regarding registration under the Securities Act.
In general, the Old Notes may not be offered or sold, unless registered under
the Securities Act, except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. To
the extent that Old Notes are tendered and accepted in the Exchange Offer, a
holder's ability to sell untendered Old Notes could be adversely affected.
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept the Exchange Offer and tender their Old
Notes. Holders of Old Notes are urged to consult their financial and tax
advisors in making their own decisions on what action to take.
23
<PAGE>
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old
Notes, as reflected in the Company's accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company upon the consummation of the Exchange Offer. The
expenses of the Exchange Offer will be amortized by the Company over the term
of the New Notes.
EXCHANGE AGENT
State Street Bank & Trust Company (formerly known as Fleet National Bank)
has been appointed as Exchange Agent for the Exchange Offer. All
correspondence in connection with the Exchange Offer and the Letter of
Transmittal should be addressed to the Exchange Agent, as follows:
<TABLE>
<CAPTION>
<S> <C>
By Facsimile: By Overnight Courier:
(617) 664-5739 State Street Bank & Company
Corporate Trust Department Corporate Trust Department
Attn: Ms. Sandra Szczsponik 4th Floor
Attn: Sandra Szczsponik
Confirm by telephone: Two International Place
(617) 664-5314 Boston, Massachusetts 02110
</TABLE>
Requests for additional copies of this Prospectus or the Letter of
Transmittal should be directed to the Exchange Agent.
24
<PAGE>
THE COMPANY
The Company is a leading extruder, finisher and fabricator of aluminum
products. In the early 1950s, the predecessor of the Company entered the
aluminum extrusion industry as a supplier to the building and construction
market. In 1967, the Company was acquired by Revere Copper and Brass,
Incorporated ("Revere"). During the 1970s the Company added capacity and
expanded its regional capabilities through the acquisition of additional
extrusion plants.
In 1987, all of the common stock of the Company was acquired from Revere
in a leveraged buyout. The equity participants included Fulcrum III, certain
members of the Company's then current management and certain institutional
investors. Subsequently, in 1988, Venalum purchased a 20% interest in the
Company.
The Company is a Maryland corporation organized in 1967. The Company's
principal executive office is located at 809 Gleneagles Court, Suite 300,
Baltimore, Maryland 21286. The Company's telephone number is (410) 494-4500.
25
<PAGE>
THE RECAPITALIZATION
The offering of the Old Notes was part of an overall recapitalization of
the Company, pursuant to which the Company would repay all of its outstanding
indebtedness (approximately $35.2 million as of March 30, 1997) and pay a
special cash dividend (the "Dividend") to the holders of Common Stock (as
defined herein in "Principal Stockholders") of $62.00 per share, or
approximately $56 million (based upon 903,063 shares outstanding as of March
30, 1997). Following the issuance of the Old Notes, the Company paid the
Dividend and settled existing employee stock options through a combination of
the payment of the difference between the amount of the Dividend per share
and the exercise price per share and the issuance of shares of Common Stock.
Option holders who received shares of Common Stock in settlement of their
options also received bonuses to enable them to satisfy a portion of the
income tax incurred by virtue of their receipt of shares of Common Stock.
After payment of the Dividend, the Company repurchased, and may continue to
repurchase, shares of Common Stock held by certain stockholders to the
extent, if any, of any remaining proceeds from the issuance of the Old Notes
(the Dividend, the settlement of employee stock options and the stock
repurchase are collectively referred to as the "Distribution").
The Company's existing credit facility (the "Old Credit Facility") under
which a $7.5 million Term A Loan, a $6.2 million Term B Loan and $6.5 million
in revolving loans were outstanding as of March 30, 1997, was, and the
Company's $15.0 million aggregate principal amount of 14.125% Senior
Subordinated Notes due 2001 (the "Subordinated Notes") will be, repaid using
a portion of the proceeds from the offering of the Old Notes. Concurrent with
the offering of the Old Notes, the Company entered into a new credit
agreement (or an amendment and restatement to the Old Credit Facility) (the
"New Credit Facility") that provides for a $15.0 million five-year secured
revolving credit facility. See "Description of New Credit Facility."
The repayment of the Old Credit Facility, the retirement of the
Subordinated Notes, the entering into of the New Credit Facility and the
Distribution are collectively referred to herein as the "Recapitalization."
The following table sets forth the estimated sources and uses of funds for
the Recapitalization assuming the Recapitalization occurred on May 28, 1997.
<TABLE>
<CAPTION>
AMOUNT
--------------
(IN THOUSANDS)
<S> <C>
SOURCES OF FUNDS:
Notes offered hereby ................. $105,000
--------------
Total Sources of Funds.............. $105,000
==============
USES OF FUNDS:
Repayment of Old Credit Facility (a) $ 21,164
Retirement of Subordinated Notes (b) 16,303
Distribution ......................... 61,706
Working capital ...................... 1,177
Estimated fees and expenses (c) ..... 4,650
--------------
Total Uses of Funds................. $105,000
==============
</TABLE>
- ------------
(a) Includes $172 relating to interest expense.
(b) Includes $244 relating to prepayment penalty and $1,059 relating to
interest expense through July 15, 1997. The Subordinated Notes will be
repurchased on July 15, 1997 at a price of 101.625%. Until such time,
the proceeds of the issuance of the Old Notes to be utilized for this
purpose have been set aside in an escrow account and invested in
government securities and commercial paper.
(c) Includes a fee of $500 to GGvA (as defined below) for financial
advisory services in connection with the Recapitalization.
Since its acquisition in 1987, the Company has been controlled by Fulcrum
III, of which GGvA is the sole general partner. After the Recapitalization,
all of the shares owned by Fulcrum III will be transferred to a new
partnership of which GGvA will be the sole general partner. In connection
with that transfer, GGvA will offer to purchase from the existing limited
partners of Fulcrum III their interests in the capital stock of the Company
owned by Fulcrum III. To the extent this offer is accepted, the interest of
GGvA in the new partnership owning the capital stock of the Company will be
increased. After the Recapitalization, members of senior management of the
Company will own approximately 17% of the Common Stock, on a fully diluted
basis.
26
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 30, 1997 on an actual basis and as adjusted to give effect to the
Recapitalization. This table should be read in conjunction with the
information set forth under "The Recapitalization" and the other financial
information appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 30, 1997
-----------------------
ACTUAL AS ADJUSTED
--------- -------------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt...................................... $ 7 $ --
--------- -------------
Long-term debt:
Revolving Credit Facility .......................... $ 6,500 $ --
Term A Loan ........................................ 7,477 --
Term B Loan ........................................ 6,201 --
New Credit Facility (a) ............................ -- --
Notes offered hereby ............................... -- 105,000
Subordinated Notes ................................. 15,000 --
--------- -------------
Total long-term debt .............................. 35,178 105,000
--------- -------------
Stockholders' equity:
Common Stock, Class A, $.01 par value, 975,000
shares authorized, 778,062.5 shares issued and
outstanding; Common Stock, Class B, $.01 par value,
125,000 shares authorized, 125,000 shares issued
and outstanding ................................... 9 8
Additional paid-in capital ......................... 24,390 --
Retained earnings (deficit) ........................ 12,409 (24,269)
Additional minimum pension liability ............... (492) (492)
--------- -------------
Total stockholders' equity (b) .................... 36,316 (24,753)
--------- -------------
Total capitalization.............................. $71,501 $ 80,247
========= =============
</TABLE>
- ------------
(a) The New Credit Facility consists of a $15 million five-year secured
revolving credit facility, which is expected to be undrawn as of the
consummation of the Recapitalization.
(b) Reflects the payment of the Distribution. See "The Recapitalization."
27
<PAGE>
SELECTED FINANCIAL DATA
The following data should be read in conjunction with the Company's
financial statements and related notes, "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and the other financial
information included elsewhere herein. The following table sets forth
selected financial data and other operating information of the Company. The
selected financial data for the five years ended December 31, 1996 have been
derived from the audited financial statements of the Company. The financial
data for the three month periods ended March 30, 1997 and March 31, 1996 are
derived from unaudited financial statements of the Company included elsewhere
in this Prospectus. Such unaudited financial statements, in the opinion of
the Company's management, include all adjustments necessary for the fair
presentation of the financial condition and the results of operations of the
Company for such periods and as of such dates. Operating results for the
three months ended March 30, 1997 are not necessarily indicative of the
results of operations that may be expected for the year ended December 31,
1997.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
------------------------------------------------------ -----------------------
MARCH 31, MARCH 30,
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ---------- ----------- -----------
(IN THOUSANDS, EXCEPT PER POUND AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales ................................ $151,314 $155,401 $197,991 $232,555 $228,161 $ 57,769 $ 55,337
Cost of sales ............................ 129,366 130,128 168,810 194,414 191,206 49,472 47,194
---------- ---------- ---------- ---------- ---------- ----------- -----------
Gross profit ............................. 21,948 25,273 29,181 38,141 36,955 8,297 8,143
Selling, general and administrative
expenses................................. 12,886 13,536 14,536 16,211 15,877 4,062 3,774
---------- ---------- ---------- ---------- ---------- ----------- -----------
Operating profit ......................... 9,062 11,737 14,645 21,930 21,078 4,235 4,369
Interest expense ......................... 9,226 8,487 8,443 7,087 5,176 1,441 1,167
Income taxes ............................. 799 1,697 3,016 6,262 7,059 1,240 1,358
---------- ---------- ---------- ---------- ---------- ----------- -----------
Earnings (loss) before extraordinary loss
and cumulative effect of accounting
change (a) .............................. $ (963) $ 1,553 $ 3,186 $ 8,581 $ 8,843 $ 1,554 $ 1,844
========== ========== ========== ========== ========== =========== ===========
OTHER FINANCIAL DATA:
EBITDA(b)................................. $ 12,783 $ 15,658 $ 24,651 $ 23,406 $ 22,285 $ 4,574 $ 7,063
Capital expenditures...................... 553 1,977 1,512 1,054 2,589 647 272
Depreciation and amortization (c) ........ 3,721 3,921 4,455 4,006 3,539 880 911
Ratio of earnings to fixed charges (d) ... -- 1.36x 1.70x 2.96x 3.80x 2.78x 3.48x
OPERATING DATA:
Pounds of product shipped................. 118,352 123,069 148,970 137,779 138,380 32,104 35,836
EBITDA per pound.......................... $ 0.108 $ 0.127 $ 0.165 $ 0.170 $ 0.161 $ 0.142 $ 0.197
Average aluminum market price per pound .. $ 0.576 $ 0.541 $ 0.688 $ 0.875 $ 0.725 $ 0.765 $ 0.755
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF AS OF
------------------------------------------------------ MARCH 31, MARCH 30
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ---------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Cash ..................................... $ 2,204 $ 1,115 $ 1,827 $ 342 $ 277 $ 243 $ 1,164
Working capital .......................... (433) 17,675 19,813 19,355 18,175 18,176 15,955
Inventories .............................. 16,957 18,705 24,665 19,972 19,838 16,533 20,312
Property, plant and equipment, net ...... 26,177 29,996 28,241 26,489 26,723 26,553 26,381
Total assets ............................. 101,786 109,366 124,800 112,261 108,726 111,644 114,296
Total indebtedness ....................... 67,067 65,180 69,064 51,683 40,091 48,587 35,185
Total stockholders' equity ............... 14,468 14,938 17,142 25,246 34,472 26,830 36,316
</TABLE>
(footnotes on following page)
28
<PAGE>
- ------------
(a) Earnings (loss) before extraordinary loss and cumulative effect of
accounting change excludes an extraordinary loss of $1,092 (less
applicable income taxes of $698) on the refinancing of debt in 1994 and
a cumulative effect of accounting change for income taxes in 1993 of
$618.
(b) EBITDA is defined as earnings before interest expense, income taxes and
depreciation and amortization and excludes non-cash LIFO income or
charges and extraordinary items. EBITDA reported above excludes LIFO
charges (income) of $0, $0, $5,551 ($2,530), ($2,332), ($541) and
$1,783 during the years ended December 31, 1992, 1993, 1994, 1995 and
1996, respectively, and for the three months ended March 31, 1996 and
March 30, 1997, respectively. EBITDA should not be considered in
isolation or as a substitute for net income, cash flows from
operations, or other income or cash flow data prepared in accordance
with generally accepted accounting principles or as a measure of a
company's profitability or liquidity. In addition, although the EBITDA
measure of performance is not recognized under generally accepted
accounting principles, it is widely used by companies as a measure of
operating performance because it assists in comparing performance on a
relatively consistent basis across companies without regard to
depreciation and amortization, which can vary significantly depending
on accounting methods (particularly where acquisitions are involved) or
non-operating factors such as historical cost bases. Because EBITDA is
not calculated identically by all companies, the presentation herein
may not be comparable to other similarly titled measures of other
companies.
(c) Amortization does not include amortization of debt issuance costs of
$550, $334, $474, $570, $495, $124 and $136 during the years ended
December 31, 1992, 1993, 1994, 1995 and 1996, respectively, and for the
three months ended March 31, 1996 and March 30, 1997, respectively.
(d) For the purpose of determining the ratio of earnings to fixed charges,
earnings consist of earnings (loss) before income taxes and fixed
charges. Fixed charges consist of interest expense, whether expensed or
capitalized, including amortization of deferred financing costs, and
the portion of rental expense considered to be interest. For the year
ended December 31, 1992, the Company's earnings were insufficient to
cover fixed charges by $164.
29
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is a leading extruder of soft alloy aluminum products, serving
principally the building and construction, transportation and consumer
durables markets. The following discussions of financial condition and the
results of operations for the quarters ended March 30, 1997 and March 31,
1996, and the years ended December 31, 1996, 1995 and 1994, are based on the
historical results achieved by the Company.
CUSTOMER DISTRIBUTION
The following tables profile customers of the Company by market sector or
distribution channel, the first by sales dollars and the second by pounds
shipped.
Customer Distribution (Sales Dollars):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------
1994 1995 1996 MARCH 31, 1996 MARCH 30, 1997
------------------- ------------------- ------------------- ------------------ ------------------
DOLLARS % DOLLARS % DOLLARS % DOLLARS % DOLLARS %
---------- -------- ---------- -------- ---------- -------- --------- -------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Building/Construction
Commercial ..........$ 36,625 17.7% $ 43,131 18.7% $ 44,984 20.7% $11,700 22.4% $10,541 19.5%
Residential ......... 52,579 25.5 53,200 23.1 58,530 26.9 12,035 23.0 12,671 23.4
Transportation ....... 62,060 30.1 74,027 32.2 52,802 24.2 14,695 28.1 14,349 26.5
Consumer Durables ... 18,487 9.0 21,399 9.3 24,189 11.1 6,661 12.7 5,686 10.5
Equipment/Electrical 12,341 6.0 16,086 7.0 17,003 7.8 3,689 7.1 5,216 9.6
Distributors/Other .. 24,424 11.7 22,312 9.7 20,255 9.3 3,511 6.7 5,706 10.5
---------- -------- ---------- -------- ---------- --------- -------- -------- --------- --------
206,516 100.0% 230,155 100.0% 217,763 100.0% 52,291 100.0% 54,169 100.0%
======== ======== ======== ======== ========
Less Returns/Freight/
Discounts............ 8,525 8,753 9,129 2,141 2,151
---------- ---------- ---------- --------- --------
Net Sales--Products $197,991 $221,402 $208,634 $50,150 $52,018
========== ========== ========== ========= ========
</TABLE>
Customer Distribution (Pounds
Sold):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------
1994 1995 1996 MARCH 31, 1996 MARCH 30, 1997
------------------- ------------------- ------------------- ------------------ ------------------
POUNDS % POUNDS % POUNDS % POUNDS % POUNDS %
---------- -------- ---------- -------- ---------- -------- --------- -------- --------- --------
(POUNDS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Building/Construction
Commercial .......... 27,621 18.5% 27,223 19.8% 30,020 7,782 21.7% 24.2% 7,298 20.4%
Residential ......... 38,730 26.0 32,958 23.9 38,063 8,095 27.5 25.2 8,558 23.9
Transportation ....... 39,413 26.5 40,178 29.2 27,514 7,650 19.9 23.8 8,508 23.7
Consumer Durables ... 13,269 8.9 12,655 9.2 15,820 4,298 11.4 13.4 3,824 10.7
Equipment/Electrical 9,562 6.4 10,074 7.3 11,269 2,307 8.1 7.2 3,575 10.0
Distributors/Other .. 20,375 13.7 14,691 10.6 15,694 1,972 11.4 6.2 4,073 11.3
---------- -------- ---------- -------- ---------- -------- --------- -------- --------- --------
Pounds of Product
Shipped............. 148,970 100.0% 137,779 100.0% 138,380 32,104 100.0% 100.0% 35,836 100.0%
========== ======== ========== ======== ========== ======== ========= ======== ========= ========
</TABLE>
FINANCIAL PRESENTATION
The table below sets forth for the periods indicated, net sales, gross
profit, operating profit and net earnings, and for performance measurement,
pounds of product shipped, gross sales price per pound, EBITDA and EBITDA per
pound. The table also identifies average market prices of aluminum per pound.
For reasons discussed below, the Company focuses on pounds of product
shipped, EBITDA and EBITDA per pound as important measures of its financial
performance.
30
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
-------------------------------- -----------------------
MARCH 31, MARCH 30,
1994 1995 1996 1996 1997
---------- ---------- ---------- ----------- -----------
(IN THOUSANDS, EXCEPT PER POUND DATA)
<S> <C> <C> <C> <C> <C>
Net sales--Products ......................... $197,991 $221,402 $208,634 $50,150 $52,018
Net sales--Metal ............................ -- 11,153 19,527 7,619 3,319
---------- ---------- ---------- ----------- -----------
Net sales .................................. 197,991 232,555 228,161 57,769 55,337
Cost of sales--Products ..................... 168,810 183,332 171,656 41,840 44,098
Cost of sales--Metal ........................ -- 11,082 19,550 7,632 3,096
---------- ---------- ---------- ----------- -----------
Cost of sales .............................. 168,810 194,414 191,206 49,472 47,194
Gross profit ................................ 29,181 38,141 36,955 8,297 8,143
Operating profit ............................ 14,645 21,930 21,078 4,235 4,369
Earnings before extraordinary item .......... 3,186 8,581 8,843 1,554 1,844
Pounds of product shipped ................... 148,970 137,779 138,380 32,104 35,836
Gross sales price per pound ................. $ 1.386 $ 1.670 $ 1.574 $ 1.629 $ 1.512
EBITDA ...................................... 24,651 23,406 22,285 4,574 7,063
EBITDA per pound ............................ 0.165 0.170 0.161 0.142 0.197
Average aluminum market price per pound .... 0.688 0.875 0.725 0.765 0.755
Market price of aluminum per pound at period
end ........................................ 0.950 0.797 0.736 0.775 0.786
</TABLE>
Aluminum Prices. For the years 1994 through 1996, approximately 60% of the
Company's cost of sales reflect the cost of aluminum, its principal raw
material. The Company seeks to manage aluminum price fluctuations, which can
be volatile, principally either by passing aluminum prices through to
customers by systematic market indexed pricing or by fixing the cost of
aluminum by hedging against committed fixed price sales to customers. As a
result, increases and decreases in aluminum prices have generally caused
similar increases and decreases in selling prices, sales and costs of sales,
and generally have had little impact on the Company's level of profitability
for the periods described herein.
Business Activity. The Company's experience indicates that pounds of
product shipped has a direct impact on profitability, since a significant
portion of the Company's operating costs are fixed. The Company defines
pounds of product shipped as the weight of all extrusions shipped, including
those pounds transferred within the Company from which it manufactures
fabricated parts, components and assemblies, but excluding the pounds of
aluminum related to excess metal sales (as described herein).
Performance Measures. The Company believes that its abilities to manage
its sales spread (gross sales minus aluminum costs), control variable
spending and minimize its fixed cost structure are significant determinants
of profitability and resultant cash flow. The Company, therefore, monitors
its sales spread per pound, variable costs per pound and fixed costs per
pound, focusing on the end results of EBITDA and EBITDA per pound. The
Company believes that EBITDA and EBITDA per pound provide good measures of
overall financial performance.
LIFO Adjustment. The Company values its aluminum inventory under the
last-in, first-out (LIFO) method. During periods of rising aluminum prices,
compared to historical LIFO inventory values, the Company may incur non-cash
LIFO charges, which will reduce taxable income, and when aluminum prices
subsequently decline, the Company may recognize non-cash LIFO income, which
will increase taxable income. The Company believes that such LIFO adjustments
are not directly related to the Company's underlying level of business
activity, and therefore, non-cash LIFO charges or income are eliminated from
the Company's performance measures, such as EBITDA.
Excess Metal Sales. The Company's policy is to sell excess metal (primary
aluminum ingot and billet) on the open market when necessary to maintain
aluminum inventory levels consistent with near-term business needs.
Imbalances in inventory can arise from the ongoing and efficient operation of
the Company's casting facility and from the Company's obligations to purchase
fixed amounts of primary aluminum ingot and billet under the Venalum
Agreement. The sale of excess metal, which also reflects aluminum price
fluctuations, has minimal effect on profit performance since the prices of
metal bought
31
<PAGE>
and metal sold are closely matched. Pounds of excess metal sold are not
included in the calculation of pounds of product shipped, the Company's
principal indicator of business activity. In the normal course of business,
the Company also sells secondary aluminum billet and aluminum scrap, which
are not accounted for as excess metal sales.
THREE MONTHS ENDED MARCH 30, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31,
1996
The Company's net sales decreased to $55.3 million in the three months
ended March 30, 1997 from $57.8 million in the three months ended March 31,
1996, a decrease of $2.5 million or 4.3%. Net sales -products, however,
increased to $52.0 million in the three months ended March 30, 1997 from
$50.2 million in the three months ended March 31, 1996, an increase of $1.8
million or 3.6%. Sales of mill finished extrusions increased 8.5% whereas
sales of value added products remained relatively flat. The decrease of
$0.117 in the Company's gross sales price per pound was mainly due to the
higher sales mix of mill finished extrusions since the average market price
per pound of aluminum declined only $0.010.
Pounds of product shipped increased 3.7 million pounds, or 11.5%, to 35.8
million in the three months ended March 30, 1997 from 32.1 million pounds of
product shipped in the three months ended March 31, 1996. Shipments to
commercial construction were down 0.5 million pounds largely due to the
completion of a contract to provide railing for a bridge renovation project,
which represented 245,000 pounds in the prior period. The decline in
commercial construction was offset by a gain of 0.5 million pounds in
residential construction, primarily for a customer's new line of storm doors.
In transportation, shipments increased 0.9 million pounds due to a
significant order involving delivery vehicles, more than offsetting declines
in shipments to truck and trailer manufacturers. The decline of 0.5 million
pounds in consumer durables resulted from slower than anticipated demand for
pleasure boats. Shipments to equipment/ electrical increased by 1.3 million
pounds due to the continuing strong performance of several niche accounts.
The increase of 2.1 million pounds to distributors/others resulted mainly
from continuing sales efforts to increase custom extrusion business with
select distributors.
Cost of sales decreased to $47.2 million for the three months ended March
30, 1997 from $49.5 million in the three months ended March 31, 1996, a
decrease of $2.3 million or 4.6%. Cost of sales -products increased to
$44.1 million for the three months ended March 30, 1997 from $41.8 million in
the three months ended March 31, 1996, an increase of $2.3 million or 5.5%.
This increase resulted from a $2.3 million increase in non-cash LIFO
adjustments and a $1.0 million increase in operating costs, offset by a $1.0
million decrease in aluminum costs. Variable costs per pound, however,
decreased to $0.412 in the three months ended March 30, 1997 from $0.438 in
the three months ended March 31, 1996, an improvement of $0.026 per pound,
due to better capacity utilization, improved extrusion press and casting
efficiencies, and control of variable spending.
Gross profit decreased to $8.1 million in the three months ended March 30,
1997 from $8.3 million in the three months ended March 31, 1996, a decrease
of $0.2 million or 2.4%.
Selling and administrative expenses decreased to $3.8 million in the three
months ended March 30, 1997 from $4.1 million for the three months ended
March 31, 1996, a decrease of $0.3 million or 7.3%. Compensation costs
decreased $0.4 million, of which $0.3 million related to employee stock
options awarded in the three months ended March 31, 1996. Sales and marketing
expense were $0.1 million higher, mainly due to increased sales and marketing
activities.
Operating profit increased to $4.4 million in the three months ended March
30, 1997 from $4.2 million in the three months ended March 31, 1996, an
increase of $0.2 million or 4.8%.
Interest expense decreased to $1.2 million in the three months ended March
30, 1997 from $1.4 million in the three months ended March 31, 1996, a
decrease of $0.2 million. The decrease in interest expense resulted from a
reduction in debt outstanding and a performance-based decrease in interest
rates under the Old Credit Facility. Income tax expense increased to $1.4
million in the three months ended March 30, 1997 from $1.2 million in the
three months ended March 31, 1996, an increase of $0.2 million. The effective
tax rates for the three months ended March 30, 1997 and March 31, 1996 were
42% and 44%, respectively, which differed from the federal statutory rate of
35% primarily due to goodwill amortization and state income taxes.
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<PAGE>
As a result of the above factors, net earnings increased to $1.8 million
in the three months ended March 30, 1997 from $1.6 million in the three
months ended March 31, 1996, an increase of $0.2 million or 12.5%.
EBITDA in the three months ended March 30, 1997 increased to $7.1 million
from $4.6 million in the three months ended March 31, 1996, an increase of
$2.5 million or 54.3%. The improvement in EBITDA consisted of $1.2 million
from increased sales volume and $1.5 million from a net reduction in
operating costs (as previously discussed), offset by a slight reduction in
sales spread of $0.2 million. EBITDA per pound, in turn, increased $0.055 to
$0.197 for the three months ended March 30, 1997 since the increase in EBITDA
was substantially greater than the increase in pounds of product shipped.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
The Company's net sales decreased to $228.2 million in 1996 from $232.6
million in 1995, a decrease of $4.4 million or 1.9%. Net sales -products
decreased to $208.6 million in 1996 from $221.4 million in 1995, a decrease
of $12.8 million or 5.8%. Sales of mill finished extrusions declined 16.8%
whereas sales of value added products increased 5.0%. The $0.096 decrease in
gross sales price per pound was less than the $0.150 decline in the average
market price per pound of aluminum, due to a higher sales mix of value added
products, led by an increase of 18.6% in sales of painted or anodized
products.
Pounds of product shipped increased 0.6 million pounds, or 0.4%, to 138.4
million in 1996 from 137.8 million pounds of product shipped in 1995.
Shipments to commercial construction increased 2.8 million pounds, reflecting
business from a new architectural account, and residential construction
increased 5.1 million pounds, mainly because of a management decision to
dedicate more press capacity to mobile home products. In transportation,
shipments decreased 12.7 million pounds, primarily as a result of a 20%
decline in shipments to truck and trailer manufacturing as the industry
consolidated after record production in the 1994-1995 period. Consumer
durables increased 3.2 million pounds primarily due to growth in demand for
office furniture and pleasure boats. Shipments to equipment/electrical
increased by 1.2 million pounds due to the continuing strong performance of
several niche accounts. The increase of 1.0 million pounds to
distributors/others resulted mainly from sales efforts to obtain custom
extrusion business with select distributors.
Cost of sales decreased to $191.2 million in 1996 from $194.4 million in
1995, a decrease of $3.2 million or 1.6%. Cost of sales -products decreased
to $171.7 million in 1996 from $183.3 million in 1995, a decrease of $11.6
million or 6.3%. This decrease resulted from a $14.7 million decrease in
aluminum costs, a $0.2 million increase in non-cash LIFO adjustments, and a
$2.9 million increase in operating costs. Production labor costs per pound
increased $0.011 mainly due to a shift in production mix from large truck
trailer extrusion shapes to smaller extrusion shapes requiring more press
labor and higher costs of labor and shipping materials, due to more extensive
protective packing. Other variable costs increased $0.014 mainly due to a
large increase in natural gas prices.
Gross profit decreased to $37.0 million in 1996 from $38.1 million in
1995, a decrease of $1.1 million or 2.9%.
Selling and administrative expenses decreased to $15.9 million in 1996
from $16.2 million in 1995, a decrease of $0.3 million or 1.9%. The
contributing factors included professional fees, which decreased $0.2
million; and travel expenses, which decreased $0.3 million; both decreases
were due to completion of supervisory training principally undertaken in
1995. Offsetting these decreases were personnel costs, which increased $0.3
million due to increased management incentive bonuses and employee stock
option compensation.
Operating profit decreased to $21.1 million in 1996 from $21.9 million in
1995, a decrease of $0.8 million or 3.7%.
Interest expense decreased to $5.2 million in 1996 from $7.1 million in
1995, a decrease of $1.9 million or 26.8%. The decrease in interest expense
resulted from a reduction in debt outstanding and a performance-based
decrease in interest rates under the Old Credit Facility. In 1996, the
Company was able to reduce debt from $51.7 million to $40.1 million, a
decrease of $11.6 million. Income tax expense
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<PAGE>
increased to $7.1 million in 1996 from $6.3 million in 1995, an increase of
$0.8 million. Effective tax rates for the years ended December 31, 1996 and
1995 were 44% and 42%, respectively, which differed from the federal
statutory rate of 35% due to goodwill amortization and state income taxes,
and in the case of 1996, the payment of income taxes due from prior periods.
As a result of the above factors, net earnings increased to $8.8 million
in 1996 from $8.6 million in 1995, an increase of approximately $0.2 million
or 2.3%.
EBITDA decreased to $22.3 million in 1996 from $23.4 million in 1995, a
decrease of $1.1 million or 4.7%. The decline in EBITDA consisted of $3.2
million from a net increase in operating costs (as previously discussed)
offset by an improvement in sales spread of $1.9 million and of $0.2 million
due to a slight increase in sales volume. EBITDA per pound, in turn,
decreased $0.009 to $0.161 in 1996.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
The Company's net sales increased to $232.6 million in 1995 from $198.0
million in 1994, an increase of $34.6 million or 17.5%. Net sales -products
increased to $221.4 million in 1995 from $198.0 million in 1994, an increase
of $23.4 million or 11.8%. Sales of mill finished extrusions increased 21.5%
whereas sales of value added products increased 3.7%. The increase of $0.284
in the Company's gross sales price per pound was greater than the $0.187
increase in the average market price per pound of aluminum, reflecting
improved sales spread.
Pounds of product shipped decreased 11.2 million or 7.5% to 137.8 million
in 1995 from 149.0 million pounds of product shipped in 1994, which was the
Company's all-time high shipment level. Shipments to commercial construction
were relatively flat. Residential construction decreased 5.8 million pounds
primarily due to an inventory correction after the build-up of customer
inventories in the second half of 1994. In transportation, shipments
increased 0.8 million pounds with demand in trailer manufacturing offsetting
a decrease in components for utility vehicles. The decline of 0.6 million
pounds in consumer durables paralleled the market decline in consumer
durables. Shipments increased to equipment/electrical due to continuing
strong performance of several niche accounts of the Company. Business with
distributors/others declined by 5.7 million pounds, of which 4.3 million
reflected an adverse response by distributors to the Company's emphasis on
deliveries to other markets in 1994.
Cost of sales increased to $194.4 million in 1995 from $168.8 million in
1994, an increase of $25.6 million or 15.2%. Cost of sales -products
increased to $183.3 million in 1995 from $168.8 million in 1994, an increase
of $14.5 million or 8.6%. This increase resulted from a $25.8 million
increase in aluminum costs, an $8.1 million decrease in non-cash LIFO
adjustments, and a $3.2 million decrease in operating costs. Production labor
costs per pound increased slightly by $0.002, reflecting normal wage
increases, whereas other variable costs increased $0.010, mainly because of
increased purchases of parts and services to support more value added
business in 1995.
Gross profit increased to $38.1 million in 1995 from $29.2 million in
1994, an increase of $8.9 million or 30.5%.
Selling and administrative expenses increased to $16.2 million in 1995
from $14.5 million in 1994, an increase of approximately $1.7 million or
11.7%. The main contributing factors were an investment of $0.4 million in
supervisory training, which increased professional fees and out-of-pocket
travel expenses, an increase in bad debts expense of $0.4 million related to
a bankrupt customer, and an increase in expense of $0.5 million related to
the adoption of Statement of Financial Standards No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions, on a prospective
basis.
Operating profit increased to $21.9 million in 1995 from $14.6 million in
1994, an increase of $7.3 million or 50.0%.
Interest expense decreased to $7.1 million in 1995 from $8.4 million in
1994, a decrease of $1.3 million or 15.5%. The decrease in interest expense
resulted from the refinancing of $35.5 million of 13.375% Senior Subordinated
Notes in December 1994 and a reduction in debt outstanding under the Old
Credit Facility. In 1995, the Company was able to reduce debt from $69.1
million to $51.7 million, a decrease of $17.4 million. Income tax expense
increased to $6.3 million in 1995 from $3.0 million in 1994, an increase
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<PAGE>
of $3.3 million. The effective tax rates for the years ended December 31,
1995 and 1994 were 42% and 49%, respectively, which differed from the federal
statutory rate of 35% and 34%, respectively, primarily due to goodwill
amortization and state income taxes.
As a result of the above factors, earnings before extraordinary item
increased to $8.6 million in 1995 from $3.2 million in 1994, an increase of
$5.4 million or 168.8%. The Company's net earnings for 1994 were $2.1 million
after taking into account an extraordinary loss of $1.1 million on the
refinancing of debt.
EBITDA decreased to $23.4 million in 1995 from $24.7 million in 1994, a
decrease of approximately $1.3 million or 5.3%. The decline in EBITDA
followed the decline in operating profit after excluding non-cash LIFO
adjustments and a decrease in depreciation charges of $0.5 million. EBITDA
per pound, in turn, increased $0.005 to $0.170 in 1995.
CURRENT DEVELOPMENTS
Based on the results of a physical inventory observation performed in the
second quarter of 1997, the Company revised its estimate of expected
inventory shrinkage. This change in estimate will be recorded in the second
quarter. The effect of this change in estimate related to the three months
ended March 31, 1997 is a reduction in cost of sales of $460,000 and an
increase in net earnings of $280,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically obtained funds from its operations, augmented
by borrowings made under various credit agreements. Aluminum price changes
increase or decrease working capital requirements since the dollar value of
accounts receivable, inventories and accounts payable reflect these changes.
Working capital requirements are generally higher during periods of higher
aluminum prices.
Cash Flows from Operating Activities
Cash provided by operations for the three months ended March 30, 1997 and
March 31, 1996 and for the years ended 1996, 1995 and 1994 was $6.1 million,
$3.6 million, $14.1 million, $17.4 million and $1.9 million, respectively.
Cash flow for the three months ended March 30, 1997 was significantly higher
than cash flow for the three months ended March 31, 1996, primarily due to
improved profitability after excluding non-cash LIFO adjustments. In 1996,
cash flow was strong reflecting a modest improvement in profit performance
and continued emphasis on working capital management. In 1995, cash flow
improved significantly from 1994 due to improved profit performance and
effective working capital management. Total working capital (excluding
current portion of long term debt) at March 30, 1997 and March 31, 1996 and
at December 31, 1996, 1995 and 1994 was $16.0 million, $18.2 million, $18.2
million, $19.4 million and $25.3 million, respectively. For the three months
ended March 30, 1997, higher inventory levels and increased volume, offset by
aluminum price decreases and increased accounts payable, resulted in higher
working capital than for the three months ended March 31, 1996. In 1994, both
higher aluminum prices and increased volume required higher working capital
than 1995, whereas in 1995, higher aluminum prices and higher inventory
levels resulted in higher working capital requirement than 1996.
Cash Flows from Investing Activities
Expenditures for property, plant and equipment were $0.3 million, $0.6
million, $2.6 million, $1.1 million and $1.5 million in the three months
ended March 30, 1997 and March 31, 1996 and in the years 1996, 1995 and 1994,
respectively. During the last two years, the Company has successfully
increased its casting capacity by 15% and capacities on two of its extrusion
presses by an average of 11% without the acquisition of expensive new
equipment. The Company also made investments in computerized numerical
control ("CNC") mills, benders, saws and presses to increase its fabrication
capabilities. The Company anticipates that expenditures for property, plant
and equipment will average $3.5 million per annum in 1997 and over the next
five years. Approximately $2.5 million of the annual $3.5 million expenditure
is expected to be invested in productivity improvements and capacity
enhancements, with the remainder expected to be used for maintenance capital.
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<PAGE>
Cash Flows from Financing Activities
In December 1994, the Company entered into the Old Credit Facility, a
$62.0 million bank credit agreement comprised of a $22.0 million working
capital line of credit, a $33.0 million term loan and a $7.0 million term
loan. Under the Old Credit Facility, the Company is required to make payments
of interest on a monthly or quarterly basis and quarterly scheduled principal
payments of $1.4 million on the $33.0 million term loan. The Company is in
full compliance with the Old Credit Facility and has prepaid $14.5 million of
the $33.0 million term loan as of March 30, 1997. In addition, in December
1994, the Company issued $15.0 million aggregate principal amount of
Subordinated Notes, which mature in July 2001 to refinance a like amount of
subordinated notes maturing in July 1999. The Company is required to make
semi-annual payments of interest on the Subordinated Notes.
Payment of Debt with Proceeds from Offering
The Company used a portion of the proceeds from the issuance of the Old
Notes to repay the Old Credit Facility (approximately $20.2 million
outstanding as of March 30, 1997) and put a portion of proceeds into an
escrow account for the redemption of the Subordinated Notes. Upon the
issuance of the Old Notes, the Company entered into the New Credit Facility,
which provides a $15.0 million five-year secured revolving credit facility
for working capital and general corporate purposes. The New Credit Facility
is expected to be undrawn as of the consummation of the Recapitalization. See
"The Recapitalization."
Indebtedness and Liquidity
The significant indebtedness to be incurred by the Company as a result of
the Recapitalization will have several important consequences, the foremost
being that interest expense will be substantially higher than immediately
prior to such transactions. The ability of the Company to satisfy its
obligations pursuant to such indebtedness, including pursuant to the New
Notes and the Indenture, will be dependent upon the Company's future
performance which, in turn, will be subject to management, financial, and
other business factors affecting the business and operations of the Company,
some of which are not in the Company's control. The Company's liquidity may
also be impacted by environmental and other regulatory matters. See "Risk
Factors -- Substantial Leverage; Ability to Service Indebtedness."
The Company currently believes that cash flow from operating activities,
together with borrowings available under the New Credit Facility, will be
sufficient to fund currently anticipated working capital needs and capital
expenditure requirements for at least several years. However, there can be no
assurance that this will be the case.
Futures Contracts and Forward Sales Contracts
In the normal course of business, the Company enters into forward sales
contracts with certain customers for the sale of fixed quantities of finished
products at scheduled intervals. The aluminum cost component of the forward
sales contract is fixed for the duration of the contract, based on forward
market prices at the inception of the contract. In order to hedge its
exposure to aluminum price volatility under these forward sales contracts,
the Company enters into aluminum futures contracts (a financial hedge) based
on the scheduled deliveries.
At March 30, 1997, the Company was party to $7.9 million of aluminum
futures contracts through nationally recognized brokerage firms and major
metal brokers. These aluminum futures contracts are for periods between April
1997 and November 1998, covering 11.7 million pounds of aluminum at prices
expected to be settled financially in cash as they reach their respective
settlement dates. The Company does not engage in any speculative trading of
futures contracts.
LIFO Adjustment and Inflation
The largest component of the Company's cost of sales is aluminum, its
principal raw material. Aluminum costs can be volatile, and reported results
may vary due to LIFO adjustments, as previously
36
<PAGE>
discussed. With the exception of non-cash LIFO adjustments, the Company does
not believe that inflation has had a significant impact on its results of
operations for the years 1996, 1995 and 1994, and the periods ended March 31,
1996 and March 30, 1997.
SEASONALITY
The Company generally does not experience significant seasonality in its
business. However, working capital requirements are often higher and
operating results are often lower during the fourth quarter principally due
to reduced shipments of product and increased inventory due to the decrease
in sales during the holiday season and increased accounts receivable due to
customers' delaying payment until after the year-end.
37
<PAGE>
BUSINESS
Wells is a leading extruder, finisher and fabricator of aluminum products.
For the years 1994 through 1996, over 92% of the products sold by the Company
were engineered and manufactured according to individual customer
specifications, and include custom designed extrusions and fabricated parts
and assemblies. In addition to mill finished extrusions (extrusions which
have neither been painted nor anodized), the Company's operations include
painting, anodizing (an electrolytic process which finely etches the surfaces
of an extrusion providing a hard coat which may contain color) and
fabrication, which enables the Company to provide its customers with
assembly-ready components. Wells also operates its own casting facility for
aluminum billet, enabling the Company to manage its internal billet
requirements as well as to recycle its scrap for use in its extrusion
operations. The Company's network of plants consists of seven facilities in
six states in the midwestern and southeastern United States. These plants
contain 12 extrusion presses and are located to meet various regional
demands; minimize transportation costs; balance production requirements among
plants, affording more flexibility and higher utilization; and provide single
source reliability to large customers.
Through its regional plant system in the Midwest and Southeast, the
Company is able to produce a broad range of extruded, finished and fabricated
products used by its approximately 800 customers in the manufacture of their
end products. Approximately two-thirds of the Company's 1996 sales in pounds
were made to customers that have been customers of the Company for more than
10 years. The Company sells its products primarily to the building and
construction (for both new construction and replacement), transportation and
consumer durables industries. These products include: (i) door and window
components, commercial entrance doors and patio doors for the building and
construction market; (ii) school bus windows and components for truck cabs,
truck trailers, delivery vans, recreational vehicles and automotive
accessories for the transportation market; (iii) components for home and
office furniture, golf carts and pleasure boats for the consumer durables
market; and (iv) heat sinks and components for lighting fixtures for the
electrical and equipment market. For the twelve months ended March 30, 1997,
the Company sold 142.1 million pounds of aluminum extrusions, generating net
sales of $225.7 million, net earnings of $9.1 million, and EBITDA of $24.8
million.
INDUSTRY OVERVIEW
The Company participates on a regional basis in the U.S. market for
extruded aluminum products, an overall market estimated at approximately 3.5
billion pounds for 1996. The Company believes that this market has been
subject to annual fluctuations reflecting general economic conditions. The
1996 demand represents a 3.1% increase from the 1995 volume of 3,400 million
pounds and a 6.8% increase from the 1994 volume of 3,281 million pounds. The
following table provides an estimate of extrusion shipments by end market for
1994, 1995 and 1996.
U.S. ALUMINUM EXTRUSION MARKET (MILLIONS OF POUNDS)
<TABLE>
<CAPTION>
1994 1995 1996
----------------- ----------------- ----------------
POUNDS % POUNDS % POUNDS %
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Building/Construction 984 30.0% 943 27.7% 998 28.5%
Transportation ........ 895 27.3 941 27.7 875 25.0
Consumer Durables .... 385 11.7 367 10.8 377 10.8
Equipment/Electrical . 284 8.7 288 8.5 300 8.6
Distributors/Other(a) 733 22.3 861 25.3 955 27.1
-------- -------- -------- -------- -------- -------
Estimated Market .... 3,281 100.0% 3,400 100.0% 3,505 100.0%
======== ======== ======== ======== ======== =======
</TABLE>
- ------------
Sources: Information based on data from the Aluminum Extruders Council, the
Aluminum Association and management estimates
(a) Extrusions sold to distributors may be resold to any of the above
categories but are not included in such categories.
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<PAGE>
The structure of the aluminum extrusion industry has changed substantially
since the early 1970s. Initially, primary aluminum producers dominated the
industry through vertical integration which provided their captive extruders
with lower raw material costs. In the mid-1970s, however, supplies from
offshore and the increasing use of aluminum scrap transformed aluminum ingot
into a worldwide product. Extruders not affiliated with primary producers
were then able to purchase aluminum at competitive prices. The reduced cost
advantages of the primary captive extruders allowed the entry of low-cost,
service-oriented independent extruders.
The economic recession of the late 1980s and early 1990s resulted in the
closure of a number of small aluminum extrusion operations and the
contraction of extrusion press capacity at regional extruders and primary
aluminum producers. Currently, according to industry sources, there are more
than 75 independent and integrated aluminum extruders operating at least 140
plants in the United States with a minimum of 450 extrusion presses. The
aluminum extrusion market in the United States continues to be highly
fragmented, although some consolidation has taken place during the last two
years. Due to logistics, higher transportation costs and the need for
generally rapid response to custom orders, imports have not, and the Company
believes are not likely to be, a significant factor in the U.S. market. The
exception would be in the states on the geographical borders of the United
States, where extrusions produced in Canada or Mexico can be a competitive
factor.
The Company believes that the markets for extruder-provided finishing and
fabrication will grow faster than the extrusion market as a whole, as
extrusion users out-source more value added operations. The Company believes
that, with its regional network of plants and its production capabilities, it
is well-positioned to respond to changes in the aluminum extrusion
marketplace.
COMPANY STRENGTHS
VALUE ADDED FINISHING AND FABRICATION. The Company provides a wide variety
of value added finishing and fabrication services, including painting,
anodizing, bending, cutting, milling, welding and assembly. Approximately 58%
of the Company's gross sales in 1996 included some degree of value added
processing, which provided Wells with a higher profit margin than the profit
margin for mill finished extrusions. The Company's ability to provide
finished components that are ready to be included in a customer's
manufacturing process enables the Company to better satisfy the needs of, and
expand its business with, existing customers as well as to attract additional
customers. In addition, the Company has broad expertise in product and die
engineering, enabling the Company to assist customers in utilizing extrusions
or fabricated components and assemblies and in creating complex extrusions to
replace several separate parts. For example, the Company has provided
engineering analysis as part of the redesign of an industrial vehicle
suspension, has assisted with the redesign of a boat deck in order to reduce
both the number of separate parts and customer assembly time, and is
collaborating with a manufacturer of light weight boat trailers on its
conversion from steel to aluminum.
LONG-TERM RELATIONSHIPS WITH DIVERSE CUSTOMER BASE. Over 66% of the
Company's sales in pounds in 1996 were made to customers that have been Wells
customers for over 10 years. Such strong relationships may decrease the
Company's exposure to volume reductions that may occur in a recession since
customers may be more likely to reduce volume from their less favored
suppliers. The Company's customers operate in many industries, including
building and construction, transportation, and consumer durables, and in a
broad range of markets within each industry. The diversity of its customer
base provides a foundation of experience on which the Company can build in
order to expand into new markets. For example, a fabrication technique
(coining) developed by the Company for the high-end office furniture market
has also found application with customers manufacturing pleasure boats,
increasing the Company's business in that segment. In addition, the Company's
familiarity with the quality, documentation and scheduling disciplines of
truck and automotive customers has facilitated entry into other industrial
markets.
REPUTATION FOR QUALITY PRODUCTS AND SERVICE. A 1995 survey of a broad
range of extrusion purchasers commissioned by the Company confirmed the
Company's reputation as a high quality extruder. For each of the past five
years, less than one percent of the Company's products have been rejected or
returned by customers. The Company believes that as a result of its ability
to provide a high level of service and quality
39
<PAGE>
products at competitive prices, the Company is typically its customers' first
or second choice to provide aluminum extruded products. The quality of the
Company's products plays a key role in customer growth, retention and
recapture. For example, the Company has recaptured the business of a major
truck trailer manufacturer, which had switched to a lower priced supplier,
despite the fact that Company's prices are higher than those offered by the
other supplier. The Company has just become the sole supplier for a customer
producing pleasure boats after committing to a "zero defect" program and
fulfilling this program in three months. A customer in the storm door market
has indicated that the Company's defect rate is 80% less than that of its
competitors.
STRATEGIC NETWORK OF FACILITIES. The Company's seven plants in the
Southeast and Midwest are located near most of the Company's customers, which
minimizes transportation costs and helps generate collaborative relationships
between key Wells and customer personnel. The Company's ability to shift
production among its plants allows Wells to more efficiently meet the
requirements of its customers. The existence of a core fabrication capability
at or adjacent to each extrusion plant and of painting and anodizing
capabilities at several locations within the Company's network provides an
advantageous mix of services for customers in the most cost effective manner.
Because of this network of plants, the Company is well positioned to take
advantage of the current industrial trends of outsourcing and just-in-time
inventory management. For example, Wells is providing daily shipments of
extrusions to a major manufacturer of golf carts and utility vehicles so that
such customer can keep its inventory at a minimum yet support its
manufacturing requirements. The Company is also providing daily shipments of
components and assembled parts to a major truck manufacturer to coordinate
with and satisfy its daily assembly line requirements.
EFFECTIVE MANAGEMENT OF ALUMINUM PRICE FLUCTUATIONS. For the years 1994
through 1996, approximately 60% of the Company's cost of sales reflect the
cost of aluminum, its principal raw material. The Company focuses on
recovering the cost of aluminum in the sales price charged to its customers
in order to maintain profit margins. This is accomplished either by passing
cost increases through to customers by systematic market indexed sales
pricing or by fixing the cost of metal by hedging against committed fixed
price sales. The Company, however, does not engage in speculative hedging. In
addition, the Company maintains its inventory at levels consistent with its
operating needs (35 days on hand) through centralized purchasing and
logistics. The market price of aluminum was extremely volatile over the three
year period ending December 31, 1996, while the Company's EBITDA (excluding
any LIFO adjustments) remained relatively stable despite such price
fluctuations, due to the Company's effective pricing management.
BUSINESS STRATEGY
The Company's objective is to capitalize on its strengths through the
implementation of its business strategy which includes the following
principal elements:
ENHANCE LONG-TERM CUSTOMER RELATIONSHIPS. The Company is committed to
enhancing its relationships with its customers by tailoring its business
approaches and systems to specific customer needs in order to improve quality
performance. To that end, the Company utilizes a sales organization comprised
primarily of Company-employed representatives having broad extrusion
experience. Their responsibility is to create effective account development
strategies and to orchestrate the Company's manufacturing, engineering and
management resources to better serve the Company's long-term customers. To
expand its customer relationships beyond the traditional sales/purchasing
function, the Company has recently created sales/engineering/manufacturing
teams to address more substantive issues with its customers. For example, the
Company has begun a program with one customer to create linked ordering and
inventory management systems in order to better support that customer's
growth. The Company has also set up focus groups to improve the shop-floor
operations of a customer and is working with another customer to overhaul its
order-through-billing process. In addition, the Company reserves
manufacturing capacity across its plant network to retain and increase
business from long-term accounts.
INCREASE VALUE ADDED CONTENT. The Company can generate higher profit
margins and differentiate itself from its competitors by increasing the value
added content of its extrusions. On a per pound basis, for example, the
painting of a mill finished extrusion can increase the plant margin by 100%;
fabrication of a mill finished extrusion can increase the plant margin by
200-800%, depending upon the complexity
40
<PAGE>
of the process. Customers have an incentive to purchase more value added
products because the use of such products reduces the number of vendors
needed and order lead times, and reduces operating costs and overhead by
outsourcing internal operations. Over 88% of extrusion purchasers included in
a survey commissioned by the Company in 1995 indicated a need for finished
and fabricated extrusions. The Company is well-positioned to satisfy
increased demand for value added services due to its wide spectrum of
finishing and fabrication capabilities, its diverse manufacturing experience
throughout its plant network, and its strong technical service capabilities.
TARGET NEW APPLICATIONS AND MARKETS. The Company also strives to grow its
business by developing new opportunities for aluminum extrusion and
fabrication. The Company seeks out applications with multi-year life cycles
in markets where the use of aluminum enhances performance due to its light
weight, resistance to corrosion and cost advantages, capitalizing on its
detailed knowledge of design requirements and objectives within specific
industries. Over the past five years, the Company has built significant
volumes in such market niches as school bus windows, where the Company
estimates that it commands an 80% share of the market; high-end office
furniture, where the Company is a valued supplier to four of the leading
office furniture manufacturers; and industrial fixturing-guarding systems,
where the Company serves the three leading suppliers in the market.
IMPLEMENT STRATEGIC CAPITAL INVESTMENTS. The Company's capital
expenditures strategy, pursuant to which the Company is planning to spend
$3.5 million annually through 2002, is to expand capacity, improve
productivity and increase value added capabilities principally by upgrading
its equipment rather than purchasing new equipment. The Company expects that
these investments will be financed by excess cash flow from operations. The
Company plans to upgrade and modernize two extrusion presses each year for
the next five years, which is expected to increase extrusion capacity by 10%
per press. In addition, the Company plans to upgrade and modernize certain
equipment at its casting facility, which will expand capacity by 5% and
improve the quality of billet cast, and also to expand capabilities in its
fabrication facilities. During the last two years, the Company has
successfully increased its casting capacity by 15% and the capacities of two
of its extrusion presses by an average of 11% without the acquisition of new
equipment.
PRODUCTS AND SERVICES
For the years 1994 through 1996, over 92% of the products sold by the
Company were designed and manufactured according to individual customer
specifications. Such products include door and window components for both new
construction and the replacement market, commercial entrance doors, patio
doors, heat sinks, school bus windows, and components for truck cabs, truck
trailers, home and office furniture, lighting fixtures, delivery vans,
architectural specialties, recreational vehicles, golf carts, pleasure boats,
and automotive accessories. The Company believes that the large share of
customized products sold by the Company can be attributed to the Company's
product quality, high level of customer service, the coordination between its
sales force and engineering staff at each plant, its engineering design
capabilities and its extensive extrusion, finishing and fabrication
capabilities. Over 91% of the Company's approximately 30,000 extrusion dies,
which are located throughout the Company's network of plants, are
customer-specific and are used to produce custom-designed extrusions. The
Company has the capability to cut, bend, punch, mill, weld, paint, and
anodize a wide array of aluminum shapes in sizes as small as 1/2 inch or as
large as 11 inches in diameter. Moreover, the Company can supply quality
products and services on a local or regional basis, which provides a
competitive advantage in meeting the needs of customers with multiple plant
locations.
41
<PAGE>
CUSTOMER DISTRIBUTION (POUNDS SOLD)
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
------------------ ------------------ ------------------ ------------------ -----------------
POUNDS % POUNDS % POUNDS % POUNDS % POUNDS %
--------- -------- --------- -------- --------- -------- --------- -------- --------- -------
(POUNDS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Building/Construction:
Commercial ........... 26,450 22.3% 27,514 22.4% 27,621 18.5% 27,223 19.8% 30,020 21.7%
Residential .......... 30,210 25.5 33,251 27.0 38,730 26.0 32,958 23.9 38,063 27.5
Transportation ........ 32,998 27.9 32,940 26.8 39,413 26.5 40,178 29.2 27,514 19.9
Consumer Durables .... 11,243 9.5 10,580 8.6 13,269 8.9 12,655 9.2 15,820 11.4
Equipment/Electrical .. 6,133 5.2 7,349 6.0 9,562 6.4 10,074 7.3 11,269 8.1
Distributors/Other ... 11,318 9.6 11,435 9.2 20,375 13.7 14,691 10.6 15,694 11.4
--------- -------- --------- -------- --------- -------- --------- -------- --------- -------
118,352 100.0% 123,069 100.0% 148,970 100.0% 137,779 100.0% 138,380 100.0%
========= ======== ========= ======== ========= ======== ========= ======== ========= =======
</TABLE>
The Company believes that the Company's stable customer base is
attributable, in part, to the status that the Company has attained with many
of its customers. Many aluminum extrusion users attempt to diversify their
supply risk by utilizing multiple extruders. The Company believes that as a
result of the Company's ability to provide a high level of service and
quality products at competitive prices, the Company is typically its
customers' first or second choice to provide aluminum extruded products.
Construction. The Company produces components for residential and
commercial window and door frames, storm doors, vents and louvers, railings,
stadium seating systems, patio enclosures and a variety of architectural
specialties for the residential and commercial construction and replacement
markets. In addition, the Company manufactures and markets a proprietary line
of sliding patio doors and a line of commercial entrance doors and storefront
systems. Extrusions for use in window and door frames constitute the largest
portion of the Company's sales to the construction market, representing over
62% of the Company's building and construction activity and approximately 30%
of the Company's total volume (in pounds sold) in 1996.
Transportation. The Company produces extrusions for truck cabs, commercial
truck trailers, recreational vehicles, utility trailers and automotive
accessories. It also produces a number of complex assemblies, including
complete door frames and structural sub frames for use in Class 8 truck
tractors and complete window assemblies for the school bus and delivery van
markets.
Consumer Durables. Customers in this industry use the Company's extrusions
and assemblies for a wide variety of applications. Manufacturers of high-end
office furniture, golf carts, and pleasure boats are among the major
consumers of the Company's products.
Equipment/Electrical. Companies producing material handling systems, heat
sinks, electrical distribution and bus bar systems, industrial
guarding/fixturing and commercial lighting are examples of the Company's
customers in the Equipment/Electrical segment.
Distributors. These customers resell the aluminum extrusions and
components purchased from the Company to manufacturers, contractors and other
industrial end users. The Company's focus in the distribution market is on
producing application-specific components, which are sold via specialty,
value-added distributors. The Company does not regularly participate in the
stock shape/metal service center portion of the distribution market. Thus,
the Company believes that the end use of products that are purchased from the
Company by distributors and then resold tends to parallel the uses of
customers which the Company serves directly.
In 1996, the Company's top ten customers received approximately 40% of the
Company's shipped volume (in pounds sold), with the top twenty-five customers
accounting for approximately 60%. No single customer accounted for more than
10% of the Company's net sales (in dollars) in 1996.
42
<PAGE>
MANUFACTURING PROCESS
The Company's manufacturing processes involve casting, extruding,
finishing, and fabricating aluminum:
Casting. The first step in the casting process is to melt primary aluminum
and aluminum scrap in a large furnace. The liquid aluminum is either directly
alloyed in this furnace or transferred to another furnace where alloying
materials are added. The aluminum is then cast into logs of varying diameters
with lengths of up to 16 feet. Next, these logs are heated and then cooled at
a controlled rate. This allows the cast aluminum to achieve the optimally
distributed chemical composition for extrusion. Afterwards, some logs are cut
into shorter lengths called billets. The cast aluminum is transferred to the
Company's extrusion plants in either log or billet form.
Extrusion. Extrusion is a manufacturing process by which the billet is
heated and pushed by a press, or extruded, through a die to produce a piece
of metal in the shape of the die at a desired length. Almost all of the
Company's dies are designed to produce extrusions according to individual
customer specifications. Extrusions are then straightened by stretching and
cut to the required lengths which range from 8 to 50 feet. Most extrusions
are hardened by aging in large ovens for 6 to 12 hours. During the extrusion
process, aluminum scrap is generated at several stages and is collected and
sent to the Company's casting facilities for recasting into billet; some
scrap is sold to dealers. Typically, 75% of the results of the extrusion
process are salable products; the remaining 25% is aluminum scrap, which is
either recast by the Company or sold on the open market.
Finishing. The Company has extensive finishing capabilities in painting
and anodizing. Two painting and two anodizing facilities cover markets from
the East Coast through the Midwest. This allows the Company to provide its
customers a single source for components ready for processing. Often
additional finishing-related services are provided, including two-tone
painting and taping of painted surfaces for protection during the customer's
manufacturing process. These services enhance the Company's value to its
customers and provide appreciable added income and profit margin. In 1996,
the operating income from painting and anodizing operations (before corporate
expenses) was approximately $4 million.
Fabrication. The Company provides additional services to its customers by
fabricating mill or finished extrusions into components or sub-assemblies
ready to be incorporated into the customer's end products. A variety of
fabrication processes, including bending, punching, tight tolerance cutting,
welding, CNC machining, and assembly are employed. The end result may range
from a curved, fully formed trim cap for use on an office partition, to a
step assembly for a truck cab, to a panel van window assembly complete with
glass. The Company's fabrication capabilities are attractive to those
customers interested in outsourcing certain manufacturing in order to better
control operating costs, manage inventory, accommodate growth, or more
sharply focus their own operations. The Company's fabrication services
provide additional opportunities to enhance margins and help protect the
business from market penetration by other competitors. In 1996, fabrication
accounted for $9 million of the Company's operating income (before corporate
expenses).
FACILITIES AND OPERATIONS
Management of the Company is structured to provide strong decentralized
plant operations in combination with certain centralized corporate functions.
Operations management focuses on plant site issues, such as productivity,
operating costs, and labor, that are directly under its control. Corporate
management provides oversight guidance and direction to the plants and has
centralized control over sales, marketing, metal procurement, capital
spending, and information services, which serves to eliminate disparities in
price among the Company's plants serving the same customers, eliminate
unwanted competition and territoriality among plants, and facilitate the
control of inventory.
43
<PAGE>
Wells has seven production facilities, which enable the Company to serve
customers effectively in markets in the East, Midwest and Southeast, as
follows:
<TABLE>
<CAPTION>
SITE FACILITIES
------------------- ----------------------
LOCATION OPERATIONS ACRES OWN/LEASE SQ. FEET OWN/LEASE
- ----------------------- --------------------- ------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Monett, Missouri .......extrusion, painting, 21.1 Owned 185,000 Owned
casting 0.3 Leased
Cassville, Missouri ...fabrication 9.6 Leased 32,224 Leased
0.5 Owned
North Liberty, Indiana extrusion, anodizing, 48.9 Owned 215,890 Owned
fabrication
Kalamazoo, Michigan ...extrusion, complex 23.3 Owned 132,784 Owned
fabrication
Sidney, Ohio ...........complex fabrication 3.7 Leased 102,400 Leased
4.8 Owned
Belton, South Carolina extrusion, painting, 54.5 Owned 165,000 Owned
fabrication
Moultrie, Georgia ......extrusion, anodizing, 24.1 Leased 315,352 Leased
fabrication 65.3 Owned
</TABLE>
These regional plants allow the Company to service national customers on a
multi-plant basis and decrease the Company's exposure to economic downturns
in specific industries or geographic regions. The Company can also balance
production requirements between plants, which affords more flexibility and
higher utilization. The Company's production facilities are equipped with
well maintained equipment.
Casting. At its Monett location, the Company has two casting furnaces and
ancillary equipment currently capable of producing 170 million pounds of
billet annually. In 1996 the Company produced 162 million pounds of billet,
operating at an average of 24 hours per day, 6 days per week, 50 weeks per
year. The Company believes that operating at this utilization level
significantly reduces the cost of billet produced and reduces working capital
requirements since the steady flow of raw material and billet lowers
inventory requirements at all extrusion facilities.
Extrusion. The Company operates five extrusion plants, which have in the
aggregate twelve extrusion presses.
PRODUCTION CAPACITY
(IN MILLIONS OF POUNDS)
<TABLE>
<CAPTION>
EXTRUSION PLANTS MONETT NORTH LIBERTY KALAMAZOO BELTON MOULTRIE
- -------------------- -------- --------------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Extrusion Presses .. 3 3 1 3 2
Size (Tons: Inches) 1675:7 1675:7 2200:8 1675:7 1675:7
1675:7 1800:7 3600:10 2600:8
1800:7 3600:10 2500:8
Capacity (mm lbs) .. 39 39 15 45 24
</TABLE>
Capacity utilization by production facility, based on operations of 6.5
days per week, 3 shifts per day, 50 weeks per year, is summarized below.
<TABLE>
<CAPTION>
COMPANY MONETT NORTH LIBERTY KALAMAZOO BELTON MOULTRIE
----------- ---------- ----------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
1996 ..... 85% 95% 88% 73% 88% 69%
1995 ..... 85% 85% 92% 87% 87% 69%
1994 ..... 92% 98% 94% 95% 98% 66%
1993 ..... 76% 86% 87% 79% 68% 55%
1992 ..... 73% 80% 86% 77% 70% 43%
</TABLE>
44
<PAGE>
The Company believes that overall capacity utilization is an imperfect
indicator of the level of business activity, as it does not take into account
the fact that certain extruded shapes can only be produced on certain
presses. For example, in 1996 the decline in the truck trailer market
combined with the Company's strategy of focusing on profitable on-going
accounts resulted in reduced utilization of the Company's 10" presses at the
same time that several of the Company's 7" and 8" presses operated at over
100% capacity.
Finishing. The Company has four finishing facilities. The capabilities of
the Company's finishing facilities, based on operations of 6.5 days per week,
3 shifts per day, 50 weeks per year, are summarized below.
FINISHING CAPABILITIES
<TABLE>
<CAPTION>
MONETT NORTH LIBERTY BELTON MOULTRIE
---------- ----------------- ---------- ------------
<S> <C> <C> <C> <C>
Anodizing Line .......... -- 1 -- 1
- ------------------------
Capacity (mm sq ft) .... -- 12 -- 18
Paint Line .............. 1 -- 1 --
- ------------------------
Capacity (mm lbs) ....... 18 -- 20 --
</TABLE>
Fabrication. The Company has six fabrication plants with a combined annual
capacity of 35.2 million pounds. The Kalamazoo and Sidney plants produced
over six million pounds each during 1996. The following table details the
fabrication capabilities at the Company's various locations:
FABRICATION CAPABILITIES
<TABLE>
<CAPTION>
FABRICATION NORTH
COMPLEXITY CAPABILITY DESCRIPTION BELTON CASSVILLE KALAMAZOO MOULTRIE LIBERTY SIDNEY
- --------------- ------------------------------- ---------- ------------- ------------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Tier #3 ........Welding, high tolerance X X
machining, assembly with sheet
metal components
Tier #2 ........Milling, automatic sawing and X X X X X X
drilling, assembly,
high capacity punching, bending
Tier #1 ........Manual sawing and drilling, X X X X X X
light punching, hand deburring
</TABLE>
RAW MATERIALS
The Company's principal raw material, aluminum, is subject to extensive
price volatility in the world market. Aluminum is an important part of the
Company's cost structure, representing 65%, 67% and 55% of total production
costs in 1996, 1995 and 1994, respectively.
The material form used in aluminum extrusion is aluminum billet. The
majority of the Company's aluminum billet requirements are supplied by its
own casting facility while a relatively small amount is supplied by outside
producers. In 1996, the Company produced 88% of its aluminum billet
requirements at its Monett facility. The Company's ability to cast a
significant amount of its aluminum billet needs gives it a cost advantage
over non-casters.
The principal materials used in the production of aluminum billet are
aluminum scrap and primary aluminum ingot. Over 64% of the aluminum scrap
required is sourced from the Company's own manufacturing process; the
remainder is purchased from a variety of scrap brokers and dealers. By
reusing its own scrap, the Company is able to reduce its operating costs. The
Company purchases approximately 60-65% of its primary aluminum requirements
from Venalum pursuant to the Venalum Agreement. The Venalum Agreement is
scheduled to expire in December 1997, but may be extended based upon
negotiations between the Company and Venalum. See "Risk Factors -- Sources of
Raw Materials" and "Certain Transactions."
45
<PAGE>
The Company seeks to reduce its exposure to the volatility in aluminum
prices either by fixing the cost of metal by hedging against committed fixed
price sales or by passing cost increases through to customers by systematic
market indexed sales pricing. The Company, however, limits its hedging
activities to committed sales and does not engage in speculative hedging. The
Company maintains its inventory at levels consistent with its operating needs
(35 days on hand) through centralized purchasing and logistics. The Company
sells any excess primary aluminum in the open market, closely matching the
cost of metal purchased to the price of such metal sold.
The Company's ability to manage its raw material costs is reflected by the
change in its spread, the difference between gross sales price per pound and
aluminum cost per pound. The Company's spread has improved from $0.723 cents
in 1992 to $0.819 cents in 1996, or 3.2% percent per annum. This improvement
can be attributed to the Company's sales price discipline, effective aluminum
purchasing, billet casting productivity and risk management (hedging)
activities.
CAPITAL IMPROVEMENTS
Capital expenditures for the years 1992-1996 totaled $7.7 million or an
average of $1.5 million per year. Beginning in 1992, the Company's capital
investment program was focused primarily on cost reductions and the
maintenance of existing facilities and equipment. The Company also made
investments during that time to upgrade its fabrication and anodizing
capabilities. Since the middle of 1995, the Company has focused its capital
investment on technology and productivity improvements in extrusion and
casting that support the Company's market initiatives. These investments
generally have expected payback periods of less than 18 months and have
increased capacity without requiring the acquisition of major new equipment.
The Company has made extensive investments in automated, centralized
information systems with all facilities on-line on a real time basis. The
capabilities include automated order entry and pricing, automated die
selection and billet requirements planning, automated production scheduling
and detailed job costing.
The Company plans to make capital expenditures of $3.5 million annually
through 2002. The Company expects to spend less than 25% of its capital
budget on maintenance of facilities and equipment in 1997. The Company
intends to continue to expand capacity by upgrading its equipment rather than
purchasing expensive new equipment. During the last two years, the Company
has successfully increased its casting capacity by 15% and the capacities of
two of its extrusion presses by an average of 11% without the acquisition of
major new equipment. The Company believes that by upgrading its extrusion
presses, the Company receives 90% of the productivity benefits realized from
replacing equipment but makes only 50% of the capital investment required.
Over the next five years, the Company plans to update and modernize two
extrusion presses each year, increasing extrusion capacity by 10% per press
and reducing scrap generated in the process by 1.5%. The Company plans to
upgrade and modernize the homogenizing ovens at its casting facility which
will expand capacity by 5% and improve the metallurgical properties of the
billet cast. Improved billet quality will improve productivity and reduce the
quantity of scrap generated in the extrusion process. The Company estimates
that the casting improvements will reduce its operating costs by $0.5 million
annually. The Company is also considering an investment in advanced
computerized isothermal extrusion control equipment. The Company estimates
that this technology improvement can increase capacity by 11% and increase
operating margins by $0.2 million per year. The Company believes that, if
this technology is implemented, it will be the first U.S. extruder utilizing
advanced isothermal extrusion control equipment. The Company also plans to
spend $1.5 million in 1997 to improve its fabrication capabilities and
quality.
SALES AND MARKETING
The Company's sales and marketing activities are directed by a Senior Vice
President, Sales and Marketing at the corporate headquarters. This executive
works with the Vice President, Sales to develop and implement customer
strategies, maintain pricing disciplines, and direct the Company's extrusion
sales force. All extrusion pricing is centrally managed and administered by
the Vice President, Sales. In
46
<PAGE>
addition, the central Sales and Marketing organization directs the Company's
market research, promotional materials and activities, and product/market
development activities.
Two regional sales managers, located in the Southeast and Midwest, have
day-to-day responsibility for directing the extrusion sales force and
implementing agreed-to market and customer strategies. With the Company's
sales force, they orchestrate the Company's manufacturing, engineering and
management resources to improve the Company's profitability. While reporting
to the Vice President, Sales, they work hand-in-hand with the operations
managers of each plant to coordinate customer service and tailor their sales
activities to meet the business needs of the plants. This arrangement allows
local sales and operations personnel to react quickly to changing market
conditions, while facilitating a uniform approach to the market and the
reassignment of production requirements among plants when warranted to
maintain customer service or plant utilization. The Company employs 12 direct
sales persons and utilizes 10 independent manufacturers' representatives for
its extrusion and fabrication businesses; the Company also utilizes a number
of specialty representatives for its patio door and commercial entrance door
business. Compensation for the direct sales force is comprised of salary plus
performance-based bonuses.
The Company's two door product lines, residential patio doors and
commercial entrance systems, are led by product managers with extensive
experience in their respective end markets, reporting to the Senior Vice
President, Sales and Marketing. The Company is moving to expand the product
manager concept to create additional centers of expertise relative to
important end-use markets.
In order to provide additional focus on fabrication opportunities, a
General Manager, Fabrication is responsible for both fabrication and sales.
Two Kalamazoo-based product managers lead the Company's efforts to develop
fabrication business in the truck and office furniture markets, as well as
pursue other fabrication opportunities. In addition, the regional extrusion
sales force actively solicits fabrication business from their established
customer base. The Senior Vice President, Sales and Marketing, Vice
President, Sales and General Manager, Fabrication regularly collaborate on
marketing programs, account strategies and pricing.
The Company has begun implementing a program to upgrade its regional sales
organization. Key elements include increasing the responsibility of sales
managers and representatives for account strategy development and
forecasting, providing easy access to the Company's central data bases via
laptops, adding additional employed sales representatives, and tieing sales
manager compensation to account profitability.
Pricing and Hedging Program
The Company offers its customers three basic pricing alternatives: forward
sales contracts, formula pricing and market pricing. These alternatives can
be tailored to meet a customer's specific market and risk management
requirements.
Forward sales contracts, which accounted for approximately 33% of total
pounds sold by the Company in 1996, are "take or pay" agreements negotiated
with long-standing customers. These contracts fix the sales price at which
the Company agrees to sell and the customer agrees to purchase a specified
quantity of aluminum extrusions in the future. These contracts typically
cover a substantial portion of the customer's contract requirements for a
three to six month period. The fixed sales price is based on the price at
which aluminum can be hedged for future delivery plus a conversion spread to
cover operating costs and provide a profit margin.
The Company also offers a formula pricing mechanism, which adjusts pricing
monthly based on aluminum price movements, to long-standing customers
(approximately 45% of pounds sold in 1996). Monthly price changes are based
on the previous month's MWTP plus a negotiated mark-up covering conversion
costs and profit margin. Formula pricing allows the Company to stay current
with the aluminum market, balancing upward and downward movements on a
monthly basis.
The Company also quotes individual orders opportunistically, based on the
MWTP in the previous month, for its remaining open market accounts. Margins
on such market accounts are generally significantly higher than on forward
sales contracts or formula accounts, due to the reduced leverage held
47
<PAGE>
by these typically smaller customers. In addition, the Company's exposure to
aluminum price movements is nominal since such orders are based on 30 day
delivery, enabling the Company to monitor its metal cost.
Fabricated components, including the Company's patio and commercial
entrance door product lines, are typically priced quarterly utilizing a
formula mechanism based on the previous quarter's average metal cost.
Aluminum costs are generally a less significant component of such product
costs, which typically include purchased parts and substantial fabrication
and assembly labor. However, pricing is tightly controlled via a quote
process during which outside components quotes and internal costs are
established and appropriate burden rates and target margins are then added.
The quarterly metal price adjustments allow for a "natural" hedge in the
first month, which minimizes the risk of changes in metal prices. In certain
cases, the Company will enter into aluminum futures contracts to hedge
against price volatility in the second and third months based on expected
purchases, although this hedge has certain risks because customers are not
bound to purchase fixed volume.
The Company takes forward positions in the aluminum market, but only when
supported by forward sales contracts or by firm orders for fabricated goods.
The Company does not engage in speculative hedging activities.
Customer Service
The Company seeks to provide high quality customer service for the markets
it serves by capitalizing on its manufacturing flexibility, technical
expertise and marketing experience. The Company believes that its strategic
network of facilities and the integration among manufacturing, marketing and
sales provide it with a competitive advantage by allowing it to respond
quickly to customer demands. Customer service organizations are located at
each of the Company's plants, reporting to the operations manager, in order
to ensure sensitivity and facilitate quick response to customer needs and
inquiries. Customer service representatives are responsible for order entry
and routinely initiate day-to-day contact with long-standing customers, in
coordination with the field sales force. The Company believes that this
close, local contact between experienced customer service personnel and its
established customers is a critical factor in maintaining strong customer
relationships.
COMPETITION
The aluminum extrusion market is highly competitive. Competitors include
the extrusion units of primary aluminum producers, sizeable multi-plant
independent extruders, small local operators, and Mexican and Canadian
exporters. Competition is generally based upon price, delivery time, quality,
service, and specialty engineering/design/production capabilities. Market
data indicates that in 1996, the top 10 companies in the aluminum extrusion
market (including the Company) supplied 80-85% of the market. The Company
estimates its market share at 4%.
The Company believes that overall market share has only a modest influence
on new business and profit performance. Instead, the Company believes that
competition is regionally oriented and that aluminum extrusion end users are
typically looking for "local" plants with a strong focus on customer service
and a reputation for fair product pricing. A regional network of plants is
also important to large end users in order to meet the needs of their
multi-plant locations and to ensure continuity of sourcing.
Primary Aluminum Producers. Initially, primary aluminum producers
dominated the extrusion market because of the economics of vertical
integration. The advent of a worldwide commodity market for primary aluminum
in the 1970's and the increased use of scrap in the production of aluminum
billet has virtually eliminated that advantage. However, the extrusion units
of primary aluminum producers, such as Kaiser Aluminum Corporation, Aluminum
Company of America Inc. ("Alcoa"), Reynolds Metals Company, and Alumax, Inc.,
remain significant competitors in certain geographic and industry markets.
Multi-Plant Independents. Independent regional extruders with their
multi-plant operations achieved success once primary aluminum and aluminum
scrap became readily available at competitive prices. This competitive
structure allowed for the advantages of central purchasing leverage on a
system-wide basis,
48
<PAGE>
while retaining an entrepreneurial character at each facility. Regional
extruders can react quickly to changing markets and compete effectively by
providing a high level of service and by reducing transportation costs. The
Company believes that extruders with a network of plants will continue to be
significant factors in the aluminum extrusion market. Key regional
competitors, including the decentralized operations of primary aluminum
producers, are Alumax/Cressona, Aluminum Shapes, Inc., Easco, Inc., William
L. Bonnell Company, Inc. and V.A.W. of America, Inc.
Smaller Local Operators. Wells also faces competition from small extruders
typically involving one location and one or two extrusion presses. These
extruders are able to compete because of low labor costs, minimal
administrative costs and proximity to customers. These competitors include
Elixir Industries (Indiana), Western Extrusions Corp. (Texas), Jordon Company
(Tennessee) and Astro Shapes, Inc. (Ohio).
Importers. Canadian and Mexican producers also provide competition for
customers located adjacent to the geographical borders of such countries.
Often such companies will reach further into the United States, competing on
an opportunistic pricing basis in order to fill their presses. Such
competitors include Cuprum S.A. de C.V. (Mexico), Exal Aluminum Inc. (Canada)
and Caradon Indalex, a division of Caradon Ltd. (Canada).
Generally, for a specific customer, the Company competes most frequently
with extruders operating plants in the Company's regions. Because not all
extruders cover all markets, the Company competes most frequently with Easco,
Inc., William L. Bonnell Company, Inc., Alumax/Cressona, and a few small
local operators.
Substitution. In recent years, vinyl, with its penetration of the
residential window and door market, has been the most commonly used
substitute for aluminum extrusions. Vinyl window shipments have grown 93%
since 1989 to surpass aluminum window products, which have decreased by 31%
in volume over the same time period. Each such material appears to have found
its niche, with vinyl most often used in the mid to high end residential
lines where cost is less important than thermal characteristics. The Company
does relatively little business in this market. In areas where the Company
does significant business, such as window components for the modular and
mobile home market, which represented approximately 20% of pounds sold by the
Company in 1996, vinyl is not a good substitute due to cost and strength
limitations. Industry forecasts indicate that the movement away from aluminum
has slowed and that aluminum should essentially maintain its unit volumes
(though not its market share) in the window and door market through the end
of the 1990s. Rolled steel may be another substitute for aluminum when
aluminum costs rise to such an extent that rolled steel becomes a viable
economic alternative for certain manufacturing requirements. The Company
believes that when the price of aluminum rises to 95 cents per pound or more,
rolled steel poses a substantial substitution risk for aluminum extrusions in
certain markets. However, the Company estimates its participation in markets
which may utilize rolled steel as a replacement to be approximately 2% of
pounds sold by the Company in 1996. See "Risk Factors -- Competition."
ENVIRONMENTAL MATTERS
The Company is subject to extensive and evolving environmental laws and
regulations that have been enacted in response to technological advances and
increased concern over environmental issues. These regulations are
administered by the United States Environmental Protection Agency and various
other federal, state and local environmental, transportation, and health and
safety agencies. The Company believes that, over time, there will continue to
be increased regulation, legislation and regulatory enforcement actions.
In order to operate its business, the Company must obtain and maintain in
effect one or more permits for each of its facilities and comply with complex
rules governing air emissions, waste water discharges, the use, storage,
treatment and disposal of solid and hazardous wastes and other items which
might affect environmental quality. As a result, the Company from time to
time is required to make expenditures for pollution control equipment or for
other purposes related to its permits and compliance.
49
<PAGE>
Among the laws that may affect the Company are CERCLA and analogous state
laws that impose joint and several liability, without regard to fault, on
persons that own or operate locations where there has been, or is threatened
to be, a release of any hazardous substances into the environment, as well as
persons who arranged for the disposal of such substances at such locations.
Such persons may become liable for the costs of investigating and remediating
such substances. There are often also substantial legal and administrative
expenses incurred in dealing with remediation claims and activities.
The Company has been notified by either the United States Environmental
Protection Agency or other persons that it is considered to be a "potentially
responsible party" for the costs of investigating and remediating hazardous
substances at several locations owned and operated by third persons. At each
such location, the Company understands that it is one of many "potentially
responsible parties." The Company believes that the volume of hazardous
substances, if any, for which it may be held responsible at each such
location is not significant. While the Company believes that it may have
valid defenses to liability claims at these locations, it has been settling
such claims where an opportunity to do so is presented at a cost which
probably would not exceed the expenses of asserting such defenses through
available administrative and judicial processes.
Certain of the Company's manufacturing facilities have been in operation
for several decades and, over such time, these facilities have used
substances and generated and disposed of wastes which are or may be
considered hazardous. For example, certain of these facilities have in the
past stored or disposed of wastewater treatment sludge in on-site ponds,
lagoons or other surface impoundments. Although the Company believes that
these facilities are in substantial compliance with current environmental
laws and regulations applicable to such storage and disposal activities, it
is possible that additional environmental issues and related matters may
arise relating to such past activities which could require additional
expenditures by the Company.
BACKLOG
Extrusion turnaround time is generally sufficiently short so as to permit
the Company to fill orders for most of its products in a short time period.
Accordingly, the Company does not consider backlog to be material to its
business.
EMPLOYEES
As of March 30, 1997, the Company had approximately 1,300 full-time
employees, 765 of whom are covered by collective bargaining agreements. The
Company's collective bargaining agreements are as follows:
<TABLE>
<CAPTION>
PLANT UNION EXPIRATION OF CONTRACT
- ------------------------------- ----------------------------------- -------------------------------
<S> <C> <C>
Kalamazoo, Michigan ............United Steelworkers of America, 1/14/00
Local 6265
Moultrie, Georgia ..............United Steelworkers of America, 2/26/99
Local 7834
North Liberty, Indiana .........International Union of United 2/20/98
Automobile, Aerospace and
Agricultural Implement Workers of
America, Local 194
Monett/Cassville, Missouri ....International Brotherhood of 11/8/96--currently working
Teamsters, Local 823 without an agreement--last
offer by the Company
implemented, waiting for
approval by union
</TABLE>
50
<PAGE>
The Company believes that its relationship with its employees is
satisfactory. The Company has not experienced any union activities resulting
in work slowdowns or work stoppages during the past five years.
PROPERTY
In addition to the facilities and properties described above under
"--Facilities and Operations," the Company leases its corporate headquarters
in Baltimore, Maryland. Pursuant to such lease, the Company leases
approximately 10,751 square feet until August 31, 1999.
PATENTS
Although the Company owns certain patents, the Company does not believe
that its business is dependent on its intellectual property rights.
LEGAL PROCEEDINGS
From time to time, the Company is a party to legal actions in the normal
course of its business. The Company is not currently involved in any legal
proceedings that it believes would have a material adverse effect upon its
financial condition or results of operations.
TAX RETURNS
The Internal Revenue Service (the "IRS") is currently conducting an
examination of the Company's federal income tax returns for its fiscal years
ended 1994 and 1995. Thus far, no significant issues have been raised by the
IRS.
51
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following is a table setting forth certain information with respect to
the individuals who are the directors and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------- ----- ----------------------------------------------------------
<S> <C> <C>
Russell W. Kupiec ...... 49 President, Chief Executive Officer and Director
W. Russell Asher ....... 54 Senior Vice President, Chief Financial Officer and
Director
Lynn F. Brown .......... 52 Senior Vice President, Sales and Marketing, and Director
Leo A. McCafferty ...... 60 Vice President, Operations
William J. Milam ....... 57 Vice President, Sales and Product Management
David J. Raymonda ...... 39 Controller, Treasurer and Secretary
Hector Alvarez ......... 45 Director
Elizabeth Varley Camp . 39 Director
Todd Goodwin ........... 65 Director
Edward R. Heiser ....... 62 Director
Isaias Medina .......... 36 Director
Lewis W. van Amerongen 57 Director
</TABLE>
Pursuant to an agreement among the Company and certain of its
stockholders, Venalum has the right to nominate two directors to the Board of
Directors. Messrs. Medina and Alvarez have been nominated by Venalum. See
"Certain Transactions."
Each director of the Company holds office until the next annual meeting of
stockholders of the Company or until his or her successor has been elected
and qualified. Officers of the Company are elected by the Board of Directors
and serve at the discretion of the Board of Directors.
RUSSELL W. KUPIEC joined the Company in 1991. Mr. Kupiec has been
President and Chief Executive Officer since April 1996. From March 1995 to
April 1996, he served as Chief Operating Officer. From November 1991 to March
1995, he served as Vice President, Manufacturing of the Company. From April
1991 to November 1991, he served as Vice President, Administration of the
Company. Mr. Kupiec has been a director of the Company since 1991.
W. RUSSELL ASHER, a certified public accountant, joined the Company in
January 1994 and has been Chief Financial Officer since that time. From
December 1991 to January 1994, he served as the Chief Financial Officer of
the Federal Emergency Management Agency. Prior thereto, Mr. Asher was Vice
President Finance of MB America Inc., a packaging and printing business, and
President and General Manager of AmeriForms Inc., a printing company which
was a subsidiary of MB America Inc. Mr. Asher has been a director of the
Company since 1994.
LYNN F. BROWN joined the Company in January 1996 and has been Senior Vice
President, Sales and Marketing since that time. From December 1994 to January
1996, he served as Executive Vice President, Sales and Marketing of Terra
Green Technologies, a start-up company in the ceramics industry. From July
1986 to December 1994, Mr. Brown was Business Manager of International
Paper's Fountainhead Products Group. Mr. Brown has been a director of the
Company since June 1997.
LEO A. MCCAFFERTY joined the Company in October 1995. Mr. McCafferty has
been Vice President, Operations since July 1996. From October 1995 to July
1996, he served as Vice President, Manufacturing. From May 1993 to October
1995, Mr. McCafferty was president of Solutions Et Al, a consulting company
engaged in strategic planning and operations control. From 1986 to May 1993,
he was president of PEMS Service and Repair, a company engaged in ground
water treatment and control. He has also held vice president and general
manager positions at Black & Decker Corporation, where he was employed for
twenty years.
52
<PAGE>
WILLIAM J. MILAM joined the Company in 1971. Mr. Milam has been Vice
President, Sales and Product Management since 1991. Prior thereto, Mr. Milam
held various regional sales management positions.
DAVID J. RAYMONDA joined the Company in September 1982. Mr. Raymonda has
been Controller and Secretary of the Company since February 1989 and
Treasurer since September 1993.
HECTOR ALVAREZ is the Executive Vice President of Venalum and CVG
Bauxilum, C.A., two aluminum producers in Venezuela. Over the past 16 years,
Mr. Alvarez has held various senior management positions in the production
team at Venalum. He has served as a director of the Company since December
1996.
ELIZABETH VARLEY CAMP has been a partner of GGvA since 1992 and has served
as a director of the Company since July 1987. She has been with GGvA since
1986.
TODD GOODWIN has been a partner of GGvA since 1984 and has served as a
director of the Company since July 1987. He is a director of Schult Homes
Corporation, The Rival Company, Inc., Johns Manville Corporation and U.S.
Energy Systems, Inc.
EDWARD R. HEISER has served as director of the Company since 1991. Mr.
Heiser retired as President and Chief Executive Officer of the Company in
April 1996, a position which he had held since 1991.
ISAIAS MEDINA has been the General Counsel for Venalum since 1996. For
more than five years prior to that, Mr. Medina was a member of the legal team
at Corporacion Venezolana de Guyana, the parent of Venalum. He has served as
a director of the Company since December 1996.
LEWIS W. VAN AMERONGEN has been a partner of GGvA since 1970 and has
served as a director of the Company since July 1987. He is also a director of
Agrifos L.L.C. and Erickson Air-Cranes Co., LLC, two privately held
companies.
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned, whether paid or
deferred, to the Company's Chief Executive Officer and its other four most
highly compensated executive officers during fiscal 1996 (collectively, the
"Named Officers") for services rendered in all capacities to the Company
during such fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- --------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS(#)
- --------------------------- --------- --------- --------------
<S> <C> <C> <C>
Russell W. Kupiec
President and Chief
Executive Officer 187,500 175,000 1,300
W. Russell Asher
Senior Vice President and
Chief Financial Officer 130,000 110,000 1,000
Lynn F. Brown
Senior Vice President,
Sales and Marketing 130,000 50,000 500
William J. Milam
Vice President, Sales and
Product Management 106,562 25,000 --
Leo A. McCafferty
Vice President, Operations 87,500 65,000 --
</TABLE>
53
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table provides information on grants of options made during
fiscal 1996 to the Named Officers.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION GRANT DATE
NAME GRANTED FISCAL YEAR PER SHARE DATE(A) VALUE(B)
- ------------------ ------------ -------------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Russell W. Kupiec 1,300 18.6% $10.00 March 3, 2003 $61,555
W. Russell Asher . 1,000 14.3% $10.00 March 3, 2003 $47,350
Lynn F. Brown...... 500 7.1% $10.00 March 3, 2003 $23,675
</TABLE>
- ------------
(a) The terms of the stock options granted in fiscal 1996 provided that 50%
of such options vested immediately and 25% of such options vested in
December 1996. Upon consummation of the Recapitalization, 100% of these
options will be fully vested.
(b) The Grant Date Value was determined using the enterprise value of the
Company, based upon third party offers to acquire the Company less the
amount of indebtedness outstanding at December 31, 1995 (including
accrued interest).
The following table provides information on the valuation of options held
by the Named Officers.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END
-------------------------- -------------------------
NAME EXECISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------ -------------------------- -------------------------
<S> <C> <C>
Russell W. Kupiec 8,850/2,950 $619,500/$206,500
W. Russell Asher . 5,250/1,750 $367,500/$122,500
Lynn F. Brown ..... 375/ 125 $ 26,250/$ 8,750
William J. Milam . 4,500/1,500 $315,000/$105,000
Leo A. McCafferty -- --
</TABLE>
PENSION BENEFITS
The following table shows the estimated annual retirement benefits payable
under the Company's pension plan to participating employees, including the
Named Officers, in the remuneration and years of service classifications
indicated. The Company maintains a tax-qualified defined benefit plan, which
covers most officers and salaried employees on a non-contributory basis. The
following table reflects benefits payable under the plan:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------
REMUNERATION 10 15 20 25 30 35
- -------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$100,000 ...... $15,360 $23,040 $30,720 $38,400 $46,080 $53,760
$125,000 ...... $19,200 $28,800 $38,400 $48,000 $57,600 $67,200
$150,000 ...... $23,040 $34,560 $46,080 $57,600 $69,120 $80,640
$175,000 ...... $24,576 $36,864 $49,152 $61,440 $73,728 $86,016
$200,000 ...... $24,576 $36,864 $49,152 $61,440 $73,728 $86,016
</TABLE>
Compensation used under the plan in calculating the annual normal
retirement benefit amounts reflected in the Pension Plan Table is the current
annual base salary. The normal retirement age for pension plan purposes is
age 65.
54
<PAGE>
The respective years of service credited for pension purposes as of
December 31, 1996, and the estimated years of service at age 65 for each of
the Named Officers are as follows:
<TABLE>
<CAPTION>
YEARS OF SERVICE YEARS OF SERVICE AT
AT DECEMBER 31, 1996 NORMAL RETIREMENT
-------------------- -------------------
<S> <C> <C>
Russell W. Kupiec 5.76 21.31
W. Russell Asher . 3.00 13.60
Lynn F. Brown ..... 1.00 14.23
William J. Milam . 25.53 33.84
Leo A. McCafferty 1.21 6.56
</TABLE>
The Pension Plan Table reflects the annual benefit payable commencing on
the participant's 65th birthday in the form of an annuity for the
participant's life. The benefits reflected in the Pension Plan Table will be
offset by .486% of the participant's Covered Compensation, as defined by the
Internal Revenue Service, and any prior plan benefits.
EMPLOYMENT AGREEMENTS
Each of the Named Officers has an employment agreement with the Company.
Among other things, each agreement provides for a term of employment in a
specified executive position, a specified annual base salary and
participation in any additional incentive compensation or bonus programs of
the Company. The employment agreements with Messrs. Kupiec and Asher continue
until December 31, 1999 and annually thereafter unless otherwise terminated.
If either Mr. Kupiec or Mr. Asher is terminated other than for cause or
disability, the Company is obligated to continue paying the base salary
amount through the end of the contract term, subject to an offset for
earnings from other full-time employment, and to maintain benefits for such
executive through the end of the contract term. If certain Change in
Ownership (as defined in such agreements) events occur during the term of
these agreements, the term of employment is automatically extended for three
years from the date the executive is notified of the Change in Ownership. In
the event of a Change in Ownership, the executive is given the right to
terminate his agreement if he is dissatisfied with his salary and performance
review to be given approximately 18 months after the Change in Ownership. If,
after a Change in Ownership, the executive terminates his employment due to
such dissatisfaction or is discharged other than for cause or disability, the
Company's obligation to continue paying his base salary through the end of
the contract term is not subject to any offset and the Company is obligated
to maintain benefits for such executive through the end of the contract term.
The employment agreements with Messrs. Brown, Milam and McCafferty
continue until December 31, 1997, December 31, 1998, and December 31, 1997,
respectively, which are subject to automatic one year, two year, and one year
extensions, respectively, if certain Change in Ownership events occur. If any
of such executives is terminated other than for cause or disability, the
Company is obligated to continue paying the base salary amount through the
end of the contract term, subject to an offset for earnings from other
full-time employment, and to maintain benefits for such executive for six
months after such termination.
STOCK OPTION PLAN
In June 1997 the Company adopted the 1997 Stock Incentive Plan (the
"Plan") pursuant to which officers, directors and key employees of the
Company will be granted stock options to purchase shares of Common Stock. The
Plan is administered by either the Stock Option Committee (the "Committee")
of the Board of Directors or the Board of Directors (the "Board"). The
Committee or the Board will have the discretion to determine the exercise
price, the duration and other terms and conditions of such options. The
Committee or the Board will have the authority to interpret and construe the
Plan, and any interpretation or construction of the Plan by the Committee or
the Board will be final and conclusive. As of the date of adoption of the
Plan, no options have been granted under the Plan.
55
<PAGE>
PRINCIPAL STOCKHOLDERS
The Company is authorized to issue 1,100,000 shares of Common Stock, par
value $.01 per share ("Common Stock"), of which 975,000 shares shall be Class
A Common Stock and 125,000 shares shall be Class B Common Stock. As of June
15, 1997, 923,205 shares of Class A Common Stock and no shares of Class B
Common Stock were issued and outstanding.
The holders of Class A Common Stock are entitled to vote on all matters to
be voted upon by stockholders of the Company. Holders of Class B Common Stock
are entitled to vote to on all matters to be voted upon by stockholders of
the Company other than the election or removal of directors of the Company.
Shares of Class B Common Stock are convertible into the same number of shares
of Class A Common Stock.
The following table sets forth certain information as of June 15, 1997,
with respect to the shares of Common Stock of the Company beneficially owned
by each person or group that is known by the Company to be a beneficial owner
of more than 5% of the outstanding Common Stock and all directors and
executive officers of the Company.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
--------------------
NUMBER OF PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF TOTAL
- ----------------------------------------------------------- -------------------- ------------
<S> <C> <C>
The Fulcrum III Limited Partnership(a)
600 Madison Avenue
New York, New York 10022 .................................. 333,380 36.11%
The Second Fulcrum III Limited Partnership(a)
600 Madison Avenue
New York, New York 10022................................... 226,620 24.55%
CVG Industria Venezolana de Aluminio C.A.
Zona Industrial Matanzas
Ciudad Guayana Apt 289312
Estado Bolivar, Venezuela.................................. 180,362.5 19.54%
Russell W. Kupiec........................................... 34,810 3.77%
W. Russell Asher............................................ 41,125 4.45%
Lynn F. Brown............................................... 2,937.5 *
William J. Milam............................................ 11,850 1.28%
David J. Raymonda........................................... 29,375 3.18%
Elizabeth Varley Camp(a).................................... 560,000 60.66%
Todd Goodwin(a)............................................. 560,000 60.66%
Edward R. Heiser............................................ 16,000 1.73%
Lewis W. van Amerongen(a)................................... 560,000 60.66%
All executive officers and directors as a group (12
persons)................................................... 696,097.5 75.40%
</TABLE>
- ------------
* Denotes less than 1%.
(a) The Fulcrum III Limited Partnership and The Second Fulcrum III Limited
Partnership (collectively, "Fulcrum III") are limited partnerships of
which GGvA is the general partner. As such, GGvA exercises sole voting
and investment power with respect to the shares owned by Fulcrum III.
Messrs. Goodwin and van Amerongen and Ms. Camp, directors of the
Company, are partners in GGvA, with the shared power to direct the
actions of GGvA, and may be deemed to beneficially own the shares owned
by Fulcrum III by virtue of their status and rights as such partners.
After the Recapitalization, all of the shares owned by Fulcrum III will
be transferred to a new partnership of which GGvA will be the sole
general partner. In connection with that transfer, GGvA will offer to
purchase from the existing limited partners of Fulcrum III their
interests in the capital stock of the Company owned by Fulcrum III. To
the extent this offer is accepted, the interest of GGvA in the new
partnership owning the capital stock of the Company will be increased.
See "The Recapitalization."
56
<PAGE>
AGREEMENTS WITH STOCKHOLDERS
In connection with the acquisition of the Company in 1987, the Company
entered into a Stock Purchase Agreement with Fulcrum III. Subject to certain
conditions, Fulcrum III has certain demand and "piggyback" rights to have its
shares of Class A Common Stock registered under the Securities Act. The
Company has agreed to pay the costs and expenses associated with two such
registrations, except for discounts and commissions.
In 1988, the Company entered into a Stock Purchase Agreement with Venalum
(the "Venalum Stock Agreement"). The Venalum Stock Agreement provides that,
upon certain issuances by the Company of equity securities, Venalum will have
rights to maintain its percentage equity interest in the Company's capital
stock by purchasing a portion of such equity securities. Subject to certain
conditions, Venalum has certain "piggyback" rights to have its shares of
Class A Common Stock registered under the Securities Act. The Company has
agreed to pay the costs and expenses associated with two such registrations,
except for discounts and commissions.
In connection with Venalum's acquisition of Class A Common Stock, the
Company entered into a Shareholders' Agreement (the "Shareholders Agreement")
with Fulcrum III and Venalum. The Shareholders Agreement provides that if
Fulcrum III transfers shares of Class A Common Stock under certain
circumstances, Venalum may participate in such transfer. Pursuant to the
Shareholders Agreement, the Company agreed to nominate for election to the
Board of Directors two persons designated by Venalum, Fulcrum III agreed to
vote its shares of Class A Common Stock so that the two persons designated by
Venalum shall be elected to the Board of Directors, and Venalum agreed to
vote its shares of Class A Common Stock in favor of the Company's slate of
nominees for election to the Board of Directors.
57
<PAGE>
CERTAIN TRANSACTIONS
The Company is a party to an agreement with Venalum pursuant to which
Venalum supplies primary aluminum to the Company. This contract accounts for
approximately 60-65% of the aluminum purchased by the Company from outside
suppliers. Pursuant to the Venalum Agreement, the Company purchased $54.4
million, $68.3 million and $96.0 million of primary aluminum from Venalum in
1994, 1995 and 1996, respectively. Prices are based on the MWTP from the
prior month. The Company believes that the terms of the Venalum Agreement are
no less favorable to the Company than would be obtained in an arms' length
transaction. The Venalum Agreement commenced in 1988 and has been renewed on
numerous occasions. The Venalum Agreement is scheduled to expire in December
1997, but may be renewed based upon negotiations between the Company and
Venalum. There can be no assurance that the Venalum Agreement will be
extended.
In 1987, the Company entered into an agreement with GGvA, pursuant to
which GGvA provides financial advisory and other services to the Company. For
such services, GGvA was paid an annual retainer of $0.25 million in 1994,
1995 and 1996, plus reimbursement for its out-of-pocket expenses. GGvA has
received a fee of $0.5 million for financial advisory services in connection
with the Recapitalization.
After the Recapitalization, all of the shares owned by Fulcrum III will be
transferred to a new partnership of which GGvA will be the sole general
partner. In connection with that transfer, GGvA will offer to purchase from
the existing limited partners of Fulcrum III their interests in the capital
stock of the Company owned by Fulcrum III. To the extent this offer is
accepted, the interest of GGvA in the new partnership owning the capital
stock of the Company will be increased. See "The Recapitalization."
58
<PAGE>
DESCRIPTION OF NEW CREDIT FACILITY
In connection with the issuance of the Old Notes, the Company entered into
the New Credit Facility with Credit Agricole Indosuez (formerly known as
Banque Indosuez) ("Indosuez") and certain banks and financial institutions as
lenders (collectively, the "Lenders") providing for a $15 million five-year
revolving credit facility.
The New Credit Facility will mature on June 30, 2002 and will bear
interest at a rate per annum equal (at the Company's option) to (i) the
London Inter-Bank Offered Rate plus 2.25% or (ii) an alternative rate equal
to the sum of 1.00% plus the greater of (a) the federal funds rate plus 0.5%
or (b) Indosuez's prime rate. The New Credit Facility will have a $5 million
sublimit for letters of credit. The New Credit Facility is available
(subject to borrowing base availability) for working capital and general
corporate purposes.
The obligations of the Company under the New Credit Facility are
secured by perfected first priority security interests in accounts
receivable, inventory and other like assets. The obligations of the Company
under the New Credit Facility will be guaranteed by each subsequently
acquired or organized domestic or foreign subsidiary of the Company, and in
such case, will be secured by a first priority pledge of all the capital
stock of each such subsidiary.
Revolving credit loans under the New Credit Facility will be subject to
maintenance by the Company of a borrowing base, which will equal the sum of
specified fixed percentages of eligible accounts receivable and eligible
inventory.
The Company will be required to make mandatory prepayments of loans under
the New Credit Facility, subject to certain exceptions, with 100% of the net
proceeds received from (i) the sale or disposition of all or any part of the
assets of the Company or any of its subsidiaries (other than sales of
inventory in the ordinary course of business), (ii) the incurrence of any
indebtedness for borrowed money or the issuance of debt or equity securities
by the Company, (iii) at the discretion of Indosuez, insurance recoveries
other than recoveries of less than a threshold amount to be determined that
are promptly applied toward repair or replacement of the damaged property,
and (iv) the reversion of pension plan assets or tax refunds.
The Company will be required to pay the Lenders under the New Credit
Facility, on a quarterly basis, a commitment fee equal to 0.375% per annum on
the undrawn portion of the revolving credit facility. The Company will also
be required to pay administration fees, to be computed on an annual basis and
paid quarterly.
The New Credit Facility contains a number of covenants that, among
other things, restrict the ability of the Company to dispose of assets, incur
additional indebtedness, prepay other indebtedness or amend certain other
debt instruments, pay dividends or make distributions (other than the
Recapitalization), create liens on assets, enter into sale and leaseback
transactions, make investments, loans or advances, make acquisitions, engage
in mergers or consolidations, issue capital stock, make capital expenditures
or engage in certain transactions with affiliates and otherwise restrict
certain corporate activities. In addition, the Company is required to
comply with specified financial ratios and tests.
The New Credit Facility contains customary events of default,
including defaults relating to payments, breach of representations and
warranties, covenants, cross-defaults and cross-acceleration to certain other
indebtedness, certain events of bankruptcy and insolvency, actual or asserted
invalidity of security and change of control.
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DESCRIPTION OF NEW NOTES
The New Notes offered hereby will be issued under an Indenture to be dated
as of May 28, 1997 (the "Indenture") between the Company and State Street
Bank & Trust Company (formerly known as Fleet National Bank), as trustee (the
"Trustee"), a copy of the form of which will be made available to prospective
purchasers of the New Notes upon request to the Company. References to
"(Section)" mean the applicable Section of the Indenture.
The following summaries of the material provisions of the Indenture do not
purport to be complete, and where reference is made to particular provisions
of the Indenture, such provisions, including the definitions of certain
terms, are qualified in their entirety by reference to all of the provisions
of the Indenture and those terms made a part of the Indenture by the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). For
definitions of certain capitalized terms used in the following summary, see
"--Certain Definitions."
GENERAL
The New Notes will mature on June 1, 2005, will be limited to $105,000,000
aggregate principal amount, and will be unsecured senior obligations of the
Company. Each New Note will bear interest at the rate set forth on the cover
page hereof from May 28, 1997 or from the most recent interest payment date
to which interest has been paid, payable semiannually on June 1 and December
1 in each year, commencing December 1, 1997, to the Person in whose name the
New Note (or any predecessor Note) is registered at the close of business on
the May 15 or November 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. (Sections 202, 301 and 307).
Pursuant to the Registration Rights Agreement, the Company has agreed for
the benefit of the holders of the Old Notes, at the Company's cost, either
(i) to effect a registered Exchange Offer under the Securities Act to
exchange the Old Notes for New Notes, which will have terms identical in all
material respects to the Old Notes (except that the New Notes will not
contain terms with respect to transfer restrictions) or (ii) in the event
that any changes in law or applicable interpretations of the staff of the
Commission do not permit the Company to effect the Exchange Offer, or if any
holder of the New Notes is prohibited by applicable law or Commission policy
from participating in the Exchange Offer or is not able to receive freely
tradeable Old Notes and as a result the Exchange Offer is not declared
effective within 130 days after the original issue of the Old Notes or the
Exchange Offer is not consummated for all of the Old Notes within 165 days
after the original issue of the Old Notes, or upon the request of the Initial
Purchaser, to register the Old Notes for resale under the Securities Act
through a shelf registration statement (the "Shelf Registration Statement").
In the event that either (a) the Exchange Offer Registration Statement is not
filed with the Commission on or prior to the 45th calendar day following the
date of original issue of the Old Notes, (b) the Exchange Offer Registration
Statement has not been declared effective on or prior to the 130th calendar
day following the date of the original issue of the Old Notes, (c) the
Exchange Offer is not consummated, or if an Exchange Offer has not been
consummated, a Shelf Registration Statement is not declared effective, in
either case, on or prior to the 165th calendar day following the date of
original issue of the Old Notes or (d) if an Exchange Offer has been
consummated, any required Shelf Registration Statement is not declared
effective on or prior to the later of (i) the 165th calendar day following
the date of original issue of the Old Notes or (ii) the 90th calendar day
following the date the Company becomes obligated to file a Shelf Registration
Statement (each such event referred to in clauses (a) through (d) above, a
"Registration Default"), the interest rate borne by the Old Notes shall be
increased by one-quarter of one percent per annum upon the occurrence of each
Registration Default, which rate will increase by one quarter of one percent
each 90-day period that such additional interest continues to accrue under
any such circumstance, with an aggregate maximum increase in the interest
rate equal to one percent (1%) per annum. Following the cure of all
Registration Defaults the accrual of additional interest will cease and the
interest rate will revert to the original rate.
Principal of, premium, if any, and interest on the New Notes will be
payable, and the New Notes will be exchangeable and transferable, at the
office or agency of the Company in The City of New York
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maintained for such purposes (which initially will be the corporate trust
office of the Trustee); provided, however, that payment of interest may be
made at the option of the Company by check mailed to the Person entitled
thereto as shown on the security register. (Sections 301, 305 and 1002) The
New Notes will be issued only in fully registered form without coupons, in
denominations of $1,000 and any integral multiple thereof. (Section 302) No
service charge will be made for any registration of transfer, exchange or
redemption of New Notes, except in certain circumstances for any tax or other
governmental charge that may be imposed in connection therewith. (Section
305)
Settlement for the New Notes will be made in same day funds. All payments
of principal and interest will be made by the Company in same day funds. The
New Notes will trade in the Same-Day Funds Settlement System of The
Depositary Trust Company (the "Depositary" or "DTC") until maturity, and
secondary market trading activity for the New Notes will therefore settle in
same day funds.
When issued, the New Notes will be a new issue of securities with no
established trading market. No assurance can be given as to the liquidity of
the trading market for the Notes. See "Risk Factors -- Absence of Public
Market for the New Notes."
OPTIONAL REDEMPTION
The New Notes will be subject to redemption at any time on or after June
1, 2001, at the option of the Company, in whole or in part, on not less than
30 nor more than 60 days' prior notice in amounts of $1,000 or an integral
multiple thereof at the following redemption prices (expressed as percentages
of the principal amount), if redeemed during the 12-month period beginning
June 1 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ------- ------------
<S> <C>
2001 ... 105.063%
2002 ... 103.375%
2003 ... 101.688%
</TABLE>
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the redemption date (subject to the
rights of holders of record on relevant record dates to receive interest due
on an interest payment date).
In addition, at any time prior to June 1, 2000, the Company may, at its
option, use the net proceeds of one or more Public Equity Offerings to redeem
up to an aggregate of 33 1/3% of the aggregate principal amount of New Notes
originally issued under the Indenture at a redemption price equal to 110 1/8%
of the aggregate principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the redemption date; provided that at least $65 million
of the principal amount of New Notes remains outstanding immediately after
the occurrence of such redemption. In order to effect the foregoing
redemption, the Company must mail a notice of redemption no later than 60
days after the closing of the related Public Equity Offering and must
consummate such redemption within 90 days of the closing of the Public Equity
Offering.
If less than all of the New Notes are to be redeemed, the Trustee shall
select the New Notes or portions thereof to be redeemed pro rata, by lot or
by any other method the Trustee shall deem fair and reasonable. (Sections
203, 1101, 1103 and 1104)
SINKING FUND
The New Notes will not be entitled to the benefit of any sinking fund.
PURCHASE OF NEW NOTES UPON A CHANGE OF CONTROL
If a Change of Control shall occur at any time, then each holder of New
Notes shall have the right to require that the Company purchase such holder's
New Notes in whole or in part in integral multiples of $1,000, at a purchase
price (the "Change of Control Purchase Price") in cash in an amount equal to
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101% of the principal amount of such New Notes, plus accrued and unpaid
interest, if any, to the date of purchase (the "Change of Control Purchase
Date"), pursuant to the offer described below (the "Change of Control Offer")
and in accordance with the other procedures set forth in the Indenture.
Within 30 days of any Change of Control, the Company shall notify the
Trustee thereof and give written notice of such Change of Control to each
holder of New Notes, by first-class mail, postage prepaid, at his address
appearing in the security register, stating, among other things, that a
Change of Control has occurred and the date of such event, the circumstances
and relevant facts regarding such Change of Control (including, but not
limited to, information with respect to pro forma historical income, cash
flow and capitalization after giving effect to such Change of Control); the
purchase price and the purchase date which shall be fixed by the Company on a
business day no earlier than 30 days nor later than 60 days from the date
such notice is mailed, or such later date as is necessary to comply with
requirements under the Exchange Act; that any New Note not tendered will
continue to accrue interest; that, unless the Company defaults in the payment
of the Change of Control Purchase Price, any New Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest after
the Change of Control Purchase Date; and certain other procedures that a
holder of New Notes must follow to accept a Change of Control Offer or to
withdraw such acceptance. (Section 1015)
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the New Notes that might be delivered by holders of
the New Notes seeking to accept the Change of Control Offer. The failure of
the Company to make or consummate the Change of Control Offer or pay the
Change of Control Purchase Price when due will give the Trustee and the
holders of the New Notes the rights described under "Events of Default."
The term "all or substantially all" as used in the definition of "Change
of Control" has not been interpreted under New York law (which is the
governing law of the Indenture) to represent a specific quantitative test. As
a consequence, in the event the holders of the New Notes elected to exercise
their rights under the Indenture and the Company elected to contest such
election, there could be no assurance as to how a court interpreting New York
law would interpret the phrase.
The existence of a holder's right to require the Company to repurchase
such holder's New Notes upon a Change of Control may deter a third party from
acquiring the Company in a transaction which constitutes a Change of Control.
The Company will comply with the applicable tender offer rules, including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws
or regulations in connection with a Change of Control Offer.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all the New Notes validly tendered and not withdrawn
under such Change of Control Offer.
Optional Redemption Upon Change of Control. The New Notes will be
redeemable, at the option of the Company, in whole or in part at any time
within 180 days after a Change of Control upon not less than 30 nor more than
60 days' prior notice to each holder of New Notes to be redeemed, at a
redemption price equal to the sum of (i) the then outstanding principal
amount thereof plus (ii) accrued and unpaid interest, if any, to the
redemption date plus (iii) the Applicable Premium.
"Applicable Premium" with respect to the New Notes is defined as the
greater of (i) 1.0% of the then outstanding principal amount of such New
Notes and (ii) the excess of (A) the present value of the required interest
and principal payments due on such New Notes, computed using a discount rate
equal to the Treasury Rate plus the Applicable Spread, over (B) the then
outstanding principal amount of such New Notes.
"Applicable Spread" is defined as 75 basis points.
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"Treasury Rate" is defined as the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical
Release H.15 (519) which has become publicly available at least two business
days prior to the date fixed for redemption of the New Notes following a
Change of Control (or, if such Statistical Release is no longer published,
any publicly available source of similar market data) most nearly equal to
the then remaining Average Life to Stated Maturity of the New Notes;
provided, that if the Average Life to Stated Maturity of the New Notes is not
equal to the constant maturity of a United States Treasury security for which
a weekly average yield is given, the Treasury Rate shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year) from
the weekly average yields of United States Treasury securities for which such
yields are given, except that if the Average Life to Stated Maturity of the
New Notes 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.
RANKING
The New Notes will be unsecured senior obligations of the Company, and the
Indebtedness represented by the New Notes and the payment of principal of,
premium, if any, and interest on the New Notes will rank pari passu in right
of payment with all other existing and future senior indebtedness of the
Company and senior in right of payment to all existing and future
Subordinated Indebtedness of the Company. The New Notes will be effectively
subordinated to secured Indebtedness of the Company as to the assets securing
such Indebtedness, including any Indebtedness under the New Credit Facility.
As of March 30, 1997, on a pro forma basis, after giving effect to the
Recapitalization, the Company would have had no Indebtedness outstanding
other than the New Notes.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Indebtedness. The Company will not, and will not permit any
of its Subsidiaries to, create, issue, incur, assume, guarantee or otherwise
in any manner become directly or indirectly liable for the payment of or
otherwise incur (collectively, "incur"), any Indebtedness (including any
Acquired Indebtedness but excluding Permitted Indebtedness), unless such
Indebtedness is incurred by the Company or any Guarantor or constitutes
Acquired Indebtedness of a Subsidiary and, in each case, the Company's
Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters
for which financial statements are available immediately preceding the
incurrence of such Indebtedness taken as one period (and after giving pro
forma effect to (i) the incurrence of such Indebtedness and (if applicable)
the application of the net proceeds therefrom, including to refinance other
Indebtedness, as if such Indebtedness was incurred, and the application of
such proceeds occurred, on the first day of such applicable period; (ii) the
incurrence, repayment or retirement of any other Indebtedness by the Company
and its Subsidiaries since the first day of such applicable period as if such
Indebtedness was incurred, repaid or retired at the beginning of such
applicable period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based upon
the average daily balance of such Indebtedness during such applicable
period); (iii) in the case of Acquired Indebtedness or any acquisition
occurring at the time of the incurrence of such Indebtedness, the related
acquisition, assuming such acquisition had been consummated on the first day
of such applicable period; and (iv) any acquisition or disposition by the
Company and its Subsidiaries of any company or any business or any assets out
of the ordinary course of business, whether by merger, stock purchase or sale
or asset purchase or sale, or any related repayment of Indebtedness, in each
case since the first day of such applicable period, assuming such acquisition
or disposition had been consummated on the first day of such applicable
period) is at least equal to or greater than 2.00:1. (Section 1008)
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution to holders
of, any shares of the Company's Capital Stock (other than dividends or
distributions payable solely in shares of its Qualified Capital Stock or
in options, warrants or other rights to acquire shares of such Qualified
Capital Stock);
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(ii) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, the Company's Capital Stock or any Capital Stock of any
Affiliate of the Company (other than Capital Stock of any Wholly Owned
Subsidiary of the Company) or options, warrants or other rights to acquire
such Capital Stock;
(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Subordinated Indebtedness;
(iv) declare or pay any dividend or distribution on any Capital Stock of
any Subsidiary to any Person (other than (a) to the Company or any of its
Wholly Owned Subsidiaries or (b) to all holders of Capital Stock of such
Subsidiary on a pro rata basis); or
(v) make any Investment in any Person (other than any Permitted
Investments)
(any of the foregoing actions described in clauses (i) through (v), other
than any such action that is a Permitted Payment (as defined below),
collectively, "Restricted Payments") (the amount of any such Restricted
Payment, if other than cash, as determined by the board of directors of the
Company, whose determination shall be conclusive and evidenced by a board
resolution), unless (1) immediately before and immediately after giving
effect to such proposed Restricted Payment on a pro forma basis, no Default
or Event of Default shall have occurred and be continuing and such Restricted
Payment shall not be an event which is, or after notice or lapse of time or
both, would be, an "event of default" under the terms of any Indebtedness of
the Company or its Subsidiaries; (2) immediately before and immediately after
giving effect to such Restricted Payment on a pro forma basis, the Company
could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the provisions described under "--Limitation on
Indebtedness;" and (3) after giving effect to the proposed Restricted
Payment, the aggregate amount of all such Restricted Payments declared or
made after the date of the Indenture, does not exceed the sum of:
(A) 50% of the aggregate Consolidated Net Income of the Company accrued
on a cumulative basis during the period beginning on the first day of the
fiscal quarter beginning after the date of the Indenture and ending on the
last day of the Company's last fiscal quarter ending prior to the date of
the Restricted Payment (or, if such aggregate cumulative Consolidated Net
Income shall be a loss, minus 100% of such loss);
(B) the aggregate Net Cash Proceeds received after the date of the
Indenture by the Company either (x) as capital contributions in the form
of common equity to the Company or (y) from the issuance or sale (other
than to any of its Subsidiaries) of Qualified Capital Stock of the Company
or any options, warrants or rights to purchase such Qualified Capital
Stock of the Company (except, in each case, to the extent such proceeds
are used to purchase, redeem or otherwise retire Capital Stock or
Subordinated Indebtedness as set forth below in clause (ii) or (iii) of
paragraph (b) below);
(C) the aggregate Net Cash Proceeds received after the date of the
Indenture by the Company (other than from any of its Subsidiaries) upon
the exercise of any options, warrants or rights to purchase Qualified
Capital Stock of the Company;
(D) the aggregate Net Cash Proceeds received after the date of the
Indenture by the Company from the conversion or exchange, if any, of debt
securities or Redeemable Capital Stock of the Company or its Subsidiaries
into or for Qualified Capital Stock of the Company plus, to the extent
such debt securities or Redeemable Capital Stock were issued after the
date of the Indenture, the aggregate of Net Cash Proceeds from their
original issuance; and
(E) in the case of the disposition or repayment of any Investment
constituting a Restricted Payment made after the date of the Indenture, an
amount equal to the lesser of the return of capital with respect to such
Investment and the initial amount of such Investment, in either case, less
the cost of the disposition of such Investment.
(b) Notwithstanding the foregoing, and in the case of clauses (ii) through
(viii) below, so long as there is no Default or Event of Default continuing,
the foregoing provisions shall not prohibit the following actions (each of
clauses (i) through (viii) being referred to as a "Permitted Payment"):
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(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment was
permitted by the provisions of paragraph (a) of this Section and such
payment shall have been deemed to have been paid on such date of
declaration and shall not have been deemed a "Permitted Payment" for
purposes of the calculation required by paragraph (a) of this Section;
(ii) the repurchase, redemption, or other acquisition or retirement for
value of any shares of any class of Capital Stock of the Company in
exchange for (including any such exchange pursuant to the exercise of a
conversion right or privilege in connection with which cash is paid in
lieu of the issuance of fractional shares or scrip), or out of the Net
Cash Proceeds of a substantially concurrent issuance and sale for cash
(other than to a Subsidiary) of, other shares of Qualified Capital Stock
of the Company; provided that the Net Cash Proceeds from the issuance of
such shares of Qualified Capital Stock are excluded from clause (3)(B) of
paragraph (a) of this Section;
(iii) the repurchase, redemption, defeasance, retirement or acquisition
for value or payment of principal of any Subordinated Indebtedness or
Redeemable Capital Stock in exchange for, or in an amount not in excess of
the Net Cash Proceeds of, a substantially concurrent issuance and sale for
cash (other than to any Subsidiary of the Company) of any Qualified
Capital Stock of the Company, provided that the Net Cash Proceeds from the
issuance of such shares of Qualified Capital Stock are excluded from
clause (3)(B) of paragraph (a) of this Section;
(iv) the repurchase, redemption, defeasance, retirement, refinancing,
acquisition for value or payment of principal of any Subordinated
Indebtedness (other than Redeemable Capital Stock) (a "refinancing")
through the substantially concurrent issuance of new Subordinated
Indebtedness of the Company, provided that any such new Subordinated
Indebtedness (1) shall be in a principal amount that does not exceed the
principal amount so refinanced (or, if such Subordinated Indebtedness
provides for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration thereof, then such lesser
amount as of the date of determination), plus the lesser of (I) the stated
amount of any premium or other payment required to be paid in connection
with such a refinancing pursuant to the terms of the Indebtedness being
refinanced or (II) the amount of premium or other payment actually paid at
such time to refinance the Indebtedness, plus, in either case, the amount
of expenses of the Company incurred in connection with such refinancing;
(2) has an Average Life to Stated Maturity greater than the remaining
Average Life to Stated Maturity of the New Notes; (3) has a Stated
Maturity for its final scheduled principal payment later than the Stated
Maturity for the final scheduled principal payment of the New Notes; and
(4) is expressly subordinated in right of payment to the New Notes at
least to the same extent as the Subordinated Indebtedness to be
refinanced;
(v) the repurchase, redemption, defeasance, retirement, refinancing,
acquisition for value or payment of any Redeemable Capital Stock through
the substantially concurrent issuance of new Redeemable Capital Stock of
the Company, provided that any such new Redeemable Capital Stock (1) shall
have an aggregate liquidation preference that does not exceed the
aggregate liquidation preference of the amount so refinanced; (2) has an
Average Life to Stated Maturity greater than the remaining Average Life to
Stated Maturity of the New Notes; and (3) has a Stated Maturity later than
the Stated Maturity for the final scheduled principal payment of the New
Notes;
(vi) the repurchase of shares of, or options to purchase shares of,
common stock of the Company or any of its Subsidiaries from employees,
former employees, directors or former directors of the Company or any of
its Subsidiaries (or permitted transferees of such employees, former
employees, directors or former directors), pursuant to the
Recapitalization, the terms of the agreements (including employment
agreements) or plans (or amendments thereto) approved by the Board of
Directors under which such individuals purchase or sell or are granted the
option to purchase or sell, shares of such common stock; provided,
however, that the aggregate amount of such repurchases in any calendar
year shall not exceed (a) $2.5 million in connection with repurchases made
in connection with the Recapitalization and (b) $1 million in any calendar
year with respect to repurchases not made in connection with the
Recapitalization;
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(vii) payments made to repurchase the Existing Subordinated Notes using
funds deposited in the Escrow Account, pursuant to the Recapitalization;
and
(viii) payments made to repurchase Capital Stock of the Company or as
dividends on Capital Stock made within six months of the date of the
Indenture in an amount not to exceed the sum of (x) the Net Cash Proceeds
received by the Company from the sale of the New Notes and (y) borrowings
under the New Credit Facility of up to $2 million made within 30 days of
the date of the Indenture, less any amounts previously used by the Company
(a) to repurchase Capital Stock of the Company, (b) to pay dividends on
Capital Stock of the Company, (c) to repay Indebtedness of the Company, or
(d) to settle or repurchase existing stock options, or (e) as payments to
holders of stock options to enable such holders to pay taxes, in each
case, from and including the date of the Indenture; provided that such
payments may not be made so long as Indebtedness outstanding prior to the
date of the Indenture remains outstanding. (Section 1009)
Limitation on Transactions with Affiliates. The Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly, enter into any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with
or for the benefit of any Affiliate of the Company (other than the Company or
a Wholly Owned Subsidiary) unless such transaction or series of related
transactions is entered into in good faith and in writing and (a) such
transaction or series of related transactions is on terms that are no less
favorable to the Company or such Subsidiary, as the case may be, than those
that would be available in a comparable transaction in arm's-length dealings
with an unrelated third party, (b) with respect to any transaction or series
of related transactions involving aggregate value in excess of $500,000, the
Company delivers an officers' certificate to the Trustee certifying that such
transaction or series of related transactions complies with clause (a) above,
and (c) with respect to any transaction or series of related transactions
involving aggregate value in excess of $1 million, either (A) such
transaction or series of related transactions has been approved by a majority
of the Disinterested Directors of the Company, or in the event there is only
one Disinterested Director, by such Disinterested Director, or (B) the
Company delivers to the Trustee a written opinion of an investment banking
firm of national standing or other recognized independent expert with
experience appraising the terms and conditions of the type of transaction or
series of related transactions for which an opinion is required stating that
the transactions or series of related transactions is fair to the Company or
such Subsidiary from a financial point of view; provided, however, that this
provision shall not apply to (i) any transaction with an officer or director
of the Company entered into in the ordinary course of business (including
compensation and employee benefit arrangements with any officer, director or
employee of the Company, including under any stock option or stock incentive
plans), (ii) any transaction with CVG Industria Venezolana de Aluminio C.A.
("Venalum") in accordance with the terms of a Venalum Purchase and Sale
Agreement (other than in connection with the entering into of any such
agreement or any amendments, renewal, supplement or modification thereof); or
(iii) payments made to Gibbons, Goodwin, van Amerongen for financial advisory
and other services in an amount not to exceed $500,000 in any calendar year.
(Section 1010)
Limitation on Liens. The Company will not, and will not permit any
Subsidiary to, directly or indirectly, create, incur or affirm any Lien of
any kind upon any property or assets (including any intercompany notes) of
the Company or any Subsidiary owned on the date of the Indenture or acquired
after the date of the Indenture, or any income or profits therefrom, unless
the New Notes are directly secured equally and ratably with (or, in the case
of Subordinated Indebtedness, prior or senior thereto, with the same relative
priority as the New Notes shall have with respect to such Subordinated
Indebtedness) the obligation or liability secured by such Lien except for any
Permitted Liens. (Section 1011)
Limitation on Sale of Assets. (a) The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly, consummate an
Asset Sale unless (i) at least 85% of the consideration from such Asset Sale
is received in cash and (ii) the Company or such Subsidiary receives
consideration at the time of such Asset Sale at least equal to the Fair
Market Value of the shares or assets subject to such Asset Sale (as
determined by the board of directors of the Company and evidenced in a board
resolution); provided
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that in the case of an Asset Swap constituting an Asset Sale, the Company or
any such Subsidiaries shall only be required to receive in cash an amount
equal to at least 85% of the proceeds of the Asset Sale which do not consist
of like kind assets acquired in the Asset Swap.
(b) If all or a portion of the Net Cash Proceeds of any Asset Sale are not
required to be applied to repay permanently any Indebtedness under the New
Credit Facility then outstanding as required by the terms thereof, or the
Company determines not to apply such Net Cash Proceeds to the permanent
prepayment of such Indebtedness under the New Credit Facility, or if no such
Indebtedness under the New Credit Facility is then outstanding, then the
Company or a Subsidiary may, within 270 days of the Asset Sale, invest the
Net Cash Proceeds in properties and other assets that (as determined by the
board of directors of the Company) replace the properties and assets that
were the subject of the Asset Sale or in properties and assets that will be
used in the businesses of the Company or its Subsidiaries existing on the
date of the Indenture or in businesses reasonably related thereto. The amount
of such Net Cash Proceeds not used or invested within 270 days of the Asset
Sale as set forth in this paragraph constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $7.5 million or
more, the Company will apply the Excess Proceeds to the repayment of the New
Notes and any other Pari Passu Indebtedness outstanding with similar
provisions requiring the Company to make an offer to purchase such
Indebtedness with the proceeds from any Asset Sale as follows: (A) the
Company will make an offer to purchase (an "Offer") from all holders of the
New Notes in accordance with the procedures set forth in the Indenture in the
maximum principal amount (expressed as a multiple of $1,000) of New Notes
that may be purchased out of an amount (the "Note Amount") equal to the
product of such Excess Proceeds multiplied by a fraction, the numerator of
which is the outstanding principal amount of the New Notes, and the
denominator of which is the sum of the outstanding principal amount of the
New Notes and such Pari Passu Indebtedness (subject to proration in the event
such amount is less than the aggregate Offered Price (as defined herein) of
all New Notes tendered) and (B) to the extent required by such Pari Passu
Indebtedness to permanently reduce the principal amount of such Pari Passu
Indebtedness, the Company will make an offer to purchase or otherwise
repurchase or redeem Pari Passu Indebtedness (a "Pari Passu Offer") in an
amount (the "Pari Passu Debt Amount") equal to the excess of the Excess
Proceeds over the Note Amount; provided that in no event will the Company be
required to make a Pari Passu Offer in a Pari Passu Debt Amount exceeding the
principal amount of such Pari Passu Indebtedness plus the amount of any
premium required to be paid to repurchase such Pari Passu Indebtedness. The
offer price for the New Notes will be payable in cash in an amount equal to
100% of the principal amount of the New Notes plus accrued and unpaid
interest, if any, to the date (the "Offer Date") such Offer is consummated
(the "Offered Price"), in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate Offered Price of the New Notes
tendered pursuant to the Offer is less than the Note Amount relating thereto
or the aggregate amount of Pari Passu Indebtedness that is purchased in a
Pari Passu Offer is less than the Pari Passu Debt Amount, the Company will
use any remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of New Notes and Pari Passu Indebtedness
surrendered by holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the New Notes to be purchased on a pro rata basis. Upon
the completion of the purchase of all the New Notes tendered pursuant to an
Offer and the completion of a Pari Passu Offer, the amount of Excess
Proceeds, if any, shall be reset at zero.
(d) When the aggregate amount of Excess Proceeds exceeds $7.5 million,
such Excess Proceeds will, prior to any purchase of New Notes described in
paragraph (c) above, be set aside by the Company in a separate account
pending (i) deposit with the depository or a paying agent of the amount
required to purchase the New Notes tendered in an Offer or Pari Passu
Indebtedness tendered in a Pari Passu Offer, (ii) delivery by the Company of
the Offered Price to the holders of the New Notes tendered in an Offer or
Pari Passu Indebtedness tendered in a Pari Passu Offer and (iii) the
completion of the purchase of all the New Notes tendered pursuant to the
Offer and the completion of the Pari Passu Offer. Such Excess Proceeds may be
invested in Temporary Cash Investments, provided that the maturity date of
any such investment made after the amount of Excess Proceeds exceeds $7.5
million shall not be later than the
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Offer Date. The Company shall be entitled to any interest or dividends
accrued, earned or paid on such Temporary Cash Investments; provided that the
Company shall not withdraw such interest from the separate account if an
Event of Default has occurred and is continuing.
(e) If the Company becomes obligated to make an Offer pursuant to clause
(c) above, the New Notes and the Pari Passu Indebtedness shall be purchased
by the Company, at the option of the holders thereof, in whole or in part in
integral multiples of $1,000, on a date that is not earlier than 30 days and
not later than 60 days from the date the notice of the Offer is given to
holders, or such later date as may be necessary for the Company to comply
with the requirements under the Exchange Act.
(f) The Company will comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws or regulations in connection with an Offer. (Section 1012)
(g) The Company will not, and will not permit any Subsidiary to, create or
permit to exist or become effective any restriction (other than restrictions
existing under Pari Passu Indebtedness) that would materially impair the
ability of the Company to make an Offer to purchase the New Notes or, if such
Offer is made, to pay for the New Notes tendered for purchase. (Section 1012)
Limitation on Issuances of Guarantees of Indebtedness. (a) The Company
will not permit any Subsidiary, directly or indirectly, to guarantee, assume
or in any other manner become liable with respect to any Pari Passu
Indebtedness or Subordinated Indebtedness of the Company unless such
Subsidiary simultaneously executes and delivers a supplemental indenture to
the Indenture providing for a Guarantee of the New Notes on the same terms as
the guarantee of such Indebtedness except that (A) such guarantee need not be
secured unless required pursuant to "--Limitation on Liens" and (B) if such
Indebtedness is by its terms expressly subordinated to the New Notes, any
such assumption, guarantee or other liability of such Subsidiary with respect
to such Indebtedness shall be subordinated to such Subsidiary's Guarantee of
the New Notes at least to the same extent as such Indebtedness is
subordinated to the New Notes.
(b) Notwithstanding the foregoing, any Guarantee by a Subsidiary of the
New Notes shall provide by its terms that it (and all Liens securing the
same) shall be automatically and unconditionally released and discharged upon
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 Subsidiary, which transaction is in compliance with
the terms of the Indenture and pursuant to which transaction such Subsidiary
is released from all guarantees, if any, by it of other Indebtedness of the
Company or any Subsidiaries. (Section 1013)
Restriction on Transfer of Assets. The Company will not sell, convey,
transfer or otherwise dispose of its assets or property to any of its
Subsidiaries, except for sales, conveyances, transfers or other dispositions
(a) made in the ordinary course of business or (b) to any Subsidiary if such
Subsidiary simultaneously executes and delivers a supplemental indenture to
the Indenture providing for a Guarantee of the payment of the New Notes by
such Subsidiary on a senior basis. For purposes of this provision, any sale,
conveyance, transfer, lease or other disposition of property or assets,
having a Fair Market Value in excess of (a) $1,000,000 for any sale,
conveyance, transfer or disposition or series of related sales, conveyances,
transfers, leases and dispositions and (b) $5,000,000 in the aggregate for
all such sales, conveyances, transfers, leases or dispositions in any fiscal
year of the Company, shall not be considered "in the ordinary course of
business." (Section 1014)
Limitation on Sale and Leaseback Transactions. The Company will not, and
will not permit any Subsidiary of the Company to, directly or indirectly,
enter into any sale and leaseback transaction with respect to any property or
assets (whether now owned or hereafter acquired), except for a sale and
leaseback transaction not exceeding 365 days, unless (i) the sale or transfer
of such property or assets to be leased is treated as an Asset Sale and
complies with the "--Limitation on Sale of Assets" covenant and (ii) the
Company or such Subsidiary would be entitled under the "--Limitation on
Indebtedness" covenant to incur any Indebtedness (with the lease obligations
being treated as Indebtedness for purposes of ascertaining compliance with
this covenant) in respect of such sale and leaseback transaction. (Section
1016)
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Limitation on Subsidiary Capital Stock. The Company will not permit (a)
any Subsidiary of the Company to issue any Capital Stock, except for (i)
Capital Stock issued or sold to, held by or transferred to the Company or a
Wholly Owned Subsidiary, and (ii) Capital Stock issued by a Person prior to
the time (A) such Person becomes a Subsidiary, (B) such Person merges with or
into a Subsidiary or (C) a Subsidiary merges with or into such Person;
provided that such Capital Stock was not issued or incurred by such Person in
anticipation of the type of transaction contemplated by subclause (A), (B) or
(C) or (b) any Person (other than the Company or a Wholly Owned Subsidiary)
to acquire Capital Stock of any Subsidiary from the Company or any
Subsidiary, except, in the case of clause (a) or (b), upon the acquisition of
all the outstanding Capital Stock of such Subsidiary in accordance with the
terms of the Indenture. (Section 1017)
Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create any consensual encumbrance or
restriction on the ability of any Subsidiary to (i) pay dividends or make any
other distribution on its Capital Stock, (ii) pay any Indebtedness owed to
the Company or any other Subsidiary, (iii) make any Investment in the Company
or any other Subsidiary or (iv) transfer any of its properties or assets to
the Company or any other Subsidiary, except for: (a) any encumbrance or
restriction pursuant to any agreement in effect on the date of the Indenture
and listed on a schedule to the Indenture; (b) any encumbrance or
restriction, with respect to a Subsidiary that is not a Subsidiary of the
Company on the date of the Indenture, in existence at the time such Person
becomes a Subsidiary of the Company and not incurred in connection with, or
in contemplation of, such Person becoming a Subsidiary; and (c) any
encumbrance or restriction existing under any agreement that extends, renews,
refinances or replaces the agreements containing the encumbrances or
restrictions in the foregoing clauses (a) and (b), or in this clause (c),
provided that the terms and conditions of any such encumbrances or
restrictions are no more restrictive in any material respect than those under
or pursuant to the agreement evidencing the Indebtedness so extended,
renewed, refinanced or replaced. (Section 1018)
Limitations on Unrestricted Subsidiaries. The Company will not make, and
will not permit its Subsidiaries to make, any Investment in Unrestricted
Subsidiaries if, at the time thereof, the aggregate amount of such
Investments would exceed the amount of Restricted Payments then permitted to
be made pursuant to the "--Limitation on Restricted Payments" covenant. Any
Investments in Unrestricted Subsidiaries permitted to be made pursuant to
this covenant (i) will be treated as a Restricted Payment in calculating the
amount of Restricted Payments made by the Company and (ii) may be made in
cash or property. (Section 1019)
Provision of Financial Statements. After the earlier to occur of the
consummation of the Exchange Offer and the 165th calendar day following the
date of original issue of the Old Notes, whether or not the Company is
subject to Section 13(a) or 15(d) of the Exchange Act, the Company will, to
the extent permitted under the Exchange Act, file with the Commission the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the Commission pursuant to Sections 13(a) or
15(d) if the Company were so subject, such documents to be filed with the
Commission on or prior to the date (the "Required Filing Date") by which the
Company would have been required so to file such documents if the Company
were so subject. The Company will also in any event (x) within 15 days of
each Required Filing Date (whether or not the Exchange Offer has occurred or
165 days has passed since the issuance of the Old Notes) (i) transmit by mail
to all holders, as their names and addresses appear in the security register,
without cost to such holders and (ii) file with the Trustee copies of the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the Commission pursuant to Sections 13(a) or
15(d) of the Exchange Act if the Company were subject to either of such
Sections and (y) if filing such documents by the Company with the Commission
is not permitted under the Exchange Act, promptly upon written request,
supply copies of such documents to any prospective holder at the Company's
cost. If any Guarantor's financial statements would be required to be
included in the financial statements filed or delivered pursuant to the
Indenture if the Company were subject to Section 13(a) or 15(d) of the
Exchange Act, the Company shall include such Guarantor's financial statements
in any filing or delivery pursuant to the Indenture. (Section 1020)
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Additional Covenants. The Indenture also contains covenants with respect
to the following matters: (i) payment of principal, premium and interest;
(ii) maintenance of an office or agency in The City of New York; (iii)
arrangements regarding the handling of money held in trust; (iv) maintenance
of corporate existence; (v) payment of taxes and other claims; (vi)
maintenance of properties; and (vii) maintenance of insurance.
CONSOLIDATION, MERGER, SALE OF ASSETS
The Company will not, in a single transaction or through a series of
related transactions, consolidate with or merge with or into any other Person
or sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to any Person or group of
affiliated Persons, or permit any of its Subsidiaries to enter into any such
transaction or series of related transactions if such transaction or series
of related transactions, in the aggregate, would result in a sale,
assignment, conveyance, transfer, lease or disposition of all or
substantially all of the properties and assets of the Company and its
Subsidiaries on a Consolidated basis to any other Person or group of
affiliated Persons, unless at the time and after giving effect thereto (i)
either (a) the Company will be the continuing corporation in the case of a
consolidation or merger involving the Company or (b) the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or the Person which acquires by sale, assignment, conveyance,
transfer, lease or disposition all or substantially all of the properties and
assets of the Company and its Subsidiaries on a Consolidated basis (the
"Surviving Entity") will be a corporation duly organized and validly existing
under the laws of the United States of America, any state thereof or the
District of Columbia and such Person expressly assumes, by a supplemental
indenture, in a form reasonably satisfactory to the Trustee, all the
obligations of the Company under the New Notes and the Indenture, as the case
may be, and the New Notes and the Indenture will remain in full force and
effect as so supplemented; (ii) immediately before and immediately after
giving effect to such transaction on a pro forma basis (and treating any
Indebtedness not previously an obligation of the Company or any of its
Subsidiaries which becomes the obligation of the Company or any of its
Subsidiaries as a result of such transaction as having been incurred at the
time of such transaction), no Default or Event of Default will have occurred
and be continuing; (iii) immediately before and immediately after giving
effect to such transaction on a pro forma basis (on the assumption that the
transaction occurred on the first day of the four-quarter period for which
financial statements are available ending immediately prior to the
consummation of such transaction with the appropriate adjustments with
respect to the transaction being included in such pro forma calculation), the
Company (or the Surviving Entity if the Company is not the continuing obligor
under the Indenture) could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the provisions of "--Certain Covenants --
Limitation on Indebtedness"; (iv) at the time of the transaction each
Guarantor, if any, unless it is the other party to the transactions described
above, will have by supplemental indenture confirmed that its Guarantee shall
apply to such Person's obligations under the Indenture and the New Notes; (v)
at the time of the transaction if any of the property or assets of the
Company or any of its Subsidiaries would thereupon become subject to any
Lien, the provisions of "--Certain Covenants -- Limitation on Liens" are
complied with; and (vi) at the time of the transaction the Company or the
Surviving Entity will have delivered, or caused to be delivered, to the
Trustee, in form and substance reasonably satisfactory to the Trustee, an
officers' certificate and an opinion of counsel, each to the effect that such
consolidation, merger, transfer, sale, assignment, conveyance, transfer,
lease or other transaction and the supplemental indenture in respect thereof
comply with the Indenture and that all conditions precedent therein provided
for relating to such transaction have been complied with. (Section 801)
Each Guarantor, if any, will not, in a single transaction or through a
series of related transactions, consolidate with or merge with or into any
other Person (other than the Company or any Guarantor) or sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of
its properties and assets on a Consolidated basis to any Person or group of
affiliated Persons (other than the Company or any Guarantor) or permit any of
its Subsidiaries to enter into any such transaction or series of related
transactions if such transaction or series of related transactions, in the
aggregate, would result in a sale, assignment, conveyance, transfer, lease or
disposition of all or substantially all of the properties and assets of the
Guarantor and its Subsidiaries on a Consolidated basis to any other Person or
group of affiliated
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Persons (other than the Company or any Guarantor), unless at the time and
after giving effect thereto (i) either (a) the Guarantor will be the
continuing corporation in the case of a consolidation or merger involving the
Guarantor or (b) the Person (if other than the Guarantor) formed by such
consolidation or into which such Guarantor is merged or the Person which
acquires by sale, assignment, conveyance, transfer, lease or disposition all
or substantially all of the properties and assets of the Guarantor and its
Subsidiaries on a Consolidated basis (the "Surviving Guarantor Entity") will
be a corporation duly organized and validly existing under the laws of the
United States of America, any state thereof or the District of Columbia and
such Person expressly assumes, by a supplemental indenture, in a form
reasonably satisfactory to the Trustee, all the obligations of such Guarantor
under its Guarantee of the New Notes and the Indenture and such Guarantee
will remain in full force and effect; (ii) immediately before and immediately
after giving effect to such transaction on a pro forma basis, no Default or
Event of Default will have occurred and be continuing; and (iii) at the time
of the transaction such Guarantor or the Surviving Guarantor Entity will have
delivered, or caused to be delivered, to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an officers' certificate and an
opinion of counsel, each to the effect that such consolidation, merger,
transfer, sale, assignment, conveyance, lease or other transaction and the
supplemental indenture in respect thereof comply with the Indenture and that
all conditions precedent therein provided for relating to such transaction
have been complied with; provided, however, that this paragraph shall not
apply to any Guarantor whose Guarantee of the New Notes is unconditionally
released and discharged in accordance with paragraph (b) under the provisions
of "--Certain Covenants -- Limitation on Issuances of Guarantees of
Indebtedness." (Section 801)
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the two immediately preceding
paragraphs in which the Company or any Guarantor, as the case may be, is not
the continuing corporation, the successor Person formed or remaining shall
succeed to, and be substituted for, and may exercise every right and power
of, the Company, and the Company or any Guarantor, as the case may be, would
be discharged from all obligations and covenants under the Indenture and the
New Notes or its Guarantee, as the case may be. (Section 802)
EVENTS OF DEFAULT
An Event of Default will occur under the Indenture if:
(i) there shall be a default in the payment of any interest on any New
Note when it becomes due and payable, and such default shall continue for
a period of 30 days;
(ii) there shall be a default in the payment of the principal of (or
premium, if any, on) any New Note at its Maturity (upon acceleration,
optional or mandatory redemption, required repurchase or otherwise);
(iii) (a) there shall be a default in the performance, or breach, of any
covenant or agreement of the Company or any Guarantor under the Indenture
or any Guarantee (other than a default in the performance, or breach, of a
covenant or agreement which is specifically dealt with in clause (i), (ii)
or in clause (b), (c) or (d) of this clause (iii)) and such default or
breach shall continue for a period of 30 days after written notice has
been given, by certified mail, (x) to the Company by the Trustee or (y) to
the Company and the Trustee by the holders of at least 25% in aggregate
principal amount of the outstanding New Notes; (b) there shall be a
default in the performance or breach of the provisions described in
"--Consolidation, Merger, Sale of Assets;" (c) the Company shall have
failed to make or consummate an Offer in accordance with the provisions of
"--Certain Covenants -- Limitation on Sale of Assets;" or (d) the Company
shall have failed to make or consummate a Change of Control Offer in
accordance with the provisions of "--Purchase of New Notes Upon a Change
of Control;"
(iv) (a) any default in the payment of the principal, premium, if any, or
interest on any Indebtedness shall have occurred under any of the
agreements, indentures or instruments under which the Company, any
Guarantor or any Subsidiary then has outstanding Indebtedness in excess of
$5 million when the same shall become due and payable in full and such
default shall have continued after any applicable grace period and shall
not have been cured or waived and, if not
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already matured at its final maturity in accordance with its terms, the
holder of such Indebtedness shall have the right to accelerate such
Indebtedness or (b) an event of default as defined in any of the
agreements, indentures or instruments described in clause (a) of this
clause (iv) shall have occurred and the Indebtedness thereunder, if not
already matured at its final maturity in accordance with its terms, shall
have been accelerated;
(v) any Guarantee shall for any reason cease to be, or shall for any
reason be asserted in writing by any Guarantor or the Company not to be,
in full force and effect and enforceable in accordance with its terms,
except to the extent contemplated by the Indenture and any such Guarantee;
(vi) one or more judgments, orders or decrees for the payment of money in
excess of $2 million, either individually or in the aggregate, shall be
rendered against the Company, any Guarantor or any Subsidiary or any of
their respective properties and shall not be discharged and either (a) any
creditor shall have commenced an enforcement proceeding upon such
judgment, order or decree or (b) there shall have been a period of 60
consecutive days during which a stay of enforcement of such judgment or
order, by reason of an appeal or otherwise, shall not be in effect;
(vii) any holder or holders of at least $2 million in aggregate principal
amount of Indebtedness of the Company, any Guarantor or any Subsidiary
after a default under such Indebtedness shall notify the Trustee of the
intended sale or disposition of any assets of the Company, any Guarantor
or any Subsidiary that have been pledged to or for the benefit of such
holder or holders to secure such Indebtedness or shall commence
proceedings, or take any action (including by way of set-off), to retain
in satisfaction of such Indebtedness or to collect on, seize, dispose of
or apply in satisfaction of Indebtedness, assets of the Company, any
Guarantor or any Subsidiary (including funds on deposit or held pursuant
to lock-box and other similar arrangements);
(viii) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of the
Company, any Guarantor or any Significant Subsidiary in an involuntary
case or proceeding under any applicable Bankruptcy Law or (b) a decree or
order adjudging the Company, any Guarantor or any Significant Subsidiary
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment
or composition of or in respect of the Company, any Guarantor or any
Significant Subsidiary under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company, any Guarantor or
any Significant Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of their respective
affairs, and any such decree or order for relief shall continue to be in
effect, or any such other decree or order shall be unstayed and in effect,
for a period of 60 consecutive days; or
(ix) (a) the Company, any Guarantor or any Significant Subsidiary
commences a voluntary case or proceeding under any applicable Bankruptcy
Law or any other case or proceeding to be adjudicated bankrupt or
insolvent, (b) the Company, any Guarantor or any Significant Subsidiary
consents to the entry of a decree or order for relief in respect of the
Company, such Guarantor or such Significant Subsidiary in an involuntary
case or proceeding under any applicable Bankruptcy Law or to the
commencement of any bankruptcy or insolvency case or proceeding against
it, (c) the Company, any Guarantor or any Significant Subsidiary files a
petition or answer or consent seeking reorganization or relief under any
applicable federal or state law, (d) the Company, any Guarantor or any
Significant Subsidiary (I) consents to the filing of such petition or the
appointment of, or taking possession by, a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the
Company, any Guarantor or such Significant Subsidiary or of any
substantial part of their respective properties, (II) makes an assignment
for the benefit of creditors or (III) admits in writing its inability to
pay its debts generally as they become due or (e) the Company, any
Guarantor or any Significant Subsidiary takes any corporate action in
furtherance of any such actions in this paragraph (ix). (Section 501)
If an Event of Default (other than as specified in clauses (viii) and (ix)
of the prior paragraph) shall occur and be continuing with respect to the
Indenture, the Trustee or the holders of not less than 25% in aggregate
principal amount of the New Notes then outstanding may, and the Trustee at
the request of such
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holders shall, declare all unpaid principal of, premium, if any, and accrued
interest on all New Notes to be due and payable, by a notice in writing to
the Company (and to the Trustee if given by the holders of the New Notes) and
upon any such declaration, such principal, premium, if any, and interest
shall become due and payable immediately. If an Event of Default specified in
clause (viii) or (ix) of the prior paragraph occurs with respect to the
Company and is continuing, then all the New Notes shall ipso facto become and
be due and payable immediately in an amount equal to the principal amount of
the New Notes, together with accrued and unpaid interest, if any, to the date
the New Notes become due and payable, without any declaration or other act on
the part of the Trustee or any holder. Thereupon, the Trustee may, at its
discretion, proceed to protect and enforce the rights of the holders of New
Notes by appropriate judicial proceedings.
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of New Notes outstanding by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if (a) the Company has paid or deposited with the
Trustee a sum sufficient to pay (i) all sums paid or advanced by the Trustee
under the Indenture and the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, (ii) all overdue
interest on all New Notes then outstanding, (iii) the principal of and
premium, if any, on any New Notes then outstanding which have become due
otherwise than by such declaration of acceleration and interest thereon at
the rate borne by the New Notes and (iv) to the extent that payment of such
interest is lawful, interest upon overdue interest at the rate borne by the
New Notes; and (b) all Events of Default, other than the non-payment of
principal of the New Notes which have become due solely by such declaration
of acceleration, have been cured or waived as provided in the Indenture. No
such rescission shall affect any subsequent default or impair any right
consequent thereon. (Section 502)
The holders of not less than a majority in aggregate principal amount of
the New Notes outstanding may on behalf of the holders of all outstanding New
Notes waive any past default under the Indenture and its consequences, except
a default in the payment of the principal of, premium, if any, or interest on
any New Note or in respect of a covenant or provision which under the
Indenture cannot be modified or amended without the consent of the holder of
each New Note affected by such modification or amendment. (Section 513)
The Company is also required to notify the Trustee within five business
days of the occurrence of any Default. The Company is required to deliver to
the Trustee, on or before a date not more than 60 days after the end of each
fiscal quarter and not more than 120 days after the end of each fiscal year,
a written statement as to compliance with the Indenture, including whether or
not any Default has occurred. (Section 1021) The Trustee is under no
obligation to exercise any of the rights or powers vested in it by the
Indenture at the request or direction of any of the holders of the New Notes
unless such holders offer to the Trustee security or indemnity satisfactory
to the Trustee against the costs, expenses and liabilities which might be
incurred thereby. (Section 603)
The Trust Indenture Act contains limitations on the rights of the Trustee,
should it become a creditor of the Company or any Guarantor, if any, to
obtain payment of claims in certain cases or to realize on certain property
received by it in respect of any such claims, as security or otherwise. The
Trustee is permitted to engage in other transactions, provided that if it
acquires any conflicting interest it must eliminate such conflict upon the
occurrence of an Event of Default or else resign.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Company may, at its option and at any time, elect to have the
obligations of the Company, any Guarantor and any other obligor upon the New
Notes discharged with respect to the outstanding New Notes ("defeasance").
Such defeasance means that the Company, any such Guarantor and any other
obligor under the Indenture shall be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding New Notes, except for (i)
the rights of holders of such outstanding New Notes to receive payments in
respect of the principal of, premium, if any, and interest on such New Notes
when such payments are due, (ii) the Company's obligations with respect to
the New Notes concerning issuing temporary New Notes, registration of New
Notes, mutilated, destroyed, lost or stolen New Notes,
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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 (iv) the 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 any 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 an Event of Default with respect to the New
Notes. In the event covenant defeasance occurs, certain events (not including
non-payment, bankruptcy and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
New Notes. (Sections 401, 402 and 403)
In order to exercise either defeasance or covenant defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the holders of the New Notes cash in United States dollars, U.S.
Government Obligations (as defined in the Indenture), or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants or a nationally
recognized investment banking firm, to pay and discharge the principal of,
premium, if any, and interest on the outstanding New Notes on the Stated
Maturity (or on any date after June 1, 2001 (such date being referred to as
the "Defeasance Redemption Date"), if at or prior to electing either
defeasance or covenant defeasance, the Company has delivered to the Trustee
an irrevocable notice to redeem all of the outstanding New Notes on the
Defeasance Redemption Date); (ii) in the case of defeasance, the Company
shall have delivered to the Trustee an opinion of independent counsel in the
United States stating that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the
date of the Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion of independent counsel in the United States shall confirm that, the
holders of the outstanding New Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance had not
occurred; (iii) in the case of covenant defeasance, the Company shall have
delivered to the Trustee an opinion of independent counsel in the United
States to the effect that the holders of the outstanding New Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such covenant defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred; (iv) no Default or Event
of Default (other than a Default or Event of Default under the Indenture
resulting from the borrowing of funds to be applied to such deposit) shall
have occurred and be continuing on the date of such deposit or insofar as
clauses (viii) or (ix) under the first paragraph under "--Events of Default"
are concerned, at any time during the period ending on the 91st day after the
date of deposit; (v) such defeasance or covenant defeasance shall not cause
the Trustee for the New Notes to have a conflicting interest as defined in
the Indenture and for purposes of the Trust Indenture Act with respect to any
securities of the Company or any Guarantor; (vi) such defeasance or covenant
defeasance shall not result in a breach or violation of, or constitute a
Default under, the Indenture or any other material agreement or instrument to
which the Company, any Guarantor or any Subsidiary is a party or by which it
is bound; (vii) such defeasance or covenant defeasance shall not result in
the trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act of 1940, as amended, unless such
trust shall be registered under such Act or exempt from registration
thereunder; (viii) the Company will have delivered to the Trustee an opinion
of independent counsel in the United States to the effect that after the 91st
day following the deposit, the trust funds will not be subject to the effect
of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; (ix) the Company shall have delivered
to the Trustee an officers' certificate stating that the deposit was not made
by the Company with the intent of preferring the holders of the New Notes or
any Guarantee over the other creditors of the Company or any Guarantor with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company, any Guarantor or others; (x) no event or condition shall exist that
would prevent the Company from making payments of the principal of, premium,
if any, and interest on the New Notes on the date of such deposit or at any
time ending on the 91st day after the date of such deposit; and (xi) the
Company will have delivered to the Trustee an officers' certificate and an
opinion of independent counsel, each stating that all conditions precedent
provided for relating to either the defeasance or the covenant defeasance, as
the case may be, have been complied with. (Section 404)
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SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
New Notes as expressly provided for in the Indenture) as to all outstanding
New Notes under the Indenture when (a) either (i) all such New Notes
theretofore authenticated and delivered (except lost, stolen or destroyed New
Notes which have been replaced or paid or New Notes whose payment has been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust as provided
for in the Indenture) have been delivered to the Trustee for cancellation or
(ii) all New Notes not theretofore delivered to the Trustee for cancellation
(x) have become due and payable, (y) will become due and payable at their
Stated Maturity within one year, or (z) are to be called for redemption
within one year under arrangements reasonably 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 has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust
an amount in United States dollars sufficient to pay and discharge the entire
indebtedness on the New Notes not theretofore delivered to the Trustee for
cancellation, including principal of, premium, if any, and accrued interest
at such Maturity, Stated Maturity or redemption date; (b) the Company or any
Guarantor has paid or caused to be paid all other sums payable under the
Indenture by the Company and any Guarantor; and (c) the Company has delivered
to the Trustee an officers' certificate and an opinion of independent counsel
each stating that (i) all conditions precedent under the Indenture relating
to the satisfaction and discharge of such Indenture have been complied with
and (ii) such satisfaction and discharge will not result in a breach or
violation of, or constitute a default under, the Indenture or any other
material agreement or instrument to which the Company, any Guarantor or any
Subsidiary is a party or by which the Company, any Guarantor or any
Subsidiary is bound. (Section 1301)
MODIFICATIONS AND AMENDMENTS
Modifications and amendments of the Indenture may be made by the Company,
each Guarantor, if any, and the Trustee with the consent of the holders of at
least a majority in aggregate principal amount of the New Notes then
outstanding; provided, however, that no such modification or amendment may,
without the consent of the holder of each outstanding New Note affected
thereby: (i) change the Stated Maturity of the principal of, or any
installment of interest on, or change to an earlier date any redemption date
of, or waive a default in the payment of the principal or interest on, any
such New Note or reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof, or change the
coin or currency in which the principal of any such New Note or any premium
or the interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the redemption date); (ii) amend,
change or modify the obligation of the Company to make and consummate a
Change of Control Offer in the event of a Change of Control in accordance
with "--Purchase of New Notes Upon a Change of Control," including, in each
case, amending, changing or modifying any definitions relating thereto; (iii)
reduce the percentage in principal amount of such outstanding New Notes, the
consent of whose holders is required for any such supplemental indenture, or
the consent of whose holders is required for any waiver or compliance with
certain provisions of the Indenture; (iv) modify any of the provisions
relating to supplemental indentures requiring the consent of holders or
relating to the waiver of past defaults or relating to the waiver of certain
covenants, except to increase the percentage of such outstanding New Notes
required for such actions or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the holder of
each such New Note affected thereby; (v) except as otherwise permitted under
"-- Consolidation, Merger, Sale of Assets," consent to the assignment or
transfer by the Company or any Guarantor of any of its rights and obligations
under the Indenture; or (vi) amend or modify any of the provisions of the
Indenture in any manner which subordinates the New Notes issued thereunder in
right of payment to any other Indebtedness of the Company or which
subordinates any Guarantee in right of payment to any other Indebtedness of
the Guarantor issuing any such Guarantee. (Section 902)
Notwithstanding the foregoing, without the consent of any holders of the
New Notes, the Company, any Guarantor, any other obligor under the Securities
and the Trustee may modify or amend the
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Indenture: (a) to evidence the succession of another Person to the Company or
a Guarantor or any other obligor under the Securities, and the assumption by
any such successor of the covenants of the Company or such Guarantor or
obligor in the Indenture and in the New Notes and in any Guarantee in
accordance with "-- Consolidation, Merger, Sale of Assets"; (b) to add to the
covenants of the Company, any Guarantor or any other obligor upon the New
Notes for the benefit of the holders of the New Notes or to surrender any
right or power conferred upon the Company or any Guarantor or any other
obligor upon the New Notes, as applicable, in the Indenture, in the New Notes
or in any Guarantee; (c) to cure any ambiguity, or to correct or supplement
any provision in the Indenture, the New Notes or any Guarantee which may be
defective or inconsistent with any other provision in the Indenture, the New
Notes or any Guarantee or make any other provisions with respect to matters
or questions arising under the Indenture, the New Notes or any Guarantee;
provided that, in each case, such provisions shall not adversely affect the
interest of the holders of the New Notes; (d) to comply with the requirements
of the Commission in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act; (e) to add a Guarantor under the
Indenture; (f) to evidence and provide the acceptance of the appointment of a
successor Trustee under the Indenture; or (g) to mortgage, pledge,
hypothecate or grant a security interest in favor of the Trustee for the
benefit of the holders of the New Notes as additional security for the
payment and performance of the Company's and any Guarantor's obligations
under the Indenture, in any property, or assets, including any of which are
required to be mortgaged, pledged or hypothecated, or in which a security
interest is required to be granted to the Trustee pursuant to the Indenture
or otherwise. (Section 901)
The holders of a majority in aggregate principal amount of the New Notes
outstanding may waive compliance with certain restrictive covenants and
provisions of the Indenture. (Section 1022)
GOVERNING LAW
The Indenture, the New Notes and any Guarantee will be governed by, and
construed in accordance with, the laws of the State of New York, without
giving effect to the conflicts of law principles thereof.
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 as Trustee with such conflict or resign as Trustee.
(Sections 608 and 610)
The holders of a majority in principal amount of the then outstanding New
Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
occurs (which has not been cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request of any holder of New Notes unless such holder shall
have offered to the Trustee security and indemnity satisfactory to it against
any loss, liability or expense. (Section 603)
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition, as the case may be. Acquired Indebtedness
shall be deemed to be incurred on the date of the related acquisition of
assets from any Person or the date the acquired Person becomes a Subsidiary,
as the case may be.
"Affiliate" means, with respect to any specified Person: (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person; (ii) any
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other Person that owns, directly or indirectly, 5% or more of such specified
Person's Capital Stock or any officer or director of any such specified
Person or other Person or, with respect to any natural Person, any person
having a relationship with such Person by blood, marriage or adoption not
more remote than first cousin; or (iii) any other Person 5% or more of the
Voting Stock of which is beneficially owned or held directly or indirectly by
such specified Person. For the purposes of this definition, "control" when
used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback transaction) (collectively, a
"transfer"), directly or indirectly, in one or a series of related
transactions, of: (i) any Capital Stock of any Subsidiary; (ii) all or
substantially all of the properties and assets of any division or line of
business of the Company or its Subsidiaries; or (iii) any other properties or
assets of the Company or any Subsidiary other than in the ordinary course of
business. For the purposes of this definition, the term "Asset Sale" shall
not include any transfer of properties and assets (A) that is governed by the
provisions described under "--Consolidation, Merger, Sale of Assets," (B)
that is by the Company to any Guarantor, or by any Subsidiary to the Company
or any Wholly Owned Subsidiary in accordance with the terms of the Indenture,
(C) that is of obsolete equipment in the ordinary course of business, (D)
that represents sales of aluminum as raw material as part of the Company's
inventory management procedures in the ordinary course of business, (E) the
Fair Market Value of which in the aggregate does not exceed $1 million in any
transaction or series of related transactions or (F) the disposition of the
Escrow Account in order to repurchase the Existing Subordinated Notes.
"Asset Swap" means a disposition by the Company or any Subsidiary of any
aluminum production plant or facility or extrusion, casting, painting,
anodizing or fabrication assets of an aluminum production plant or facility
for an aluminum production plant or facility or extrusion, casting, painting,
anodizing or fabrication assets of an aluminum production plant or facility
(or the Capital Stock of a Person owning extrusion, casting, painting,
anodizing or fabrication assets or an aluminum production plant or facility);
provided that the Board of Directors of the Company shall have approved such
disposition and exchange and determined the Fair Market Value of the assets
subject to such transaction as evidenced by a board resolution or such Fair
Market Value has been determined by a written opinion of an investment
banking firm of national standing or other recognized independent expert with
experience appraising the terms and conditions of the type of transaction
contemplated thereby.
"Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing (i) the
sum of the products of (a) the number of years from the date of determination
to the date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal payment by
(ii) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state 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.
"Capital Lease Obligation" of any Person means any obligation of such
Person and its Subsidiaries on a Consolidated basis under any capital lease
of real or personal property which, in accordance with GAAP, has been
recorded as a capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock or other equity interests whether now outstanding or issued
after the date of the Indenture.
"Change of Control" means the occurrence of any of the following events:
(i) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), other than Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
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Act, except that a Person shall be deemed to have beneficial ownership of all
shares that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total outstanding Voting Stock of the
Company, provided, that the Permitted Holders "beneficially own" (as so
defined) a lesser percentage of such Voting Stock than such other "person" or
"group" and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the board of
directors of the Company; (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the board of
directors of the Company (together with any new directors whose election to
such board or whose nomination for election by the stockholders of the
Company was approved by a vote of 66 2/3% of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved), cease for
any reason to constitute a majority of such board of directors then in
office; (iii) the Company consolidates with or merges with or into any Person
or conveys, transfers or leases all or substantially all of its assets to any
Person, or any corporation consolidates with or merges into or with the
Company in any such event pursuant to a transaction in which the outstanding
Voting Stock of the Company is changed into or exchanged for cash, securities
or other property, other than any such transaction where the outstanding
Voting Stock of the Company is not changed or exchanged at all (except to the
extent necessary to reflect a change in the jurisdiction of incorporation of
the Company or where (A) the outstanding Voting Stock of the Company is
changed into or exchanged for (x) Voting Stock of the surviving corporation
which is not Redeemable Capital Stock or (y) cash, securities and other
property (other than Capital Stock of the surviving corporation) in an amount
which could be paid by the Company as a Restricted Payment as described under
"--Certain Covenants -- Limitation on Restricted Payments" (and such amount
shall be treated as a Restricted Payment subject to the provisions in the
Indenture described under "--Certain Covenants -- Limitation on Restricted
Payments") and (B) no "person" or "group," other than Permitted Holders, owns
immediately after such transaction, directly or indirectly, more than the
greater of (i) 35% of the total outstanding Voting Stock of the surviving
corporation and (ii) the percentage of the outstanding Voting Stock of the
surviving corporation owned, directly or indirectly, by Permitted Holders
immediately after such transaction); or (iv) the Company is liquidated or
dissolved or adopts a plan of liquidation or dissolution other than in a
transaction which complies with the provisions described under
"--Consolidation, Merger, Sale of Assets."
"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 the 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.
"Commodity Price Protection Agreement" means any forward contract,
commodity swap, commodity option or other similar financial agreement or
arrangement relating to, or the value which is dependent upon, fluctuations
in commodity prices.
"Company" means Wells Aluminum Corporation, a corporation incorporated
under the laws of Maryland, until a successor Person shall have become such
pursuant to the applicable provisions of the Indenture, and thereafter
"Company" shall mean such successor Person.
"Consolidated Fixed Charge Coverage Ratio" of any Person means, for any
period, the ratio of (a) the sum of Consolidated Net Income (Loss),
Consolidated Interest Expense, Consolidated Income Tax Expense and
Consolidated Non-cash Charges deducted in computing Consolidated Net Income
(Loss) in each case, for such period, of such Person and its Subsidiaries on
a Consolidated basis, all determined in accordance with GAAP to (b) the
Consolidated Interest Expense for such period; provided that (i) in making
such computation, the Consolidated Interest Expense attributable to interest
on any Indebtedness computed on a pro forma basis and (A) bearing a floating
interest rate shall be computed as if the rate in effect on the date of
computation had been the applicable rate for the entire period and (B) which
was not outstanding during the period for which the computation is being made
but which bears, at the option of such Person, a fixed or floating rate of
interest, shall be computed by applying at the option of such Person either
the fixed or floating rate and (ii) in making such computation, the
Consolidated Interest Expense of such Person attributable to 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.
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"Consolidated Income Tax Expense" of any Person means, for any period, the
provision for federal, state, local and foreign income taxes of such Person
and its Consolidated Subsidiaries for such period as determined in accordance
with GAAP.
"Consolidated Interest Expense" of any Person means, without duplication,
for any period, the sum of (a) the interest expense of such Person and its
Subsidiaries for such period, on a Consolidated basis, including, without
limitation, (i) amortization of debt discount, (ii) the net costs associated
with Interest Rate Agreements, Currency Hedging Agreements and Commodity
Price Protection Agreements (including amortization of discounts), (iii) the
interest portion of any deferred payment obligation and (iv) accrued
interest, plus (b) (i) the interest component of the Capital Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such
Person and its Subsidiaries during such period and (ii) all capitalized
interest of such Person and its Subsidiaries plus (c) the interest expense
under any Guaranteed Debt of such Person and any Subsidiary to the extent not
included under clause (a)(iv) above, plus (d) the aggregate amount for such
period of cash or non-cash dividends on any Redeemable Capital Stock or
Preferred Stock of the Company and its Subsidiaries, in each case as
determined on a Consolidated basis in accordance with GAAP.
"Consolidated Net Income (Loss)" of any Person means, for any period, the
Consolidated net income (or loss) of such Person and its Subsidiaries for
such period on a Consolidated basis as determined in accordance with GAAP,
adjusted, to the extent included in calculating such net income (or loss), by
excluding, without duplication, (i) all extraordinary gains or losses, net of
taxes, (less all fees and expenses relating thereto), (ii) the portion of net
income (or loss) of such Person and its Subsidiaries on a Consolidated basis
allocable to minority interests in unconsolidated Persons to the extent that
cash dividends or distributions have not actually been received by such
Person or one of its Consolidated Subsidiaries, (iii) net income (or loss) of
any Person combined with such Person or any of its Subsidiaries on a "pooling
of interests" basis attributable to any period prior to the date of
combination, (iv) any gain or loss, net of taxes, realized upon the
termination of any employee pension benefit plan, (v) net gains (or losses),
net of taxes, (less all fees and expenses relating thereto) in respect of
dispositions of assets other than in the ordinary course of business, (vi)
the net income of any Subsidiary to the extent that the declaration of
dividends or similar distributions by that Subsidiary of that income is not
at the time permitted, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary or its
stockholders, (vii) any restoration to income of any contingency reserve, net
of taxes, except to the extent provision for such reserve was made out of
income accrued at any time following the date of the Indenture, (viii) any
gain, net of taxes, arising from the extinguishment, under GAAP, of any
Indebtedness of such Person or (ix) any gain or loss, net of taxes, arising
from non-cash charges or income relating to the valuation of inventory on a
LIFO basis.
"Consolidated Non-cash Charges" of any Person means, for any period, the
aggregate depreciation, amortization and other non-cash charges of such
Person and its subsidiaries on a Consolidated basis for such period, as
determined in accordance with GAAP (excluding (i) any non-cash charge which
requires an accrual or reserve for cash charges for any future period and
(ii) all non-cash charges incurred in connection with the valuation of
inventory on a LIFO basis).
"Consolidation" means, with respect to any Person, the consolidation of
the accounts of such Person and each of its subsidiaries if and to the extent
the accounts of such Person and each of its subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP. The term
"Consolidated" shall have a similar meaning.
"Currency Hedging Arrangements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
foreign exchange contracts, currency swap agreements or other similar
agreements or arrangements designed to protect against the fluctuations in
currency values.
"Default" means any event which is, or after notice or passage of any time
or both would be, an Event of Default.
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"Disinterested Director" means, with respect to any transaction or series
of related transactions, a member of the board of directors of the Company
who does not have any material direct or indirect financial interest in or
with respect to such transaction or series of related transactions (other
than as a result of such directors' Investment in the Company).
"Escrow Account" means the escrow account established pursuant to the
Escrow Agreement dated the date of the Indenture between the Company and
State Street Bank & Trust Company (formerly known as Fleet National Bank), as
Escrow Agent.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute.
"Existing Credit Facility" means the Credit Agreement, dated as of
December 21, 1994, among the Company and Credit Agricole Indosuez (formerly
known as Banque Indosuez, New York Branch), as Agent and the Lending
Institutions listed therein, as amended.
"Existing Subordinated Notes" means the 14.125% Senior Subordinated Notes
due 2001 originally issued pursuant to the Exchange and Amendment Agreement,
dated December 21, 1994 among the Company and each of the Purchasers listed
on the Schedule of Purchasers thereon, as amended.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy. Fair Market Value shall be
determined by the board of directors of the Company acting in good faith and
shall be evidenced by a resolution of the board of directors.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied,
which are in effect on the date of the Indenture.
"Guarantee" means the guarantee by any Guarantor of the Company's
Indenture Obligations.
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person referred to in the definition of
Indebtedness 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 Indebtedness or to advance or supply
funds for the payment or purchase of such Indebtedness, (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 Indebtedness or to assure the holder of such Indebtedness 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 without requiring
that such property be received or such services be rendered), (iv) to
maintain working capital or equity capital of the debtor, or otherwise to
maintain the net worth, solvency or other financial condition of the debtor
or (v) otherwise to assure a creditor against loss; provided that the term
"guarantee" shall not include endorsements for collection or deposit, in
either case in the ordinary course of business.
"Guarantor" means any Subsidiary which is a guarantor of the New Notes,
including any Person that is required after the date of the Indenture to
execute a guarantee of the New Notes pursuant to the "Limitations on Liens"
covenant or the "Limitation on Issuances of Guarantees of Indebtedness"
covenant until a successor replaces such party pursuant to the applicable
provisions of the Indenture and, thereafter, shall mean such successor.
"Indebtedness" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and
other accrued current liabilities arising in the ordinary course of business,
(ii) all obligations of such Person evidenced by bonds, notes, debentures or
other similar instruments, (iii) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to
property acquired by such Person (even if 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), but excluding trade payables arising
in the ordinary course of business, (iv) all obligations under Interest Rate
Agreements, Currency Hedging Agreements or Commodity Price Protection
Agreements of such Person, (v) all Capital Lease Obligations of such Person,
(vi) all Indebtedness referred to in clauses (i) through (v) above of other
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Persons and all dividends of other Persons, the payment of which is secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien, upon or with respect to
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 Indebtedness, in which case the amount of such
Indebtedness shall be deemed to be the lesser of (a) the amount of such
Indebtedness and (b) the Fair Market Value of the property that secures such
Indebtedness; (vii) all Guaranteed Debt of such Person, (viii) all Redeemable
Capital Stock issued by such Person valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid dividends,
and (ix) any amendment, supplement, modification, deferral, renewal,
extension, refunding or refinancing of any liability of the types referred to
in clauses (i) through (viii) above. For purposes hereof, the "maximum fixed
repurchase price" of any Redeemable Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant
to the Indenture, and if such price is based upon, or measured by, the Fair
Market Value of such Redeemable Capital Stock, such Fair Market Value to be
determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock.
"Indenture Obligations" means the obligations of the Company and any other
obligor under the Indenture or under the New Notes including any Guarantor,
to pay principal of, premium, if any, and interest when due and payable, and
all other amounts due or to become due under or in connection with the
Indenture, the New Notes and the performance of all other obligations to the
Trustee and the holders under the Indenture and the New Notes, according to
the respective terms thereof.
"Interest Rate Agreements" means one or more of the following agreements
which shall be entered into by one or more financial institutions: interest
rate protection agreements (including, without limitation, interest rate
swaps, caps, floors, collars and similar agreements) and/or other types of
interest rate hedging agreements from time to time.
"Investment" means, with respect to any Person, directly or indirectly,
any advance, loan (including guarantees), or other extension of credit or
capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase, acquisition or ownership by such Person of any
Capital Stock, bonds, notes, debentures or other securities issued or owned
by any other Person and all other items that would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"Lien" means any mortgage or deed of trust, charge, pledge, lien
(statutory or otherwise), privilege, security interest, assignment, deposit,
arrangement, easement, hypothecation, claim, preference, priority or other
encumbrance upon or with respect to any property of any kind (including any
conditional sale, capital lease or other title retention agreement, any
leases in the nature thereof, and any agreement to give any security
interest), real or personal, movable or immovable, now owned or hereafter
acquired.
"Maturity" means, when used with respect to the New Notes, the date on
which the principal of the New Notes becomes due and payable as therein
provided or as provided in the Indenture, whether at Stated Maturity, the
Offer Date or the redemption date and whether by declaration of acceleration,
Offer in respect of Excess Proceeds, Change of Control Offer in respect of a
Change of Control, call for redemption or otherwise.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any
Person, the proceeds thereof (without duplication in respect of all Asset
Sales) in the form of cash or Temporary Cash Investments including payments
in respect of deferred payment obligations when received in the form of, or
stock or other assets when disposed of for, cash or Temporary Cash
Investments (except to the extent that such obligations are financed or sold
with recourse to the Company or any Subsidiary) net of (i) brokerage
commissions and other reasonable fees and expenses (including fees and
expenses of counsel and investment bankers) related to such Asset Sale, (ii)
provisions for all taxes payable as a result of such Asset Sale, (iii)
payments made to retire Indebtedness where payment of such Indebtedness is
secured by the assets or properties the subject of such Asset Sale, (iv)
amounts required to be paid to any Person (other than the Company or any
Subsidiary) owning a beneficial interest in the assets subject to the Asset
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Sale and (v) appropriate amounts to be provided by the Company or any
Subsidiary, as the case may be, as a reserve, in accordance with GAAP,
against any liabilities associated with such Asset Sale and retained by the
Company or any Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset Sale, all as
reflected in an officers' certificate delivered to the Trustee and (b) with
respect to any issuance or sale of Capital Stock or options, warrants or
rights to purchase Capital Stock, or debt securities or Capital Stock that
have been converted into or exchanged for Capital Stock as referred to under
"--Certain Covenants -- Limitation on Restricted Payments," the proceeds of
such issuance or sale in the form of cash or Temporary Cash Investments
including payments in respect of deferred payment obligations when received
in the form of, or stock or other assets when disposed of for, cash or
Temporary Cash Investments (except to the extent that such obligations are
financed or sold with recourse to the Company or any Subsidiary), net of
attorney's fees, accountant's fees and brokerage, consultation, underwriting
and other fees and expenses actually incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof.
"New Credit Facility" means the Amended and Restated Credit Agreement
dated as of May 28, 1997 by and among the Company, certain financial
institutions and Credit Agricole Indosuez (formerly known as Banque
Indosuez), as agent, providing for an aggregate $15 million revolving credit
facility, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, as such credit
agreement and/or related documents may be amended, restated, supplemented,
renewed, replaced or otherwise modified from time to time whether or not with
the same agent, trustee, lenders or holders, and, subject to the provisos to
the next sentence, irrespective of any changes in the terms and conditions
thereof. Without limiting the generality of the foregoing, the term "New
Credit Facility" shall include any amendment, amendment and restatement,
renewal, extension, restructuring, supplement or modification to the New
Credit Facility and all refundings, refinancings and replacements of the New
Credit Facility, including any agreement (i) extending the maturity of any
Indebtedness incurred thereunder or contemplated thereby, (ii) adding or
deleting borrowers or guarantors thereunder, so long as borrowers and issuers
include the Company and its successors and assigns, (iii) increasing the
amount of Indebtedness incurred thereunder or available to be borrowed
thereunder, provided that on the date such Indebtedness is incurred it would
not exceed the amount permitted to be incurred by clause (i) of the
definition of Permitted Indebtedness or (iv) otherwise altering the terms and
conditions thereof; provided further that in the case of clauses (i) through
(iv), any such agreement is not prohibited by the terms of the Indenture.
"Pari Passu Indebtedness" means (a) any Indebtedness of the Company which
ranks pari passu in right of payment to the New Notes and (b) with respect to
any Guarantee, Indebtedness which ranks pari passu in right of payment to
such Guarantee.
"Permitted Holders" means (i) Gibbons, Goodwin, van Amerongen ("GGvA"),
(ii) Edward W. Gibbons, Todd Goodwin, Lewis W. van Amerongen and Elizabeth
Varley Camp (the "GGvA Partners"), (iii) trusts created for the benefit of
any of the GGvA Partners or the spouse, issue, parents or other relatives of
any such GGvA Partner, (iv) entities controlled by any of such GGvA Partners,
and (v) in the event of the death of any of the GGvA Partners, the heirs or
testamentary legatees of such GGvA Partner.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company (and guarantees thereof by Subsidiaries)
under the New Credit Facility in an aggregate principal amount at any one
time outstanding not to exceed $15 million under any such credit facility
or in respect of letters of credit thereunder minus the amount by which
any commitments thereunder are permanently reduced;
(ii) Indebtedness of the Company pursuant to the New Notes and
Indebtedness of any Guarantor pursuant to a Guarantee of the New Notes;
(iii) Indebtedness of the Company or any Subsidiary outstanding on the
date of the Indenture and listed on a schedule thereto;
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(iv) Indebtedness of the Company owing to a Subsidiary; provided that any
Indebtedness of the Company owing to a Subsidiary is made pursuant to an
intercompany note in the form attached to the Indenture and is
subordinated in right of payment from and after such time as the New Notes
shall become due and payable (whether at Stated Maturity, acceleration or
otherwise) to the payment and performance of the Company's obligations
under the New Notes; provided, further, that any disposition, pledge or
transfer of any such Indebtedness to a Person (other than a disposition,
pledge or transfer to a Subsidiary) shall be deemed to be an incurrence of
such Indebtedness by the Company not permitted by this clause (iv);
(v) Indebtedness of a Wholly Owned Subsidiary owing to the Company or
another Wholly Owned Subsidiary; provided that any such Indebtedness is
made pursuant to an intercompany note in the form attached to the
Indenture; provided, further, that (a) any disposition, pledge or transfer
of any such Indebtedness to a Person (other than the Company or a Wholly
Owned Subsidiary) shall be deemed to be an incurrence of such Indebtedness
by the obligor not permitted by this clause (v), and (b) any transaction
pursuant to which any Wholly Owned Subsidiary, which has Indebtedness
owing to the Company or any other Wholly Owned Subsidiary, ceases to be a
Wholly Owned Subsidiary shall be deemed to be the incurrence of
Indebtedness by such Wholly Owned Subsidiary that is not permitted by this
clause (v);
(vi) guarantees of any Subsidiary made in accordance with the provisions
of "--Certain Covenants -- Limitation on Issuances of Guarantees of
Indebtedness;"
(vii) obligations of the Company entered into in the ordinary course of
business (a) pursuant to Interest Rate Agreements designed to protect the
Company or any Subsidiary against fluctuations in interest rates in
respect of Indebtedness of the Company or any Subsidiary as long as such
obligations do not exceed the aggregate principal amount of such
Indebtedness then outstanding, (b) under any Currency Hedging
Arrangements, which if related to Indebtedness do not increase the amount
of such Indebtedness other than as a result of foreign exchange
fluctuations, or (c) under any Commodity Price Protection Agreements,
which if related to Indebtedness do not increase the amount of such
Indebtedness other than as a result of foreign exchange fluctuations;
(viii) Indebtedness of the Company represented by Capital Lease
Obligations or Purchase Money Obligations or other Indebtedness incurred
or assumed in connection with the acquisition or development of real or
personal, movable or immovable, property in each case incurred for the
purpose of financing or refinancing all or any part of the purchase price
or cost of construction or improvement of property used in the business of
the Company, in an aggregate principal amount pursuant to this clause
(viii) not to exceed $5 million outstanding at any time; provided that the
principal amount of any Indebtedness permitted under this clause (viii)
did not in each case at the time of incurrence exceed the Fair Market
Value, as determined by the Board of Directors of the Company in good
faith, of the acquired or constructed asset or improvement so financed;
(ix) any renewals, extensions, substitutions, refundings, refinancings or
replacements (collectively, a "refinancing") of any Indebtedness described
in clauses (ii) and (iii) of this definition of "Permitted Indebtedness,"
including any successive refinancings so long as the borrower under such
refinancing is the Company or, if not the Company, the same as the
borrower of the Indebtedness being refinanced and the aggregate principal
amount of Indebtedness represented thereby is not increased by such
refinancing plus the lesser of (I) the stated amount of any premium or
other payment required to be paid in connection with such a refinancing
pursuant to the terms of the Indebtedness being refinanced or (II) the
amount of premium or other payment actually paid at such time to refinance
the Indebtedness, plus, in either case, the amount of expenses of the
Company incurred in connection with such refinancing and (A) in the case
of any refinancing of Indebtedness that is Subordinated Indebtedness, such
new Indebtedness is made subordinated to the New Notes at least to the
same extent as the Indebtedness being refinanced and (B) in the case of
Pari Passu Indebtedness or Subordinated Indebtedness, as the case may be,
such refinancing does not reduce the Average Life to Stated Maturity or
the Stated Maturity of such Indebtedness; and
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(x) Indebtedness of the Company and its Subsidiaries in addition to that
described in clauses (i) through (ix) above, and any renewals, extensions,
substitutions, refinancings or replacements of such Indebtedness, so long
as the aggregate principal amount of all such Indebtedness shall not
exceed $7.5 million outstanding at any one time in the aggregate.
"Permitted Investment" means (i) Investments in any Wholly Owned
Subsidiary or any Person which, as a result of such Investment, (a) becomes a
Wholly Owned Subsidiary or (b) is merged or consolidated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated
into, the Company or any Wholly Owned Subsidiary; (ii) Indebtedness of the
Company or a Subsidiary described under clauses (iv), (v) and (vi) of the
definition of "Permitted Indebtedness"; (iii) Investments in any of the New
Notes; (iv) Temporary Cash Investments; (v) Investments acquired by the
Company or any Subsidiary in connection with an Asset Sale permitted under
"--Certain Covenants -- Limitation on Sale of Assets" to the extent such
Investments are non-cash proceeds as permitted under such covenant; (vi)
Investments in existence on the date of the Indenture; (vii) guarantees of
Indebtedness of a Wholly Owned Subsidiary given by the Company or another
Wholly Owned Subsidiary and guarantees of Indebtedness of the Company given
by any Subsidiary, in each case, in accordance with the terms of the
Indenture; (viii) advances to employees or officers of the Company in the
ordinary course of business so long as the aggregate amount of such advances
shall not exceed $250,000 outstanding at any one time; and (ix) any other
Investments in the aggregate amount of $2.5 million at any one time
outstanding. In connection with any assets or property contributed or
transferred to any Person as an Investment, such property and assets shall be
equal to the Fair Market Value (as determined by the Company's Board of
Directors) at the time of Investment.
"Permitted Lien" means:
(a) any Lien existing as of the date of the Indenture (other than Liens
securing the New Credit Facility which is covered by clause (b) below);
(b) any Lien on the Company's or any Subsidiary's accounts receivable and
inventory which secures the New Credit Facility and any pledge of Capital
Stock of any Subsidiary of the Company which secures the New Credit Facility,
provided such Subsidiary provides a guarantee of the New Notes on a senior
basis in a form reasonably acceptable to the Trustee;
(c) any Lien arising by reason of (1) any judgment, decree or order of any
court, so long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have expired;
(2) taxes not yet delinquent or which are being contested in good faith; (3)
security for payment of workers' compensation or other insurance; (4) good
faith deposits in connection with tenders, leases, or contracts (other than
contracts for the payment of money); (5) zoning restrictions, easements,
licenses, reservations, title defects, rights of others for rights of way,
utilities, sewers, electric lines, telephone or telegraph lines, and other
similar purposes, provisions, covenants, conditions, waivers, restrictions on
the use of property or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, liens and other encumbrances
incurred, created, assumed or permitted to exist and arising by, through or
under a landlord or owner of the leased property, with or without consent of
the lessee), none of which materially impairs the use of any parcel of
property material to the operation of the business of the Company or any
Subsidiary or the value of such property for the purpose of such business;
(6) deposits to secure public or statutory obligations, or in lieu of surety
or appeal bonds; or (7) operation of law in favor of mechanics, materialmen,
laborers, employees or suppliers, incurred in the ordinary course of business
for sums which are not yet delinquent or are being contested in good faith by
negotiations or by appropriate proceedings which suspend the collection
thereof;
(d) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by the Company or any Subsidiary;
(e) any Lien to secure the performance bids, trade contracts, leases
(including, without limitation, statutory and common law landlord's liens),
statutory obligations, surety and appeal bonds, letters of credit and other
obligations of a like nature and incurred in the ordinary course of business
of the Company or any Subsidiary;
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(f) any Lien securing Indebtedness permitted to be incurred under Interest
Rate Agreements or otherwise incurred to hedge interest rate risk;
(g) any Lien securing Capitalized Lease Obligations or Purchase Money
Obligations incurred in accordance with clause (viii) of the definition
Permitted Indebtedness and which are incurred or assumed in connection with
the acquisition, development or construction of real or personal, moveable or
immovable property within 90 days of such incurrence or assumption; provided
that such Liens only extend to such acquired, developed or constructed
property; and
(h) any extension, renewal, refinancing or replacement, in whole or in
part, of any Lien described in the foregoing clauses (a) through (g) so long
as no additional collateral is granted as security thereby.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock" means, with respect to any Person, any Capital Stock of
any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over the Capital Stock of any other class in such Person.
"Public Equity Offering" means an underwritten offering with gross
proceeds to the Company of at least $25 million pursuant to a registration
statement that has been declared effective by the Commission (other than a
registration statement on Form S-8 or otherwise relating to equity securities
issuable under any employee benefit plan of the Company).
"Purchase Money Obligation" means any Indebtedness secured by a Lien on
assets related to the business of the Company and any additions and
accessions thereto, which are purchased by the Company at any time after the
New Notes are issued; provided that (i) the security agreement or conditional
sales or other title retention contract pursuant to which the Lien on such
assets is created (collectively a "Purchase Money Security Agreement") shall
be entered into within 90 days after the purchase or substantial completion
of the construction of such assets and shall at all times be confined solely
to the assets so purchased or acquired, any additions and accessions thereto
and any proceeds therefrom, (ii) at no time shall the aggregate principal
amount of the outstanding Indebtedness secured thereby be increased, except
in connection with the purchase of additions and accessions thereto and
except in respect of fees and other obligations in respect of such
Indebtedness and (iii) (A) the aggregate outstanding principal amount of
Indebtedness secured thereby (determined on a per asset basis in the case of
any additions and accessions) shall not at the time such Purchase Money
Security Agreement is entered into exceed 100% of the purchase price to the
Company of the assets subject thereto or (B) the Indebtedness secured thereby
shall be with recourse solely to the assets so purchased or acquired, any
additions and accessions thereto and any proceeds therefrom.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Recapitalization" shall have the meaning ascribed to such term in the
Prospectus.
"Redeemable Capital Stock" means any Capital Stock that, either by its
terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is or upon the happening of an event or passage of
time would be, required to be redeemed prior to the Stated Maturity of the
principal of the New Notes or is redeemable at the option of the holder
thereof at any time prior to such Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to such Stated Maturity at
the option of the holder thereof.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute.
"Significant Subsidiary" means, at any particular time, any Subsidiary
that, together with the Subsidiaries of such Subsidiary, (i) for the most
recent fiscal year of the Company accounted for more than
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10% of the Consolidated revenues of the Company and its Subsidiaries or (ii)
at the end of such fiscal year, was the owner (beneficial or otherwise) of
more than 10% of the Consolidated assets of the Company and its Subsidiaries,
all as calculated in accordance with GAAP and as shown on the Consolidated
financial statements of the Company and its Subsidiaries.
"Stated Maturity" means, when used with respect to any Indebtedness or any
installment of interest thereon, the dates specified in such Indebtedness as
the fixed date on which the principal of such Indebtedness or such
installment of interest, as the case may be, is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor subordinated in right of payment to the New Notes or the Guarantee
of such Guarantor, as the case may be.
"Subsidiary" means any Person, a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries; provided that any Unrestricted Subsidiary shall not
be deemed a Subsidiary under the New Notes.
"Temporary Cash Investments" means (i) any evidence of Indebtedness,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof, and
guaranteed fully as to principal, premium, if any, and interest by the United
States of America, (ii) any certificate of deposit, maturing not more than
one year after the date of acquisition, issued by, or time deposit of, a
commercial banking institution that is a member of the Federal Reserve System
and that has combined capital and surplus and undivided profits of not less
than $250 million, whose debt has a rating, at the time as of which any
investment therein is made, of "P-1" (or higher) according to Moody's
Investors Service, Inc. ("Moody's") or any successor rating agency or "A-1"
(or higher) according to Standard & Poor's Corporation ("S&P") or any
successor rating agency, (iii) commercial paper, maturing not more than one
year after the date of acquisition, issued by a corporation (other than an
Affiliate or Subsidiary of the Company) organized and existing under the laws
of the United States of America with a rating, at the time as of which any
investment therein is made, of "P-1" (or higher) according to Moody's or
"A-1" (or higher) according to S&P, (iv) any money market deposit accounts
issued or offered by a domestic commercial bank having capital and surplus in
excess of $250 million; provided that the short term debt of such commercial
bank has a rating, at the time of Investment, of "P-1" (or higher) according
to Moody's or "A-1" (or higher) according to S&P, (v) repurchase obligations
for underlying securities of the type described in clause (i) above entered
into with any financial institution designated as a "Primary Dealer" by the
Federal Reserve Bank of New York or any commercial banking institution that
satisfies the criteria set forth in clause (ii) of this definition of
"Temporary Cash Investments" as a counterparty, and (vi) any security,
maturing not more than six months after the date of acquisition, issued or
fully guaranteed by any state, commonwealth or territory of the United States
of America, or by any political subdivision or taxing authority thereof, and
rated at least "A" by S&P or "A" by Moody's; provided that the Company shall
not invest any amount held in the Escrow Account in any investment set forth
in clauses (v) and (vi) above.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
or any successor statute.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be 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 newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary if all
of the following conditions apply: (a) neither the Company nor any of its
Subsidiaries provides credit support for Indebtedness of such Subsidiary
(including any undertaking, agreement or instrument evidencing such
Indebtedness), (b) such Subsidiary is not liable, directly or indirectly,
with respect to any Indebtedness other than Unrestricted Subsidiary
Indebtedness, (c) any Investment in such Subsidiary made as a result of
designating such Subsidiary an Unrestricted Subsidiary shall not violate the
provisions of the "--Certain Covenants -- Limitation on Unrestricted
Subsidiaries" covenant and such Unrestricted Subsidiary is not party to any
agreement, contract, arrangement or understanding at such time with the
Company or any Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to
the Company or such
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Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of the Company or, in the event such condition is not
satisfied, the value of such agreement, contract, arrangement or
understanding to such Subsidiary shall be deemed a Restricted Investment; and
(v) such Unrestricted Subsidiary does not own any Capital Stock in any
Subsidiary of the Company which is not simultaneously being designated an
Unrestricted Subsidiary. Any such designation by the Board of Directors of
the Company shall be evidenced to the Trustee by filing with the Trustee a
board resolution giving effect to such designation and an officers'
certificate certifying that such designation complies with the foregoing
conditions and shall be deemed a Restricted Payment on the date of
designation in an amount equal to the greater of (1) the net book value of
such Investment or (2) the fair market value of such Investment as determined
in good faith by the Company's Board of Directors. The Board of Directors of
the Company may designate any Unrestricted Subsidiary as a Subsidiary;
provided that (i) immediately after giving effect to such designation, the
Company could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the restrictions under "--Certain Covenants --
Limitation on Indebtedness" and (ii) all Indebtedness of such Subsidiary
shall be deemed to be incurred on the date such Subsidiary becomes a
Subsidiary.
"Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary
means Indebtedness of such Unrestricted Subsidiary (i) as to which neither
the Company nor any Subsidiary is directly or indirectly liable (by virtue of
the Company or any such Subsidiary being the primary obligor on, guarantor
of, or otherwise liable in any respect to, such Indebtedness), except
Guaranteed Debt of the Company or any Subsidiary to any Affiliate, in which
case (unless the incurrence of such Guaranteed Debt resulted in a Restricted
Payment at the time of incurrence) the Company shall be deemed to have made a
Restricted Payment equal to the principal amount of any such Indebtedness to
the extent guaranteed at the time such Affiliate is designated an
Unrestricted Subsidiary and (ii) which, upon the occurrence of a default with
respect thereto, does not result in, or permit any holder of any Indebtedness
of the Company or any Restricted Subsidiary to declare, a default on such
Indebtedness of the Company or any Restricted Subsidiary or cause the payment
thereof to be accelerated or payable prior to its Stated Maturity.
"Venalum Purchase and Sale Agreement" means the Purchase and Sale
Agreement dated as of November 1, 1994, by and between Venalum and the
Company relating to the purchase and sale of aluminum and aluminum products,
as such agreement may be amended, renewed, supplemented or otherwise modified
or any new agreement between the parties entered into from time to time
(including, without limitation, any successive renewals, extensions,
supplementations or other modifications of the foregoing).
"Voting Stock" means Capital Stock of the class or classes pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors,
managers or trustees of a corporation (irrespective of whether or not at the
time Capital Stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).
"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock of
which is owned by the Company or another Wholly Owned Subsidiary (other than
directors' qualifying shares).
BOOK-ENTRY DELIVERY AND FORM
The certificates representing the New Notes will be issued in fully
registered form. Except as described in the next paragraph, the New Notes
initially will be represented by a single, permanent global New Note, in
definitive, fully registered form without interest coupons (the "Global
Note") and will be deposited with the Trustee as custodian for DTC and
registered in the name of Cede & Co. or such other nominee as DTC may
designate.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provision of section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance
87
<PAGE>
and settlement of securities transactions between participants through
electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and certain other organizations. Indirect access to the DTC
system is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly ("indirect participants").
Upon the issuance of the Global Note, DTC or its custodian will credit, on
its internal system, the respective principal amount of the individual
beneficial interests represented by such Global Note to the accounts of
persons who have accounts with DTC. Such accounts initially will be
designated by or on behalf of the Initial Purchasers. Ownership of beneficial
interests in the Global Note will be limited to persons who have accounts
with DTC ("participants") or persons who hold interests through participants.
Ownership of beneficial interests in the Global Note will be shown on, and
the transfer of that ownership will be effected only though, records
maintained by DTC or its nominee (with respect to interests of participants)
and the records of participants (with respect to interests of persons other
than participants). QIBs may hold their interests in the Global Note directly
through DTC if they are participants in such system, or indirectly through
organizations which are participants in such system.
So long as DTC or its nominee is the registered owner or holder of the
Global Note, DTC or such nominee, as the case may be, will be considered the
sole record owner or holder of the New Notes represented by such Global Note
for all purposes under the Indenture and the New Notes. No beneficial owners
of an interest in the Global Note will be able to transfer that interest
except in accordance with DTC's applicable procedures in addition to those
provided for under the Indenture.
Payments of the principal of, premium, if any, and interest on the Global
Note will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. Neither the Company, the Trustee, nor any paying
agent will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
the Global Note or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment
of principal of, premium, if any, or interest in respect of the Global Note
will credit participants' accounts with payments in amounts proportionate to
their respective beneficial ownership interests in the principal amount of
such Global Note, as shown on the records of DTC or its nominee. The Company
also expects that payments by participants to owners of beneficial interests
in such Global Note held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Transfer between participants in DTC will be effected in the ordinary way
in accordance with DTC rules. If a Holder requires physical delivery of
Certificated Notes (as defined below) for any reason, including to sell New
Notes to persons in states which require such delivery of such New Notes or
to pledge such New Notes, such holder must transfer its interest in the
Global Note in accordance with the normal procedures of DTC and the
procedures set forth in the Indenture.
DTC has advised the Company that DTC will take any action permitted to be
taken by a holder of New Notes (including the presentation of New Notes for
exchange as described below) only at the direction of one or more
participants to whose account the DTC interests in the Global Note are
credited and only in respect of such portion of the aggregate principal
amount of New Notes as to which such participant or participants has or have
given such direction. However, if there is an Event of Default under the
Indenture, DTC will exchange the Global Note for Certificated Notes, which it
will distribute to its participants.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is
under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
88
<PAGE>
Subject to certain conditions and in certain circumstances, any person
having a beneficial interest in the Global Note may, upon request to the
Trustee, exchange such beneficial interest for New Notes in fully registered
definitive form without interest coupons ("Certificated Notes"). Upon any
such issuance, the Trustee is required to register such Certificated Notes in
the name of, and cause the same to be delivered to, such person or persons
(or the nominee of any thereof). In addition, if DTC is at any time unwilling
or unable to continue as a depositary for the Global Note and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue Certificated Notes in exchange for the Global Note.
89
<PAGE>
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that New
Notes issued pursuant to the Exchange Offer to an Eligible Holder in exchange
for Old Notes may be offered for resale, resold and otherwise transferred by
such Eligible Holder (other than (i) a broker-dealer who purchased the Old
Notes directly from the Company for resale pursuant to Rule 144A under the
Securities Act 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
Eligible Holder is acquiring the New Notes in the ordinary course of business
and is not participating, and has no arrangement or understanding with any
person to participate, in a distribution of the New Notes.
Each broker-dealer that holds Old Notes which were acquired for its own
account as a result of market-making activities or other trading activities
(other than Old Notes acquired directly from the Company or an affiliate of
the Company), may exchange the Old Notes for New Notes in the Exchange Offer.
However, such broker-dealer may be deemed an "underwriter" within the meaning
of the Securities Act and, therefore, must deliver a prospectus in connection
with any resales of the New Notes received by such broker-dealer in the
Exchange Offer. This prospectus delivery requirement may be satisfied by
delivery of this Prospectus, as it may be amended or supplemented from time
to time. The Company has agreed that it will provide sufficient copies of the
latest version of the Prospectus to broker-dealers promptly upon request to
facilitate such resales.
The Company will not receive any proceeds from any sale of the New Notes
by broker-dealers. New Notes received by broker-dealers for their own
accounts 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 New Notes or a
combination of such methods of resale, at market prices at the time of
resale, at prices related to such prevailing market prices or negotiated
prices. Any such resales 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 New
Notes. Any broker-dealer that resells New 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 New Notes may be deemed to be an
"underwriter' within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
By acceptance of the Exchange Offer, each broker-dealer and Holder that
receives New 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 New Notes, and each broker-dealer and Holder agrees that upon receipt of
any notice from the Company of the existence of any fact or the happening of
any event that makes any statement of a material fact in the Prospectus, or
any amendment or supplement hereto, or any document incorporated herein by
reference untrue or requires the making of any additions or changes in the
Prospectus (the "Notice"), such broker-dealer or Holder will forthwith
discontinue the disposition of the New Notes until such broker-dealer or
Holder (i) receives copies of a supplemental prospectus or (ii) is advised in
writing by the Company that the use of the Prospectus may be resumed and has
received copies of any additional or supplemental filings that are
incorporated herein by reference. Upon the Company's request and at its
expense, each Holder will deliver to the Company all copies, other than
permanent file copies in such Holder's possession, of the Prospectus covering
such New Notes that was current at the time of receipt of such Notice.
90
<PAGE>
LEGAL MATTERS
The legality of the New Notes being offered hereby will be passed upon for
the Company by Kramer, Levin, Naftalis & Frankel, New York, New York. Through
a limited partnership interest in Fulcrum III, certain partners of Kramer,
Levin, Naftalis & Frankel have an indirect equity interest in approximately
4,100 shares of Class A Common Stock of the Company.
EXPERTS
The financial statements and schedule of the Company as of December 31,
1996 and 1995 and for each of the three years in the period ended December
31, 1996 included in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as stated in their report
appearing herein, and are included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
91
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Report of Independent Auditors .......................................................... F-2
Balance Sheets as of December 31, 1996 and 1995 ......................................... F-3
Statements of Operations for the years ended December 31, 1996, 1995, and 1994 ......... F-4
Statements of Stockholders' Equity for the years ended December 31, 1996, 1995,
and 1994 ............................................................................... F-5
Statements of Cash Flows for the years ended December 31, 1996, 1995, and 1994 ......... F-6
Notes to Financial Statements ........................................................... F-7
Balance Sheet as of March 30, 1997 (Unaudited)........................................... F-16
Statements of Operations for the three months ended March 31, 1996 and March 30, 1997
(Unaudited) ............................................................................ F-17
Statements of Cash Flows for the three months ended March 31, 1996 and March 30, 1997
(Unaudited) ............................................................................ F-18
Notes to Financial Statements............................................................ F-19
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Wells Aluminum Corporation
We have audited the balance sheets of Wells Aluminum Corporation (the
"Corporation") as of December 31, 1996 and 1995, and the related statements
of operations, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1996. Our audits also included the
financial statement schedule listed in the Index as Item 21(b). These
financial statements and schedule are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Wells Aluminum
Corporation as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
As discussed in Note 9 to the Financial Statements, the Corporation
changed its method of accounting for postretirement benefits other than
pensions in 1995.
Ernst & Young LLP
February 14, 1997
Baltimore, Maryland
F-2
<PAGE>
WELLS ALUMINUM CORPORATION
BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash.................................................................. $ 277 $ 342
Accounts receivable, principally trade, less allowance for doubtful
accounts of $1,170 and $925 ......................................... 22,279 24,641
Inventories .......................................................... 19,838 19,972
Other current assets ................................................. 938 494
---------- ----------
Total current assets................................................. 43,332 45,449
Property, plant and equipment, at cost less accumulated depreciation .. 26,723 26,489
Debt issuance costs, net of accumulated amortization of $1,365 and
$870.................................................................. 2,104 2,599
Goodwill, net of accumulated amortization of $11,286 and $10,098 ..... 35,738 36,926
Other intangible assets ............................................... 829 798
---------- ----------
Total assets ........................................................ $108,726 $112,261
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY...................................
Current liabilities:
Current portion of long-term debt .................................... $ 13 $ 20
Accounts payable, principally trade .................................. 19,577 20,699
Accrued expenses ..................................................... 5,567 5,375
---------- ----------
Total current liabilities ........................................... 25,157 26,094
Long-term debt, less current portion .................................. 40,078 51,663
Deferred income taxes ................................................. 5,750 5,847
Deferred benefit plan obligations ..................................... 3,269 3,411
---------- ----------
Total liabilities.................................................... 74,254 87,015
========== ==========
Stockholders' equity:
Common stock, Class A, par value $.01 per share; 975,000 shares
authorized, 778,062.5 and 775,062.5 shares issued and outstanding
for the respective year ............................................. 8 8
Common stock, Class B, par value $.01 per share; 125,000 shares
authorized and issued ............................................... 1 1
Additional paid-in capital ........................................... 24,390 24,360
Accumulated earnings ................................................. 10,565 1,722
Additional minimum pension liability ................................. (492) (845)
---------- ----------
Total stockholders' equity .......................................... 34,472 25,246
---------- ----------
Total liabilities and stockholders' equity .......................... $108,726 $112,261
========== ==========
</TABLE>
See accompanying notes.
F-3
<PAGE>
WELLS ALUMINUM CORPORATION
STATEMENTS OF OPERATIONS
(In thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net sales .......................................... $228,161 $232,555 $197,991
Cost of sales ...................................... 191,206 194,414 168,810
---------- ---------- ----------
Gross profit ....................................... 36,955 38,141 29,181
Selling, general and administrative expenses ...... 15,877 16,211 14,536
---------- ---------- ----------
Operating profit ................................... 21,078 21,930 14,645
Interest expense ................................... 5,176 7,087 8,443
---------- ---------- ----------
Earnings before income taxes and extraordinary
item............................................... 15,902 14,843 6,202
Income taxes ....................................... 7,059 6,262 3,016
---------- ---------- ----------
Earnings before extraordinary item ................. 8,843 8,581 3,186
Extraordinary loss on refinancing of debt (less
applicable income taxes of $698) .................. -- -- (1,092)
---------- ---------- ----------
Net earnings........................................ $ 8,843 $ 8,581 $ 2,094
========== ========== ==========
</TABLE>
See accompanying notes.
F-4
<PAGE>
WELLS ALUMINUM CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON COMMON ADDITIONAL ACCUMULATED MINIMUM
STOCK, STOCK, PAID-IN EARNINGS PENSION
CLASS A CLASS B CAPITAL (DEFICIT) LIABILITY
--------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993 $ 8 $ 1 $24,347 $(8,953) $(465)
Net earnings for 1994 ....... -- -- -- 2,094 --
Change in additional minimum
pension liability .......... -- -- -- -- 110
--------- --------- ------------ ------------- ------------
Balance at December 31, 1994 8 1 24,347 (6,859) (355)
Net earnings for 1995 ....... -- -- -- 8,581 --
Change in additional minimum
pension liability .......... -- -- -- -- (490)
Exercise of options ......... -- -- 13 -- --
--------- --------- ------------ ------------- ------------
Balance at December 31, 1995 8 1 24,360 1,722 (845)
Net earnings for 1996 ....... -- -- -- 8,843 --
Change in additional minimum
pension liability .......... -- -- -- -- 353
Exercise of options ......... -- -- 30 -- --
--------- --------- ------------ ------------- ------------
Balance at December 31, 1996 . $ 8 $ 1 $24,390 $10,565 $(492)
========= ========= ============ ============= ============
</TABLE>
See accompanying notes.
F-5
<PAGE>
WELLS ALUMINUM CORPORATION
STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings ............................................. $ 8,843 $ 8,581 $ 2,094
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization ......................... 4,034 4,576 4,929
Deferred income taxes ................................. (704) (191) 598
Extraordinary loss on refinancing of debt ............. -- -- 1,092
Changes in operating assets and liabilities:
Accounts receivable, net ............................. 2,362 1,748 (10,245)
Inventories .......................................... 134 4,693 (5,960)
Accounts payable and accrued expenses ................ (930) (3,650) 10,634
Other assets and liabilities ......................... 348 1,663 (1,229)
---------- ---------- ----------
Net cash provided by operating activities ................ 14,087 17,420 1,913
---------- ---------- ----------
INVESTING ACTIVITIES
Additions to property, plant and equipment ............... (2,589) (1,054) (1,512)
---------- ---------- ----------
Net cash used in investing activities .................... (2,589) (1,054) (1,512)
---------- ---------- ----------
FINANCING ACTIVITIES
Principal payments on long-term debt ..................... (93,793) (89,231) (50,629)
Proceeds from long-term debt ............................. 82,200 71,850 54,513
Payments of debt issue costs ............................. -- (483) (2,518)
Proceeds from the exercise of stock options .............. 30 13 --
Premium paid on early retirement of debt ................. -- -- (1,055)
---------- ---------- ----------
Net cash provided by (used in) financing activities ..... (11,563) (17,851) 311
---------- ---------- ----------
Net increase (decrease) in cash .......................... (65) (1,485) 712
Cash at beginning of year ................................ 342 1,827 1,115
---------- ---------- ----------
Cash at end of year ...................................... $ 277 $ 342 $ 1,827
========== ========== ==========
</TABLE>
See accompanying notes.
F-6
<PAGE>
WELLS ALUMINUM CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Wells Aluminum Corporation (the "Corporation") is a domestic manufacturer
of aluminum extruded and fabricated products for several diversified
industries including transportation, durable goods and construction.
STOCK-BASED COMPENSATION
The Corporation has elected to follow the provisions of Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees,
for stock based compensation. Pro forma disclosures required under Statement
of Financial Accounting Standard No. 123, Accounting for Stock-Based
Compensation, are not significant.
INVENTORIES
The aluminum component of inventories, representing approximately 68% and
67% of total inventories at December 31, 1996 and 1995, respectively, is
stated at the lower of cost, using the last-in, first-out method (LIFO) or
market. The labor, overhead and supplies components of inventories are
carried at the lower of cost or market using the first-in, first-out method
(FIFO). The outside purchased parts component of inventory are carried at the
lower of cost or market using the weighted average cost method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets.
Depreciation expense for the years ended December 31, 1996, 1995 and 1994 was
$2,351,000, $2,818,000 and $3,267,000, respectively.
DEBT ISSUANCE COSTS
Costs incurred to obtain financing are capitalized and amortized using the
straight-line method over the term of the related financing.
GOODWILL
The excess of the purchase price of the Corporation over the fair value of
the net assets acquired was recorded as goodwill. Amortization is recorded on
the straight-line method over forty years. On a periodic basis, the
Corporation estimates its future undiscounted cash flows of the businesses to
which goodwill relates in order to ensure that the carrying value of such
goodwill has not been impaired.
PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
The Corporation sponsors several defined benefit pension plans covering
substantially all employees. The Corporation uses the "projected unit credit"
actuarial method for financial reporting purposes and the "entry age normal"
actuarial method for funding purposes.
The Corporation has historically provided postretirement medical insurance
and life insurance benefits (primarily for salaried employees). In 1995, the
Corporation adopted on a prospective basis Statement of Financial Accounting
Standards No. 106, Employers' Accounting for Postretirement Benefits Other
Than Pensions, to account for the cost of postretirement benefits other than
pensions. This statement changes the prevalent practice of cash basis
accounting for postretirement benefits by requiring the accrual of such
benefits during the employees' years of service. Postretirement benefits in
1994 were recorded on a cash basis.
F-7
<PAGE>
WELLS ALUMINUM CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
RELATED PARTY TRANSACTIONS
During the years ended December 31, 1996, 1995, and 1994, the Corporation
purchased aluminum from CVG Industria Venezolana de Aluminio C.A. (Venalum),
an owner of 180,362.5 shares of Class A common stock. The total amount
purchased from Venalum was $95,959,000, $68,277,000, and $54,375,000,
respectively. Amounts payable to Venalum at December 31, 1996 and 1995 were
$8,567,000, and $8,339,000, respectively. The terms of transactions with
Venalum are substantially the same as those with unrelated companies.
CREDIT RISK
The Corporation is potentially subject to concentrations of credit risk
with accounts receivable, interest rate cap agreements and futures contracts.
Although the Corporation has a diverse customer base, 27% and 29% of the
accounts receivable balance was due in aggregate from five customers as of
December 31, 1996 and 1995, respectively. The Corporation performs ongoing
credit evaluations of customers and does not require collateral for accounts
receivable. The Corporation evaluates the creditworthiness of the
counterparties to the interest rate cap and the futures contracts and
considers nonperformance credit risk to be remote.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires that management make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results inevitably will differ from those
estimates, and such differences may be material to the financial statements.
RECLASSIFICATIONS
Certain amounts previously reported have been reclassified to conform with
the 1996 presentation.
CASH FLOW INFORMATION
Cash paid for interest amounted to $5,014,995, $6,148,000, and $10,023,000
for the years ended December 31, 1996, 1995 and 1994, respectively. Cash paid
for federal income taxes amounted to $6,659,152, $4,240,000, and $2,678,482
for the years ended December 31, 1996, 1995, and 1994, respectively.
FUTURES CONTRACTS AND FORWARD SALES CONTRACTS
In the normal course of business, the Corporation enters into forward
sales contracts with certain customers for the sale of fixed quantities of
extruded aluminum at scheduled intervals whereby the cost of aluminum
component of the contract is fixed for the duration of the contract, based on
market price at the inception of the contract. In order to hedge its exposure
to aluminum price volatility under these forward sales contracts, the
Corporation enters into aluminum futures contracts to purchase aluminum,
based on scheduled deliveries under the forward sales contracts. Gains and
losses on futures contracts designated and effective as hedges of aluminum
price exposure are recorded as adjustments to the cost of inventory.
F-8
<PAGE>
WELLS ALUMINUM CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. INVENTORIES
A summary of inventories at December 31 follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Average cost for aluminum and FIFO cost for other
components:
Raw materials ................................... $11,073 $13,430
Finished goods and work-in-process .............. 8,929 9,074
Supplies ........................................ 525 489
--------- ---------
20,527 22,993
Less LIFO reserve ................................ (689) (3,021)
--------- ---------
$19,838 $19,972
========= =========
</TABLE>
In 1995, aluminum inventories were reduced. This reduction resulted in a
liquidation of LIFO inventories carried at lower costs prevailing in prior
years as compared with the cost of 1995 purchases. The effect of this
liquidation was to increase net earnings by $1,415,000 in 1995.
3. PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment at December 31 follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Land .......................... $ 816 $ 816
Buildings ..................... 8,039 7,673
Machinery and equipment ...... 45,355 43,199
Construction in progress ..... 352 469
---------- ----------
54,562 52,157
Less accumulated depreciation (27,839) (25,668)
---------- ----------
$ 26,723 $ 26,489
========== ==========
</TABLE>
4. LONG-TERM DEBT
A summary of long-term debt at December 31 follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Credit Agreement:
Revolving Loan Facility .......... $11,400 $11,900
Term A Loan ...................... 7,477 18,022
Term B Loan....................... 6,201 6,728
Subordinated notes:
14.125% Senior Subordinated Notes 15,000 15,000
Other ............................. 13 33
--------- ---------
40,091 51,683
Less current portion .............. (13) (20)
--------- ---------
$40,078 $51,663
========= =========
</TABLE>
F-9
<PAGE>
WELLS ALUMINUM CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. LONG-TERM DEBT (Continued)
Aggregate maturities of long-term debt for each of the five years
succeeding December 31, 1996 are: $12,723 in 1997; $0 in 1998; $4,500,000 in
1999; $14,377,200 in 2000; and $21,200,500 in 2001. In 1995 and 1996, the
Corporation prepaid $14,522,800 of its Term A loan, and, therefore, is not
required to make any principal payments on that instrument until March 1999.
CREDIT AGREEMENT
In December of 1994, the Corporation entered into a $62,000,000 credit
agreement ("Credit Agreement") with Banque Indosuez, New York Branch
("Agent"), comprised of 1) a $22,000,000 working capital line of credit
("Revolving Loan Facility"), 2) a $33,000,000 term loan ("Term A Loan"), and
3) a $7,000,000 term loan ("Term B Loan"). The proceeds under the Credit
Agreement were used to refinance existing debt.
The Revolving Loan Facility terminates on December 31, 2000. Outstanding
balances under the Revolving Loan Facility are subject to interest at the
Corporation's option, at either 1.5% over the Agent's prime lending rate or
2.75% over LIBOR. On or after January 1, 1996, either rate is subject to a
reduction of .25% or .5% if the Corporation meets certain financial criteria
stated in the agreement. The Corporation met these financial criteria and as
such the interest rates were reduced by .25%. In addition, the Corporation
pays a commitment fee of 0.5% per annum on the average daily unused amount.
The Revolving Loan Facility includes available letters of credit of
$5,000,000 which have not been used by the Corporation. There are no
additional fees with respect to unused letters of credit.
The Term A Loan requires quarterly principal payments of $1,375,000,
through December 31, 2000 and is subject to interest at the Corporation's
option, at either 1.5% over the Agent's prime lending rate or 2.75% over
LIBOR. On or after January 1 1996, either rate is subject to a reduction of
.25% or .5% if the Corporation meets certain financial criteria stated in the
agreement. The Corporation met these financial criteria and as such the
interest rates were reduced by .25%.
The Term B Loan matures on March 31, 2001 and is subject to interest at
the Corporation's option, at either 2% over the Agent's prime lending rate or
3.25% over LIBOR. On or after January 1, 1996, either rate is subject to a
reduction of .25% or .5% if the Corporation meets certain financial criteria
stated in the agreement. The Corporation met these financial criteria and as
such the interest rates were reduced by .25%.
The Agreement contains numerous covenants, including: (a) a limitation on
the payment of dividends or the repurchase of common stock; (b) a restriction
on redemption or purchase of any indebtedness or the alteration of terms of
any indebtedness; (c) a restriction on the incurrence of future indebtedness,
capital expenditures, investments, liens, transactions with affiliates and
disposition of assets; and (d) the maintenance of specified financial ratios
and minimum net worth. The Corporation was in compliance with the covenants
at December 31, 1996.
The Corporation's obligations under the Agreement are secured by
substantially all of the Corporation's property, plant and equipment,
inventories, accounts receivable, contract rights and general intangibles.
SUBORDINATED NOTES
In 1987, the Corporation issued $35,500,000 of 13.375% Senior Subordinated
Notes with required mandatory redemptions of $8,875,000 on June 15, 1995 and
1996, and final maturity on July 15, 1997. These notes became redeemable at
the option of the Corporation effective July 15, 1993 at a price of 104.46%
of the principal amount redeemed, with the premium decreasing annually
thereafter to maturity. In connection with the Credit Agreement discussed
previously, these notes were redeemed in December
F-10
<PAGE>
WELLS ALUMINUM CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. LONG-TERM DEBT (Continued)
of 1994 at 102.97%. In connection with the early retirement of these notes,
the Corporation recorded an extraordinary loss of $1,092,000, comprised of
$1,055,000 call premium and $735,000 of unamortized costs related to the
original issuance of the notes, net of an income tax benefit of $698,000.
In 1987, the Corporation issued $15,000,000 of 14.125% Junior Subordinated
Notes with a required mandatory redemption of $7,500,000 on June 15, 1998 and
final maturity on July 15, 1999. In December of 1994, the Corporation entered
into an Exchange and Amendment Agreement whereby the original notes were
exchanged for $15,000,000 of 14.125% Senior Subordinated Notes maturing on
July 15, 2001. The notes are currently redeemable at the option of the
Corporation at a price of 102.875% of the principal amount redeemed, with the
premium decreasing annually to 100% at July 15, 1999 subject to the certain
restrictions in the Exchange and Amendment Agreement.
During 1995, the Corporation entered into a 7.50% interest rate cap
agreement which has the effect of limiting exposure to fluctuating interest
rates on its variable rate debt. The notional amount of the agreement as of
December 31, 1996 is $14,900,000 and the cap rate is based upon LIBOR.
5. FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standard No. 107, Disclosures about Fair
Values of Financial Instruments, defines the fair value of a financial
instrument as the amount at which the instrument could be exchanged in a
current transaction between willing parties. The carrying values reported in
the balance sheets for cash, accounts receivable, accounts payable, long-term
debt and the interest rate cap approximate their fair values.
6. ACCRUED EXPENSES
A summary of accrued expenses at December 31 follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Interest ............................... $1,011 $1,348
Salaries, wages and other compensation 2,474 2,227
Other .................................. 2,082 1,800
-------- --------
$5,567 $5,375
======== ========
</TABLE>
7. INCOME TAXES
The significant components of the Corporation's deferred tax liabilities
and assets as of December 31 were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment ...... $6,701 $6,869
Inventory ........................... 212 448
-------- --------
Total deferred tax liabilities ...... 6,913 7,317
Pension and benefit plan liabilities 952 1,021
Accrued liabilities ................. 135 88
Allowance for doubtful accounts .... 456 361
-------- --------
Total deferred tax assets ............ 1,543 1,470
-------- --------
Net deferred tax liabilities.......... $5,370 $5,847
======== ========
</TABLE>
F-11
<PAGE>
WELLS ALUMINUM CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. INCOME TAXES (Continued)
There was no valuation allowance for any of the deferred tax assets.
A reconciliation of the statutory income tax to the income tax expense
included in the Statements of Operations for the years ended December 31 is
as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Income tax expense (benefit) calculated at the
statutory federal income tax rate ..................... $5,566 $5,195 $2,109
Amortization of goodwill ............................... 416 416 404
State taxes net of federal benefits .................... 683 642 448
Prior years' income taxes .............................. 313 -- --
Other .................................................. 81 9 55
--------- --------- ---------
Income tax expense ..................................... 7,059 $6,262 $3,016
========= ========= =========
Current taxes .......................................... 7,763 $6,453 $2,418
Deferred taxes ......................................... (704) (191) 598
--------- --------- ---------
Income tax expense...................................... $7,059 $6,262 $3,016
========= ========= =========
</TABLE>
8. LEASES
The Corporation leases various facilities and equipment under short-term
rental and operating lease agreements. Rent expense under these agreements
amounted to $1,496,133, $1,434,000, and $1,348,000 for the years ended
December 31, 1996, 1995 and 1994, respectively. Future minimum payments under
noncancellable operating leases as of December 31, 1996 are: $1,385,978 in
1997; $1,280,012 in 1998; $795,679 in 1999, $523,513 in 2000; $309,503 in
2001; and $631,090 thereafter.
9. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
The Corporation sponsors several defined benefit pension plans covering
substantially all salaried and hourly employees. The benefits for salaried
employees are based on years of service and compensation while benefits for
hourly employees are based on years of service. The Corporation's funding
policy is to contribute annually an amount at least equal to the minimum
annual contributions required by ERISA. The plans' assets are invested
primarily in money market and stock mutual funds.
F-12
<PAGE>
WELLS ALUMINUM CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
9. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS (Continued)
A summary of the actuarially computed benefit obligations and assets for
the Corporation's defined benefit pension plans as of December 31 follows (in
thousands):
<TABLE>
<CAPTION>
1996 1996 1995
-------------- --------------- --------------
ACCUMULATED ASSETS EXCEED ACCUMULATED
BENEFIT ACCUMULATED BENEFIT
OBLIGATION BENEFIT OBLIGATION
EXCEEDS ASSETS OBLIGATION EXCEEDS ASSETS
-------------- --------------- --------------
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation.......................... $ 5,652 $ 3,884 $ 9,815
============== =============== ==============
Accumulated benefit obligation .................... 6,620 4,292 11,026
============== =============== ==============
Projected benefit obligation ....................... 6,620 6,038 12,650
Plan assets at fair value .......................... 4,895 4,815 8,483
-------------- --------------- --------------
Plan assets less than projected benefit obligation (1,725) (1,223) (4,167)
Unrecognized prior service costs ................... 829 33 834
Unrecognized net gain/(loss) ....................... 807 (208) 1,737
Additional minimum pension liability ............... (1,636) -- (2,185)
-------------- --------------- --------------
Total accrued and deferred pension obligations ..... $ (1,725) $ (1,398) $ (3,781)
============== =============== ==============
</TABLE>
A summary of net pension cost for the years ended December 31 follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
--------- ------- --------
<S> <C> <C> <C>
Service cost--benefits earned during the period.. $ 825 $ 690 $ 804
Interest cost on projected benefit obligation ... 884 824 812
Return on plan assets ............................ (758) (622) (559)
Net amortization and deferral .................... 195 105 137
--------- ------- --------
Net pension cost.................................. $1,146 $ 997 $1,194
========= ======= ========
</TABLE>
A summary of the significant actuarial assumptions is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Discount rates ............... 7.75% 7.25% 8.50%
Future compensation
increases.................... 4.50% 4.00% 6.00%
</TABLE>
The actuary assumed an expected long-term rate of return on assets of 8.0%
for 1996, 1995 and 1994.
In addition to the Corporation's defined benefit pension plans, the
Corporation offers postretirement medical insurance and life insurance
benefits (primarily salaried employees) to employees who retire under certain
eligibility requirements. Coverage is for the lifetime of the retiree and
spouse (if elected). Contribution requirements for current retirees is set at
a fixed percentage of expected claims costs, while contributions for future
retirees vary dependent upon years of service at retirement.
In 1995, the Corporation adopted prospectively Statement of Financial
Accounting Standards No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions. The effect of adopting the new rules increased
1995 net periodic postretirement benefit cost for the above defined benefit
plans by approximately $488,612 and decreased net income by approximately
$298,053, respectively. Postretirement benefit cost for 1994 which
approximated $50,000 was recorded on a cash basis and has not been restated.
F-13
<PAGE>
WELLS ALUMINUM CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
9. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS (Continued)
The following table shows the plans' combined funded status reconciled
with the amounts recognized in the Corporation's balance sheet (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
-------------- --------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees ................................................. $(1,044) $(1,285)
Fully eligible active plan participants .................. (475) (557)
Other active plan participants ........................... (1,605) (1,591)
-------------- --------------
(3,124) (3,433)
Plan assets at fair value................................. -- --
Accumulated postretirement benefit obligation in excess
of plan assets .......................................... (3,124) (3,433)
Unrecognized transition obligation ....................... 2,588 2,732
Unrecognized net (gain) or loss .......................... (413) 212
-------------- --------------
Accrued postretirement benefit cost....................... $ (949) $ (489)
============== ==============
</TABLE>
The portion of the accumulated postretirement benefit obligation related
to life insurance benefits is $798,543, and $599,297 for December 31, 1996
and 1995, respectively.
The Corporation funds its postretirement benefit obligation on a pay as
you go basis.
Net periodic postretirement benefit cost included the following components
(in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Service cost ............................................. $186 $150
Interest cost ............................................ 220 240
Amortization of unrecognized transition obligation over
20 years ................................................ 144 144
Net periodic postretirement benefit cost ................. $550 $534
</TABLE>
The weighted-average annual assumed rate of increase in the per capita
cost of covered benefits (i.e. health care cost trend rate) for the plans is
10% and is assumed to decrease gradually to 5% and remain at that level
thereafter. The health care cost trend rate assumption has a significant
effect on the amounts reported. For example, increasing the health care cost
trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation for the plans as of December
31, 1996 by $468,228 and the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for 1996 by $109,886.
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.75 percent and 7.25 percent at
December 31, 1996 and 1995, respectively.
The actuary assumed that salaries would increase by 5% per year for 1996
and 1995.
10. STOCK OPTION PLAN
In November 1993, the Board of Directors of the Corporation approved a
stock option plan which authorizes up to 60,000 shares of common stock, Class
A, for the plan. The plan provides for the granting of options to officers
and other key employees at an exercise price not to exceed the fair market
value on the date of the grant as determined by the Board of Directors. Under
the terms of the plan, the maximum
F-14
<PAGE>
WELLS ALUMINUM CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
10. STOCK OPTION PLAN (Continued)
term for the options granted is ten years with the options vesting ratably
over a period of four years. The options granted are exercisable at a price
of $10 per share. The weighted-average contractual life of the options
outstanding as of December 31, 1996 approximates 7.4 years.
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- --------
<S> <C> <C> <C>
Options outstanding at January 1 .. 53,000 60,000 3,000
Options exercised .................. (3,000) (750) --
Options granted .................... 7,000 -- 57,000
Options canceled ................... -- (6,250) --
--------- --------- --------
Options outstanding at December 31 57,000 53,000 60,000
========= ========= ========
</TABLE>
The Corporation recognized $250,000 in compensation expense relating to
the 7,000 options granted in 1996.
11. FUTURES CONTRACTS
The Corporation, in the normal course of business, enters into futures
contracts to manage the risk of fluctuations in the price of aluminum.
Fluctuations in the price of aluminum can have a significant impact upon the
operations of the Corporation. These instruments involve elements of credit
and market risk that are not reflected on the Corporation's balance sheet.
Entering into these contracts involves not only the risk of dealing with
counterparties and their ability to meet the terms of the contracts, but also
of movements in the market value of the futures contracts. The Corporation is
required to place amounts on deposit with brokers based on the market value
of certain contracts. These margin deposits bear interest based on the rate
of certain U.S. Treasury instruments and are to be refunded as the market
value changes or contracts are closed.
As of December 31, 1996 and 1995, the Corporation has contracts
outstanding with a notional principal amount of $11,125,000 and $12,100,000,
respectively, all of which the Corporation has used to hedge forward sales
contracts. The unrealized gain related to these contracts is approximately
$605,000 at December 31, 1996.
12. COMMITMENTS AND CONTINGENCIES
At December 31, 1996, the Corporation has commitments to purchase 95.9
million pounds of aluminum through December 1997 from Venalum at current
market prices at the delivery date. Management expects that such quantity of
aluminum will be utilized in the normal course of operations during the term
of the agreements.
The Corporation has received notice of claims asserting potential
liability under various federal and state environmental laws. Management
believes substantially all such claims were discharged in a Chapter 11
bankruptcy filing by the former owner of the Corporation and relate to
matters existing prior to June 1987 which are covered by an indemnity
agreement with the former owner of the Corporation. The indemnity agreement
requires the former owner to pay all qualifying claims, as defined, in excess
of $500,000 if the aggregate amount of all claims exceeds $1,500,000.
The Corporation is also a party to a number of lawsuits and claims arising
out of the conduct of its business. Although the ultimate results of
lawsuits, environmental claims or other proceedings against the Corporation
cannot be predicted with certainty, management does not expect that these
matters will have a material adverse effect on the Corporation.
F-15
<PAGE>
WELLS ALUMINUM CORPORATION
BALANCE SHEET
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
MARCH 30,
1997
-----------
<S> <C>
ASSETS:
Current assets:
Cash........................................................................... $ 1,164
Accounts and notes receivable, principally trade, less allowance for doubtful
accounts of $1,223 ........................................................... 27,222
Inventories ................................................................... 20,312
Other current assets .......................................................... 979
-----------
Total current assets ......................................................... 49,677
Property, plant and equipment, at cost less accumulated depreciation of $28,453 26,381
Debt issuance costs, net of accumulated amortization of $1,501 ................. 1,968
Goodwill, net of accumulated amortization of $11,583 ........................... 35,441
Other intangible assets ........................................................ 829
-----------
Total assets.................................................................. $114,296
===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current portion of long-term debt ............................................. $ 7
Accounts payable, principally trade ........................................... 27,434
Accrued expenses .............................................................. 6,281
-----------
Total current liabilities .................................................... 33,722
Long-term debt, less current portion ........................................... 35,178
Deferred income taxes .......................................................... 5,670
Deferred benefit plan obligations .............................................. 3,410
-----------
Total liabilities............................................................. 77,980
-----------
Stockholders' equity:
Common stock, Class A, par value $0.01 per share;
975,000 shares authorized, 778,062.5 issued .................................. 8
Common stock, Class B, par value $0.01 per share;
125,000 shares authorized and issued ......................................... 1
Additional paid-in capital .................................................... 24,390
Accumulated earnings .......................................................... 12,409
Additional minimum pension liability .......................................... (492)
-----------
Total stockholders' equity ................................................... 36,316
-----------
Total liabilities and stockholders' equity ................................... $114,296
===========
</TABLE>
See accompanying notes.
F-16
<PAGE>
WELLS ALUMINUM CORPORATION
STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, MARCH 30,
1996 1997
----------- -----------
<S> <C> <C>
Net sales .................................... $57,769 $55,337
Cost of sales ................................ 49,472 47,194
----------- -----------
Gross profit ................................. 8,297 8,143
Selling, general and administrative expenses 4,062 3,774
----------- -----------
Operating profit ............................. 4,235 4,369
Interest expense ............................. 1,441 1,167
----------- -----------
Earnings before income taxes ................. 2,794 3,202
Income taxes ................................. 1,240 1,358
----------- -----------
Net earnings ................................. $ 1,554 $ 1,844
=========== ===========
</TABLE>
See accompanying notes.
F-17
<PAGE>
WELLS ALUMINUM CORPORATION
STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, MARCH 30,
1996 1997
----------- -----------
<S> <C> <C>
Operating activities:
Net earnings...................................... $ 1,554 $ 1,844
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization ................... 1,004 1,047
Deferred income taxes............................ (275) (81)
Changes in operating assets and liabilities:
Accounts and notes receivable, net ............. (3,265) (4,943)
Inventories .................................... 3,439 (474)
Accounts payable and accrued expenses ......... 919 8,571
Other assets and liabilities ................... 238 101
----------- -----------
Net cash provided by operating activities ........ 3,614 6,065
Investing activities:
Additions to property, plant and equipment ...... (647) (272)
----------- -----------
Net cash used in investing activities............. (647) (272)
----------- -----------
Financing activities:
Principal payments on long-term debt ............. (24,396) (17,906)
Proceeds from long-term debt ..................... 21,300 13,000
Proceeds from exercise of stock options ......... 30 --
----------- -----------
Net cash used in financing activities ............ (3,066) (4,906)
Net increase (decrease) in cash .................. (99) 887
Cash at beginning of year ........................ 342 277
----------- -----------
Cash at end of period............................. $ 243 $ 1,164
=========== ===========
</TABLE>
See accompanying notes.
F-18
<PAGE>
WELLS ALUMINUM CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 30, 1997
(unaudited)
(dollars in thousands)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months ended March 30, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997. For further information, refer to the financial statements
and footnotes thereto included in this Prospectus.
NOTE 2. INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
MARCH 30,
1997
-----------
<S> <C>
Average cost for aluminum and FIFO cost for other
components:
Raw materials .............................................. $13,901
Finished goods and work-in-process ......................... 8,339
Supplies ................................................... 544
-----------
22,784
Less LIFO reserve .......................................... (2,472)
-----------
$20,312
===========
</TABLE>
NOTE 3. INCOME TAXES
The difference between the Company's reported tax provision for the three
months ended March 31, 1996 and March 30, 1997 and the tax provision computed
based on United States statutory rates is primarily attributable to
non-deductible goodwill amortization and state taxes.
F-19
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION TO BUY THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
HEREUNDER SHALL, IN ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Available Information ...................... i
Prospectus Summary ......................... 1
Risk Factors................................ 13
The Exchange Offer.......................... 17
The Company................................. 25
The Recapitalization........................ 26
Capitalization.............................. 27
Selected Financial Data..................... 28
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 30
Business.................................... 38
Management.................................. 52
Principal Stockholders...................... 56
Certain Transactions........................ 58
Description of New Credit Facility.......... 59
Description of New Notes.................... 60
Plan of Distribution........................ 90
Legal Matters............................... 91
Experts..................................... 91
Index to Financial Statements .............. F-1
</TABLE>
WELLS ALUMINUM
CORPORATION
OFFER TO EXCHANGE ITS 10 1/8%
SERIES B SENIOR NOTES DUE 2005
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT FOR ANY AND ALL
OF ITS OUTSTANDING 10 1/8% SERIES A
SENIOR NOTES DUE 2005
PROSPECTUS
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 2-148 of the Maryland General Corporation Law (the "MGCL")
provides that a Maryland corporation may indemnify any present or former
director, officer, employee or agent of the corporation (i) against
judgments, penalties, fines, settlements, and reasonable expenses actually
incurred in connection with any proceeding to which they are made a party by
reason of their service in those capacities, unless it is established that
the act or omission of the director, officer, employee or agent was material
to the matter giving rise to the proceeding and (a) was committed in bad
faith or (b) was the result of active and deliberate dishonesty, (ii) the
director, officer, employee or agent actually received an improper personal
benefit in money, property or services, or (iii) in the case of any criminal
proceeding, the director, officer, employee or agent had reasonable cause to
believe that the act or omission was unlawful.
The MGCL permits a corporation to pay or reimburse, in advance of the
final disposition of a proceeding, reasonable expenses (including attorney's
fees) incurred by a present or former director, officer, employee or agent
made a party to the proceeding by reason of his service in that capacity,
provided that the corporation shall have received (a) a written affirmation
by the director, officer, employee or agent of the corporation of his good
faith belief that he has met the standard of conduct necessary for
indemnification by the corporation; and (b) a written undertaking by or on
his behalf to repay the amount paid or reimbursed by the corporation if it
shall ultimately be determined that the standard of conduct was not met.
In addition, the MGCL permits the charter of a Maryland corporation to
include a provision limiting the liability of its directors, officers,
employees or agents of the corporation to the corporation and its
stockholders for money damages, subject to specified restrictions. The
Company's charter does not contain such a provision. The law does not,
however, permit the liability of directors, officers, employees or agents of
the corporation to the corporation or its stockholders to be limited to the
extent that (1) it is proved that the person actually received an improper
personal benefit or (2) a judgment or other final adjudication is entered in
a proceeding based on a finding that the person's action, or failure to act
was material to the cause of action adjudicated in the proceeding; and was
(a) committed in bad faith or (b) the result of active and deliberate
dishonesty.
The Company's charter provides that its directors shall be indemnified to
the maximum extent permitted by Maryland law, as such laws may be amended
from time to time, including the advance of expenses under the procedures
provided by such laws.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers
and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, subject to a court of
appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ----------- ------------------------------------------------------------------------------------------------
<S> <C>
3.1 Certificate of Incorporation of Wells Aluminum Corporation (the "Company").*
3.2 By-laws of the Company.
4.1 Indenture, dated as of May 28, 1997, between the Company and State Street Bank & Trust Company
(formerly known as Fleet National Bank)(the "Trustee").
4.2 Form of 10 1/8% Series A and Series B Senior Notes due 2005, dated as of May 28, 1997
(incorporated by reference to Exhibit 4.1).
4.3 Registration Rights Agreement, dated as of May 28, 1997, between the Company and Merrill Lynch &
Co. (the "Initial Purchaser").
5.1 Opinion of Kramer, Levin, Naftalis & Frankel.*
10.1 Amended and Restated Credit Agreement, dated as of May 28, 1997, among the Company, the
lending institutions party thereto and Credit Agricole Indosuez, as agent.
10.2 Amended and Restated General Security Agreement, dated as of
May 28, 1997, between the Company and Credit Agricole Indosuez.
10.3 Purchase and Sale Agreement, dated as of November 1, 1994, between the Company and CVG Industria
Venezolana de Aluminio C.A.*
12.1 Statement re computation of ratio of earnings to fixed charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Kramer, Levin, Naftalis & Frankel (to be contained in the opinion filed as Exhibit
5.1).*
24.1 Power of Attorney (incorporated by reference in the signature pages).
25.1 Form T-1 Statement of Eligibility and Qualification of State Street Bank & Trust Company
(formerly known as Fleet National Bank), as trustee.*
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Exchange Agent Agreement.*
</TABLE>
- ------------
* To be filed by amendment.
(b) The Financial Statement Schedule filed as part of this Registration
Statement is as follows:
Schedule II -- Valuation and Qualifying Accounts
Information required by other schedules is not applicable or the required
information is included in the Financial Statements or Notes thereto.
ITEM 22. UNDERTAKING.
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
II-2
<PAGE>
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 for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day
of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained
in documents filed subsequent to the effective date of the Exchange Offer
Registration Statement through the date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means to 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 Exchange Offer Registration Statement when it became
effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement or amendment to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of New York,
New York, on July 10, 1997.
WELLS ALUMINUM CORPORATION
By: /s/ RUSSELL W. KUPIEC
-------------------------------
Russell W. Kupiec
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of W. Russell Asher, Michael S. Nelson
and Shari Krouner his true and lawful attorney-in-fact and agent, each acting
alone, with full powers of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any or all
amendments to this registration statement 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, each acting alone, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or 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 or amendment has been signed by the following persons
in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
- ----------------------------- ------------------------------------ -----------------
<S> <C> <C>
/s/ RUSSELL W. KUPIEC President, and Chief Executive
----------------------------- Officer and Director (Principal
Russell W. Kupiec Executive Officer) July 10, 1997
/s/ W. RUSSELL ASHER Senior Vice President, Chief
----------------------------- Financial Officer and Director
W. Russell Asher (Principal Accounting Officer) July 10, 1997
/s/ HECTOR ALVAREZ
-----------------------------
Hector Alvarez Director July 10, 1997
/s/ LYNN F. BROWN
----------------------------- Senior Vice President,Sales and
Lynn F. Brown Marketing, and Director July 10, 1997
/s/ ELIZABETH VARLEY CAMP
-----------------------------
Elizabeth Varley Camp Director July 10, 1997
/s/ TODD GOODWIN
-----------------------------
Todd Goodwin Director July 10, 1997
-----------------------------
Edward R. Heiser Director July , 1997
-----------------------------
Isaias Medina Director July , 1997
-----------------------------
Lewis W. van Amerongen Director July , 1997
</TABLE>
II-4
<PAGE>
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
WELLS ALUMINUM CORPORATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
BALANCE AT CHARGED CHARGED
BEGINNING OF TO COSTS AND TO OTHER DEDUCTIONS
DESCRIPTION PERIOD EXPENSES ACCOUNTS DESCRIBE BALANCE
- ------------------------------ --------------- -------------- ---------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1996:
Deducted from assets accounts:
Allowance for doubtful
accounts...................... $ 924,678 $548,555 $(303,233)(1) $1,170,000
---------- -------- -------- ---------- ----------
Total........................ $ 924,678 $548,555 $(303,233) $1,170,000
========== ======== ======== ========== ==========
Year Ended December 31, 1995:
Deducted from assets accounts:
Allowance for doubtful
accounts...................... $1,007,534 $463,534 $(546,390)(1) $ 924,678
---------- -------- -------- ---------- ----------
Total........................ $1,007,534 $463,534 $(546,390) $ 924,678
========== ======== ======== ========== ==========
Year Ended December 31, 1994:
Deducted from assets accounts:
Allowance for doubtful
accounts...................... $1,164,925 $180,000 $(337,391)(1) $1,007,534
---------- -------- -------- ---------- ----------
Total........................ $1,164,925 $180,000 $(337,391) $1,007,534
========== ======== ======== ========== ==========
</TABLE>
- ------------
(1) Uncollectable accounts written off, net of recoveries and adjustments.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ----------- ------------------------------------------------------------------------------------------------
<S> <C>
3.1 Certificate of Incorporation of Wells Aluminum Corporation (the "Company").*
3.2 By-laws of the Company.
4.1 Indenture, dated as of May 28, 1997, between the Company and State Street Bank & Trust Company
(formerly known as Fleet National Bank)(the "Trustee").
4.2 Form of 10 1/8% Series A and Series B Senior Notes due 2005, dated as of May 28, 1997
(incorporated by reference to Exhibit 4.1).
4.3 Registration Rights Agreement, dated as of May 28, 1997, between the Company and Merrill Lynch &
Co. (the "Initial Purchaser").
5.1 Opinion of Kramer, Levin, Naftalis & Frankel.*
10.1 Amended and Restated Credit Agreement, dated as of May 28, 1997, among the Company, the
lending institutions party thereto and Credit Agricole Indosuez, as agent.
10.2 Amended and Restated General Security Agreement, dated as of
May 28, 1997, between the Company and Credit Agricole Indosuez.
10.3 Purchase and Sale Agreement, dated as of November 1, 1994, between the Company and CVG Industria
Venezolana de Aluminio C.A.*
12.1 Statement re computation of ratio of earnings to fixed charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Kramer, Levin, Naftalis & Frankel (to be contained in the opinion filed as Exhibit
5.1).*
24.1 Power of Attorney (incorporated by reference in the signature pages).
25.1 Form T-1 Statement of Eligibility and Qualification of State Street Bank & Trust Company
(formerly known as Fleet National Bank), as trustee.*
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Exchange Agent Agreement.*
</TABLE>
- ------------
* To be filed by amendment.
<PAGE>
BYLAWS
OF
WELLS ALUMINUM CORPORATION
ARTICLE I
Stockholders
SECTION 1. Annual Meeting.
The annual meeting of the stockholders for the election of Directors
and for the transaction of general business shall be held on the fourth Monday
in April of each year if not a legal holiday, and if a legal holiday then on the
next secular day following, at 2:00 p.m. or at such other date and time as the
Board of Directors may provide in the notice of meeting. The annual meeting
shall be open for the transaction of any business within the powers of the
Corporation without special notice of such business, except when special notice
is specifically required by law or by charter. Failure to hold an annual meeting
at the designated time or at any other time shall not invalidate the
Corporation's existence or affect any otherwise valid corporate act.
SECTION 2. Special Meetings.
Special meetings of the stockholders may be called at any time for any
purpose by the Chairman of the Board, by the President, or by a majority of the
members of the Board of Directors, and shall be called by the Secretary of the
Corporation upon the written request of the holders of at least 25% of all the
shares of stock outstanding and entitled to vote on the business to be
transacted at the special meeting. The written request shall state the purpose
or purposes of the meeting and the matters proposed to be acted on at the
meeting. However called, notice of the meeting shall be given to each
stockholder and shall state the purpose or purposes of the meeting. No business
other than that stated in the notice shall be transacted at any special meeting.
SECTION 3. Place of Meetings.
All meetings of stockholders shall be held at the principal offices of
the Corporation or such other location in the United States as the Board of
Directors may provide in the notice of the meeting.
<PAGE>
SECTION 4. Notice of Meetings.
Written notice of each meeting of the stockholders shall be given to
each stockholder by delivering such notice to such stockholder or to such
stockholder's residence or usual place of business or by mailing it, postage
prepaid and addressed to such stockholder, to such stockholder's address as it
appears upon the records of the Corporation. The notice shall be delivered or
mailed not more than 90 nor less than 10 days before the meeting, and shall
state the place, day and hour at which the meeting is to be held. No notice of
any meeting of the stockholders need be given to any stockholder who attends the
meeting in person or by proxy or to any stockholder who, in writing executed and
filed with the records of the meeting either before or after the holding
thereof, waives such notice. Any meeting of stockholders annual or special, may
adjourn from time to time to reconvene at the same or some other place without
further notice to a date not more than 120 days after the original record date.
SECTION 5. Quorum.
At any meeting of stockholders, the presence in person or by proxy of
the holders of record of a majority of the shares of stock entitled to vote at
the meeting shall constitute a quorum. In the absence of a quorum, the
stockholders entitled to vote who shall be present in person or by proxy at any
meeting, or adjournment of any meeting, may, by a majority vote of those present
and without further notice, adjourn the meeting from time to time, but not for a
period of more than 120 days after the original record date, until a quorum
shall attend. At any adjourned meeting at which a quorum shall be present, any
business may be transacted that could have been transacted if the meeting had
been held as originally scheduled.
SECTION 6. Conduct of Meetings.
Meetings of stockholders shall be presided over by the Chairman of the
Board (if a Chairman of the Board has been elected by the Board of Directors)
or, in his or her absence, by the President or, if none of those officers is
present, by a chairman to be elected at the meeting. The Secretary shall act as
secretary of meetings of the stockholders, and in his or her absence, the record
of the proceedings shall be kept and authenticated by any other person at the
meeting appointed for that purpose by the presiding officer.
SECTION 7. Adjournment of Meeting.
Any meeting of stockholders, annual or special, at which a quorum is
present, may adjourn from time to time to reconvene at the same or some other
place without further notice to a date not more than 120 days after the original
record date. At any adjourned meeting at which a quorum shall be present, any
business
-2-
<PAGE>
may be transacted that could have been transacted if the meeting had been held
as originally scheduled.
SECTION 8. Proxies.
Stockholders may vote either in person or by proxy, but no proxy that
is dated more than 11 months before the meeting at which it is offered shall be
accepted unless the proxy shall on its face name a longer period for which it is
to remain in force. Every proxy shall be in writing, shall be dated and shall be
signed by the stockholder or by such stockholder's duly authorized agent. A
proxy need not be sealed, witnessed or acknowledged. Proxies shall be filed with
the Secretary of the Corporation at or before the meeting.
SECTION 9. Voting.
At all meetings of stockholders, every stockholder shall be entitled to
one vote for each share of stock of the Corporation registered in such
stockholder's name upon the books of the Corporation on the date the Board of
Directors may fix as the date of record for the determination of stockholders
entitled to vote at such meeting; provided, however, that no share shall be
entitled to be voted if any installment payment on such share is overdue and
unpaid. All elections and matters submitted to a vote at meetings of
stockholders shall be decided by the vote of the holders of a majority of the
votes cast, in person or by proxy, unless a different vote is required by law or
by charter, or is provided for in these bylaws. If the officer presiding over
the meeting shall so determine, a vote by ballot may be taken upon any matter,
and the vote shall be so taken upon the request of the holders of 10% of the
stock present and entitled to vote on the matter.
SECTION 10. Informal Action by Stockholders.
Any action required or permitted to be taken at a meeting of the
stockholders may be taken without a meeting if a consent in writing, setting
forth the action, shall be signed by all of the stockholders entitled to vote on
the matter and such written consent is filed with the records of stockholders'
meetings.
SECTION 11. List of Stockholders.
Prior to each meeting of the stockholders, the Secretary shall prepare,
as of the record date fixed by the Board of Directors with respect to the
meeting, a full and accurate list of all stockholders entitled to vote at the
meeting, indicating the number of shares held by each. The Secretary shall be
responsible for the production of the list at the meeting.
-3-
<PAGE>
ARTICLE II
Board of Directors
SECTION 1. Powers.
The property, business and affairs of the Corporation shall be managed
by the Board of Directors. The Board of Directors may exercise all the powers of
the Corporation, except those conferred upon or reserved to the stockholders by
law, by charter or by these bylaws. The Board of Directors shall keep minutes of
each of its proceedings and a full account of all of its transactions.
SECTION 2. Number of Directors.
The number of directors of the Corporation shall be nine, or such other
number as may from time to time be determined by the vote of two-thirds of the
entire Board of Directors; provided, however, that the number of directors shall
not be less than the number of stockholders unless the number of stockholders
shall be three or more in which case the number of directors shall be not less
than three. The tenure of office of a director may not be affected by any change
in the number of directors.
SECTION 3. Election.
Except as hereinafter provided, the members of the Board of Directors
shall be elected each year at the annual meeting of stockholders by a plurality
of all the votes cast, in person or by proxy, provided a quorum is present.
Directors need not be stockholders. Each director shall hold office until the
next annual meeting of stockholders held after his election and until his
successor has been duly elected and qualifies, until his death, or until he has
resigned or has been removed pursuant to the applicable provisions of these
bylaws.
SECTION 4. Removal.
At a duly called meeting of the stockholders at which a quorum is
present, the stockholders, by vote of the holders of a majority of the votes
cast, in person or by proxy, may remove with or without cause any director or
directors from office, and may elect a successor or successors to fill any
resulting vacancy for the remainder of the term of the director so removed.
SECTION 5. Vacancies.
If any director shall die or resign, or if the stockholders shall
remove any director without electing a successor to fill the remaining term, the
vacancy may be filled by the vote of a majority of the remaining members of the
Board of Directors, although the remaining directors may be less than a quorum.
Vacancies in the Board of Directors created by an increase in the number
-4-
<PAGE>
of directors may be filled by the vote of a majority of the entire Board of
Directors as constituted prior to the increase. A director elected by the Board
of Directors to fill any vacancy, however created, shall hold office until the
next annual meeting of stockholders and until his successor has been duly
elected and qualifies.
SECTION 6. Meetings.
Immediately after each meeting of stockholders at which a Board of
Directors has been elected, the Board of Directors shall meet, without notice,
for the election of officers of the Corporation and for the transaction of other
business. Other, regular meetings of the Board of Directors shall be held at
such times as the Board of Directors may determine by resolution or as may be
designated by the Chairman of the Board or the President. Special meetings of
the Board of Directors may be called at any time by the Chairman of the Board,
by the President or by any two directors. Regular and special meetings of the
Board of Directors may be held at such place, in or outside the State of
Maryland, as the Board of Directors may from time to time determine. Members of
the Board of Directors may participate in meetings by means of a conference call
or similar communication equipment if all persons participating in the meeting
can hear and speak to each other at the same time. Participation in a meeting by
these means constitutes presence in person at such meeting.
SECTION 7. Notice of Meetings.
Except for the meeting immediately following the annual meeting of
stockholders, notice of the place, day and hour of a regular meeting of the
Board of Directors shall be given in writing to each director not less than
three days prior to the meeting by delivering it to the director or to his or
her residence or usual place of business, or by mailing it, postage prepaid and
addressed to him or her at his or her address as it appears upon the records of
the Corporation. Notice of special meetings may be given the same way, or may be
given personally, by telephone, or by telegraph message addressed to the
director at his or her address as it appears upon the records of the
Corporation, not less than one day prior to the meeting. Unless required by
these bylaws or by resolution of the Board of Directors, no notice of any
meeting of the Board of Directors need state the business to be transacted at
the meeting. No notice of any meeting of the Board of Directors need be given to
any director who attends, or to any director who, in writing executed and filed
with the records of the meeting either before or after the holding of the
meeting, waives such notice.
SECTION 8. Quorum.
A majority of the members of the Board of Directors shall constitute a
quorum for the transaction of business at meetings of the Board of Directors.
Except as otherwise provided by law, by
-5-
<PAGE>
charter, or by these bylaws, the vote of a majority of the directors at a duly
constituted meeting shall be sufficient to pass any measure. In the absence of a
quorum, the directors present, by majority vote and without further notice, may
adjourn the meeting from time to time until a quorum shall be present. The Board
of Directors may also take action or make decisions by any other method that may
be permitted by law, by charter, or by these bylaws.
SECTION 9. 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 presumed
to have assented to the action taken unless such director announces his or her
dissent at the meeting, and his or her dissent is entered in the minutes of the
meeting, or such director files his or her written dissent to the action before
the meeting adjourns with the person acting as the secretary of the meeting, or
such director forwards his or her written dissent within 24 hours after the
meeting is adjourned by registered or certified mail to the secretary of the
meeting or the Secretary of the Corporation. The right to dissent does not apply
to a director who voted in favor of the action or who failed to make his or her
dissent known at the meeting. A director may abstain from voting on any matter
coming before the meeting by stating that such director is so abstaining at the
time the vote is taken and by causing his or her abstention to be recorded or
stated in writing in the same manner as provided above for a dissent.
SECTION 10. Informal Action by Directors.
Any action required or permitted to be taken at a meeting of the
directors may be taken without a meeting if a consent in writing, setting forth
the action, shall be signed by all the directors entitled to vote on the matter
and such written consent is filed with the minutes of proceedings of the Board
of Directors.
SECTION 11. Compensation.
Each director shall be entitled to receive such remuneration as may be
fixed from time to time by the Board of Directors. However, no director who
receives a salary as an officer or employee of the Corporation shall receive any
remuneration as a director or as a member of any committee of the Board of
Directors. Each director also may receive reimbursement for the reasonable
expenses such director incurs in attending the meetings of the Board of
Directors, the meetings of any committee thereof, or otherwise in connection
with his or her attention to the affairs of the Corporation.
-6-
<PAGE>
ARTICLE III
Committees
SECTION 1. Executive Committee.
The Board of Directors, by resolution adopted by a majority of the
members of the entire Board of Directors, may provide for an Executive
Committee. If provision is made for an Executive Committee, the members thereof
shall be elected by the Board of Directors from their own members to serve at
the pleasure of the Board of Directors. During the intervals between the
meetings of the Board of Directors, the Executive Committee shall have and may
exercise all the authority of the Board of Directors except to the extent, if
any, that such authority shall be limited by law, by charter or by resolution of
the Board of Directors. All action taken by the Executive Committee shall be
reported to the Board of Directors at its next meeting after such action, and
shall be subject to revision and alteration by the Board of Directors, provided
that no rights of third parties shall be affected by any such revision or
alteration. Such delegation of authority to the Executive Committee shall not
relieve the Board of Directors or any director of any responsibility imposed by
law or by charter.
SECTION 2. Other Committees.
From time to time the Board of Directors by the affirmative vote of a
majority of the members of the entire Board of Directors may by resolution
provide for and appoint any other committee or committees, composed of one or
more directors, to have such powers and perform such duties as may be assigned
to it by the Board of Directors. The appointment of a committee of the Board of
Directors and the delegation of authority to such committee shall not relieve
the Board of Directors or any director of any responsibility imposed by law or
by charter.
SECTION 3. Meetings of Committees.
Each committee of the Board of Directors shall fix its own rules of
procedure, and shall meet as provided by those rules, or by resolution of the
Board of Directors, or at the call of the chairman or any two members of the
committee. A majority of each entire committee shall constitute a quorum, and in
every case the affirmative vote of a majority of the entire committee shall be
necessary to take any action. Members of a committee may participate in meetings
by means of a conference call or similar communication if all persons
participating in the meeting can hear each other at the same time. Participation
in a meeting by these means constitutes presence in person at such meeting. Each
committee also may take action by any other method that may be permitted by law,
by charter or by these bylaws. In the event a member of a committee fails to
attend any meeting of that committee, the other members of that committee
present at the meeting, whether or not they constitute a quorum, may appoint a
-7-
<PAGE>
member of the Board of Directors to act in the place of such absent member.
Vacancies in any committee of the Board of Directors shall be filled by the
Board of Directors.
ARTICLE IV
Officers
SECTION 1. Election, Tenure, and Compensation.
The Board of Directors shall elect annually at its first meeting
following the annual meeting of stockholders a President, Secretary and
Treasurer, who need not be directors. The Board of Directors may elect from
among its members a Chairman of the Board. The Board of Directors may also elect
one or more Vice Presidents, and such other officers with such powers and duties
as the Board may from time to time designate for the proper conduct of the
business of the Corporation, none of whom need be directors. Each officer shall
be elected by a majority vote of the entire Board of Directors and shall hold
office until the first meeting of the Board of Directors following the next
annual meeting of stockholders and thereafter until his successor is duly
elected and qualifies, or until his death, resignation or removal. The Board of
Directors shall have power to fix the compensation of all officers of the
Corporation.
SECTION 2. Chairman of the Board.
The Chairman of the Board, if one is elected, shall preside at all
meetings of the stockholders and of the Board of Directors at which he or she
shall be present. He or she also shall have such other powers and perform such
other duties as from time to time may be assigned by the Board of Directors.
SECTION 3. President.
The President shall be the Chief Executive Officer of the Corporation
and, subject to the control of the Board of Directors, shall have general charge
and supervision of the Corporation's business, affairs and properties. He or she
shall have authority to sign and execute, in the name of the Corporation, all
authorized deeds, mortgages, bonds, contracts or other instruments. He or she
may sign, with the Secretary, the Treasurer, an Assistant Secretary or an
Assistant Treasurer, certificates of stock of the Corporation. In the absence of
the Chairman of the Board, the President shall preside at meetings of
stockholders and of the Board of Directors. In general, the President shall
perform all the duties ordinarily incident to the office of a president of a
corporation, and such other duties as, from time to time, may be assigned by the
Board of Directors or by the Executive Committee, if one is established by the
Board of Directors. The President shall annually prepare or cause to be prepared
a full and correct statement of the affairs of the Corporation, which statement
shall
-8-
<PAGE>
include a balance sheet and a financial statement of the operations of the
Corporation during the preceding fiscal year. This annual statement of affairs
shall be submitted at the annual meeting of the stockholders and placed on file
at the Corporation's principal office within 20 days after each annual meeting.
SECTION 4. Vice Presidents.
Each Vice President, which term shall include any Executive Vice
President, shall have the power to sign and execute, unless otherwise provided
by resolution of the Board of Directors, all contracts or other obligations in
the name of the Corporation in the ordinary course of business, and with the
Secretary, or with the Treasurer, or with an Assistant Secretary, or with an
Assistant Treasurer, may sign certificates of stock of the Corporation. At the
request of the President or in his absence or during his inability to act, the
Vice President or Vice Presidents shall perform the duties and exercise the
functions of the President, and when so acting shall have the powers of the
President. If there be more than one Vice President, the Board of Directors may
determine which one or more of the Vice Presidents shall perform any of such
duties or exercise any of such functions, or if such determination is not made
by the Board of Directors, the President may make such determination. The Vice
President or Vice Presidents shall have such other powers and perform such other
duties as may be assigned by the Board of Directors or by the President. For the
purposes of this Article IV, Section 4, the term Vice President does not include
a Vice President appointed pursuant to Article IV, Section 9.
SECTION 5. Secretary.
The Secretary shall keep the minutes of the meetings of the
stockholders, including all the votes taken at such meetings, and record them in
books provided for that purpose. He or she shall see that all notices are duly
given in accordance with the provisions of these bylaws or as required by law.
He or she shall be the custodian of the records and of the corporate seal of the
Corporation. He or she shall see that the corporate seal is affixed to all
documents, the execution of which on behalf of the Corporation under its seal is
duly authorized, and when so affixed may attest the seal. He may sign with the
President or a Vice President, certificates of stock of the Corporation. In
general, the Secretary shall perform all duties ordinarily incident to the
office of a secretary of a corporation, and such other duties as, from time to
time, may be assigned by the Board of Directors or by the President.
SECTION 6. Treasurer.
The Treasurer shall have charge of and be responsible for all funds,
securities, receipts and disbursements of the Corporation, and shall deposit or
cause to be deposited, in the name of the Corporation, all moneys or other
valuable effects in
-9-
<PAGE>
such banks, trust companies or depositories as may be designated by the Board of
Directors. He or she shall maintain full and accurate accounts of all assets,
liabilities and transactions of the Corporation and shall render to the
President and the members of the Board of Directors at regular meetings of the
Board of Directors, or whenever they may require it, an account of all his or
her transactions as Treasurer and of the financial condition of the Corporation.
In general, the Treasurer shall perform all the duties ordinarily incident to
the office of a treasurer of a corporation, and such other duties as, from time
to time, may be assigned to him by the Board of Directors or by the President.
The Treasurer shall give the Corporation a bond, if required by the Board of
Directors, in a sum, and with one or more sureties, satisfactory to the Board of
Directors, for the faithful performance of the duties of the office and for the
restoration to the Corporation in case of his or her death, resignation,
retirement or removal from office of all Corporation books, papers, vouchers,
moneys and other properties of whatever kind in his or her possession or
control.
SECTION 7. Subordinate Officers.
The subordinate officers shall consist of such assistant officers as
may be deemed desirable and as may be elected by a majority of the members of
the Board of Directors. Each such subordinate officer shall hold office for such
period, have such authority and perform such duties as the Board of Directors
may prescribe.
SECTION 8. Officers Holding Two or More Offices.
Any two or more of the above-named offices may be held by the same
person, except that the office of President and Vice President may not be held
by the same person. No officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument be required by law, by
charter, by these bylaws, or by resolution of the Board of Directors to be
executed, acknowledged or verified by two or more officers.
SECTION 9. Appointed Vice Presidents.
The President may from time to time designate one or more Appointed
Vice Presidents with such administrative powers and duties as may be designated
or approved by the President. Any such Appointed Vice President shall not be a
corporate officer and may be removed by the President.
SECTION 10. Removal and Vacancies.
Any officer of the Corporation may be removed, with or without cause,
by a vote of a majority of the entire Board of Directors. A vacancy in any
office because of removal, resignation, death or any other cause may be filled
for the unexpired
-10-
<PAGE>
portion of the term by election of the Board of Directors at any
regular or special meeting.
ARTICLE V
Stock
SECTION 1. Payment.
The consideration for the issuance of stock in the Corporation may be
paid in whole or in part in money, tangible or intangible property, labor or
services actually performed for the Corporation, a promissory note or other
obligation for future payment in money or contracts for labor or services to be
performed. The Corporation may place in escrow stock issued for a contract for
future labor or services or a promissory note or other obligation for future
payment in money, or make such other arrangements restricting transfer of the
stock as are permitted by law.
SECTION 2. Certificates.
Each stockholder shall be entitled to a certificate or certificates
that shall represent and certify the number and kind of shares of stock owned by
him in the Corporation for which full payment has been made or for which
certificates are permitted to be issued under Maryland law prior to full
payment. Such certificates shall be signed by the President or a Vice President
and countersigned by the Secretary or Treasurer or any Assistant Secretary or
Assistant Treasurer, and shall bear the seal of the Corporation. A certificate
shall be deemed to be so signed and sealed whether the required signatures be
manual or facsimile signatures and whether the seal be a facsimile seal or any
other form of seal. In case any officer of the Corporation who has signed any
certificate ceases to be an officer of the Corporation, whether because of
death, resignation or otherwise, before such certificate is issued, the
certificate may nevertheless be issued and delivered by the Corporation as if
the officer had not ceased to be such officer as of the date of its issue.
SECTION 3. Transfer of Shares.
Shares of stock shall be transferable only on the books of the
Corporation by the holder of the shares, in person or by duly authorized agent,
upon the surrender of the certificate representing the shares to be transferred,
properly endorsed. The Board of Directors shall have power and authority to make
such other rules and regulations concerning the issue, transfer and registration
of certificates of stock as it may deem expedient.
-11-
<PAGE>
SECTION 4. New Certificates.
In case any certificate of stock is alleged to have been lost, stolen
or destroyed, the Board of Directors may authorize the issue of a new
certificate upon such terms and conditions as it may deem advisable. The Board
of Directors may, in its discretion, further require the owner of such
certificate or his duly authorized agent to give bond with sufficient surety to
the Corporation to indemnify it against any loss or claim that may arise by
reason of the issue of a certificate in the place of one reportedly lost, stolen
or destroyed.
SECTION 5. Record Dates.
The Board of Directors may fix, in advance, a date as the record date
for the purpose of determining those stockholders who shall be entitled to
notice of, or to vote at, any meeting of stockholders, or for the purpose of
determining those stockholders who shall be entitled to receive payment of any
dividend or the allotment of any rights, or for the purpose of making any other
proper determination with respect to stockholders. Such date, in any case, shall
be not more than 90 days, and in the case of a meeting of stockholders, not less
than 10 days, prior to the date on which the particular action, requiring such
determination of stockholders, is to be taken. In lieu of fixing a record date,
the Board of Directors may provide that the stock transfer books shall be closed
for a stated period, not to exceed in any case 20 days. When the stock transfer
books are closed for the purpose of determining stockholders entitled to notice
of or to vote at a meeting of stockholders, the closing of the transfer books
shall be at least ten days before the date of such meeting.
ARTICLE VI
Stockholder Distributions and Finance
SECTION 1. Distributions.
Subject to any conditions and limitations of the charter or law, the
Board of Directors may in its discretion determine what, if any, distributions
shall be made to the stockholders of the Corporation, the date when such
distributions shall be made, and the date for the determination of holders of
record to whom such distributions shall be made.
SECTION 2. Depositories.
The Board of Directors from time to time shall designate one or more
banks or trust companies as depositories of the Corporation and shall designate
those officers and agents who shall have authority to deposit corporate funds in
such depositories. It shall also designate those officers and agents who shall
have
-12-
<PAGE>
authority to withdraw from time to time any or all of the funds of the
Corporation so deposited upon checks, drafts, or orders for the payment of
money, notices and other evidences of indebtedness, drawn against the account
and issued in the name of the Corporation. Any such designations by the Board of
Directors may be either general or specific. The signatures of such officers or
agents may be made by manual or facsimile signature. No check or order for the
payment of money shall be invalidated because a person whose signature appears
on such check or order has ceased to be an officer or agent of the Corporation
prior to the time of payment of such check or order by any such depository.
SECTION 3. Corporate Obligations.
No loans shall be contracted on behalf of the Corporation and no
evidences of indebtedness or guaranties of the obligations of others shall be
issued in the name of the Corporation unless authorized by a resolution of the
Board of Directors. Such authority may be either general or specific. Unless the
authorizing resolution shall provide otherwise, all loans, promissory notes,
acceptances, other evidences of indebtedness and guaranties shall be signed by
the President, a Vice President, the Secretary or the Treasurer.
SECTION 4. Fiscal Year.
The fiscal year of the Corporation shall be determined by the Board of
Directors and evidenced by a resolution filed with the corporate records.
ARTICLE VII
Books and Records
SECTION 1. Books and Records.
The Corporation shall maintain a stock ledger that shall contain the
name and address of each stockholder and the number of shares of stock of the
Corporation which the stockholder holds. The ledger shall be kept at the
principal offices of the Corporation. All other books, accounts and records of
the Corporation, including the original or a certified copy of these bylaws, the
minutes of all stockholders meetings, a copy of the annual statement, and any
voting trust agreements on file with the Corporation, shall also be kept and
maintained by the Secretary at the principal offices of the Corporation.
SECTION 2. Inspection Rights.
Except as otherwise provided by law or by charter, the Board of
Directors shall determine whether and to what extent the books, accounts, and
records of the Corporation, or any of them, shall be open to the inspection of
stockholders. No stockholder
-13-
<PAGE>
shall have any right to inspect any book, account, document or record of the
Corporation, except as conferred by law, by charter, or by resolution of the
Board of Directors.
ARTICLE VIII
Indemnification
SECTION 1. Indemnification.
The Corporation to the full extent permitted by, and in the manner
permissible under, the laws of the State of Maryland and other applicable laws
and regulations may indemnify any person who is or was an officer, employee, or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee, or agent of another corporation or entity and
shall indemnify any director of the Corporation or any director who is or was
serving at the request of the Corporation as a director of another corporation
or entity, who by reason of his or her position was, is, or is threatened to be
made a party to an action or proceeding, whether civil, criminal,
administrative, or investigative, against any and all expenses (including, but
not limited to, attorneys' fees, judgments, fines, penalties, and amounts paid
in settlement) actually and reasonably incurred by the director, officer,
employee, or agent in connection with the proceeding. Repeal or modification of
this Section or the relevant law shall not affect adversely any rights or
obligations then existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.
ARTICLE IX
Amendments
SECTION 1. Amendment of Bylaws.
The Board of Directors shall have the power and authority to amend,
alter or repeal all or any provisions of these bylaws and may from time to time
make additional bylaws. The stockholders also shall have full power to amend,
alter or repeal all or any provisions of these bylaws and to make additional
bylaws at any annual meeting as part of the general business of such meeting, or
at any special meeting provided there was stated in the notice of such special
meeting given to the stockholders the substance of such proposed alteration or
repeal. Any bylaws so made, modified, or altered by the stockholders shall not
be modified, changed or rendered ineffective by any action taken by the Board of
Directors prior to the annual meeting of stockholders next following the meeting
of stockholders at which such action was taken.
-14-
<PAGE>
WELLS ALUMINUM CORPORATION, AS ISSUER,
AND
FLEET NATIONAL BANK, AS TRUSTEE
-------
INDENTURE
DATED AS OF MAY 28, 1997
----------
$105,000,000
10 1/8% SENIOR NOTES DUE 2005
<PAGE>
Reconciliation and tie between Trust Indenture Act
of 1939, as amended, and Indenture, dated as of May 28, 1997
Trust Indenture Indenture
Act Section Section
- --------------- ---------
ss. 310 (a)(1).............................................609
(a)(2).............................................609
(b)................................................607, 610
ss. 311 (a)................................................613
ss. 312 (a)................................................701
(c)................................................702
ss. 313 (a)................................................703
(c)................................................703, 704
ss. 314 (a)................................................704
(a)(4).............................................1018
(c)(1).............................................103
(c)(2).............................................103
(e)................................................103
ss. 315 (a)................................................601(b)
(b)................................................602
(c)................................................601(a)
(d)................................................601(c), 603
(e)................................................514
ss. 316 (a)(last sentence).................................101 ("Outstanding")
(a)(1)(A)..........................................502, 512
(a)(1)(B)..........................................513
(b)................................................508
(c)................................................105
ss. 317 (a)(1).............................................503
(a)(2).............................................504
(b)................................................1003
ss. 318 (a)................................................108
- -----------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
PARTIES.....................................................................1
RECITALS....................................................................1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION
Section 101. Definitions....................................................1
"Acquired Indebtedness"................................2
"Affiliate"............................................2
"Applicable Premium"...................................2
"Applicable Spread"....................................2
"Asset Sale"...........................................3
"Asset Swap"...........................................3
"Average Life to Stated Maturity"......................3
"Bankruptcy Law".......................................3
"Board of Directors"...................................4
"Board Resolution".....................................4
"Book-Entry Security"..................................4
"Business Day".........................................4
"Capital Lease Obligation".............................4
"Capital Stock"........................................4
"Change of Control"....................................4
"Code".................................................5
"Commission"...........................................5
"Commodity Price Protection Agreement".................5
"Common Stock".........................................5
"Company"..............................................5
"Company Request" or "Company Order"...................6
"Consolidated Fixed Charge Coverage Ratio".............6
"Consolidated Income Tax Expense"......................6
"Consolidated Interest Expense"........................6
"Consolidated Net Income (Loss)".......................7
"Consolidated Non-cash Charges"........................7
"Consolidation"........................................7
"Corporate Trust Office"...............................7
"Currency Hedging Arrangements"........................8
"Default"..............................................8
(i)
<PAGE>
PAGE
"Depositary"...........................................8
"Disinterested Director"...............................8
"Escrow Account".......................................8
"Event of Default".....................................8
"Exchange Act".........................................8
"Exchange Offer".......................................8
"Exchange Offer Registration Statement"................8
"Existing Credit Facility".............................8
"Existing Subordinated Notes"..........................8
"Fair Market Value"....................................9
"Generally Accepted Accounting Principles" or
"GAAP".................................................9
"Global Securities"....................................9
"Guarantee"............................................9
"Guaranteed Debt"......................................9
"Guarantor"............................................9
"Holder"..............................................10
"Indebtedness"........................................10
"Indenture"...........................................10
"Indenture Obligations"...............................10
"Initial Securities"..................................11
"Initial Purchaser"...................................11
"Interest Payment Date"...............................11
"Interest Rate Agreements"............................11
"Investment"..........................................11
"Issue Date"..........................................11
"Lien"................................................11
"Maturity"............................................11
"Moody's".............................................12
"Net Cash Proceeds"...................................12
"New Credit Facility".................................12
"Non-U.S. Person".....................................13
"Officers' Certificate"...............................13
"Opinion of Counsel"..................................13
"Opinion of Independent Counsel"......................13
"Outstanding".........................................13
"Pari Passu Indebtedness".............................14
"Paying Agent"........................................14
"Permitted Holders"...................................15
"Permitted Indebtedness"..............................15
"Permitted Investment"................................17
"Permitted Lien"......................................17
"Person"..............................................19
(ii)
<PAGE>
PAGE
"Predecessor Security"................................19
"Preferred Stock".....................................19
"Prospectus"..........................................19
"Public Equity Offering"..............................19
"Purchase Money Obligation"...........................19
"QIB".................................................20
"Qualified Capital Stock".............................20
"Recapitalization"....................................20
"Redeemable Capital Stock"............................20
"Redemption Date".....................................20
"Redemption Price"....................................20
"Registration Rights Agreement".......................20
"Registration Statement"..............................20
"Regular Record Date".................................21
"Responsible Officer".................................21
"Sale and Leaseback Transaction"......................21
"S&P".................................................21
"Securities Act"......................................21
"Shelf Registration Statement"........................21
"Significant Subsidiary"..............................21
"Special Record Date".................................21
"Stated Maturity".....................................22
"Subordinated Indebtedness"...........................22
"Subsidiary"..........................................22
"Temporary Cash Investments"..........................22
"Trustee".............................................23
"Trust Indenture Act".................................23
"Treasury Rate".......................................23
"Unrestricted Subsidiary".............................23
"Unrestricted Subsidiary Indebtedness"................24
"Venalum Purchase and Sale Agreement".................24
"Voting Stock"........................................24
"Wholly Owned Subsidiary".............................25
Section 102. Other Definitions.............................................25
Section 103. Compliance Certificates and Opinions..........................26
Section 104. Form of Documents Delivered to Trustee........................27
Section 105. Acts of Holders...............................................28
Section 106. Notices, etc., to the Trustee, the Company and any
Guarantor..........................................29
Section 107. Notice to Holders; Waiver.....................................29
Section 108. Conflict with Trust Indenture Act.............................30
Section 109. Effect of Headings and Table of Contents......................30
Section 110. Successors and Assigns........................................30
(iii)
<PAGE>
PAGE
Section 111. Separability Clause...........................................30
Section 112. Benefits of Indenture.........................................31
SECTION 113. GOVERNING LAW.................................................31
Section 114. Legal Holidays................................................31
Section 115. Independence of Covenants.....................................31
Section 116. Schedules and Exhibits........................................31
Section 117. Counterparts..................................................31
Section 118. No Personal Liability of Directors, Officers, Incorporators,
Employees and Stockholders...........................32
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally..............................................32
Section 202. Form of Face of Security.....................................33
Section 203. Form of Reverse of Securities................................46
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms..............................................55
Section 302. Denominations................................................56
Section 303. Execution, Authentication, Delivery and Dating...............56
Section 304. Temporary Securities.........................................57
Section 305. Registration, Registration of Transfer and Exchange..........58
Section 306. Book-Entry Provisions for U.S. Global Security...............60
Section 307. Special Transfer Provisions..................................62
Section 308. Mutilated, Destroyed, Lost and Stolen Securities.............66
Section 309. Payment of Interest; Interest Rights Preserved...............67
Section 310. CUSIP Numbers................................................68
Section 311. Persons Deemed Owners........................................68
Section 312. Cancellation.................................................69
Section 313. Computation of Interest......................................69
ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. Company's Option to Effect Defeasance or Covenant
Defeasance...........................................69
Section 402. Defeasance and Discharge.....................................69
Section 403. Covenant Defeasance..........................................70
Section 404. Conditions to Defeasance or Covenant Defeasance..............70
(iv)
<PAGE>
PAGE
Section 405. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions......73
Section 406. Reinstatement................................................73
ARTICLE FIVE
REMEDIES
Section 501. Events of Default............................................74
Section 502. Acceleration of Maturity; Rescission and Annulment...........76
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee...........................................77
Section 504. Trustee May File Proofs of Claim.............................78
Section 505. Trustee May Enforce Claims without Possession of
Securities..........................................79
Section 506. Application of Money Collected...............................79
Section 507. Limitation on Suits..........................................80
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest................................81
Section 509. Restoration of Rights and Remedies...........................81
Section 510. Rights and Remedies Cumulative...............................81
Section 511. Delay or Omission Not Waiver.................................81
Section 512. Control by Holders...........................................82
Section 513. Waiver of Past Defaults......................................82
Section 514. Undertaking for Costs........................................82
Section 515. Waiver of Stay, Extension or Usury Laws......................83
Section 516. Remedies Subject to Applicable Law...........................83
ARTICLE SIX
THE TRUSTEE
Section 601. Duties of Trustee............................................83
Section 602. Notice of Defaults...........................................85
Section 603. Certain Rights of Trustee....................................85
Section 604. Trustee Not Responsible for Recitals, Dispositions of
Securities or Application of Proceeds Thereof......86
Section 605. Trustee and Agents May Hold Securities; Collections; etc.....87
Section 606. Money Held in Trust..........................................87
Section 607. Compensation and Indemnification of Trustee and Its Prior
Claim................................................87
Section 608. Conflicting Interests........................................88
Section 609. Trustee Eligibility..........................................88
Section 610. Resignation and Removal; Appointment of Successor
Trustee............................................88
(v)
<PAGE>
PAGE
Section 611. Acceptance of Appointment by Successor.......................90
Section 612. Merger, Conversion, Consolidation or Succession to
Business............................................91
Section 613. Preferential Collection of Claims Against Company............91
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND
COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of
Holders..............................................92
Section 702. Disclosure of Names and Addresses of Holders.................92
Section 703. Reports by Trustee...........................................92
Section 704. Reports by Company...........................................93
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OF ASSETS
Section 801. Company and Guarantors May Consolidate, etc., Only on
Certain Terms........................................94
Section 802. Successor Substituted........................................96
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements without Consent
of Holders..........................................97
Section 902. Supplemental Indentures and Agreements with Consent of
Holders.............................................98
Section 903. Execution of Supplemental Indentures and Agreements..........99
Section 904. Effect of Supplemental Indentures...........................100
Section 905. Conformity with Trust Indenture Act.........................100
Section 906. Reference in Securities to Supplemental Indentures..........100
Section 907. Notice of Supplemental Indentures...........................100
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.................100
Section 1002. Maintenance of Office or Agency............................101
Section 1003. Money for Security Payments to Be Held in Trust............101
Section 1004. Corporate Existence........................................103
(vi)
<PAGE>
Section 1005. Payment of Taxes and Other Claims..........................103
Section 1006. Maintenance of Properties..................................103
Section 1007. Maintenance of Insurance...................................104
Section 1008. Limitation on Indebtedness.................................104
Section 1009. Limitation on Restricted Payments..........................105
Section 1010. Limitation on Transactions with Affiliates.................109
Section 1011. Limitation on Liens........................................110
Section 1012. Limitation on Sale of Assets...............................111
Section 1013. Limitation on Issuances of Guarantees of Indebtedness......116
Section 1014. Restriction on Transfer of Assets..........................116
Section 1015. Purchase of Securities upon a Change of Control............117
Section 1016. Limitation on Sale and Leaseback Transactions..............120
Section 1017. Limitation on Subsidiary Capital Stock.....................121
Section 1018. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries............................121
Section 1019. Limitations on Unrestricted Subsidiaries...................122
Section 1020. Provision of Financial Statements..........................122
Section 1021. Statement by Officers as to Default........................123
Section 1022. Waiver of Certain Covenants................................123
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Rights of Redemption.......................................124
Section 1102. Applicability of Article...................................124
Section 1103. Election to Redeem; Notice to Trustee......................124
Section 1104. Selection by Trustee of Securities to Be Redeemed..........125
Section 1105. Notice of Redemption.......................................125
Section 1106. Deposit of Redemption Price................................126
Section 1107. Securities Payable on Redemption Date......................127
Section 1108. Securities Redeemed or Purchased in Part...................127
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201. Satisfaction and Discharge of Indenture....................127
Section 1202. Application of Trust Money.................................129
TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGMENTS
(vii)
<PAGE>
PAGE
ANNEX A Form of Intercompany Note
SCHEDULE I Existing Indebtedness
SCHEDULE II Existing Dividend Restrictions
EXHIBIT A Form of Certificate to Be Delivered upon
Termination of Restricted Period
EXHIBIT B Form of Certificate to Be Delivered in Connection
with Transfers to Non-QIB Institutional Accredited
Investors
EXHIBIT C Form of Certificate to Be Delivered in Connection
with Transfers Pursuant to Regulation S
APPENDIX I Form of Transferee Certificate for Series A
Securities
APPENDIX II Form of Transferee Certificate for Series B
Securities
(viii)
<PAGE>
INDENTURE, dated as of May 28, 1997, between Wells Aluminum
Corporation, a Maryland corporation (the "Company"), and Fleet National Bank, as
trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of
10 1/8% Senior Notes due 2005, Series A (the "Series A Securities" or the
"Initial Securities"), and an issue of 10 1/8% Senior Notes due 2005, Series B
(the "Series B Securities" and, together with the Series A Securities, the
"Securities"), 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 and the Securities;
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act that are required to be part of and to
govern indentures qualified under the Trust Indenture Act;
All acts and things necessary have been done to make the
Securities, when duly issued and executed by the Company and authenticated and
delivered hereunder, the valid obligations of the Company and this Indenture a
valid agreement of the Company and each of the Guarantors in accordance with the
terms of this Indenture;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities, 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 include the plural as well as the
singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
<PAGE>
(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) all references to $, US$, dollars or United States dollars
shall refer to the lawful currency of the United States of America; and
(f) all references herein to particular Sections or Articles
refer to this Indenture unless otherwise so indicated.
Certain terms used principally in Article Four are defined in
Article Four.
"Acquired Indebtedness" means Indebtedness of a Person (i)
existing at the time such Person becomes a Subsidiary or (ii) assumed in
connection with the acquisition of assets from such Person, in each case, other
than Indebtedness incurred in connection with, or in contemplation of, such
Person becoming a Subsidiary or such acquisition, as the case may be. Acquired
Indebtedness shall be deemed to be incurred on the date of the related
acquisition of assets from any Person or the date the acquired Person becomes a
Subsidiary, as the case may be.
"Affiliate" means, with respect to any specified Person: (i)
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person; (ii) any other
Person that owns, directly or indirectly, 5% or more of such specified Person's
Capital Stock or any officer or director of any such specified Person or other
Person or, with respect to any natural Person, any person having a relationship
with such Person by blood, marriage or adoption not more remote than first
cousin; or (iii) any other Person 5% or more of the Voting Stock of which is
beneficially owned or held directly or indirectly by such specified Person. For
the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Applicable Premium" with respect to the Securities is defined
as the greater of (i) 1.0% of the then outstanding principal amount of such
Securities and (ii) the excess of (A) the present value of the required interest
and principal payments due on such Securities, computed using a discount rate
equal to the Treasury Rate plus the Applicable Spread, over (B) the then
outstanding principal amount of such Securities.
"Applicable Spread" is defined as 75 basis points.
2
<PAGE>
"Asset Sale" means any sale, issuance, conveyance, transfer,
lease or other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback transaction) (collectively, a "transfer"),
directly or indirectly, in one or a series of related transactions, of: (i) any
Capital Stock of any Subsidiary; (ii) all or substantially all of the properties
and assets of any division or line of business of the Company or its
Subsidiaries; or (iii) any other properties or assets of the Company or any
Subsidiary other than in the ordinary course of business. For the purposes of
this definition, the term "Asset Sale" shall not include any transfer of
properties and assets (A) that is governed by Article Eight, (B) that is by the
Company to any Guarantor, or by any Subsidiary to the Company or any Wholly
Owned Subsidiary in accordance with the terms of the Indenture, (C) that is of
obsolete equipment in the ordinary course of business, (D) that represents sales
of aluminum as raw material as part of the Company's inventory management
procedures in the ordinary course of business, (E) the Fair Market Value of
which in the aggregate does not exceed $1 million in any transaction or series
of related transactions or (F) the disposition of the Escrow Account in order to
repurchase the Existing Subordinated Notes.
"Asset Swap" means a disposition by the Company or any
Subsidiary of any aluminum production plant or facility or extrusion, casting,
painting, anodizing or fabrication operations of an aluminum production plant or
facility for an aluminum production plant or facility or extrusion, casting,
painting, anodizing or fabrication assets of an aluminum production facility (or
the Capital Stock of a Person owning extrusion, casting, painting, anodizing or
fabrication assets of an aluminum production plant or facility); provided that
the Board of Directors of the Company shall have approved such disposition and
exchange and determined the Fair Market Value of the assets subject to such
transaction as evidenced by a board resolution or such Fair Market Value has
been determined by a written opinion of an investment banking firm of national
standing or other recognized independent expert with experience appraising the
terms and conditions of the type of transaction contemplated thereby.
"Average Life to Stated Maturity" means, as of the date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years from the date of
determination to the date or dates of each successive scheduled principal
payment of such Indebtedness multiplied by (b) the amount of each such principal
payment by (ii) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code
of 1978, as amended, or any similar United States federal or state 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 the board of directors of the
Company or any Guarantor, as the case may be, or any duly authorized committee
of such board.
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"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company or any Guarantor, as the
case may be, to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Book-Entry Security" means any Securities bearing the legend
specified in Section 202 evidencing all or part of a series of Securities,
authenticated and delivered to the Depositary for such series or its nominee,
and registered in the name of such Depositary or nominee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions or trust companies
in The City of New York or the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law, regulation or executive
order to close.
"Capital Lease Obligation" of any Person means any obligation
of such Person and its Subsidiaries on a Consolidated basis under any capital
lease of real or personal property which, in accordance with GAAP, has been
recorded as a capitalized lease obligation.
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock or other equity interests whether now outstanding or
issued after the date hereof.
"Change of Control" means the occurrence of any of the
following events: (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, is
or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person shall be deemed to have beneficial ownership
of all shares that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total outstanding Voting Stock of the
Company, provided, that the Permitted Holders "beneficially own" (as so defined)
a lesser percentage of such Voting Stock than such other "person" or "group" and
do not have the right or ability by voting power, contract or otherwise to elect
or designate for election a majority of the Board of Directors of the Company;
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such board or whose
nomination for election by the stockholders of the Company was approved by a
vote of 66 2/3% of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for election was
previously so approved), cease for any reason to constitute a majority of such
Board of Directors then in office; (iii) the Company consolidates with or merges
with or into any Person or conveys, transfers or leases all or substantially all
of its assets to any Person, or
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any corporation consolidates with or merges into or with the Company in any such
event pursuant to a transaction in which the outstanding Voting Stock of the
Company is changed into or exchanged for cash, securities or other property,
other than any such transaction where the outstanding Voting Stock of the
Company is not changed or exchanged at all (except to the extent necessary to
reflect a change in the jurisdiction of incorporation of the Company or where
(A) the outstanding Voting Stock of the Company is changed into or exchanged for
(x) Voting Stock of the surviving corporation which is not Redeemable Capital
Stock or (y) cash, securities and other property (other than Capital Stock of
the surviving corporation) in an amount which could be paid by the Company as a
Restricted Payment as described in Section 1009 (and such amount shall be
treated as a Restricted Payment subject to the provisions in the Indenture
described in Section 1009) and (B) no "person" or "group," other than Permitted
Holders, owns immediately after such transaction, directly or indirectly, more
than the greater of (i) 35% of the total outstanding Voting Stock of the
surviving corporation and (ii) the percentage of the outstanding Voting Stock of
the surviving corporation owned, directly or indirectly, by Permitted Holders
immediately after such transaction); or (iv) the Company is liquidated or
dissolved or adopts a plan of liquidation or dissolution other than in a
transaction which complies with the provisions described under Article Eight.
"Code" means the Internal Revenue Code of 1986, as amended.
"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.
"Commodity Price Protection Agreement" means any forward
contract, commodity swap, commodity option or other similar financial agreement
or arrangement relating to, or the value which is dependent upon, fluctuations
in commodity prices.
"Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Company" means Wells Aluminum Corporation, a corporation
incorporated under the laws of Maryland, 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 by any one of its Chairman of the
Board, its President, its Chief Executive Officer, its Chief Financial Officer
or a Vice President (regardless of Vice Presidential designation), and by any
one of its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
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"Consolidated Fixed Charge Coverage Ratio" of any Person
means, for any period, the ratio of (a) the sum of Consolidated Net Income
(Loss), Consolidated Interest Expense, Consolidated Income Tax Expense and
Consolidated Non-cash Charges deducted in computing Consolidated Net Income
(Loss) in each case, for such period, of such Person and its Subsidiaries on a
Consolidated basis, all determined in accordance with GAAP to (b) the
Consolidated Interest Expense for such period; provided that (i) in making such
computation, the Consolidated Interest Expense attributable to interest on any
Indebtedness computed on a pro forma basis and (A) bearing a floating interest
rate shall be computed as if the rate in effect on the date of computation had
been the applicable rate for the entire period and (B) which was not outstanding
during the period for which the computation is being made but which bears, at
the option of such Person, a fixed or floating rate of interest, shall be
computed by applying at the option of such Person either the fixed or floating
rate and (ii) in making such computation, the Consolidated Interest Expense of
such Person attributable to 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.
"Consolidated Income Tax Expense" of any Person means, for any
period, the provision for federal, state, local and foreign income taxes of such
Person and its Consolidated Subsidiaries for such period as determined in
accordance with GAAP.
"Consolidated Interest Expense" of any Person means, without
duplication, for any period, the sum of (a) the interest expense of such Person
and its Subsidiaries for such period, on a Consolidated basis, including,
without limitation, (i) amortization of debt discount, (ii) the net costs
associated with Interest Rate Agreements, Currency Hedging Agreements and
Commodity Price Protection Agreements (including amortization of discounts),
(iii) the interest portion of any deferred payment obligation and (iv) accrued
interest, plus (b) (i) the interest component of the Capital Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person and its
Subsidiaries during such period and (ii) all capitalized interest of such Person
and its Subsidiaries plus (c) the interest expense under any Guaranteed Debt of
such Person and any Subsidiary to the extent not included under clause (a)(iv)
above, plus (d) the aggregate amount for such period of cash or non-cash
dividends on any Redeemable Capital Stock or Preferred Stock of the Company and
its Subsidiaries, in each case as determined on a Consolidated basis in
accordance with GAAP.
"Consolidated Net Income (Loss)" of any Person means, for any
period, the Consolidated net income (or loss) of such Person and its
Subsidiaries for such period on a Consolidated basis as determined in accordance
with GAAP, adjusted, to the extent included in calculating such net income (or
loss), by excluding, without duplication, (i) all extraordinary gains or losses,
net of taxes, (less all fees and expenses relating thereto), (ii) the portion of
net income (or loss) of such Person and its Subsidiaries on a Consolidated basis
allocable to minority interests in unconsolidated Persons to the extent
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that cash dividends or distributions have not actually been received by such
Person or one of its Consolidated Subsidiaries, (iii) net income (or loss) of
any Person combined with such Person or any of its Subsidiaries on a "pooling of
interests" basis attributable to any period prior to the date of combination,
(iv) any gain or loss, net of taxes, realized upon the termination of any
employee pension benefit plan, (v) net gains (or losses), net of taxes, (less
all fees and expenses relating thereto) in respect of dispositions of assets
other than in the ordinary course of business, (vi) the net income of any
Subsidiary to the extent that the declaration of dividends or similar
distributions by that Subsidiary of that income is not at the time permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders, (vii) any
restoration to income of any contingency reserve, net of taxes, except to the
extent provision for such reserve was made out of income accrued at any time
following the date of the Indenture, (viii) any gain, net of taxes, arising from
the extinguishment, under GAAP, of any Indebtedness of such Person or (ix) any
gain or loss, net of taxes, arising from non-cash charges or income relating to
the valuation of inventory on a LIFO basis.
"Consolidated Non-cash Charges" of any Person means, for any
period, the aggregate depreciation, amortization and other non-cash charges of
such Person and its subsidiaries on a Consolidated basis for such period, as
determined in accordance with GAAP (excluding (i) any non-cash charge which
requires an accrual or reserve for cash charges for any future period and (ii)
all non-cash charges incurred in connection with the valuation of inventory on a
LIFO basis).
"Consolidation" means, with respect to any Person, the
consolidation of the accounts of such Person and each of its subsidiaries if and
to the extent the accounts of such Person and each of its subsidiaries would
normally be consolidated with those of such Person, all in accordance with GAAP.
The term "Consolidated" shall have a similar meaning.
"Corporate Trust Office" means the office of the Trustee or an
affiliate or agent thereof at which at any particular time the corporate trust
business for the purposes of this Indenture shall be principally administered,
which office at the date of execution of this Indenture is located at 777 Main
Street, Hartford, Connecticut 06115.
"Currency Hedging Arrangements" means one or more of the
following agreements which shall be entered into by one or more financial
institutions: foreign exchange contracts, currency swap agreements or other
similar agreements or arrangements designed to protect against the fluctuations
in currency values.
"Default" means any event which is, or after notice or passage
of any time or both would be, an Event of Default.
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"Depositary" means, with respect to the Securities issued in
the form of one or more Book-Entry Securities, The Depository Trust Company
("DTC"), its nominees and successors, or another Person designated as Depositary
by the Company, which must be a clearing agency registered under the Exchange
Act.
"Disinterested Director" means, with respect to any
transaction or series of related transactions, a member of the Board of
Directors of the Company who does not have any material direct or indirect
financial interest in or with respect to such transaction or series of related
transactions (other than as a result of such directors' Investment in the
Company).
"Escrow Account" means the escrow account established pursuant
to the Escrow Agreement dated the date hereof between the Company and Fleet
National Bank, as Escrow Agent.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
"Exchange Offer" means the exchange offer by the Company of
Series B Securities for Series A Securities to be effected pursuant to Section
2.1 of the Registration Rights Agreement.
"Exchange Offer Registration Statement" means the registration
statement under the Securities Act contemplated by Section 2.1 of the
Registration Rights Agreement.
"Existing Credit Facility" means the Credit Agreement, dated
as of December 21, 1994, among the Company and Banque Indosuez, New York Branch,
as Agent and the Lending Institutions listed therein, as amended.
"Existing Subordinated Notes" means the 14.125% Senior
Subordinated Notes due 2001 originally issued pursuant to the Exchange and
Amendment Agreement, dated December 21, 1994 among the Company and each of the
Purchasers listed on the Schedule of Purchasers thereon, as amended.
"Fair Market Value" means, with respect to any asset or
property, the sale value that would be obtained in an arm's-length transaction
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy. Fair Market Value shall
be determined by the Board of Directors of the Company acting in good faith and
shall be evidenced by a Board Resolution.
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"Generally Accepted Accounting Principles" or "GAAP" means
generally accepted accounting principles in the United States, consistently
applied, which are in effect on the date hereof.
"Global Securities" means a security evidencing all or a part
of the Securities to be issued as Book-Entry Securities issued to the Depositary
in accordance with Section 306.
"Guarantee" means the guarantee by any Guarantor of the
Company's Indenture Obligations.
"Guaranteed Debt" of any Person means, without duplication,
all Indebtedness of any other Person referred to in the definition of
Indebtedness 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 Indebtedness or to advance or supply
funds for the payment or purchase of such Indebtedness, (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
Indebtedness or to assure the holder of such Indebtedness 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 without requiring that such
property be received or such services be rendered), (iv) to maintain working
capital or equity capital of the debtor, or otherwise to maintain the net
worth, solvency or other financial condition of the debtor or (v) otherwise to
assure a creditor against loss; provided that the term "guarantee" shall not
include endorsements for collection or deposit, in either case in the ordinary
course of business.
"Guarantor" means any Subsidiary which is a guarantor of the
Securities, including any Person that is required after the date hereof to
execute a guarantee of the Securities pursuant to Section 1011 or Section 1013
until a successor replaces such party pursuant to the applicable provisions of
this Indenture and, thereafter, shall mean such successor.
"Holder" means a Person in whose name a Security is registered
in the Security Register.
"Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade payables
and other accrued current liabilities arising in the ordinary course of
business, (ii) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (iii) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if 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
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property), but excluding trade payables arising in the ordinary course of
business, (iv) all obligations under Interest Rate Agreements, Currency Hedging
Agreements or Commodity Price Protection Agreements of such Person, (v) all
Capital Lease Obligations of such Person, (vi) all Indebtedness referred to in
clauses (i) through (v) above of other Persons and all dividends of other
Persons, the payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien, upon or with respect to 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 Indebtedness, in which case
the amount of such Indebtedness shall be deemed to be the lesser of (a) the
amount of such Indebtedness and (b) the Fair Market Value of the property that
secures such Indebtedness; (vii) all Guaranteed Debt of such Person, (viii) all
Redeemable Capital Stock issued by such Person valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends, and (ix) any amendment, supplement, modification, deferral, renewal,
extension, refunding or refinancing of any liability of the types referred to in
clauses (i) through (viii) above. For purposes hereof, the "maximum fixed
repurchase price" of any Redeemable Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
this Indenture, and if such price is based upon, or measured by, the Fair Market
Value of such Redeemable Capital Stock, such Fair Market Value to be determined
in good faith by the Board of Directors of the issuer of such Redeemable Capital
Stock.
"Indenture" means this instrument as originally executed
(including all exhibits and schedules thereto) 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.
"Indenture Obligations" means the obligations of the Company
and any other obligor under this Indenture or under the Securities including any
Guarantor, to pay principal of, premium, if any, and interest when due and
payable, and all other amounts due or to become due under or in connection with
this Indenture, the Securities and the performance of all other obligations to
the Trustee and the holders under this Indenture and the Securities, according
to the respective terms thereof.
"Initial Securities" has the meaning stated in the first
recital of this Indenture.
"Initial Purchaser" means Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
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"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate Agreements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
interest rate protection agreements (including, without limitation, interest
rate swaps, caps, floors, collars and similar agreements) and/or other types of
interest rate hedging agreements from time to time.
"Investment" means, with respect to any Person, directly or
indirectly, any advance, loan (including guarantees), or other extension of
credit or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase, acquisition or ownership by such Person of any
Capital Stock, bonds, notes, debentures or other securities issued or owned by
any other Person and all other items that would be classified as investments on
a balance sheet prepared in accordance with GAAP.
"Issue Date" means the date on which the Securities are
originally issued under this Indenture.
"Lien" means any mortgage or deed of trust, charge, pledge,
lien (statutory or otherwise), privilege, security interest, assignment,
deposit, arrangement, easement, hypothecation, claim, preference, priority or
other encumbrance upon or with respect to any property of any kind (including
any conditional sale, capital lease or other title retention agreement, any
leases in the nature thereof, and any agreement to give any security interest),
real or personal, movable or immovable, now owned or hereafter acquired.
"Maturity" means, when used with respect to the Securities,
the date on which the principal of the Securities becomes due and payable as
therein provided or as provided in this Indenture, whether at Stated Maturity,
the Offer Date or the redemption date and whether by declaration of
acceleration, Offer in respect of Excess Proceeds, Change of Control Offer in
respect of a Change of Control, call for redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. or any
successor rating agency.
"Net Cash Proceeds" means (a) with respect to any Asset Sale
by any Person, the proceeds thereof (without duplication in respect of all Asset
Sales) in the form of cash or Temporary Cash Investments including payments in
respect of deferred payment obligations when received in the form of, or stock
or other assets when disposed of for, cash or Temporary Cash Investments (except
to the extent that such obligations are financed or sold with recourse to the
Company or any Subsidiary) net of (i) brokerage
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commissions and other reasonable fees and expenses (including fees and expenses
of counsel and investment bankers) related to such Asset Sale, (ii) provisions
for all taxes payable as a result of such Asset Sale, (iii) payments made to
retire Indebtedness where payment of such Indebtedness is secured by the assets
or properties the subject of such Asset Sale, (iv) amounts required to be paid
to any Person (other than the Company or any Subsidiary) owning a beneficial
interest in the assets subject to the Asset Sale and (v) appropriate amounts to
be provided by the Company or any Subsidiary, as the case may be, as a reserve,
in accordance with GAAP, against any liabilities associated with such Asset Sale
and retained by the Company or any Subsidiary, as the case may be, after such
Asset Sale, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale, all as reflected in an Officers' Certificate delivered to the Trustee and
(b) with respect to any issuance or sale of Capital Stock or options, warrants
or rights to purchase Capital Stock, or debt securities or Capital Stock that
have been converted into or exchanged for Capital Stock as referred to in
Section 1009, the proceeds of such issuance or sale in the form of cash or
Temporary Cash Investments including payments in respect of deferred payment
obligations when received in the form of, or stock or other assets when disposed
of for, cash or Temporary Cash Investments (except to the extent that such
obligations are financed or sold with recourse to the Company or any
Subsidiary), net of attorney's fees, accountant's fees and brokerage,
consultation, underwriting and other fees and expenses actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"New Credit Facility" means the Amended and Restated Credit
Agreement to be dated as of May 28, 1997 by and among the Company, certain
financial institutions and Credit Agricole Indosuez, as agent, providing for an
aggregate $15 million revolving credit facility, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, as such credit agreement and/or related documents may be
amended, restated, supplemented, renewed, replaced or otherwise modified from
time to time whether or not with the same agent, trustee, lenders or holders,
and, subject to the provisos to the next sentence, irrespective of any changes
in the terms and conditions thereof. Without limiting the generality of the
foregoing, the term "New Credit Facility" shall include any amendment, amendment
and restatement, renewal, extension, restructuring, supplement or modification
to the New Credit Facility and all refundings, refinancings and replacements of
the New Credit Facility, including any agreement (i) extending the maturity of
any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or
deleting borrowers or guarantors thereunder, so long as borrowers and issuers
include the Company and its successors and assigns, (iii) increasing the amount
of Indebtedness incurred thereunder or available to be borrowed thereunder,
provided that on the date such Indebtedness is incurred it would not exceed the
amount permitted to be incurred by clause (i) of the definition of Permitted
Indebtedness or (iv) otherwise altering the terms and conditions thereof;
provided,
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further, that in the case of clauses (i) through (iv), any such agreement is
not prohibited by the terms of the Indenture.
"Non-U.S. Person" means a Person that is not a "U.S. person"
as defined in Regulation S under the Securities Act.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President, the Chief Executive Officer, the Chief
Financial Officer or a Vice President (regardless of Vice Presidential
designation), and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company or any Guarantor, as the case may be, and in
form and substance reasonably satisfactory to, and delivered to, the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, any Guarantor or the Trustee, unless an Opinion
of Independent Counsel is required pursuant to the terms of this Indenture, and
who shall be acceptable to the Trustee, and which opinion shall be in form and
substance reasonably satisfactory to the Trustee.
"Opinion of Independent Counsel" means a written opinion of
counsel, who may be regular outside counsel for the Company, but which is issued
by a Person who is not an employee or consultant (other than non-employee legal
counsel) of the Company, or any Guarantor and who shall be reasonably acceptable
to the Trustee, and which opinion shall be inform and substance reasonably
satisfactory to the Trustee.
"Outstanding" when used with respect to Securities means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, 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 Securities; provided that if such Securities are
to be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor reasonably satisfactory to the Trustee has been
made;
(c) Securities, except to the extent provided in Sections 402
and 403, with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article Four; and
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(d) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this Indenture,
other than any such Securities in respect of which there shall have been
presented to the Trustee and the Company proof reasonably satisfactory to each
of them that such Securities are held by a bona fide purchaser in whose hands
the Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company, any Guarantor, or any other obligor upon the Securities or any
Affiliate of the Company, any Guarantor or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the reasonable satisfaction of the Trustee the pledgee's right so
to act with respect to such Securities and that the pledgee is not the Company,
any Guarantor or any other obligor upon the Securities or any Affiliate of the
Company, any Guarantor or such other obligor.
"Pari Passu Indebtedness" means (a) any Indebtedness of the
Company which ranks pari passu in right of payment to the Securities 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)
authorized by the Company to pay the principal of, premium, if any, or interest
on, any Securities on behalf of the Company.
"Permitted Holders" means (i) Gibbons, Goodwin, van Amerongen
("GGvA"), (ii) Edward W. Gibbons, Todd Goodwin, Lewis W. van Amerongen and
Elizabeth Varley Camp (the "GGvA Partners"), (iii) trusts created for the
benefit of any of the GGvA Partners or the spouse, issue, parents or other
relatives of any such GGvA Partner, (iv) entities controlled by any of such GGvA
Partners, and (v) in the event of the death of any of the GGvA Partners, the
heirs or testamentary legatees of such GGvA Partner.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company (and guarantees thereof by
Subsidiaries) under the New Credit Facility in an aggregate principal amount at
any one time outstanding not to exceed $15 million under any such credit
facility or in respect of letters of credit thereunder minus the amount by which
any commitments thereunder are permanently reduced;
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(ii) Indebtedness of the Company pursuant to the Notes and
Indebtedness of any Guarantor pursuant to a Guarantee of the Securities;
(iii) Indebtedness of the Company or any Subsidiary
outstanding on the date of this Indenture and listed on Schedule I hereto;
(iv) Indebtedness of the Company owing to a Subsidiary;
provided that any Indebtedness of the Company owing to a Subsidiary is made
pursuant to an intercompany note in the form attached as Annex A to this
Indenture and is subordinated in right of payment from and after such time as
the Securities shall become due and payable (whether at Stated Maturity,
acceleration or otherwise) to the payment and performance of the Company's
obligations under the Securities; provided, further, that any disposition,
pledge or transfer of any such Indebtedness to a Person (other than a
disposition, pledge or transfer to a Subsidiary) shall be deemed to be an
incurrence of such Indebtedness by the Company not permitted by this clause
(iv);
(v) Indebtedness of a Wholly Owned Subsidiary owing to the
Company or another Wholly Owned Subsidiary; provided that any such Indebtedness
is made pursuant to an intercompany note in the form attached as Annex A to this
Indenture; provided, further, that (a) any disposition, pledge or transfer of
any such Indebtedness to a Person (other than the Company or a Wholly Owned
Subsidiary) shall be deemed to be an incurrence of such Indebtedness by the
obligor not permitted by this clause (v), and (b) any transaction pursuant to
which any Wholly Owned Subsidiary, which has Indebtedness owing to the Company
or any other Wholly Owned Subsidiary, ceases to be a Wholly Owned Subsidiary
shall be deemed to be the incurrence of Indebtedness by such Wholly Owned
Subsidiary that is not permitted by this clause (v);
(vi) guarantees of any Subsidiary made in accordance with the
provisions of Section 1013;
(vii) obligations of the Company entered into in the ordinary
course of business (a) pursuant to Interest Rate Agreements designed to protect
the Company or any Subsidiary against fluctuations in interest rates in respect
of Indebtedness of the Company or any Subsidiary as long as such obligations do
not exceed the aggregate principal amount of such Indebtedness then outstanding,
(b) under any Currency Hedging Arrangements, which if related to Indebtedness do
not increase the amount of such Indebtedness other than as a result of foreign
exchange fluctuations, or (c) under any Commodity Price Protection Agreements,
which if related to Indebtedness do not increase the amount of such Indebtedness
other than as a result of foreign exchange fluctuations;
(viii) Indebtedness of the Company represented by Capital
Lease Obligations or Purchase Money Obligations or other Indebtedness incurred
or assumed in connection with the acquisition or development of real or
personal, movable or immovable, property in each case incurred for the purpose
of financing or refinancing all
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or any part of the purchase price or cost of construction or improvement of
property used in the business of the Company, in an aggregate principal amount
pursuant to this clause (viii) not to exceed $ 5 million outstanding at any
time; provided that the principal amount of any Indebtedness permitted under
this clause (viii) did not in each case at the time of incurrence exceed the
Fair Market Value, as determined by the Board of Directors of the Company in
good faith, of the acquired or constructed asset or improvement so financed;
(ix) any renewals, extensions, substitutions, refundings,
refinancings or replacements (collectively, a "refinancing") of any Indebtedness
described in clauses (ii) and (iii) of this definition of "Permitted
Indebtedness," including any successive refinancings so long as the borrower
under such refinancing is the Company or, if not the Company, the same as the
borrower of the Indebtedness being refinanced and the aggregate principal amount
of Indebtedness represented thereby is not increased by such refinancing plus
the lesser of (I) the stated amount of any premium or other payment required to
be paid in connection with such a refinancing pursuant to the terms of the
Indebtedness being refinanced or (II) the amount of premium or other payment
actually paid at such time to refinance the Indebtedness, plus, in either case,
the amount of expenses of the Company incurred in connection with such
refinancing and (A) in the case of any refinancing of Indebtedness that is
Subordinated Indebtedness, such new Indebtedness is made subordinated to the
Securities at least to the same extent as the Indebtedness being refinanced and
(B) in the case of Pari Passu Indebtedness or Subordinated Indebtedness, as the
case may be, such refinancing does not reduce the Average Life to Stated
Maturity or the Stated Maturity of such Indebtedness; and
(x) Indebtedness of the Company and its Subsidiaries in
addition to that described in clauses (i) through (ix) above, and any renewals,
extensions, substitutions, refinancings or replacements of such Indebtedness, so
long as the aggregate principal amount of all such Indebtedness shall not exceed
$7.5 million outstanding at any one time in the aggregate.
"Permitted Investment" means (i) Investments in any Wholly
Owned Subsidiary or any Person which, as a result of such Investment, (a)
becomes a Wholly Owned Subsidiary or (b) is merged or consolidated with or into,
or transfers or conveys substantially all of its assets to, or is liquidated
into, the Company or any Wholly Owned Subsidiary; (ii) Indebtedness of the
Company or a Subsidiary described under clauses (iv), (v) and (vi) of the
definition of "Permitted Indebtedness"; (iii) Investments in any of the
Securities; (iv) Temporary Cash Investments; (v) Investments acquired by the
Company or any Subsidiary in connection with an Asset Sale permitted under
Section 1012 to the extent such Investments are non-cash proceeds as permitted
under such covenant; (vi) Investments in existence on the date of this
Indenture; (vii) guarantees of Indebtedness of a Wholly Owned Subsidiary given
by the Company or another Wholly Owned Subsidiary and guarantees of Indebtedness
of the Company given by any
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Subsidiary, in each case, in accordance with the terms of this Indenture; (viii)
advances to employees or officers of the Company in the ordinary course of
business so long as the aggregate amount of such advances shall not exceed
$250,000 outstanding at any one time; and (ix) any other Investments in the
aggregate amount of $2.5 million at any one time outstanding. In connection with
any assets or property contributed or transferred to any Person as an
Investment, such property and assets shall be equal to the Fair Market Value (as
determined by the Company's Board of Directors) at the time of Investment.
"Permitted Lien" means:
(a) any Lien existing as of the date of this Indenture other
than Liens securing the New Credit Facility which is covered by clause (b)
below;
(b) any Lien on the Company's or any Subsidiary's accounts
receivable and inventory which secures the New Credit Facility and any pledge of
Capital Stock of any Subsidiary of the Company which secures the New Credit
Facility, provided such Subsidiary provides a guarantee of the Securities on a
senior basis in a form reasonably acceptable to the Trustee;
(c) any Lien arising by reason of (1) any judgment, decree or
order of any court, so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been duly initiated for the review
of such judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have expired;
(2) taxes not yet delinquent or which are being contested in good faith; (3)
security for payment of workers' compensation or other insurance; (4) good faith
deposits in connection with tenders, leases or contracts (other than contracts
for the payment of money); (5) zoning restrictions, easements, licenses,
reservations, title defects, rights of others for rights of way, utilities,
sewers, electric lines, telephone or telegraph lines, and other similar
purposes, provisions, covenants, conditions, waivers, restrictions on the use of
property or minor irregularities of title (and with respect to leasehold
interests, mortgages, obligations, liens and other encumbrances incurred,
created, assumed or permitted to exist and arising by, through or under a
landlord or owner of the leased property, with or without consent of the
lessee), none of which materially impairs the use of any parcel of property
material to the operation of the business of the Company or any Subsidiary or
the value of such property for the purpose of such business; (6) deposits to
secure public or statutory obligations, or in lieu of surety or appeal bonds; or
(7) operation of law in favor of mechanics, materialmen, laborers, employees or
suppliers, incurred in the ordinary course of business for sums which are not
yet delinquent or are being contested in good faith by negotiations or by
appropriate proceedings which suspend the collection thereof;
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(d) any Lien securing Acquired Indebtedness created prior to
(and not created in connection with, or in contemplation of) the incurrence of
such Indebtedness by the Company or any Subsidiary;
(e) any Lien to secure the performance bids, trade contracts,
leases (including, without limitation, statutory and common law landlord's
liens), statutory obligations, surety and appeal bonds, letters of credit and
other obligations of a like nature and incurred in the ordinary course of
business of the Company or any Subsidiary;
(f) any Lien securing Indebtedness permitted to be incurred
under Interest Rate Agreements or otherwise incurred to hedge interest rate
risk;
(g) any Lien securing Capitalized Lease Obligations or
Purchase Money Obligations incurred in accordance with clause (viii) of the
definition Permitted Indebtedness and which are incurred or assumed in
connection with the acquisition, development or construction of real or
personal, moveable or immovable property within 90 days of such incurrence or
assumption; provided that such Liens only extend to such acquired, developed or
constructed property; and
(h) any extension, renewal, refinancing or replacement, in
whole or in part, of any Lien described in the foregoing clauses (a) through (g)
so long as no additional collateral is granted as security thereby.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 308 in exchange for a
mutilated Security or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Security.
"Preferred Stock" means, with respect to any Person, any
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over the Capital Stock of any other class in such Person.
"Prospectus" means the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any portion
of the Series A Securities covered
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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.
"Public Equity Offering" means an underwritten offering with
gross proceeds to the Company of at least $25 million pursuant to a registration
statement that has been declared effective by the Commission (other than a
registration statement on Form S-8 or otherwise relating to equity securities
issuable under any employee benefit plan of the Company).
"Purchase Money Obligation" means any Indebtedness secured by
a Lien on assets related to the business of the Company and any additions and
accessions thereto, which are purchased by the Company at any time after the
Securities are issued; provided that (i) the security agreement or conditional
sales or other title retention contract pursuant to which the Lien on such
assets is created (collectively a "Purchase Money Security Agreement") shall be
entered into within 90 days after the purchase or substantial completion of the
construction of such assets and shall at all times be confined solely to the
assets so purchased or acquired, any additions and accessions thereto and any
proceeds therefrom, (ii) at no time shall the aggregate principal amount of the
outstanding Indebtedness secured thereby be increased, except in connection with
the purchase of additions and accessions thereto and except in respect of fees
and other obligations in respect of such Indebtedness and (iii) (A) the
aggregate outstanding principal amount of Indebtedness secured thereby
(determined on a per asset basis in the case of any additions and accessions)
shall not at the time such Purchase Money Security Agreement is entered into
exceed 100% of the purchase price to the Company of the assets subject thereto
or (B) the Indebtedness secured thereby shall be with recourse solely to the
assets so purchased or acquired, any additions and accessions thereto and any
proceeds therefrom.
"QIB" means a "Qualified Institutional Buyer" under Rule 144A
under the Securities Act.
"Qualified Capital Stock" of any Person means any and all
Capital Stock of such Person other than Redeemable Capital Stock.
"Recapitalization" means the transactions defined as the
"Recapitalization" in the Company's Offering Memorandum, dated as of May 20,
1997, with respect to the Securities.
"Redeemable Capital Stock" means any Capital Stock that,
either by its terms or by the terms of any security into which it is convertible
or exchangeable or otherwise, is or upon the happening of an event or passage of
time would be, required to be redeemed prior to the Stated Maturity of the
principal of the Securities or is redeemable at the option of the holder thereof
at any time prior to such Stated Maturity,
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or is convertible into or exchangeable for debt securities at any time prior to
any such Stated Maturity at the option of the holder thereof.
"Redemption Date" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the date fixed for
such redemption by or pursuant to this Indenture.
"Redemption Price" when used with respect to any Security to
be redeemed pursuant to any provision in this Indenture means the price at which
it is to be redeemed pursuant to this Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of May 28, 1997, between the Company and the Initial
Purchaser.
"Registration Statement" means any registration statement of
the Company which covers any of the Series A Securities or Series B Securities
pursuant to the provisions of the Registration Rights 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.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the May 15 or November 15 (whether or not a Business Day)
next preceding such Interest Payment Date.
"Responsible Officer" when used with respect to the Trustee
means any officer or employee assigned to the Corporate Trust Office or any
agent of the Trustee appointed hereunder, including any vice president,
assistant vice president, secretary, assistant secretary, or any other officer
or assistant officer of the Trustee or any agent of the Trustee appointed
hereunder to whom any corporate trust matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Sale and Leaseback Transaction" means any transaction or
series of related transactions pursuant to which the Company or a Subsidiary
sells or transfers any property or asset in connection with the leasing, or the
resale against installment payments, of such property or asset to the seller or
transferor.
"S&P" means Standard & Poor's Rating Group, a division of
McGraw Hill, Inc. or any successor rating agency.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor statute.
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"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to Section 2.2 of the of the Registration
Rights Agreement, which covers all of the Registrable Securities (as defined in
the Registration Rights Agreement) on an appropriate form under Rule 415 under
the Securities Act, or any similar rule that may be adopted by the Commission,
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.
"Significant Subsidiary" means, at any particular time, any
Subsidiary that, together with the Subsidiaries of such Subsidiary, (i) for the
most recent fiscal year of the Company accounted for more than 10% of the
Consolidated revenues of the Company and its Subsidiaries or (ii) at the end of
such fiscal year, was the owner (beneficial or otherwise) of more than 10% of
the Consolidated assets of the Company and its Subsidiaries, all as calculated
in accordance with GAAP and as shown on the Consolidated financial statements of
the Company and its Subsidiaries.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 309.
"Stated Maturity" means, when used with respect to any
Indebtedness or any installment of interest thereon, the dates specified in such
Indebtedness as the fixed date on which the principal of such Indebtedness or
such installment of interest, as the case may be, is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company
or a Guarantor subordinated in right of payment to the Securities or the
Guarantee of such Guarantor, as the case may be.
"Subsidiary" means any Person, a majority of the equity
ownership or the Voting Stock of which is at the time owned, directly or
indirectly, by the Company or by one or more other Subsidiaries, or by the
Company and one or more other Subsidiaries; provided that any Unrestricted
Subsidiary shall not be deemed a Subsidiary under the Securities.
"Temporary Cash Investments" means (i) any evidence of
Indebtedness, maturing not more than one year after the date of acquisition,
issued by the United States of America, or an instrumentality or agency thereof,
and guaranteed fully as to principal, premium, if any, and interest by the
United States of America, (ii) any certificate of deposit, maturing not more
than one year after the date of acquisition, issued by, or time deposit of, a
commercial banking institution that is a member of the Federal Reserve System
and that has combined capital and surplus and undivided profits of not less than
$250 million, whose debt has a rating, at the time as of which any investment
therein is made, of "P-1" (or higher) according to Moody's or any successor
rating agency or "A-1"
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(or higher) according to S&P or any successor rating agency, (iii) commercial
paper, maturing not more than one year after the date of acquisition, issued by
a corporation (other than an Affiliate or Subsidiary of the Company) organized
and existing under the laws of the United States of America with a rating, at
the time as of which any investment therein is made, of "P-1" (or higher)
according to Moody's or "A-1" (or higher) according to S&P, (iv) any money
market deposit accounts issued or offered by a domestic commercial bank having
capital and surplus in excess of $250 million; provided that the short term debt
of such commercial bank has a rating, at the time of Investment, of "P-1" (or
higher) according to Moody's or "A-1" (or higher) according to S&P, (v)
repurchase obligations for underlying securities of the type described in clause
(i) above entered into with any financial institution designated as a "Primary
Dealer" by the Federal Reserve Bank of New York or any commercial banking
institution that satisfies the criteria set forth in clause (ii) of this
definition of "Temporary Cash Investments" as a counterparty, and (vi) any
security, maturing not more than six months after the date of acquisition,
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or "A" by Moody's, provided that the Company shall
not invest any amount held in the Escrow Account in any investment set forth in
clauses (v) and (vi) above.
"Trustee" means, except as set forth in Section 405, 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.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, or any successor statute.
"Treasury Rate" is defined as the yield to maturity at the
time of computation of United States Treasury securities with a constant
maturity (as compiled by and published in the most recent Federal Reserve
Statistical Release H.15 (519) which has become publicly available at least two
business days prior to the date fixed for redemption of the Securities following
a Change of Control (or, if such Statistical Release is no longer published, any
publicly available source of similar market data) most nearly equal to the then
remaining Average Life to Stated Maturity of the Securities; provided, that if
the Average Life to Stated Maturity of the Securities 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 Average Life to Stated Maturity of the Securities 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.
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"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be 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 newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary if all of
the following conditions apply: (a) neither the Company nor any of its
Subsidiaries provides credit support for Indebtedness of such Subsidiary
(including any undertaking, agreement or instrument evidencing such
Indebtedness), (b) such Subsidiary is not liable, directly or indirectly, with
respect to any Indebtedness other than Unrestricted Subsidiary Indebtedness, (c)
any Investment in such Subsidiary made as a result of designating such
Subsidiary an Unrestricted Subsidiary shall not violate the provisions of
Section 1019 and such Unrestricted Subsidiary is not party to any agreement,
contract, arrangement or understanding at such time with the Company or any
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of the Company or, in the event such condition is not satisfied,
the value of such agreement, contract, arrangement or understanding to such
Subsidiary shall be deemed a Restricted Payment; and (d) such Unrestricted
Subsidiary does not own any Capital Stock in any Subsidiary of the Company which
is not simultaneously being designated an Unrestricted Subsidiary. Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing with the Trustee a board resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complies with the foregoing conditions and shall be deemed a Restricted Payment
on the date of designation in an amount equal to the greater of (1) the net book
value of such Investment or (2) the fair market value of such Investment as
determined in good faith by the Company's Board of Directors. The Board of
Directors of the Company may designate any Unrestricted Subsidiary as a
Subsidiary; provided that (i) immediately after giving effect to such
designation, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 1008 and (ii) all Indebtedness
of such Subsidiary shall be deemed to be incurred on the date such Subsidiary
becomes a Subsidiary.
"Unrestricted Subsidiary Indebtedness" of any Unrestricted
Subsidiary means Indebtedness of such Unrestricted Subsidiary (i) as to which
neither the Company nor any Subsidiary is directly or indirectly liable (by
virtue of the Company or any such Subsidiary being the primary obligor on,
guarantor of, or otherwise liable in any respect to, such Indebtedness), except
Guaranteed Debt of the Company or any Subsidiary to any Affiliate, in which case
(unless the incurrence of such Guaranteed Debt resulted in a Restricted Payment
at the time of incurrence) the Company shall be deemed to have made a Restricted
Payment equal to the principal amount of any such Indebtedness to the extent
guaranteed at the time such Affiliate is designated an Unrestricted Subsidiary
and (ii) which, upon the occurrence of a default with respect thereto, does not
result in, or permit
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any holder of any Indebtedness of the Company or any Restricted Subsidiary to
declare, a default on such Indebtedness of the Company or any Restricted
Subsidiary or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity.
"Venalum Purchase and Sale Agreement" means the Purchase and
Sale Agreement dated as of November 1, 1994, by and between Venalum and the
Company relating to the purchase and sale of aluminum and aluminum products, as
such agreement may be amended, renewed, supplemented or otherwise modified or
any new agreement between the parties entered into from time to time (including,
without limitation, any successive renewals, extensions, supplementations or
other modifications of the foregoing).
"Voting Stock" means Capital Stock of the class or classes
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of a corporation (irrespective of whether or not at the
time Capital Stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
"Wholly Owned Subsidiary" means a Subsidiary all the Capital
Stock of which is owned by the Company or another Wholly Owned Subsidiary (other
than directors' qualifying shares).
Section 102. Other Definitions.
Term Defined in Section
---- ------------------
"Act" 105
"Agent Members" 306
"Change of Control Offer" 1015
"Change of Control Purchase Date" 1015
"Change of Control Purchase Notice" 1015
"Change of Control Purchase Price" 1015
"covenant defeasance" 403
"Defaulted Interest" 309
"defeasance" 402
"Defeasance Redemption Date" 404
"Defeased Securities" 401
"Excess Proceeds" 1012
"incur" 1008
"Offer" 1012
"Offer Date" 1012
"Offered Price" 1012
"Offshore Securities Exchange Date" 201
"Pari Passu Debt Amount" 1012
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"Pari Passu Offer" 1012
"Permanent Offshore Physical Securities" 201
"Permitted Payment" 1009
"Private Placement Legend" 202
"Purchase Money Security Agreement" 101
"refinancing" 1009
"Required Filing Date" 1020
"Restricted Payments" 1009
"Rule 144A" 201
"Securities" Recitals
"Security Amount" 1012
"Security Register" 305
"Security Registrar" 305
"Series A Securities" Recitals
"Series B Securities" Recitals
"Special Payment Date" 309
"Surviving Entity" 801
"Surviving Guarantor Entity" 801
"Temporary Offshore Physical Securities" 201
"U.S. Global Security" 201
"U.S. Government Obligations" 404
"U.S. Physical Securities" 201
Section 103. 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 Securities (if
applicable) shall furnish to the Trustee an Officers' Certificate in a 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 in a form and
substance reasonably acceptable to the Trustee 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 certificates or opinions is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
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(a) a statement that each individual signing such certificate
or individual or firm signing such opinion has read and understands such
covenant or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of 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
(d) a statement as to whether, in the opinion of each such
individual or such firm, such condition or covenant has been complied with.
Section 104. 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 of an officer of the Company, any Guarantor or
other obligor on the Securities 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 matters
upon which his certificate or opinion is based are erroneous. Any such
certificate or opinion 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 Securities stating that
the information with respect to such factual matters is in the possession of the
Company, any Guarantor or other obligor on the Securities, unless such officer
or 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. Opinions of Counsel required to be delivered to the Trustee may have
qualifications customary for opinions of the type required and counsel
delivering such Opinions of Counsel may rely on certificates of the Company or
government or other officials customary for opinions of the type required,
including certificates certifying as to matters of fact, including that various
financial covenants have been complied with.
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<PAGE>
Any certificate or opinion of an officer of the Company, any
Guarantor or other obligor on the Securities may be based, insofar as it relates
to accounting matters, upon a certificate or opinion of, or representations by,
an accountant or firm of accountants in the employ of the Company, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the accounting matters
upon which his certificate or opinion may be based are erroneous. Any
certificate or opinion of any independent firm of public accountants filed with
the Trustee shall contain a statement that such firm is independent with respect
to the Company.
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 105. 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 an agent 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 105.
(b) The ownership of Securities shall be proved by the
Security Register.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holder of any Security shall bind every
future Holder of the same Security or the Holder of every Security issued upon
the transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, suffered or omitted to be done by the Trustee, any Paying Agent
or the Company, any Guarantor or any other obligor of the Securities in reliance
thereon, whether or not notation of such action is made upon such Security.
(d) 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
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<PAGE>
acting in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his 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 which the
Trustee deems sufficient.
(e) 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 such 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 Trust
Indenture Act Section 316(c), any such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a date not
more than 30 days prior to the first solicitation of Holders generally in
connection therewith and no later than the date such first 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 purposes of
determining whether Holders of the requisite proportion of Securities then
Outstanding have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for this
purpose the Securities then Outstanding shall be computed as of such record
date; provided that no such request, demand, authorization, direction, notice,
consent, waiver or other Act 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 such record date.
Section 106. Notices, etc., to the 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:
(a) the Trustee by any Holder or by the Company or any
Guarantor or any other obligor on the Securities shall be sufficient for every
purpose (except as provided in Section 501(c)) hereunder if in writing and
mailed, first-class postage prepaid, or delivered by recognized overnight
courier, to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Administration, or at any other address previously furnished in
writing to the Holders or the Company, any Guarantor or any other obligor on the
Securities by the Trustee; or
(b) the Company or any Guarantor by the Trustee or any Holder
shall be sufficient for every purpose (except as provided in Section 501(c))
hereunder if in writing and mailed, first-class postage prepaid, or delivered by
recognized overnight courier, to
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<PAGE>
the Company or such Guarantor addressed to it c/o Wells Aluminum Corporation,
809 Gleneagles Ct., Suite 300, Baltimore, Maryland 21286, Attention: Chief
Financial Officer or at any other address previously furnished in writing to the
Trustee by the Company or such Guarantor.
Section 107. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, or
delivered by recognized overnight courier, to each Holder affected by such
event, at its address as it appears in the Security 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 when mailed to a Holder in the aforesaid manner shall
be conclusively deemed to have been received by such Holder whether or not
actually received by such Holder. 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 regular mail service or
by reason of any other cause, it shall be impracticable to mail notice of any
event as required by any provision of this Indenture, then any method of giving
such notice as shall be reasonably satisfactory to the Trustee shall be deemed
to be a sufficient giving of such notice.
Section 108. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
any provision of the Trust Indenture Act or another provision which is required
or deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, the provision or requirement of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 109. 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.
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Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
and the Guarantors shall bind their respective successors and assigns, whether
so expressed or not.
Section 111. Separability Clause.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 112. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person (other than the parties hereto and their
successors hereunder, any Paying Agent and the Holders) any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 113. GOVERNING LAW.
THIS INDENTURE, THE SECURITIES AND ANY GUARANTEE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 114. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Maturity or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal or premium, if any, 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 such Interest Payment Date or Redemption Date, or at
the Maturity or Stated Maturity and no interest shall accrue with respect to
such payment for the period from and after such Interest Payment Date,
Redemption Date, Maturity or Stated Maturity, as the case may be, to the next
succeeding Business Day.
Section 115. Independence of Covenants.
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenants, the fact that it would be permitted by an exception to,
or be otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
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Section 116. Schedules and Exhibits.
All schedules and exhibits attached hereto are by this
reference made a part hereof with the same effect as if herein set forth in
full.
Section 117. Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be deemed an original; but all such counterparts shall
together constitute but one and the same instrument.
Section 118. No Personal Liability of Directors, Officers,
Incorporators, Employees and Stockholders.
No director, officer, employee, incorporator or stockholder of
the Company or of any Guarantor shall have any liability for any obligation of
the Company or any Guarantor under the Securities, this Indenture, any Guarantee
or for any claim based on, in respect of, or by reason of, any such obligation
or the creation of any such obligation. Each Holder by accepting a Security
waives and releases such Persons from all such liability and such waiver and
release is part of the consideration for the issuance of the Securities.
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.
The Securities and the Trustee's certificate of authentication
thereon shall be in substantially the forms set forth in this Article Two, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted hereby 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, any
organizational document or governing instrument or applicable law or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. Any portion of the text of
any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Securities may be listed,
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<PAGE>
all as determined by the officers executing such Securities, as evidenced by
their execution of such Securities.
Initial Securities offered and sold in reliance on Rule 144A
under the Securities Act ("Rule 144A") shall be issued initially in the form of
one or more permanent global Securities substantially in the form set forth in
Section 202 (the "U.S. Global Security") deposited with the Trustee, as
custodian for the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the U.S.
Global Security 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.
Initial Securities offered and sold inside the United States
to an institutional investor within the meaning of subparagraphs (a)(1), (a)(2),
(a)(3) or (a)(7) of Rule 501 under the Securities Act shall be issued in
certificated form substantially in the form set forth in Section 202 (the "U.S.
Physical Securities").
Initial Securities offered and sold in reliance on Regulation
S under the Securities Act shall be issued initially in the form of temporary
certificated Securities in registered form substantially in the form set forth
in Section 202 (the "Temporary Offshore Physical Securities"). The Temporary
Offshore Physical Securities will be registered in the name of, and held by, a
temporary certificate holder designated by the Initial Purchaser until the later
of the completion of the distribution of the Initial Securities and the
termination of the "restricted period" (as defined in Regulation S) with respect
to the offer and sale of the Initial Securities (the "Offshore Securities
Exchange Date"). At any time following the Offshore Securities Exchange Date,
upon receipt by the Trustee and the Company of a certificate substantially in
the form of Exhibit A hereto, the Company shall execute, and the Trustee shall
authenticate and deliver, one or more permanent certificated Securities in
registered form substantially in the form set forth in Section 202 (the
"Permanent Offshore Physical Securities"), in exchange for the surrender of
Temporary Offshore Physical Securities of like tenor and amount.
Section 202. Form of Face of Security.
(a) The form of the face of any Series A Securities
authenticated and delivered hereunder shall be substantially as follows:
Unless and until (i) an Initial Security is sold under an
effective Registration Statement or (ii) an Initial Security is exchanged for a
Series B Security in connection with an effective Registration Statement, in
each case pursuant to the Registration Rights Agreement, then (A) the U.S.
Global Security and each U.S. Physical Security shall bear the legend set forth
below (the "Private Placement Legend") on the face thereof and (B) the Temporary
Offshore Physical Securities shall bear the Private Placement Legend on the face
thereof until at least 41 days after the Issue Date and
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receipt by the Company and the Trustee of a certificate substantially in the
form as set forth in Exhibit B:
THE SECURITIES HAVE 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 OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AS SET FORTH
BELOW.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT ("RULE 144A")) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) 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 THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A INSIDE THE UNITED STATES, 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) OUTSIDE THE UNITED STATES PURSUANT TO
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OFFERS AND SALES TO NON-U.S. PERSONS IN AN OFFSHORE
TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPHS (A)(1), (A)(2), (A)(3) OR (A)(7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE 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, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (I) PURSUANT TO CLAUSES (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. AS USED HEREIN, THE TERMS "UNITED STATES," "OFFSHORE
TRANSACTION," AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
[Legend if Security is a Global Security]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A
SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF THE DEPOSITARY TRUST COMPANY OR CEDE & CO. OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
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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.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
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WELLS ALUMINUM CORPORATION
------------------
10 1/8% SENIOR NOTE DUE 2005, SERIES A
CUSIP NO. ______________
No. __________ $_______________________
Wells Aluminum Corporation, a Maryland 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 _____________
United States dollars on June 1, 2005, at the office or agency of
the Company referred to below, and to pay interest thereon from May 28, 1997,
or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semiannually on June 1 and December 1 in each year,
commencing December 1, 1997 at the rate of 10 1/8% per annum, subject to
adjustments as described in the second following paragraph, in United States
dollars, until the principal hereof is paid or duly provided for. Interest
shall be computed on the basis of a 360-day year comprised of twelve 30-day
months.
The Holder of this Series A Security is entitled to the
benefits of the Registration Rights Agreement between the Company and the
Initial Purchaser, dated May 28, 1997, pursuant to which, subject to the terms
and conditions thereof, the Company is obligated to consummate the Exchange
Offer pursuant to which the Holder of this Security shall have the right to
exchange this Security for 10 1/8% Senior Notes due 2005, Series B (herein
called the "Series B Securities") in like principal amount as provided therein.
The Series A Securities and the Series B Securities are together referred to as
the "Securities." The Series A Securities rank pari passu in right of payment
with the Series B Securities.
In the event that (a) the Exchange Offer Registration
Statement is not filed with the Commission on or prior to the 45th calendar day
following the date of original issue of the Series A Securities, (b) the
Exchange Offer Registration Statement has not been declared effective on or
prior to the 130th calendar day following the date of original issue of the
Series A Securities, (c) the Exchange Offer is not consummated or, if an
Exchange Offer has not been consummated, a Shelf Registration Statement is not
declared effective, in either case, on or prior to the 165th calendar day
following the date of original issue of the Series A Securities, or (d) if an
Exchange Offer has been consummated, any required Shelf Registration Statement
is not declared effective on or prior to the later of (A) the 165th calendar
day following the date of original issue of the Series A Securities or (B) the
90th day following the date the Company becomes
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<PAGE>
obligated to file a Shelf Registration Statement (each such event referred to in
clauses (a) through (d) above, a "Registration Default"), the interest rate
borne by the Series A Securities shall be increased by one-quarter of one
percent per annum upon the occurrence of each Registration Default, which rate
will increase by one quarter of one percent each 90-day period that such
additional interest continues to accrue under any such circumstance, with an
aggregate maximum increase in the interest rate equal to one percent (1%) per
annum. Following the cure of all Registration Defaults the accrual of additional
interest will cease and the interest rate will revert to the original rate.
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 Security (or any Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the May 15 or November 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, and interest on such
defaulted interest at the interest rate borne by the Series A Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may either be paid to the Person in whose name this Security
(or any Predecessor Securities) 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 of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by this Indenture not inconsistent with the requirements of such
exchange, all as more fully provided in this Indenture.
Payment of the principal of, premium, if any, and interest on,
this Security, and exchange or transfer of the Security, will be made at the
office or agency of the Company in The City of New York maintained for that
purpose (which initially will be a corporate trust office of the Trustee located
at 14 Wall Street, New York, NY 10005), or at such other office or agency 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 by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register.
Reference is hereby made to the further provisions of this
Security 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 referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall
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<PAGE>
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 by the manual or facsimile signature of its authorized officers
and its corporate seal to be affixed or reproduced hereon.
WELLS ALUMINUM CORPORATION
[Seal] By: ______________________
Title:____________________
Attest:
___________________________
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 10 1/8% Senior Notes due 2005, Series A
referred to in the within-mentioned Indenture.
FLEET NATIONAL BANK,
as Trustee
By: _____________________
Authorized Signer
Dated:
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OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company
pursuant to Section 1012 or Section 1015, as applicable, of the Indenture, check
the Box: [ ].
If you wish to have a portion of this Security purchased by
the Company pursuant to Section 1012 or Section 1015 as applicable, of the
Indenture, state the amount (in original principal amount):
$_________________.
Date: ___________________ Your Signature: _____________________
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee: __________________________________
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
(b) The form of the face of any Series B Securities
authenticated and delivered hereunder shall be substantially as follows:
[Legend if Security is a Global Security]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A
SUCCESSOR DEPOSITORY. TRANSFERS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF THE DEPOSITARY TRUST COMPANY OR 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
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<PAGE>
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS
306 AND 307 OF THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
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WELLS ALUMINUM CORPORATION
__________________
10 1/8% SENIOR NOTE DUE 2005, SERIES B
CUSIP NO. ______________
No. __________ $_______________________
Wells Aluminum Corporation, a Maryland 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 _______________
United States dollars on June 1, 2005, at the office or agency of the Company
referred to below, and to pay interest thereon from May 28, 1997, or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semiannually on June 1 and December 1 in each year, commencing
December 1, 1997 at the rate of 10 1/8% per annum, in United States dollars,
until the principal hereof is paid or duly provided for; provided that to the
extent interest has not been paid or duly provided for with respect to the
Series A Security exchanged for this Series B Security, interest on this
Series B Security shall accrue from the most recent Interest Payment Date
to which interest on the Series A Security which was exchanged for this Series
B Security has been paid or duly provided for. Interest shall be computed on
the basis of a 360-day year comprised of twelve 30-day months.
This Series B Security was issued pursuant to the Exchange
Offer pursuant to which the 10 1/8% Senior Notes due 2005, Series A (herein
called the "Series A Securities") in like principal amount were exchanged for
the Series B Securities. The Series B Securities rank pari passu in right of
payment with the Series A Securities.
In addition, for any period in which the Series A Security
exchanged for this Series B Security was outstanding, in the event that (a) the
Exchange Offer Registration Statement is not filed with the Commission on or
prior to the 45th calendar day following the date of original issue of the
Series A Security, (b) the Exchange Offer Registration Statement has not been
declared effective on or prior to the 130th calendar day following the date
after the original issue of the Series A Security, (c) the Exchange Offer is not
consummated or, if an Exchange Offer has not been consummated, a Shelf
Registration Statement is not declared effective, in either case, on or prior to
the 165th calendar day following the date of original issue of the Series A
Security, or (d) if an Exchange Offer has been consummated, any required Shelf
Registration Statement is not declared effective on or prior to the later of (A)
the 165th calendar day following the date of original issue of the Series A
Security (or, if a Shelf Registration Statement is required to be filed because
of the request by the Initial Purchaser, 30 days following
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the request by the Initial Purchaser that the Company file the Shelf
Registration Statement) or (B) the 90th day following the date the Company
becomes obligated to file a Shelf Registration Statement (each such event
referred to in clauses (a) through (d) above, a "Registration Default"), the
interest rate borne by the Series A Securities shall be increased by one-quarter
of one percent per annum upon the occurrence of any Registration Default, which
rate (as increased as aforesaid) will increase by an additional one quarter of
one percent each 90-day period that such additional interest continues to accrue
under any such circumstance, with an aggregate maximum increase in the interest
rate equal to one percent (1%) per annum. Following the cure of all Registration
Defaults the accrual of additional interest will cease and the interest rate
will revert to the original rate; provided that, to the extent interest at such
increased interest rate has been paid or duly provided for with respect to the
Series A Security, interest at such increased interest rate, if any, on this
Series B Security shall accrue from the most recent Interest Payment Date to
which such interest on the Series A Security has been paid or duly provided for;
provided, however, that, if after any such reduction in interest rate, a
different event specified in clause (a), (b), (c) or (d) above occurs, the
interest rate shall again be increased pursuant to the foregoing provisions.
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 Security (or any Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the May 15 or November 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, and interest on such
defaulted interest at the interest rate borne by the Series B Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may either be paid to the Person in whose name this Security
(or any Predecessor Securities) 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 of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by this Indenture not inconsistent with the requirements of such
exchange, all as more fully provided in this Indenture.
Payment of the principal of, premium, if any, and interest on,
this Security, and exchange or transfer of the Security, will be made at the
office or agency of the Company in The City of New York maintained for such
purpose (which initially will be a corporate trust office of the Trustee located
at 14 Wall Street New York, NY 10005), or at such other office or agency 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
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made at the option of the Company by check mailed to the address of the Person
entitled thereto as such address shall appear on the Security Register.
Reference is hereby made to the further provisions of this
Security 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 referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security 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 by the manual or facsimile signature of its authorized officers
and its corporate seal to be affixed or reproduced hereon.
WELLS ALUMINUM CORPORATION
[Seal] By: _____________________
Title: __________________
Attest:
____________________________
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 10 1/8% Senior Notes due 2005, Series B
referred to in the within-mentioned Indenture.
FLEET NATIONAL BANK,
as Trustee
By: ______________________
Authorized Signer
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Dated:
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company
pursuant to Section 1012 or Section 1015, as applicable, of the Indenture, check
the Box: [ ].
If you wish to have a portion of this Security purchased by
the Company pursuant to Section 1012 or Section 1015 as applicable, of the
Indenture, state the amount (in original principal amount):
$_______________.
Date: ___________________ Your Signature: _____________________
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee: __________________________________
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
Section 203. Form of Reverse of Securities.
(a) The form of the reverse of the Series A Securities shall
be substantially as follows:
WELLS ALUMINUM CORPORATION
10 1/8% Senior Note due 2005, Series A
This Security is one of a duly authorized issue of Securities
of the Company designated as its 10 1/8% Senior Notes due 2005, Series A
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $105,000,000,
issued under and subject to the terms of an indenture (herein called the
"Indenture") dated as of May 28, 1997, between the Company and Fleet
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National Bank, as trustee (herein called 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 Guarantors, the Trustee and the Holders of the Securities, and
of the terms upon which the Securities are, and are to be, authenticated and
delivered.
The Indenture contains provisions for defeasance at any time
of (a) the entire Indebtedness on the Securities and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance with certain conditions set forth therein.
The Securities are subject to redemption at any time on or
after June 1, 2001, at the option of the Company, in whole or in part, on not
less than 30 nor more than 60 days' prior notice, in amounts of $1,000 or an
integral multiple thereof, at the following redemption prices (expressed as
percentages of the principal amount), if redeemed during the 12-month period
beginning June 1 of the years indicated below:
Redemption
Year Price
---- ----------
2001...................................... 105.063%
2002...................................... 103.375%
2003...................................... 101.688%
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant record dates to receive interest due on
an Interest Payment Date).
In addition, at any time on or prior to June 1, 2000, the
Company may, at its option, use the net proceeds of one or more Public Equity
Offerings to redeem up to an aggregate of 33 1/3% of the aggregate principal
amount of Securities originally issued under the Indenture at a redemption price
equal to 110.125% of the aggregate principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the Redemption Date; provided that at least
$65,000,000 aggregate principal amount of Securities remains outstanding
immediately after the occurrence of such redemption. In order to effect the
foregoing redemption, the Company must mail a notice of redemption no later than
60 days after the closing of the related Public Equity Offering and must
consummate such redemption within 90 days of the closing of the Public Equity
Offering.
If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities or portions thereof to be redeemed pro rata,
by lot or by any other method the Trustee shall deem fair and reasonable.
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Upon the occurrence of a Change of Control, each Holder may
require the Company to purchase such Holder's Securities in whole or in part in
integral multiples of $1,000, at a purchase price in cash in an amount equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of purchase, pursuant to a Change of Control Offer in accordance
with the procedures set forth in the Indenture.
In addition, the Securities will be redeemable, at the option
of the Company, in whole or in part, after a Change of Control at a redemption
price equal to the sum of (i) the outstanding principal amount thereof, plus
(ii) accrued and unpaid interest, if any, to the redemption date, plus the
Applicable Premium.
Under certain circumstances, in the event the Net Cash
Proceeds received by the Company from any Asset Sale, which proceeds are not
used to repay any Indebtedness under the New Credit Facility or invested in
properties or other assets that replace the properties and assets that were the
subject of the Asset Sale or which will be used in the businesses of the Company
or its Subsidiaries existing on the date of the Indenture or in businesses
reasonably related thereto, exceeds a specified amount, the Company will be
required to apply such proceeds to the repayment of the Securities and certain
Indebtedness ranking pari passu in right of payment to the Securities.
In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity is on
or prior to the Redemption Date will be payable to the Holders of such
Securities of record as of the close of business on the relevant Regular Record
Date or Special Record Date referred to on the face hereof. Securities (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 Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions (including
certain amendments permitted without the consent of any Holders and certain
amendments which require the consent of all the Holders) as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders under the Indenture and
the Securities and the Guarantees at any time by the Company and the Trustee
with the consent of the Holders of at least a majority in aggregate principal
amount of the Securities at the time Outstanding. The Indenture also contains
provisions permitting the Holders of at least a majority in
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aggregate principal amount of the Securities (100% of the Holders in certain
circumstances) at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company and the Guarantors with certain
provisions of the Indenture and the Securities and the Guarantees and certain
past Defaults under the Indenture and the Securities and the Guarantees and
their consequences. Any such consent or waiver by or on behalf of the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security 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 Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the event such
Guarantor or such other obligor is obligated to make payments in respect of the
Securities), which is absolute and unconditional, to pay the principal of,
premium, if any, and interest on, this Security at the times, place, and rate,
and in the coin or currency, herein prescribed.
If this Series A Security is in certificated form, then as
provided in the Indenture and subject to certain limitations therein set forth,
the transfer of this Series A Security is registrable on the Security Register
of the Company, upon surrender of this Series A Security for registration of
transfer 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, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or its attorney duly authorized in
writing, and thereupon one or more new Series A Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
If this Series A Security is in certificated form, then as
provided in the Indenture and subject to certain limitations therein set forth,
the Holder, provided it is a Qualified Institutional Buyer, may exchange this
Series A Security for a Book-Entry Security by instructing the Trustee (by
completing the Transferee Certificate in the form in Appendix I) to arrange for
such Series A Security to be represented by a beneficial interest in a Global
Security in accordance with the customary procedures of the Depository, unless
the Company has elected not to issue a Global Security.
If this Series A Security is a U.S. Global Security, it is
exchangeable for a Series A Security in certificated form as provided in the
Indenture and in accordance with the rules and procedures of the Trustee and the
Depositary. In addition, certificated securities shall be transferred to all
beneficial holders in exchange for their beneficial interests in the U.S. Global
Securities if (x) the Depository notifies the Company that it is unwilling or
unable to continue as depository for the U.S. Global Security and a
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successor depositary is not appointed by the Company within 90 days or (y) there
shall have occurred and be continuing an Event of Default and the Security
Registrar has received a request from the Depositary. Upon any such issuance,
the Trustee is required to register such certificated Series A Securities in the
name of, and cause the same to be delivered to, such Person or Persons (or the
nominee of any thereof). All such certificated Series A Securities would be
required to include the Private Placement Legend.
Series A Securities in certificated form 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 Series A Securities are exchangeable for a
like aggregate principal amount of Securities of a differing authorized
denomination, as requested by the Holder surrendering the same.
At any time when the Company is not subject to Sections 13 or
15(d) of the Exchange Act, upon the written request of a Holder of a Series A
Security, the Company will promptly furnish or cause to be furnished such
information as is specified pursuant to Rule 144A(d)(4) under the Securities Act
(or any successor provision thereto) to such Holder or to a prospective
purchaser of such Series A Security who such Holder informs the Company is
reasonably believed to be a "Qualified Institutional Buyer" within the meaning
of Rule 144A under the Securities Act, as the case may be, in order to permit
compliance by such Holder with Rule 144A under the Securities Act.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any such agent
shall be affected by notice to the contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
[The Transferee Certificate, in the form of Appendix I hereto,
will be attached to the Series A Security.]
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(b) The form of the reverse of the Series B Securities shall
be substantially as follows:
WELLS ALUMINUM CORPORATION
10 1/8% Senior Note due 2005, Series B
This Security is one of a duly authorized issue of Securities
of the Company designated as its 10 1/8% Senior Notes due 2005, Series B
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $105,000,000,
issued under and subject to the terms of an indenture (herein called the
"Indenture") dated as of May 28, 1997, between the Company and Fleet National
Bank, as trustee (herein called 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 Guarantors, the Trustee and the Holders of the Securities, and
of the terms upon which the Securities are, and are to be, authenticated and
delivered.
The Indenture contains provisions for defeasance at any time
of (a) the entire Indebtedness on the Securities and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance with certain conditions set forth therein.
The Securities are subject to redemption at any time on or
after June 1, 2001, at the option of the Company, in whole or in part, on not
less than 30 nor more than 60 days' prior notice, in amounts of $1,000 or an
integral multiple thereof, at the following redemption prices (expressed as
percentages of the principal amount), if redeemed during the 12-month period
beginning June 1 of the years indicated below:
Redemption
Year Price
---- ----------
2001...................................... 105.063%
2002...................................... 103.375%
2003...................................... 101.688%
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant record dates to receive interest due on
an Interest Payment Date).
In addition, at any time on or prior to June 1, 2000, the
Company may, at its option, use the net proceeds of one or more Public Equity
Offerings to redeem up to an aggregate of 33 1/3% of the aggregate principal
amount of Securities originally issued
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under the Indenture at a redemption price equal to 110.125% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Redemption Date; provided that at least $65,000,000 aggregate principal
amount of Securities remains outstanding immediately after the occurrence of
such redemption. In order to effect the foregoing redemption, the Company must
mail a notice of redemption no later than 60 days after the closing of the
related Public Equity Offering and must consummate such redemption within 90
days of the closing of the Public Equity Offering.
If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities or portions thereof to be redeemed pro rata,
by lot or by any other method the Trustee shall deem fair and reasonable.
Upon the occurrence of a Change of Control, each Holder may
require the Company to purchase such Holder's Securities in whole or in part in
integral multiples of $1,000, at a purchase price in cash in an amount equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of purchase, pursuant to Change of Control Offer and in accordance
with the procedures set forth in the Indenture.
In addition, the Securities will be redeemable, at the option
of the Company, in whole or in part, after a Change of Control at a redemption
price equal to the sum of (i) the outstanding principal amount thereof, plus
(ii) accrued and unpaid interest, if any, to the redemption date, plus the
Applicable Premium.
Under certain circumstances, in the event the Net Cash
Proceeds received by the Company from any Asset Sale, which proceeds are not
used to repay any Indebtedness under the New Credit Facility or invested in
properties or other assets that replace the properties and assets that were the
subject of the Asset Sale or which will be used in the businesses of the Company
or its Subsidiaries existing on the date of the Indenture or in businesses
reasonably related thereto, exceeds a specified amount, the Company will be
required to apply such proceeds to the repayment of the Securities and certain
Indebtedness ranking pari passu in right of payment to the Securities.
In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity is on
or prior to the Redemption Date will be payable to the Holders of such
Securities of record as of the close of business on the relevant Regular Record
Date or Special Record Date referred to on the face hereof. Securities (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 Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
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If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions (including
certain amendments permitted without the consent of any Holders and certain
amendments which required the consent of all of the Holders) as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the Guarantors and the rights of the Holders
under the Indenture and the Securities and the Guarantees at any time by the
Company and the Trustee with the consent of the Holders of at least a majority
in aggregate principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of at least a majority
in aggregate principal amount of the Securities (100% of the Holders in certain
circumstances) at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company and the Guarantors with certain
provisions of the Indenture and the Securities and the Guarantees and certain
past Defaults under the Indenture and the Securities and the Guarantees and
their consequences. Any such consent or waiver by or on behalf of the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security 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 Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the event such
Guarantor or such other obligor is obligated to make payments in respect of the
Securities), which is absolute and unconditional, to pay the principal of, and
premium, if any, and interest on, this Security at the times, place, and rate,
and in the coin or currency, herein prescribed.
If this Series B Security is in certificated form, then as
provided in the Indenture and subject to certain limitations therein set forth,
the transfer of this Series B Security is registrable on the Security Register
of the Company, upon surrender of this Series B Security for registration of
transfer 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, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or its attorney duly authorized in
writing, and thereupon one or more new Series B Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
If this Series B Security is in certificated form, then as
provided in the Indenture and subject to certain limitations therein set forth,
the Holder, provided it is a
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Qualified Institutional Buyer, may exchange this Series B Security for a
Book-Entry Security by instructing the Trustee (by completing the Transferee
Certificate in the form in Appendix I) to arrange for such Series A Security to
be represented by a beneficial interest in a Global Security in accordance with
the customary procedures of the Depository, unless the Company has elected not
to issue a Global Security.
If this Series B Security is a U.S. Global Security, it is
exchangeable for a Series B Security in certificated form as provided in the
Indenture and in accordance with the rules and procedures of the Trustee and the
Depositary. In addition, certificated securities shall be transferred to all
beneficial holders in exchange for their beneficial interests in the U.S. Global
Security if (x) the Depository notifies the Company that it is unwilling or
unable to continue as depository for the U.S. Global Security and a successor
depositary is not appointed by the Company within 90 days or (y) there shall
have occurred and be continuing an Event of Default and the Security Registrar
has received a request from the Depositary. Upon any such issuance, the Trustee
is required to register such certificated Series B Securities in the name of,
and cause the same to be delivered to, such Person or Persons (or the nominee of
any thereof).
Series B Securities in certificated form 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 Series B Securities are exchangeable for a
like aggregate principal amount of Securities of a differing authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any such agent
shall be affected by notice to the contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
[The Transferee Certificate, in the form of Appendix II
hereto, will be attached to the Series B Security.]
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ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $105,000,000 in
principal amount of Securities, except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities pursuant to Section 303, 304, 305, 306, 307, 308, 906, 1012,
1015 or 1108.
The Securities shall be known and designated as the "101/8%
Senior Notes due 2005" of the Company. The Stated Maturity of the Securities
shall be June 1, 2005, and the Securities shall each bear interest at the rate
of 101/8% per annum, as such interest rate may be adjusted as set forth in the
Securities, from May 28, 1997, or from the most recent Interest Payment Date to
which interest has been paid, payable semiannually on June 1 and December 1 in
each year, commencing December 1, 1997, 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, premium, if any, and interest on, the
Securities shall be payable and the Securities shall be exchangeable and
transferable at an office or agency of the Company in The City of New York
maintained for such purposes (which initially will be a corporate trust office
of the Trustee located at 14 Wall Street, New York, NY 10005); provided,
however, that payment of interest may be made at the option of the Company by
check mailed to addresses of the Persons entitled thereto as shown on the
Security Register.
For all purposes hereunder, the Series A Securities and the
Series B Securities will be treated as one class and are together referred to as
the "Securities." The Series A Securities rank pari passu in right of payment
with the Series B Securities.
The Securities shall be subject to repurchase by the Company
pursuant to an Offer as provided in Section 1012.
Holders shall have the right to require the Company to
purchase their Securities, in whole or in part, in the event of a Change of
Control pursuant to Section 1015.
The Securities shall be redeemable as provided in Article
Eleven and in the Securities.
At the election of the Company, the entire Indebtedness on the
Securities or
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certain of the Company's obligations and covenants and certain Events of Default
thereunder may be defeased as provided in Article Four.
Section 302. Denominations.
The Securities shall be issuable only in fully registered form
without coupons and only in denominations of $1,000 and any integral multiple
thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by
one of its Chairman of the Board, its President, its Chief Executive Officer,
its Chief Financial Officer or one of its Vice Presidents under its corporate
seal reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signatures of any of these officers on the Securities may be
manual or facsimile.
Securities 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 Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee (with or without Guarantees endorsed thereon) for
authentication, together with a Company Order for the authentication and
delivery of such Securities; and the Trustee in accordance with such Company
Order shall authenticate and make available for delivery such Securities as
provided in this Indenture and not otherwise.
Each Security shall be dated the date of its authentication.
No Security or Guarantee endorsed thereon shall be entitled to
any benefit under this Indenture or be valid or obligatory for any purpose
unless there appears on such Security a certificate of authentication
substantially in the form provided for herein duly executed by the Trustee by
manual signature of an authorized officer, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
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, in a single transaction or through a series of related
transactions, be consolidated or merged with or into any other Person or shall
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to any Person, and the successor
Person resulting from such consolidation or surviving such merger, or into
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which the Company or such Guarantor shall have been merged, or the successor
Person which shall have participated in the sale, assignment, 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 Securities authenticated or delivered prior to such consolidation, merger,
sale, assignment, conveyance, transfer, lease or other disposition may, from
time to time, at the request of the successor Person, be exchanged for other
Securities 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 Securities surrendered for such exchange and of like principal
amount; and the Trustee, upon Company Request of the successor Person, shall
authenticate and deliver Securities as specified in such request for the purpose
of such exchange. If Securities 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 Securities, such
successor Person, at the option of the Holders but without expense to them,
shall provide for the exchange of all Securities at the time Outstanding for
Securities authenticated and delivered in such new name.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities on behalf of the Trustee. Unless limited
by the terms of such appointment, an authenticating agent may authenticate
Securities 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 Security Registrar or Paying
Agent to deal with the Company and its Affiliates.
If an officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates such Security such Security
shall be valid nevertheless.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten or otherwise produced, in any authorized denomination, substantially
of the tenor of the definitive Securities in lieu of which they are issued and
with such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Securities may determine, as conclusively
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities 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 Securities, the Company shall execute
and
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the Trustee (in accordance with a Company Order for the authentication of such
Securities) shall authenticate and make available for delivery in exchange
therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall cause the Trustee to keep, so long as it is
the Security Registrar, at the Corporate Trust Office of the Trustee, or such
other office as the Trustee may designate, a register (the register maintained
in such office or in any other office or agency designated pursuant to Section
1002 being herein sometimes referred to as the "Security Register") in which,
subject to such reasonable regulations as the Security Registrar may prescribe,
the Company shall provide for the registration of Securities and of transfers
of Securities. The Trustee shall initially be the "Security Registrar" for the
purpose of registering Securities and transfers of Securities as herein
provided. The Company may change the Security Registrar or appoint one or more
co-Security Registrars without notice.
Upon surrender for registration of transfer of any Security
at the office or agency of the Company designated pursuant to Section 1002, the
Company shall execute, and the Trustee shall (in accordance with a Company
Order for the authentication of such Securities) authenticate and make
available for delivery, in the name of the designated transferee or
transferees, one or more new Securities of the same series of any authorized
denomination or denominations, of a like aggregate principal amount.
Furthermore, any Holder of the U.S. Global Security shall,
by acceptance of such Global Security, agree that transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Holder of such Global Security (or its agent), and
that ownership of a beneficial interest in a Security shall be required to be
reflected in a book entry.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination or denominations, of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall (in accordance with a Company
Order for the authentication of such Securities) authenticate and make
available for delivery, Securities of the same series which the Holder making
the exchange is entitled to receive; provided that no exchange of Series A
Securities for Series B Securities shall occur until an Exchange Offer
Registration Statement shall have been declared effective by the Commission
and that the Series A Securities exchanged for the Series B Securities shall
be canceled.
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All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same Indebtedness, and entitled to the same benefits under this Indenture,
as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer, or for exchange, repurchase or redemption, shall (if so required by
the Company or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made to a Holder for any
registration of transfer, exchange or redemption of Securities, except for any
tax or other governmental charge that may be imposed in connection therewith,
other than exchanges pursuant to Sections 303, 304, 305, 906, 1012, 1015 or 1108
not involving any transfer.
The Company shall not be required (a) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business 15 days before the mailing of a notice of redemption of the Securities
selected for redemption under Section 1104 and ending at the close of business
on the day of such mailing or (b) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of Securities being redeemed in part.
Every Security shall be subject to the restrictions on
transfer provided in the legend required to be set forth on the face of each
Security pursuant to Section 202, and the restrictions set forth in this Section
305, and the Holder of each Security, by such Holder's acceptance thereof (or
interest therein), agrees to be bound by such restrictions on transfer.
The restrictions imposed by this Section 305 upon the
transferability of any particular Security shall cease and terminate on (a) the
later of May 28, 1999 or two years after the last date on which the Company or
any Affiliate of the Company was the owner of such Security (or any predecessor
of such Security) or (b) (if earlier) if and when such Security has been sold
pursuant to an effective registration statement under the Securities Act or
transferred pursuant to Rule 144 or Rule 904 under the Securities Act (or any
successor provision), unless the Holder thereof is an affiliate of the Company
within the meaning of Rule 144 (or such successor provisions). Any Security as
to which such restrictions on transfer shall have expired in accordance with
their terms or shall have terminated may, upon surrender of such Security for
exchange to the Security Registrar in accordance with the provision of this
Section 305 (accompanied, in the event that such restrictions on transfer have
terminated pursuant to Rule 144 or Rule 904 (or any successor provision), by an
Opinion of Counsel satisfactory to the Company and the Trustee, to the effect
that the transfer of such Security has been made in compliance with
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Rule 144 or Rule 904 (or any such successor provision)), be exchanged for a new
Security, of like tenor and aggregate principal amount, which shall not bear the
Private Placement Legend. The Company shall inform the Trustee of the effective
date of any Registration Statement registering the Securities under the
Securities Act no later than two Business Days after such effective date.
Except as provided in the preceding paragraph, any Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any U.S. Global Security, whether pursuant to this Section
305, Section 304, 308, 906 or 1108 or otherwise, shall also be a U.S. Global
Security and bear the legend specified in Section 202.
Section 306. Book-Entry Provisions for U.S. Global Security.
(a) The U.S. Global Security initially shall (i) be registered
in the name of the Depositary for such Global Security or the nominee of such
Depositary, (ii) be deposited with, or on behalf of, the Depositary or with the
Trustee as custodian for such 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 U.S.
Global Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under the U.S. Global Security, 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 U.S. Global Security 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
Security.
(b) Transfers of the U.S. Global Security shall be limited to
transfers of such U.S. Global Security in whole, but not in part, to the
Depositary, its successors or their respective nominees. Interests of beneficial
owners in the U.S. Global Security may be transferred in accordance with the
rules and procedures of the Depositary and the provisions of Section 307.
Beneficial owners may obtain U.S. Physical Securities in exchange for their
beneficial interests in the U.S. Global Security upon request in accordance with
the Depositary's and the Security Registrar's procedures. In connection with the
execution, authentication and delivery of such Physical Securities, the Security
Registrar shall reflect on its books and records a decrease in the principal
amount of the relevant Global Security equal to the principal amount of such
Physical Securities and the Company shall execute and the Trustee shall (in
accordance with a Company Order for the authentication of such Securities)
authenticate and deliver one or more Physical Securities having an equal
aggregate principal amount. In addition, U.S. Physical
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Securities and Offshore Physical Securities shall be issued to all beneficial
owners in exchange for their beneficial interests in the U.S. Global Security if
(i) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for the U.S. Global Security and a successor Depositary
is not appointed by the Company within 90 days of such notice or (ii) an Event
of Default has occurred and is continuing and the Security Registrar has
received a request from the Depositary.
(c) In connection with any transfer of a portion of the
beneficial interest in the U.S. Global Security pursuant to subsection (b) of
this Section to beneficial owners who are required to hold U.S. Physical
Securities, the Security Registrar shall reflect on its books and records the
date and a decrease in the principal amount of the U.S. Global Security in an
amount equal to the principal amount of the beneficial interest in the U.S.
Global Security to be transferred, and the Company shall execute, and the
Trustee shall (in accordance with a Company Order for the authentication of such
Securities) authenticate and deliver, one or more U.S. Physical Securities of
like tenor and amount.
(d) In connection with the transfer of the entire U.S. Global
Security to beneficial owners pursuant to subsection (b) of this Section, the
U.S. Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in the U.S. Global Security, an equal aggregate
principal amount of U.S. Physical Securities or Offshore Physical Securities, as
the case may be, of authorized denominations.
(e) Any U.S. Physical Security delivered in exchange for an
interest in U.S. Global Securities pursuant to subsection (c) or subsection (d)
of this Section shall, except as otherwise provided by paragraph (a)(i)(x) and
paragraph (f) of Section 307, bear the Private Placement Legend.
(f) The registered holder of the U.S. Global Security 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 Securities.
Section 307. Special Transfer Provisions.
Unless and until (i) an Initial Security is sold under an
effective Registration Statement, or (ii) an Initial Security is exchanged for a
Series B Security in connection with the Exchange Offer, in each case pursuant
to the Registration Rights Agreement, the following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors.
The following provisions shall apply with respect to the registration of any
proposed transfer of an Initial Security to an institutional "accredited
investor" (as defined in Rule 501(a)(1), (2),
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(3) or (7) of Regulation D under the Securities Act) which is not a QIB
(excluding Non-U.S. Persons):
(i) The Security Registrar shall register the
transfer of any Initial Security whether or not such Initial
Security bears the Private Placement Legend, if (x) the
requested transfer is at least two years after the Issue Date
of the Initial Securities or (y) the proposed transferee has
delivered to the Security Registrar a certificate
substantially in the form of Exhibit B hereto.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global Security,
upon receipt by the Security Registrar of (x) the documents,
if any, required by paragraph (i) and (y) instructions given
in accordance with the Depositary's and the Security
Registrar's procedures therefor, the Security Registrar shall
reflect on its books and records the date and a decrease in
the principal amount of the U.S. Global Security in an amount
equal to the principal amount of the beneficial interest in
the U.S. Global Security transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one
or more U.S. Physical Certificates of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of an Initial Security
to a QIB (excluding Non-U.S. Persons):
(i) If the Security to be transferred consists of
U.S. Physical Securities, Temporary Offshore Physical
Securities or Permanent Offshore Physical Securities, the
Security Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has
checked the box provided for on the form of Initial Security
stating, or has otherwise advised the Company and the Security
Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to the transferee
who has signed the certification provided for on the form of
Initial Security stating, or has otherwise advised the Company
and the Security Registrar in writing, that it is purchasing
the Initial Security for its own account or an account with
respect to which it exercises sole investment discretion and
that it, or the person on whose behalf it is acting with
respect to any such account, is a QIB within the meaning of
Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim
the exemption from registration provided by Rule 144A.
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(ii) If the proposed transferee is an Agent Member,
and the Initial Security to be transferred consists of U.S.
Physical Securities, Temporary Offshore Physical Securities or
Permanent Offshore Physical Securities, upon receipt by the
Security Registrar of instructions given in accordance with
the Depositary's and the Security Registrar's procedures
therefor, the Security Registrar shall reflect on its books
and records the date and an increase in the principal amount
of the U.S. Global Security in an amount equal to the
principal amount of the U.S. Physical Securities, Temporary
Offshore Physical Securities or Permanent Offshore Physical
Securities, as the case may be, to be transferred, and the
Trustee shall cancel the Physical Security so transferred.
(c) Transfers by Non-U.S. Persons on or Prior to July 7, 1997.
The following provisions shall apply with respect to registration of any
proposed transfer of an Initial Security by a Non-U.S. Person on or prior to
July 7, 1997:
(i) The Security Registrar shall register the
transfer of any Initial Security (x) if the proposed
transferee is a Non-U.S. Person and the proposed transferor
has delivered to the Security Registrar a certificate
substantially in the form of Exhibit C hereto or (y) if the
proposed transferee is a QIB and the proposed transferor has
checked the box provided for on the form of Initial Security
stating, or has otherwise advised the Company and the Security
Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee
who has signed the certification provided for on the form of
Initial Security stating, or has otherwise advised the Company
and the Security Registrar in writing, that it is purchasing
Initial Security for its own account or an account with
respect to which it exercises sole investment discretion and
that it, or the person on whose behalf it is acting with
respect to any such account, is a QIB within the meaning of
Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim
the exemption from registration provided by Rule 144A. Unless
clause (ii) below is applicable, the Company shall execute,
and the Trustee shall authenticate and deliver, one or more
Temporary Offshore Physical Securities of like tenor and
amount.
(ii) If the proposed transferee is an Agent Member,
upon receipt by the Security Registrar of instructions given
in accordance with the Depositary's and the Security
Registrar's procedures therefor, the Security Registrar shall
reflect on its books and records the date and an increase in
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the principal amount at maturity of the U.S. Global Security
in an amount equal to the principal amount of the Temporary
Offshore Physical Security to be transferred, and the Trustee
shall cancel the Temporary Offshore Physical Security, if any,
so transferred.
(d) Transfers by Non-U.S. Persons on or After July 8, 1997.
The following provisions shall apply with respect to any transfer of an Initial
Security by a Non-U.S. Person on or after July 8, 1997:
(i)(x) If the Initial Security to be transferred is a
Permanent Offshore Physical Security, the Security Registrar
shall register such transfer, (y) if the Initial Security to
be transferred is a Temporary Offshore Physical Security, upon
receipt of a certificate substantially in the form of Exhibit
A from the proposed transferor, the Security Registrar shall
register such transfer and (z) in the case of either clause
(x) or (y), unless clause (ii) below is applicable, the
Company shall execute, and the Trustee shall authenticate and
deliver, one or more Permanent Offshore Physical Securities of
like tenor and amount.
(ii) If the proposed transferee is an Agent Member,
upon receipt by the Security Registrar of instructions given
in accordance with the Depositary's and the Security
Registrar's procedures therefor, the Security Registrar shall
reflect on its books and records the date and an increase in
the principal amount of the U.S. Global Security in an amount
equal to the principal amount of the Temporary Offshore
Physical Security or Permanent Offshore Physical Security to
be transferred, and the Trustee shall cancel the Physical
Security so transferred.
(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of an Initial Security to a
Non-U.S. Person:
(i) On and prior to July 7, 1997, the Security
Registrar shall register any proposed transfer of an Initial
Security to a Non-U.S. Person upon receipt of a certificate
substantially in the form of Exhibit C hereto from the
proposed transferor and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Temporary
Offshore Physical Securities of like tenor and amount.
(ii) On and after July 8, 1997, the Security
Registrar shall register any proposed transfer to any Non-U.S.
Person (w) if the Initial Security to be transferred is a
Permanent Offshore Physical Security, (x) if the Initial
Security to be transferred is a Temporary Offshore Physical
Security, upon receipt of a certificate substantially in the
form of Exhibit C from the
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proposed transferor, (y) if the Initial Security to be
transferred is a U.S. Physical Security or an interest in the
U.S. Global Security, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed
transferor and (z) in the case of any of clause (w), (x) or
(y), the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Permanent Offshore
Physical Securities of like tenor and amount.
(iii) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global Security,
upon receipt by the Security Registrar of (x) the document, if
any, required by paragraph (i), and (y) instructions in
accordance with the Depositary's and the Security Registrar's
procedures therefor, the Security Registrar shall reflect on
its books and records the date and a decrease in the principal
amount of the U.S. Global Security in an amount equal to the
principal amount of the beneficial interest in the U.S. Global
Security to be transferred and the Company shall execute, and
the Trustee shall authenticate and deliver, one or more
Permanent Offshore Physical Securities of like tenor and
amount.
(f) Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Securities not bearing the Private
Placement Legend, the Security Registrar shall deliver Securities that do not
bear the Private Placement Legend. Upon the registration of transfer, exchange
or replacement of Securities bearing the Private Placement Legend, the Security
Registrar shall deliver only Securities that bear the Private Placement Legend
unless either (i) the circumstances contemplated by paragraphs (a)(i)(x), (d)(i)
or (e)(ii) of this Section 307 exist or (ii) there is delivered to the Security
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
(g) General. By its acceptance of any Security bearing the
Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.
The Security 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 Security Registrar.
Section 308. Mutilated, Destroyed, Lost and Stolen Securities.
If (a) any mutilated Security is surrendered to the Trustee,
or (b) the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or
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theft of any Security, 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 Security has been acquired by a
bona fide purchaser, the Company shall execute and upon a Company Request the
Trustee shall authenticate and make available for delivery, in exchange for any
such mutilated Security or in lieu of any such destroyed, lost or stolen
Security, a replacement Security of like tenor and principal amount, bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a replacement Security, pay such Security.
Upon the issuance of any replacement Securities under this
Section, the Company may require the payment of a sum sufficient to pay all
documentary, stamp or similar issue or transfer taxes or other governmental
charges that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company and any Guarantor, whether or
not the destroyed, lost or stolen Security 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 Securities 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 Securities.
Section 309. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on the Stated Maturity of such interest shall be paid
to the Person in whose name the Security (or any Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
payment.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on the Stated Maturity of such interest,
and interest on such defaulted interest at the then applicable interest rate
borne by the Securities, to the extent lawful (such defaulted interest and
interest thereon herein collectively called "Defaulted Interest"), shall
forthwith cease to be payable to the Holder on the Regular Record Date; and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Subsection (a) or (b) below:
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(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or any
relevant Predecessor Securities) 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
Security and the date (not less than 30 days after such
notice) of the proposed payment (the "Special Payment 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 Special Payment Date, such money when
deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this Subsection
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
date of the Special Payment 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 in
writing of such Special Record Date. In the name and at the
expense of the Company, the Trustee shall cause notice of the
proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage
prepaid, to each Holder at its address as it appears in the
Security Register, 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 and Special Payment Date
therefor having been so mailed, such Defaulted Interest shall
be paid to the Persons in whose names the Securities are
registered on such Special Record Date and shall no longer be
payable pursuant to the following Subsection (b).
(b) 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 Securities may be
listed, and upon such notice as may be required by this
Indenture not inconsistent with the requirements of such
exchange, if, after written notice given by the Company to the
Trustee of the proposed payment pursuant to this Subsection,
such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 309, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
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Section 310. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP"
numbers (if then generally in use), and the Company, or the Trustee on behalf of
the Company, shall use CUSIP numbers in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice shall state that
no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of redemption or
exchange and that reliance may be placed only on the other identification
numbers printed on the Securities; and provided further, however, that failure
to use CUSIP numbers in any notice of redemption or exchange shall not affect
the validity or sufficiency of such notice.
Section 311. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name any Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 309) interest on, such
Security and for all other purposes whatsoever, whether or not such Security is
overdue, and neither 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 312. Cancellation.
All Securities surrendered for payment, purchase, redemption,
registration of transfer or exchange shall be delivered to the Trustee and, if
not already canceled, shall be promptly canceled by it. The Company and any
Guarantor may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company or such
Guarantor may have acquired in any manner whatsoever, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section 312, except as expressly permitted by this Indenture. All
canceled Securities held by the Trustee shall be returned to the Company. The
Trustee shall provide the Company a list of all Securities that have been
canceled from time to time as requested by the Company.
Section 313. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year comprised of twelve 30-day months.
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ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. Company's Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at any
time, with respect to the Securities, elect to have either Section 402 or
Section 403 be applied to all of the Outstanding Securities (the "Defeased
Securities"), upon compliance with the conditions set forth below in this
Article Four.
Section 402. Defeasance and Discharge.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 402, the Company, each Guarantor and any other
obligor upon the Securities, if any, shall be deemed to have been discharged
from its obligations with respect to the Defeased Securities on the date the
conditions set forth in Section 404 below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company, each
Guarantor and any other obligor upon the Securities shall be deemed to have
paid and discharged the entire Indebtedness represented by the Defeased
Securities, which shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 405 and the other Sections of this Indenture referred to
in (a) and (b) below, and to have satisfied all its other obligations under
such Securities and this Indenture insofar as such Securities are concerned
(and the Trustee, at the expense of the Company and upon Company Request,
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 Defeased Securities to receive,
solely from the trust fund described in Section 404 and as more fully set
forth in such Section, payments in respect of the principal of, premium,
if any, and interest on, such Securities, when such payments are due, (b) the
Company's obligations with respect to such Defeased Securities under Sections
304, 305, 308, 1002 and 1003, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder, including, without limitation, the
Trustee's rights under Section 607, and (d) this Article Four. Subject to
compliance with this Article Four, the Company may exercise its option under
this Section 402 notwithstanding the prior exercise of its option under
Section 403 with respect to the Securities.
Section 403. Covenant Defeasance.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 403, the Company and each Guarantor shall be
released from its obligations under any covenant or provision contained or
referred to in Sections 1005 through 1021, inclusive, and the provisions of
clauses (iii) and (v) of Section 801(a) with respect to the Defeased
Securities on and after the date the conditions set forth in Section 404
below are satisfied (hereinafter, "covenant defeasance"), and the Defeased
Securities shall thereafter
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be deemed to be not "Outstanding" for the purposes of any direction, waiver,
consent or declaration or Act of Holders (and the consequences of any thereof)
in connection with such covenants, but shall continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the Defeased Securities, the Company and each
Guarantor may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such Section, whether directly or
indirectly, by reason of any reference elsewhere herein to any such Section or
by reason of any reference in any such Section 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(c) but, except as specified above, the
remainder of this Indenture and such Defeased Securities shall be unaffected
thereby. In the event covenant defeasance occurs, the Event of Default specified
in Section 501(d) will no longer constitute an Event of Default with respect to
the Securities.
Section 404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 402 or Section 403 to the Defeased Securities:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee 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 Securities, (a) cash in United
States dollars, (b) U.S. Government Obligations, or (c) a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants or a nationally recognized investment
banking firm expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee to pay
and discharge, the principal of, premium, if any, and interest on, the Defeased
Securities, on the Stated Maturity of such principal or interest (or on any date
after June 1, 2001 (such date being referred to as the "Defeasance Redemption
Date") if at or prior to electing to exercise either its option applicable to
Section 402 or its option applicable to Section 403, the Company has delivered
to the Trustee an irrevocable notice to redeem the Defeased Securities on the
Defeasance Redemption Date). For this purpose, "U.S. Government Obligations"
means securities that are (i) direct obligations of the United States of America
for the timely payment of which its full faith and credit is pledged or (ii)
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 U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository
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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
U.S. Government Obligation or the specific payment of principal of or interest
on the U.S. Government Obligation evidenced by such depository receipt;
(2) In the case of an election under Section 402, the Company
shall have delivered to the Trustee an Opinion of Independent Counsel in the
United States stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date
hereof, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Independent
Counsel in the United States shall confirm that, the Holders of the Outstanding
Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred;
(3) In the case of an election under Section 403, the Company
shall have delivered to the Trustee an Opinion of Independent Counsel in the
United States to the effect that the Holders of the Outstanding Securities will
not recognize income, gain or loss for federal income tax purposes as a result
of such covenant defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred;
(4) No Default or Event of Default (other than a Default or
Event of Default under this Indenture resulting from the borrowing of funds to
be applied to such deposit) shall have occurred and be continuing on the date of
such deposit or insofar as Section 501(h) or (i) is concerned, at any time
during the period ending on the 91st day after the date of deposit (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period);
(5) Such defeasance or covenant defeasance shall not cause the
Trustee for the Securities to have a conflicting interest for purposes of the
Trust Indenture Act with respect to any other securities of the Company or any
Guarantor;
(6) Such defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a Default under, this Indenture or any
other material agreement or instrument to which the Company, any Guarantor or
any Subsidiary is a party or by which it is bound;
(7) Such defeasance or covenant defeasance shall not result in
the trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act of 1940, as amended, unless such trust
shall be registered under such Act or exempt from registration thereunder;
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(8) The Company shall have delivered to the Trustee an Opinion
of Independent Counsel in the United States to the effect that after the 91st
day following the deposit, the trust funds will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(9) The Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the holders of the Securities or any Guarantee over the
other creditors of the Company or any Guarantor with the intent of defeating,
hindering, delaying or defrauding creditors of the Company, any Guarantor or
others;
(10) No event or condition shall exist that would prevent the
Company from making payments of the principal of, premium, if any, and interest
on the Securities on the date of such deposit or at any time ending on the 91st
day after the date of such deposit; and
(11) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Independent Counsel, each stating that
all conditions precedent provided for relating to either the defeasance under
Section 402 or the covenant defeasance under Section 403 (as the case may be)
have been complied with.
Opinions of Counsel or Opinions of Independent Counsel
required to be delivered under this Section shall be in form and substance
reasonably satisfactory to the Trustee may have qualifications customary for
opinions of the type required and counsel delivering such opinions may rely on
certificates of the Company or government or other officials customary for
opinions of the type required, which certificates shall be limited as to matters
of fact, including that various financial covenants have been complied with.
Section 405. Deposited Money and U.S. Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section
1003, all United States dollars and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee pursuant to Section 404 in respect
of the Defeased Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (excluding the Company or
any of its Affiliates acting as Paying Agent), as the Trustee may determine, to
the Holders of such Securities of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 404 or the principal and interest
received in respect thereof other than
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any such tax, fee or other charge which by law is imposed, assessed or for the
account of the Holders of the Defeased Securities.
Anything in this Article Four to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any United States dollars or U.S. Government Obligations held by it as
provided in Section 404 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 defeasance or covenant defeasance.
Section 406. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United
States dollars or U.S. Government Obligations in accordance with Section 402 or
403, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
Securities and any Guarantor's obligations under any Guarantee shall be revived
and reinstated, with present and prospective effect, as though no deposit had
occurred pursuant to Section 402 or 403, as the case may be, until such time as
the Trustee or Paying Agent is permitted to apply all such United States dollars
or U.S. Government Obligations in accordance with Section 402 or 403, as the
case may be; provided, however, that if the Company makes any payment to the
Trustee or Paying Agent of principal of, premium, if any, or interest on any
Security following the reinstatement of its obligations, the Trustee or Paying
Agent shall promptly pay any such amount to the Holders of the Securities and
the Company shall be subrogated to the rights of the Holders of such Securities
to receive such payment from the United States dollars and U.S. Government
Obligations 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 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):
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(a) there shall be a default in the payment of any interest on
any Security when it becomes due and payable, and such default shall continue
for a period of 30 days;
(b) there shall be a default in the payment of the principal
of (or premium, if any, on) any Security at its Maturity (upon acceleration,
optional or mandatory redemption, required repurchase or otherwise);
(c) (i) there shall be a default in the performance, or
breach, of any covenant or agreement of the Company or any Guarantor under the
Indenture or any Guarantee (other than a default in the performance, or breach,
of a covenant or agreement which is specifically dealt with in clause (a), (b)
or in clause (ii), (iii) or (iv) of this clause (c)) and such default or breach
shall continue for a period of 30 days after written notice has been given, by
certified mail, (x) to the Company by the Trustee or (y) to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
outstanding Securities; (ii) there shall be a default in the performance or
breach of the provisions of Article Eight; (iii) the Company shall have failed
to make or consummate an Offer in accordance with the provisions of Section
1012; or (iv) the Company shall have failed to make or consummate a Change of
Control Offer in accordance with the provisions of Section 1015;
(d) (i) any default in the payment of the principal, premium,
if any, or interest on any Indebtedness shall have occurred under any of the
agreements, indentures or instruments under which the Company, any Guarantor or
any Subsidiary then has outstanding Indebtedness in excess of $5,000,000 when
the same shall become due and payable in full and such default shall have
continued after any applicable grace period and shall not have been cured or
waived and, if not already matured at its final maturity in accordance with its
terms, the holder of such Indebtedness shall have the right to accelerate such
Indebtedness or (ii) an event of default as defined in any of the agreements,
indentures or instruments described in clause (i) of this clause (d) shall have
occurred and the Indebtedness thereunder, if not already matured at its final
maturity in accordance with its terms, shall have been accelerated;
(e) any Guarantee shall for any reason cease to be, or shall
for any reason be asserted in writing by any Guarantor or the Company not to be,
in full force and effect and enforceable in accordance with its terms, except to
the extent contemplated by this Indenture and any such Guarantee;
(f) one or more judgments, orders or decrees for the payment
of money in excess of $2,000,000, either individually or in the aggregate, shall
be rendered against the Company, any Guarantor or any Subsidiary or any of their
respective properties and shall not be discharged and either (i) any creditor
shall have commenced an enforcement proceeding upon such judgment, order or
decree or (ii) there shall have been a period of
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60 consecutive days during which a stay of enforcement of such judgment or
order, by reason of an appeal or otherwise, shall not be in effect;
(g) any holder or holders of at least $2,000,000 in aggregate
principal amount of Indebtedness of the Company, any Guarantor or any Subsidiary
after a default under such Indebtedness shall notify the Trustee of the intended
sale or disposition of any assets of the Company, any Guarantor or any
Subsidiary that have been pledged to or for the benefit of such holder or
holders to secure such Indebtedness or shall commence proceedings, or take any
action (including by way of set-off), to retain in satisfaction of such
Indebtedness or to collect on, seize, dispose of or apply in satisfaction of
Indebtedness, assets of the Company, any Guarantor or any Subsidiary (including
funds on deposit or held pursuant to lock-box and other similar arrangements);
(h) there shall have been the entry by a court of competent
jurisdiction of (i) a decree or order for relief in respect of the Company, any
Guarantor or any Significant Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy Law or (ii) a decree or order adjudging the
Company, any Guarantor or any Significant Subsidiary bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company, any Guarantor or any Significant Subsidiary under any applicable
federal or state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company, any Guarantor
or any Significant Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of their respective
affairs, and any such decree or order for relief shall continue to be in effect,
or any such other decree or order shall be unstayed and in effect, for a period
of 60 consecutive days; or
(i) (i) the Company, any Guarantor or any Significant
Subsidiary commences a voluntary case or proceeding under any applicable
Bankruptcy Law or any other case or proceeding to be adjudicated bankrupt or
insolvent, (ii) the Company, any Guarantor or any Significant Subsidiary
consents to the entry of a decree or order for relief in respect of the Company,
such Guarantor or such Significant Subsidiary in an involuntary case or
proceeding under any applicable Bankruptcy Law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, (iii) the Company, any
Guarantor or any Significant Subsidiary files a petition or answer or consent
seeking reorganization or relief under any applicable federal or state law, (iv)
the Company, any Guarantor or any Significant Subsidiary (1) consents to the
filing of such petition or the appointment of, or taking possession by, a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company, any Guarantor or such Significant Subsidiary or of any
substantial part of their respective properties, (2) makes an assignment for the
benefit of creditors or (3) admits in writing its inability to pay its debts
generally as they become due or (v) the Company, any Guarantor or any
Significant
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Subsidiary takes any corporate action in furtherance of any such actions in this
paragraph (i).
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default
specified in Sections 501(h) and (i) with respect to the Company) shall occur
and be continuing with respect to this Indenture, the Trustee or the Holders of
not less than 25% in aggregate principal amount of the Securities then
Outstanding may, and the Trustee at the request of such Holders shall, declare
all unpaid principal of, premium, if any, and accrued interest on all Securities
to be due and payable, by a notice in writing to the Company (and to the Trustee
if given by the Holders of the Securities) and upon any such declaration, such
principal, premium, if any, and interest shall become due and payable
immediately. If an Event of Default specified in clause (h) or (i) of Section
501 occurs with respect to the Company and is continuing, then all the
Securities shall ipso facto become and be due and payable immediately in an
amount equal to the principal amount of the Securities, together with accrued
and unpaid interest, if any, to the date the Securities become due and payable,
without any declaration or other act on the part of the Trustee or any Holder.
Thereupon, the Trustee may, at its discretion, proceed to protect and enforce
the rights of the Holders of the Securities by appropriate judicial proceedings.
After a declaration of acceleration with respect to the
Securities, but before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter in this Article provided, the
Holders of a majority in aggregate principal amount of the Securities
Outstanding, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all sums paid or advanced by the Trustee under
this Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel,
(ii) all overdue interest on all Outstanding
Securities,
(iii) the principal of and premium, if any, on any
Outstanding Securities which have become due otherwise than by
such declaration of acceleration and interest thereon at a
rate borne by the Securities, and
(iv) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the Securities; and
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(b) all Events of Default, other than the non-payment of
principal of the Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513. No such
rescission shall affect any subsequent Default or impair any right consequent
thereon.
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company and each Guarantor covenant that if
(a) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default continues
for a period of 30 days, or
(b) default is made in the payment of the principal of or
premium, if any, on any Security at the Stated Maturity thereof,
the Company and such Guarantor will, upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal and premium, if any, and interest, with
interest upon the overdue principal and premium, if any, and, to the extent that
payment of such interest shall be legally enforceable, upon overdue installments
of interest, at the rate borne by the Securities; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company or any Guarantor, as the case may be, fails to
pay such amounts forthwith upon such demand, the Trustee, in its own name and as
trustee of an express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid and may prosecute such proceeding to
judgment or final decree, and may enforce the same against the Company or any
Guarantor or any other obligor upon the Securities 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 Securities,
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 private
or judicial proceedings as the Trustee shall deem most effectual to protect and
enforce 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 therein, 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 512. No recovery of any such judgment upon any property of the Company
or any
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Guarantor shall affect or impair any rights, powers or remedies of the Trustee
or the Holders.
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 Securities or the property of the Company or
of such other obligor or their creditors, the Trustee (irrespective of whether
the principal of the Securities 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
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(a) 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
Securities 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
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay 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 607.
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
Securities 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.
Section 505. Trustee May Enforce Claims without Possession of
Securities.
All rights of action and claims under this Indenture, the
Securities or the Guarantees may be prosecuted and enforced by the Trustee
without the possession of any of the Securities 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
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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
of the Securities in respect of which such judgment has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article or
otherwise on behalf of the Holders or the Trustee pursuant to this Article or
through any proceeding or any arrangement or restructuring in anticipation or in
lieu of any proceeding contemplated by this Article shall be applied, subject to
applicable law, 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,
premium, if any, or interest, upon presentation of the Securities 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 upon
the Securities for principal, premium, if any, and interest, 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 Securities for principal, premium, if any, and interest; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto, including the Company, 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 Securities shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture or the
Securities, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of
the Outstanding Securities 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;
(c) such Holder or Holders have offered to the Trustee an
indemnity satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
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(d) the Trustee for 15 days after its receipt of such notice,
request and offer (and if requested, provision) of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 15-day period by the Holders of a majority
in principal amount of the Outstanding Securities;
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 Security 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 Security or any Guarantee, except in the manner provided in this Indenture
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 Security shall have the right based on the terms stated herein,
which is absolute and unconditional, to receive payment of the principal of,
premium, if any, and (subject to Section 309) interest on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption or repurchase, on the Redemption Date or the repurchase date) 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 the Company, any Guarantor, any other obligor on the Securities, the
Trustee and the Holders shall, subject to any determination in such proceeding,
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.
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,
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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
Security 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 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 aggregate principal
amount of the Outstanding Securities shall have the right to direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, provided that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture (including, without limitation, Section 507) or any
Guarantee, expose the Trustee to personal liability, or be unduly prejudicial to
Holders not joining therein; and
(b) 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.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities may on behalf of the Holders of all
Outstanding Securities waive any past Default hereunder and its consequences,
except a Default
(a) in the payment of the principal of, premium, if any, or
interest on any Security; or
(b) in respect of a covenant or a provision hereof which under
this Indenture cannot be modified or amended without the consent of the Holder
of each Security Outstanding affected by such modification or amendment.
Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
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Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security 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, 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 Securities,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of, premium, if any, or interest on, any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
Section 515. Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Guarantors covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or any usury or other law wherever enacted, now or at
any time hereafter in force, which would prohibit or forgive the Company or any
Guarantor from paying all or any portion of the principal of, premium, if any,
or interest on the Securities contemplated herein or in the Securities or which
may affect the covenants or the performance of this Indenture; and each of the
Company and the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
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 516. Remedies Subject to Applicable Law.
All rights, remedies and powers provided by this Article Five
may be exercised only to the extent that the exercise thereof does not violate
any applicable provision of law in the premises, and all the provisions of this
Indenture are intended to be subject to all applicable mandatory provisions of
law which may be controlling in the premises and to be limited to the extent
necessary so that they will not render this Indenture invalid, unenforceable or
not entitled to be recorded, registered or filed under the provisions of any
applicable law.
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ARTICLE SIX
THE TRUSTEE
Section 601. Duties of Trustee.
Subject to the provisions of Trust Indenture Act Sections
315(a) through 315(d):
(a) if a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs;
(b) except during the continuance of a Default or an Event of
Default:
(1) the Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture that are
adverse to 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
expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture;
(c) the Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this Subsection (c) does not limit the effect of
Subsection (b) of this Section 601;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it is proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(3) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith, in
accordance with a direction of the Holders of a majority in
principal amount of Outstanding Securities relating to the
time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or
power confirmed upon the Trustee under this Indenture;
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(d) 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;
(e) whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
Subsections (a), (b), (c) and (d) and (f) of this Section 601; and
(f) the Trustee shall not be liable for interest on any money
or assets received by it except as the Trustee may agree with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
Section 602. Notice of Defaults.
Within 30 days after a Responsible Officer of the Trustee
receives notice of the occurrence of any Default, the Trustee shall transmit by
mail to all Holders and any other Persons entitled to receive reports pursuant
to Section 313(c) of the Trust Indenture Act, as their names and addresses
appear in the Security Register, 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,
premium, if any, or interest on any Security, the Trustee shall be protected in
withholding such notice if and so long as a trust committee of Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interest of the Holders.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601 hereof and Trust
Indenture Act Sections 315(a) through 315(d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon receipt by it of 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;
(b) 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;
(c) the Trustee may consult with counsel of its selection and
any advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and
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protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon in accordance with such advice or Opinion
of Counsel;
(d) 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 pursuant to this Indenture, unless such Holders
shall have offered to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred
therein or ,
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture other than any
liabilities arising out of the negligence, bad faith or willful misconduct of
the Trustee;
(f) 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,
approval, appraisal, bond, debenture, note, coupon, security or other paper or
document unless requested in writing to do so by the Holders of not less than a
majority in aggregate principal amount of the Securities then Outstanding;
provided that, if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expenses or liabilities as
a condition to proceeding; the reasonable expenses of every such investigation
so requested by the Holders of not less than 25% in aggregate principal amount
of the Securities Outstanding shall be paid by the Company or, if paid by the
Trustee or any predecessor Trustee, shall be repaid by the Company upon demand;
provided, further, the Trustee in its discretion may make such further inquiry
or investigation into such facts or matters as it may deem 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; and
(g) 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.
Section 604. Trustee Not Responsible for Recitals, Dispositions
of Securities or Application of Proceeds Thereof.
The recitals contained herein and in the Securities, except
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
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representations as to the validity or sufficiency of this Indenture or of the
Securities, except that the Trustee represents that it is duly authorized to
execute and deliver this Indenture, authenticate the Securities and perform its
obligations hereunder and that the statements made by it in any Statement of
Eligibility and Qualification 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 Securities or the
proceeds thereof.
Section 605. Trustee and Agents May Hold Securities;
Collections; etc.
The Trustee, any Paying Agent, Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities, with the same rights it would have if it were
not the Trustee, Paying Agent, Security Registrar or such other agent and,
subject to Trust Indenture Act Sections 310 and 311, may otherwise deal with the
Company and receive, collect, hold and retain collections from the Company with
the same rights it would have if it were not the Trustee, Paying Agent, Security
Registrar or such other agent.
Section 606. Money Held in Trust.
All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Except for funds or securities
deposited with the Trustee pursuant to Article Four, the Trustee shall be
required to invest all moneys received by the Trustee, until used or applied as
herein provided, in Temporary Cash Investments in accordance with the directions
of the Company.
Section 607. Compensation and Indemnification of Trustee and
Its Prior Claim.
The Company covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, such compensation as the
parties shall agree in writing from time to time 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) and the Company
covenants and agrees to pay or reimburse the Trustee and each predecessor
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by or on behalf of the Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all agents and other persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence, bad faith or willful misconduct. The Company also
covenants and agrees to indemnify the Trustee and each predecessor Trustee for,
and to hold it harmless against, any claim, loss, liability, tax, assessment or
other governmental charge (other than taxes applicable to the Trustee's
compensation hereunder) or expense incurred without
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negligence, bad faith or willful misconduct on its part, arising out of or in
connection with the acceptance or administration of this Indenture or the trusts
hereunder and its duties hereunder, including enforcement of this Section 607
and also including any liability which the Trustee may incur as a result of
failure to withhold, pay or report any tax, assessment or other governmental
charge, and the costs and expenses of defending itself against or investigating
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 607 to compensate and indemnify the Trustee and each predecessor Trustee
and to pay or reimburse the Trustee and each predecessor Trustee for reasonable
expenses, disbursements and advances shall constitute an additional obligation
hereunder and shall survive the satisfaction and discharge of this Indenture and
the resignation or removal of the Trustee and each predecessor Trustee.
Section 608. Conflicting Interests.
The Trustee shall comply with the provisions of Section 310(b)
of the Trust Indenture Act.
Section 609. Trustee Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as trustee under Trust Indenture Act Section 310(a) and which
shall have a combined capital and surplus of at least $250,000,000, to the
extent there is an institution eligible and willing to serve. If the Trustee
does not have a Corporate Trust 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 Trustee 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 609, 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
609, the Trustee shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor
Trustee.
(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 under
Section 611.
(b) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice thereof to the
Company. Upon receiving such notice or resignation, the Company shall promptly
appoint a successor trustee by written
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instrument executed by authority of the Board of Directors of the Company, a
copy of which shall be delivered to the resigning Trustee and a copy to the
successor trustee. If an instrument of acceptance by a successor trustee shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may, or any Holder who has been a
bona fide Holder of a Security 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. Such court may thereupon, after such
notice, if any, as it may deem proper, appoint and prescribe a successor
trustee.
(c) The Trustee may be removed at any time for any cause or
for no cause by an Act of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the
provisions of Trust Indenture Act Section 310(b) after written
request therefor by the Company or by any Holder who has been
a bona fide Holder of a Security for at least six months,
(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request
therefor by the Company or by any Holder who has been a bona
fide Holder of a Security for at least six months, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver 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 case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 514, the Holder of any Security who has been a bona
fide Holder of a Security 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. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint 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 and shall comply with the applicable requirements of Section
611. If, within 60 days after such resignation,
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removal or incapability, or the occurrence of such vacancy, the Company has not
appointed a successor Trustee, a successor trustee shall be appointed by the Act
of the Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee. Such 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 of the Securities and accepted appointment in the manner hereinafter
provided, the Trustee or the Holder of any Security who has been a bona fide
Holder for at least six months may, subject to Section 514, 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 by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor trustee and the
address of its Corporate Trust Office or agent hereunder.
Section 611. 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 as if originally named as
Trustee hereunder; but, nevertheless, on the written request of the Company or
the successor trustee, upon payment of its charges pursuant to Section 607 then
unpaid, such retiring Trustee shall pay over to the successor trustee all moneys
at the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. 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 and powers.
No successor trustee with respect to the Securities shall
accept appointment as provided in this Section 611 unless at the time of such
acceptance such successor trustee shall be eligible to act as trustee under the
provisions of Trust Indenture Act Section 310(a) and this Article Six and shall
have a combined capital and surplus of at least $250,000,000 and have a
Corporate Trust Office or an agent selected in accordance with Section 609.
Upon acceptance of appointment by any successor trustee as
provided in this Section 611, the Company shall give notice thereof to the
Holders of the Securities,
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by mailing such notice to such Holders at their addresses as they shall appear
on the Security Register. If the acceptance of appointment is substantially
contemporaneous with the appointment, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 610. If
the Company fails to give such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be given at the expense of the Company.
Section 612. 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 (including the trust created by this
Indenture) shall be the successor of the Trustee hereunder, provided that such
corporation shall be eligible under Trust Indenture Act Section 310(a) and this
Article Six and shall have a combined capital and surplus of at least
$250,000,000 and have a Corporate Trust Office or an agent selected in
accordance with Section 609, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Securities shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee and deliver
such Securities so authenticated; and, in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor trustee; and in all such cases such certificate
shall have the full force which it is anywhere in the Securities or in this
Indenture provided that the certificate of the Trustee shall have; provided that
the right to adopt the certificate of authentication of any predecessor Trustee
or to authenticate Securities in the name of any predecessor Trustee shall apply
only to its successor or successors by merger, conversion or consolidation.
Section 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the
Company (or other obligor under the Securities), the Trustee shall be subject to
the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor). A Trustee who has resigned or
been removed shall be subject to Trust Indenture Act Section 311(a) to the
extent indicated therein.
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not more than 15 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 Security
Registrar, no such list need be furnished.
Section 702. Disclosure of Names and Addresses of Holders.
Holders may communicate pursuant to Trust Indenture Act
Section 312(b) with other Holders with respect to their rights under this
Indenture or the Securities, and the Trustee shall comply with Trust Indenture
Act Section 312(b). The Company, the Trustee, the Security Registrar and any
other Person shall have the protection of Trust Indenture Act Section 312(c).
Further, every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee or any
agent of either of them shall be held accountable by reason of the disclosure of
any information as to the names and addresses of the Holders in accordance with
Trust Indenture Act 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 Trust Indenture
Act Section 312.
Section 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with
the first May 15 after the issuance of Securities, the Trustee, if so required
under the Trust Indenture Act, shall transmit by mail to all Holders, in the
manner and to the extent provided in Trust Indenture Act Section 313(c), a brief
report dated as of such May 15 in accordance with and with respect to the
matters required by Trust Indenture Act Section 313(a). The Trustee shall also
transmit by mail to all Holders, in the manner and to the extent provided in
Trust Indenture Act Section 313(c), a brief report in accordance with and with
respect to the matters required by Trust Indenture Act Section 313(b)(2).
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(b) A copy of each report transmitted to Holders pursuant to
this Section 703 shall, at the time of such transmission, be mailed to the
Company and filed with each stock exchange, if any, upon which the Securities
are listed and also with the Commission. The Company will notify the Trustee
promptly if the Securities are listed on any stock exchange.
Section 704. Reports by Company.
The Company and any Guarantor, as the case may be, shall:
(a) file with the Trustee, within 15 days after the Company or
any Guarantor, as the case may be, is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which the
Company or any Guarantor may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or, if the Company or any
Guarantor, as the case may be, is not required to file information, documents or
reports pursuant to either of said Sections, then it shall (i) deliver to the
Trustee annual audited financial statements of the Company and its Subsidiaries,
prepared on a Consolidated basis in conformity with GAAP, within 120 days after
the end of each fiscal year of the Company, and (ii) file with the Trustee and,
to the extent permitted by law, the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to compliance by
the Company or any Guarantor, as the case may be, with the conditions and
covenants of this Indenture as are required from time to time by such rules and
regulations (including such information, documents and reports referred to in
Trust Indenture Act Section 314(a)); and
(c) within 15 days after the filing thereof with the Trustee,
transmit by mail to all Holders in the manner and to the extent provided in
Trust Indenture Act Section 313(c), such summaries of any information, documents
and reports required to be filed by the Company or any Guarantor, as the case
may be, pursuant to Section 1019 hereunder and subsections (a) and (b) of this
Section as are required by rules and regulations prescribed from time to time by
the Commission.
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ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OF ASSETS
Section 801. Company and Guarantors May Consolidate, etc.,
Only on Certain Terms.
(a) The Company will not, in a single transaction or through a
series of related transactions, consolidate with or merge with or into any other
Person or sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to any Person or group of
affiliated Persons, or permit any of its Subsidiaries to enter into any such
transaction or series of related transactions if such transaction or series of
related transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of the
properties and assets of the Company and its Subsidiaries on a Consolidated
basis to any other Person or group of affiliated Persons, unless at the time and
after giving effect thereto:
(i) either (a) the Company will be the continuing
corporation in the case of a consolidation or merger involving
the Company or (b) the Person (if other than the Company)
formed by such consolidation or into which the Company is
merged or the Person which acquires by sale, assignment,
conveyance, transfer, lease or disposition all or
substantially all of the properties and assets of the Company
and its Subsidiaries on a Consolidated basis (the "Surviving
Entity") will be a corporation duly organized and validly
existing under the laws of the United States of America, any
state thereof or the District of Columbia and such Person
expressly assumes, by a supplemental indenture, in a form
reasonably satisfactory to the Trustee, all the obligations of
the Company under the Securities and this Indenture, as the
case may be, and the Securities and this Indenture will remain
in full force and effect as so supplemented;
(ii) immediately before and immediately after giving
effect to such transaction on a pro forma basis (and treating
any Indebtedness not previously an obligation of the Company
or any of its Subsidiaries which becomes the obligation of the
Company or any of its Subsidiaries as a result of such
transaction as having been incurred at the time of such
transaction), no Default or Event of Default will have
occurred and be continuing;
(iii) immediately before and immediately after giving
effect to such transaction on a pro forma basis (on the
assumption that the transaction occurred on the first day of
the four-quarter period for which financial statements are
available ending immediately prior to the
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consummation of such transaction with the appropriate
adjustments with respect to the transaction being included in
such pro forma calculation), the Company (or the Surviving
Entity if the Company is not the continuing obligor hereunder)
could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under Section 1008;
(iv) at the time of the transaction, each Guarantor,
if any, unless it is the other party to the transactions
described above, will have by supplemental indenture confirmed
that its Guarantee shall apply to such Person's obligations
under this Indenture and under the Securities;
(v) at the time of the transaction if any of the
property or assets of the Company or any of its Subsidiaries
would thereupon become subject to any Lien, the provisions of
Section 1011 are complied with; and
(vi) at the time of the transaction the Company or
the Surviving Entity will have delivered, or caused to be
delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an
Opinion of Counsel, each to the effect that such
consolidation, merger, transfer, sale, assignment, conveyance,
transfer, lease or other transaction and the supplemental
indenture in respect thereof comply with this Indenture and
that all conditions precedent herein provided for relating to
such transaction have been complied with.
(b) Each Guarantor, if any, shall not, in a single transaction
or through a series of related transactions, consolidate with or merge with or
into any other Person (other than the Company or any Guarantor) or sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of its
properties and assets on a Consolidated basis to any Person or group of
affiliated Persons (other than the Company or any Guarantor), or permit any of
its Subsidiaries to enter into any such transaction or series of related
transactions if such transaction or series of related transactions, in the
aggregate, would result in a sale, assignment, conveyance, transfer, lease or
disposition of all or substantially all of the properties and assets of the
Guarantor and its Subsidiaries on a Consolidated basis to any other Person or
group of affiliated Persons (other than the Company or any Guarantor), unless at
the time and after giving effect thereto:
(i) either (1) the Guarantor will be the continuing
corporation in the case of a consolidation or merger involving
the Guarantor or (2) the Person (if other than the Guarantor)
formed by such consolidation or into which such Guarantor is
merged or the Person which acquires by sale, assignment,
conveyance, transfer, lease or disposition all or
substantially all of the properties and assets of the
Guarantor and its Subsidiaries on a Consolidated basis (the
"Surviving Guarantor Entity") will be a corporation
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duly organized and validly existing under the laws of the
United States of America, any state thereof or the District of
Columbia and such Person expressly assumes, by a supplemental
indenture, in a form reasonably satisfactory to the Trustee,
all the obligations of such Guarantor under its Guarantee of
the Securities and this Indenture, and such Guarantee will
remain in full force and effect;
(ii) immediately before and immediately after giving
effect to such transaction, on a pro forma basis no Default or
Event of Default shall have occurred and be continuing; and
(iii) at the time of the transaction such Guarantor
or the Surviving Guarantor Entity will have delivered, or
caused to be delivered, to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an Officers'
Certificate and an Opinion of Counsel, each to the effect that
such consolidation, merger, transfer, sale, assignment,
conveyance, lease or other transaction and the supplemental
indenture in respect thereof comply with this Indenture and
that all conditions precedent therein provided for relating to
such transaction have been complied with.
(c) Notwithstanding the foregoing, the provisions of Section
801(b) shall not apply to any Guarantor whose Guarantee of the Notes is
unconditionally released and discharged in accordance with paragraph (b) under
Section 1013.
Section 802. Successor Substituted.
Upon any consolidation or merger, or any sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of the
properties and assets of the Company or any Guarantor, if any, in accordance
with Section 801 in which the Company or any Guarantor, as the case may be, is
not the continuing corporation, the successor Person formed by such
consolidation or into which the Company or such Guarantor, as the case may be,
is merged or the successor Person to which such sale, assignment, conveyance,
transfer, lease or disposition is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company or such Guarantor, as the
case may be, under this Indenture, in the Securities and/or the Guarantee, as
the case may be, with the same effect as if such successor had been named as the
Company or such Guarantor, as the case may be, herein, in the Securities and/or
in the Guarantee, as the case may be and, the Company or any Guarantor, as the
case may be, shall be discharged from all obligations and covenants hereof and
the Securities or its Guarantee, as the case may be; provided that in the case
of a transfer by lease, the predecessor shall not be released from the payment
of principal and interest on the Securities or a Guarantee, as the case may be.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements without
Consent of Holders.
Without the consent of any Holders, the Company, the
Guarantors, if any, and any other obligor under the Securities 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 or agreements or other
instruments with respect to any Guarantee, in form and substance satisfactory to
the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the
Company or a Guarantor or any other obligor upon the Securities, and the
assumption by any such successor of the covenants of the Company or such
Guarantor or obligor herein and in the Securities and in any Guarantee in
accordance with Article Eight;
(b) to add to the covenants of the Company, any Guarantor or
any other obligor upon the Securities for the benefit of the Holders, or to
surrender any right or power conferred upon the Company or any Guarantor or any
other obligor upon the Securities, as applicable, herein, in the Securities or
in any Guarantee;
(c) to cure any ambiguity, or to correct or supplement any
provision herein or in any supplemental indenture, the Securities or any
Guarantee which may be defective or inconsistent with any other provision herein
or in the Securities or any Guarantee or to make any other provisions with
respect to matters or questions arising under this Indenture, the Securities or
any Guarantee; provided that, in each case, such provisions shall not adversely
affect the interest of the Holders;
(d) to comply with the requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the Trust
Indenture Act, as contemplated by Section 905 or otherwise;
(e) to add a Guarantor pursuant to the requirements of Section
1013;
(f) to evidence and provide the acceptance of the appointment
of a successor trustee hereunder; or
(g) to mortgage, pledge, hypothecate or grant a security
interest in favor of the Trustee for the benefit of the Holders as additional
security for the payment and performance of the Company's or any Guarantor's
Indenture Obligations, in any property, or assets, including any of which are
required to be mortgaged, pledged or hypothecated,
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or in which a security interest is required to be granted to the Trustee
pursuant to this Indenture or otherwise.
Section 902. Supplemental Indentures and Agreements with
Consent of Holders.
Except as permitted by Section 901, with the consent of the
Holders of at least a majority in aggregate principal amount of the Outstanding
Securities, by Act of said Holders delivered to the Company, each Guarantor, if
any, and the Trustee, the Company and each Guarantor (if a party thereto) when
authorized by Board Resolutions, and the Trustee may (i) enter into an indenture
or indentures supplemental hereto or agreements or other instruments with
respect to any Guarantee in form and substance satisfactory to the Trustee, for
the purpose of adding any provisions to or amending, modifying or changing in
any manner or eliminating any of the provisions of this Indenture, the
Securities or any Guarantee (including but not limited to, for the purpose of
modifying in any manner the rights of the Holders under this Indenture, the
Securities or any Guarantee) or (ii) waive compliance with any provision in this
Indenture, the Securities or any Guarantee (other than waivers of past Defaults
covered by Section 513 and waivers of covenants which are covered by Section
1022); provided, however, that no such supplemental indenture, agreement or
instrument shall, without the consent of the Holder of each Outstanding Security
affected thereby:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, or change to an earlier date any redemption date of,
or waive a default in the payment of the principal or interest on, any such
Security or reduce the principal amount thereof or the rate of interest thereon
or any premium payable upon the redemption thereof, or change the coin or
currency in which the principal of any Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date);
(b) amend, change or modify the obligation of the Company to
make and consummate a Change of Control Offer in the event of a Change of
Control in accordance with Section 1015, including, in each case, amending,
changing or modifying any definitions relating thereto;
(c) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver or compliance with certain provisions of this Indenture;
(d) modify any of the provisions of this Section 902 or
Section 513 or 1022, except to increase the percentage of such Outstanding
Securities required for any such actions or to provide that certain other
provisions of this Indenture cannot be
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modified or waived without the consent of the Holder of each such Security
affected thereby;
(e) except as otherwise permitted under Article Eight,
consent to the assignment or transfer by the Company or any Guarantor of
any of its rights and obligations hereunder; or
(f) amend or modify any of the provisions of this Indenture
in any manner which subordinates the Securities issued hereunder in right of
payment to any other Indebtedness of the Company or which subordinates any
Guarantee in right of payment to any other Indebtedness of the Guarantor
issuing such Guarantee.
Upon the written request of the Company and each Guarantor,
if any, accompanied by a copy of Board Resolutions authorizing the execution
of any such supplemental indenture or Guarantee, and upon the filing with the
Trustee of evidence of the consent of Holders as aforesaid, the Trustee shall
join with the Company and each Guarantor in the execution of such supplemental
indenture or Guarantee.
It shall not be necessary for any Act of Holders under this
Section 902 to approve the particular form of any proposed supplemental
indenture or Guarantee or agreement or instrument relating to any Guarantee,
but it shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures and
Agreements.
In executing, or accepting the additional trusts created by,
any supplemental indenture, agreement, instrument or waiver permitted by this
Article Nine or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Trust
Indenture Act Sections 315(a) through 315(d) and Section 602 hereof) shall be
fully protected in relying upon, an Opinion of Counsel and an Officers'
Certificate stating that the execution of such supplemental indenture,
agreement or instrument is authorized or permitted by this Indenture.
The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture, agreement or instrument which affects the Trustee's
own rights, duties or immunities under this Indenture, any Guarantee 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 of Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
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Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
Nine shall conform to the requirements of the Trust Indenture Act as then in
effect.
Section 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article Nine 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 Securities so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any such supplemental indenture may be
prepared and executed by the Company and each Guarantor and authenticated and
delivered by the Trustee in exchange for Outstanding Securities.
Section 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company, any Guarantor 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
Security affected, in the manner provided for in Section 106, setting forth in
general terms the substance of such supplemental indenture. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
The Company shall duly and punctually pay the principal of,
premium, if any, and interest on the Securities in accordance with the terms of
the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company shall maintain an office or agency where
Securities may be presented or surrendered for payment. The Company also will
maintain in The City of New York an office or agency where Securities may be
surrendered for registration of transfer, redemption or exchange and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The office of the Trustee, at its Corporate Trust
Office initially located at 14 Wall Street, New York, NY
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10005, will be such office or agency of the Company, unless 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 the
location and any change in the location of any such offices or agencies. If at
any time the Company shall fail to maintain any such required offices or
agencies or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
office of the Trustee and the Company hereby appoints the Trustee such agent as
its agent to receive all such presentations, surrenders, notices and demands.
The Company may from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Securities
may be presented or surrendered for any or all such purposes, and may from time
to time rescind such designation. 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 office or agency.
The Trustee shall initially act as Paying Agent for the
Securities.
Section 1003. Money for Security Payments to Be Held in Trust.
If the Company or any of its Affiliates shall at any time act
as Paying Agent, it will, on or before each due date of the principal of,
premium, if any, or interest on any of the Securities, segregate and hold in
trust for the benefit of the Holders entitled thereto a sum sufficient to pay
the principal, 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 so to act.
If the Company or any of its Affiliates is not acting as
Paying Agent, the Company will, on or before each due date of the principal of,
premium, if any, or interest on any of the Securities, deposit with a Paying
Agent a sum in same day funds sufficient to pay the principal, 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 so to act.
If the Company is not acting as Paying Agent, 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:
(a) hold all sums held by it for the payment of the principal
of, premium, if any, or interest on the Securities 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;
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(b) give the Trustee notice of any Default by the Company or
any Guarantor (or any other obligor upon the Securities) in the making of any
payment of principal, premium, if any, or interest on the Securities;
(c) 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; and
(d) acknowledge, accept and agree to comply in all aspects
with the provisions of this Indenture relating to the duties, rights and
disabilities of 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 money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
if any, or interest on any Security and remaining unclaimed for two years after
such principal and premium, if any, or interest has become due and payable shall
promptly 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 Security
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, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), and mail to each such Holder, 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 notification,
publication and mailing, any unclaimed balance of such money then remaining will
promptly be repaid to the Company.
Section 1004. Corporate Existence.
Subject to Article Eight, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect the
corporate existence and related rights and franchises (charter and statutory) of
the Company and each Subsidiary; provided, however, that the Company shall not
be required to preserve any such right or franchise or the corporate existence
of any such Subsidiary if the Board of Directors of the Company shall determine
that the preservation thereof is no longer necessary or
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desirable in the conduct of the business of the Company and its Subsidiaries as
a whole; and provided, further, however, that the foregoing shall not prohibit a
sale, transfer or conveyance of a Subsidiary or any of its assets in compliance
with the terms of this Indenture.
Section 1005. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, on or before the date the same shall become due and payable, (a) all
taxes, assessments and governmental charges levied or imposed upon the Company
or any of its Subsidiaries shown to be due on any return of the Company or any
of its Subsidiaries or otherwise assessed or upon the income, profits or
property of the Company or any of its Subsidiaries if failure to pay or
discharge the same could reasonably be expected to have a material adverse
effect on the ability of the Company or any Guarantor to perform its obligations
hereunder and (b) all lawful claims for labor, materials and supplies, which, if
unpaid, would by law become a Lien upon the property of the Company or any of
its Subsidiaries, except for any Lien permitted to be incurred under Section
1011, if failure to pay or discharge the same could reasonably be expected to
have a material adverse effect on the ability of the Company or any Guarantor to
perform its obligations hereunder; 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 properly instituted and
diligently conducted and in respect of which appropriate reserves (in the good
faith judgment of management of the Company) are being maintained in accordance
with GAAP.
Section 1006. Maintenance of Properties.
The Company shall cause all material properties owned by the
Company or any of its Subsidiaries or used or held for use in the conduct of its
business or the business of any of its Subsidiaries to be maintained and kept in
good condition, repair and working order (ordinary wear and tear excepted) and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the reasonable judgment of the Company may be consistent with sound business
practice and 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 from discontinuing the maintenance of any of
such properties if such discontinuance is, in the reasonable judgment of the
Company, desirable in the conduct of its business or the business of any of its
Subsidiaries; and provided, further, however, that the foregoing shall not
prohibit a sale, transfer or conveyance of a Subsidiary or any of its properties
or assets in compliance with the terms of this Indenture.
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Section 1007. Maintenance of Insurance.
The Company shall at all times keep all of its and its
Subsidiaries' properties which are of an insurable nature insured with insurers,
believed by the Company in good faith to be financially sound and responsible,
against loss or damage to the extent that property of similar character is
usually so insured by corporations similarly situated and owning like properties
in the same general geographic areas in which the Company and its Subsidiaries
operate, except where the failure to do so could not reasonably be expected to
have a material adverse effect on the condition (financial or otherwise),
earnings, business affairs or prospects of the Company and its Subsidiaries,
taken as a whole.
Section 1008. Limitation on Indebtedness.
The Company will not, and will not permit any of its
Subsidiaries to, create, issue, incur, assume, guarantee or otherwise in any
manner become directly or indirectly liable for the payment of or otherwise
incur (collectively, "incur"), any Indebtedness (including any Acquired
Indebtedness but excluding Permitted Indebtedness), unless such Indebtedness is
incurred by the Company or any Guarantor or constitutes Acquired Indebtedness of
a Subsidiary and, in each case, the Company's Consolidated Fixed Charge Coverage
Ratio for the four full fiscal quarters for which financial statements are
available immediately preceding the incurrence of such Indebtedness taken as one
period (and after giving pro forma effect to (i) the incurrence of such
Indebtedness and (if applicable) the application of the net proceeds therefrom,
including to refinance other Indebtedness, as if such Indebtedness was incurred,
and the application of such proceeds occurred, on the first day of such
applicable period; (ii) the incurrence, repayment or retirement of any other
Indebtedness by the Company and its Subsidiaries since the first day of such
applicable period as if such Indebtedness was incurred, repaid or retired at the
beginning of such applicable period (except that, in making such computation,
the amount of Indebtedness under any revolving credit facility shall be computed
based upon the average daily balance of such Indebtedness during such applicable
period); (iii) in the case of Acquired Indebtedness or any acquisition occurring
at the time of the incurrence of such Indebtedness, the related acquisition,
assuming such acquisition had been consummated on the first day of such
applicable period; and (iv) any acquisition or disposition by the Company and
its Subsidiaries of any company or any business or any assets out of the
ordinary course of business, whether by merger, stock purchase or sale or asset
purchase or sale, or any related repayment of Indebtedness, in each case since
the first day of such applicable period, assuming such acquisition or
disposition had been consummated on the first day of such applicable period) is
at least equal to or greater than 2.00:1.
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Section 1009. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any Subsidiary
to, directly or indirectly:
(i) declare or pay any dividend on, or make any
distribution to holders of, any shares of the
Company's Capital Stock (other than dividends or
distributions payable solely in shares of its
Qualified Capital Stock or in options, warrants or
other rights to acquire shares of such Qualified
Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for
value, directly or indirectly, the Company's Capital
Stock or any Capital Stock of any Affiliate of the
Company (other than Capital Stock of any Wholly Owned
Subsidiary of the Company) or options, warrants or
other rights to acquire such Capital Stock;
(iii) make any principal payment on, or repurchase, redeem,
defease, retire or otherwise acquire for value, prior
to any scheduled principal payment, sinking fund
payment or maturity, any Subordinated Indebtedness;
(iv) declare or pay any dividend or distribution on any
Capital Stock of any Subsidiary to any Person (other
than (a) to the Company or any of its Wholly Owned
Subsidiaries or (b) to all holders of Capital Stock
of such Subsidiary on a pro rata basis); or
(v) make any Investment in any Person (other than any
Permitted Investments)
(any of the foregoing actions described in clauses (i) through (v), other than
any such action that is a Permitted Payment (as defined below), collectively,
"Restricted Payments") (the amount of any such Restricted Payment, if other than
cash, as determined by the board of directors of the Company, whose
determination shall be conclusive and evidenced by a board resolution), unless
(1) immediately before and immediately after giving effect to such proposed
Restricted Payment on a pro forma basis, no Default or Event of Default shall
have occurred and be continuing and such Restricted Payment shall not be an
event which is, or after notice or lapse of time or both, would be, an "event of
default" under the terms of any Indebtedness of the Company or its Subsidiaries;
(2) immediately before and immediately after giving effect to such Restricted
Payment on a pro forma basis, the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the provisions described
in Section 1008; and (3) after giving effect to the proposed Restricted Payment,
the
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aggregate amount of all such Restricted Payments declared or made after the date
of the date hereof, does not exceed the sum of:
(A) 50% of the aggregate Consolidated Net Income of the Company
accrued on a cumulative basis during the period beginning on
the first day of the fiscal quarter beginning after the date of
this Indenture and ending on the last day of the Company's last
fiscal quarter ending prior to the date of the Restricted
Payment (or, if such aggregate cumulative Consolidated Net
Income shall be a loss, minus 100% of such loss);
(B) the aggregate Net Cash Proceeds received after the date of this
Indenture by the Company either (x) as capital contributions in
the form of common equity to the Company or (y) from the
issuance or sale (other than to any of its Subsidiaries) of
Qualified Capital Stock of the Company or any options, warrants
or rights to purchase such Qualified Capital Stock of the
Company (except, in each case, to the extent such proceeds are
used to purchase, redeem or otherwise retire Capital Stock or
Subordinated Indebtedness as set forth below in clause (ii) or
(iii) of paragraph (b) below);
(C) the aggregate Net Cash Proceeds received after the date of this
Indenture by the Company (other than from any of its
Subsidiaries) upon the exercise of any options, warrants or
rights to purchase Qualified Capital Stock of the Company;
(D) the aggregate Net Cash Proceeds received after the date of this
Indenture by the Company from the conversion or exchange, if
any, of debt securities or Redeemable Capital Stock of the
Company or its Subsidiaries into or for Qualified Capital Stock
of the Company plus, to the extent such debt securities or
Redeemable Capital Stock were issued after the date of this
Indenture, the aggregate of Net Cash Proceeds from their
original issuance; and
(E) in the case of the disposition or repayment of any Investment
constituting a Restricted Payment made after the date of this
Indenture, an amount equal to the lesser of the return of
capital with respect to such Investment and the initial amount
of such Investment, in either case, less the cost of the
disposition of such Investment.
(b) Notwithstanding the foregoing, and in the case of
clauses (ii) through (viii) below, so long as there
is no Default or Event of Default continuing, the
foregoing provisions shall not prohibit the following
actions (each of clauses (i) through (viii) being
referred to as a "Permitted Payment"):
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(i) the payment of any dividend within 60 days after the
date of declaration thereof, if at such date of
declaration such payment was permitted by the
provisions of paragraph (a) of this Section and such
payment shall have been deemed to have been paid on
such date of declaration and shall not have been
deemed a "Permitted Payment" for purposes of the
calculation required by paragraph (a) of this Section
1009;
(ii) the repurchase, redemption, or other acquisition or
retirement for value of any shares of any class of
Capital Stock of the Company in exchange for
(including any such exchange pursuant to the exercise
of a conversion right or privilege in connection with
which cash is paid in lieu of the issuance of
fractional shares or scrip), or out of the Net Cash
Proceeds of a substantially concurrent issuance and
sale for cash (other than to a Subsidiary) of, other
shares of Qualified Capital Stock of the Company;
provided that the Net Cash Proceeds from the issuance
of such shares of Qualified Capital Stock are
excluded from clause (3)(B) of paragraph (a) of this
Section 1009;
(iii) the repurchase, redemption, defeasance, retirement or
acquisition for value or payment of principal of any
Subordinated Indebtedness or Redeemable Capital Stock
in exchange for, or in an amount not in excess of the
Net Cash Proceeds of, a substantially concurrent
issuance and sale for cash (other than to any
Subsidiary of the Company) of any Qualified Capital
Stock of the Company, provided that the Net Cash
Proceeds from the issuance of such shares of
Qualified Capital Stock are excluded from clause
(3)(B) of paragraph (a) of this Section 1009;
(iv) the repurchase, redemption, defeasance, retirement,
refinancing, acquisition for value or payment of
principal of any Subordinated Indebtedness (other
than Redeemable Capital Stock) (a "refinancing")
through the substantially concurrent issuance of new
Subordinated Indebtedness of the Company, provided
that any such new Subordinated Indebtedness (1) shall
be in a principal amount that does not exceed the
principal amount so refinanced (or, if such
Subordinated Indebtedness provides for an amount less
than the principal amount thereof to be due and
payable upon a declaration of acceleration thereof,
then such lesser amount as
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of the date of determination), plus the lesser of (I)
the stated amount of any premium or other payment
required to be paid in connection with such a
refinancing pursuant to the terms of the Indebtedness
being refinanced or (II) the amount of premium or
other payment actually paid at such time to refinance
the Indebtedness, plus, in either case, the amount of
expenses of the Company incurred in connection with
such refinancing; (2) has an Average Life to Stated
Maturity greater than the remaining Average Life to
Stated Maturity of the Securities; (3) has a Stated
Maturity for its final scheduled principal payment
later than the Stated Maturity for the final
scheduled principal payment of the Securities; and
(4) is expressly subordinated in right of payment to
the Securities at least to the same extent as the
Subordinated Indebtedness to be refinanced;
(v) the repurchase, redemption, defeasance, retirement,
refinancing, acquisition for value or payment of any
Redeemable Capital Stock through the substantially
concurrent issuance of new Redeemable Capital Stock
of the Company, provided that any such new Redeemable
Capital Stock (1) shall have an aggregate liquidation
preference that does not exceed the aggregate
liquidation preference of the amount so refinanced;
(2) has an Average Life to Stated Maturity greater
than the remaining Average Life to Stated Maturity of
the Securities; and (3) has a Stated Maturity later
than the Stated Maturity for the final scheduled
principal payment of the Securities;
(vi) the repurchase of shares of, or options to purchase
shares of, common stock of the Company or any of its
Subsidiaries from employees, former employees,
directors or former directors of the Company or any
of its Subsidiaries (or permitted transferees of such
employees, former employees, directors or former
directors), pursuant to the Recapitalization, the
terms of the agreements (including employment
agreements) or plans (or amendments thereto) approved
by the Board of Directors under which such
individuals purchase or sell or are granted the
option to purchase or sell, shares of such common
stock; provided, however, that the aggregate amount
of such repurchases in any calendar year shall not
exceed (a) $2.5 million in connection with
repurchases made in connection with the
Recapitalization and (b) $1,000,000 in any calendar
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year with respect to repurchases not made in
connection with the Recapitalization;
(vii) payments made to repurchase the Existing Subordinated
Notes using funds deposited in the Escrow Account
pursuant to the Recapitalization; and
(viii) payments made to repurchase Capital Stock of the
Company or as dividends on Capital Stock made within
six months of the date of this Indenture in an amount
not to exceed the sum of (x) Net Cash Proceeds
received by the Company from the sale of the
Securities and (y) borrowings under the New Credit
Facility of up to $2 million made within 30 days of
the date of this Indenture less any amounts
previously used by the Company (a) to repurchase
Capital Stock of the Company, (b) to pay dividends on
Capital Stock of the Company, (c) to repay
Indebtedness of the Company, or (d) to settle or
repurchase existing stock options, or (e) as payments
to holders of stock options to enable such holders to
pay taxes, in each case, from and including the date
of this Indenture; provided that such payments may
not be made so long as Indebtedness outstanding prior
to the date of this Indenture remains outstanding.
Section 1010. Limitation on Transactions with Affiliates.
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, enter into any transaction or series of
related transactions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or services) with or for the benefit of
any Affiliate of the Company (other than the Company or a Wholly Owned
Subsidiary) unless such transaction or series of related transactions is entered
into in good faith and in writing and (a) such transaction or series of related
transactions is on terms that are no less favorable to the Company or such
Subsidiary, as the case may be, than those that would be available in a
comparable transaction in arm's-length dealings with an unrelated third party,
(b) with respect to any transaction or series of related transactions involving
aggregate value in excess of $500,000, the Company delivers an Officers'
Certificate to the Trustee certifying that such transaction or series of related
transactions complies with clause (a) above, and (c) with respect to any
transaction or series of related transactions involving aggregate value in
excess of $1,000,000, either (A) such transaction or series of related
transactions has been approved by a majority of the Disinterested Directors of
the Company, or in the event there is only one Disinterested Director, by such
Disinterested Director, or (B) the Company delivers to the Trustee a written
opinion of an investment banking firm of
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national standing or other recognized independent expert with experience
appraising the terms and conditions of the type of transaction or series of
related transactions for which an opinion is required stating that the
transactions or series of related transactions is fair to the Company or such
Subsidiary from a financial point of view; provided, however, that this
provision shall not apply to (i) any transaction with an officer or director of
the Company entered into in the ordinary course of business (including
compensation and employee benefit arrangements with any officer, director or
employee of the Company, including under any stock option or stock incentive
plans), (ii) any transaction with CVG Industria Venezolana de Aluminio C.A.
("Venalum") in accordance with the terms of a Venalum Purchase and Sale
Agreement (other than in connection with the entering into of any such agreement
or any amendments, renewal, supplement or modification thereof); or (iii)
payments made to Gibbons, Goodwin, van Amerongen for financial advisory and
other services in an amount not to exceed $500,000 in any calendar year.
Section 1011. Limitation on Liens.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly, create, incur or affirm any Lien of any kind upon any
property or assets (including any intercompany notes) of the Company or any
Subsidiary owned on the date hereof, or acquired after the date hereof, or any
income or profits therefrom, unless the Securities are directly secured equally
and ratably with (or, in the case of Subordinated Indebtedness, prior or senior
thereto, with the same relative priority as the Securities shall have with
respect to such Subordinated Indebtedness) the obligation or liability secured
by such Lien except for any Permitted Liens.
Section 1012. Limitation on Sale of Assets.
(a) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, consummate an Asset Sale unless (i) at
least 85% of the consideration from such Asset Sale is received in cash and (ii)
the Company or such Subsidiary receives consideration at the time of such Asset
Sale at least equal to the Fair Market Value of the shares or assets subject to
such Asset Sale (as determined by the board of directors of the Company and
evidenced in a board resolution); provided that in the case of an Asset Swap
constituting an Asset Sale, the Company or any such Subsidiaries shall only be
required to receive in cash an amount equal to at least 85% of the proceeds of
the Asset Sale which do not consist of like kind assets acquired in the Asset
Swap.
(b) If all or a portion of the Net Cash Proceeds of any Asset
Sale are not required to be applied to repay permanently any Indebtedness under
the New Credit Facility then outstanding as required by the terms thereof, or
the Company determines not to apply such Net Cash Proceeds to the permanent
prepayment of such Indebtedness under the New Credit Facility, or if no such
Indebtedness under the New Credit Facility
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is then outstanding, then the Company or a Subsidiary may, within 270 days of
the Asset Sale, invest the Net Cash Proceeds in properties and other assets that
(as determined by the Board of Directors of the Company) replace the properties
and assets that were the subject of the Asset Sale or in properties and assets
that will be used in the businesses of the Company or its Subsidiaries existing
on the date of this Indenture or in businesses reasonably related thereto. The
amount of such Net Cash Proceeds not used or invested within 270 days of the
Asset Sale as set forth in this paragraph constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds
$7,500,000 or more, the Company will apply the Excess Proceeds to the repayment
of the Securities and any other Pari Passu Indebtedness outstanding with similar
provisions requiring the Company to make an offer to purchase such Indebtedness
with the proceeds from any Asset Sale as follows: (A) the Company will make an
offer to purchase (an "Offer") from all holders of the Securities in accordance
with the procedures set forth in the Indenture in the maximum principal amount
(expressed as a multiple of $1,000) of Securities that may be purchased out of
an amount (the "Security Amount") equal to the product of such Excess Proceeds
multiplied by a fraction, the numerator of which is the outstanding principal
amount of the Securities, and the denominator of which is the sum of the
outstanding principal amount of the Securities and such Pari Passu Indebtedness
(subject to proration in the event such amount is less than the aggregate
Offered Price (as defined herein) of all Securities tendered) and (B) to the
extent required by such Pari Passu Indebtedness to permanently reduce the
principal amount of such Pari Passu Indebtedness, the Company will make an offer
to purchase or otherwise repurchase or redeem Pari Passu Indebtedness (a "Pari
Passu Offer") in an amount (the "Pari Passu Debt Amount") equal to the excess of
the Excess Proceeds over the Security Amount; provided that in no event will the
Company be required to make a Pari Passu Offer in a Pari Passu Debt Amount
exceeding the principal amount of such Pari Passu Indebtedness plus the amount
of any premium required to be paid to repurchase such Pari Passu Indebtedness.
The offer price for the Securities will be payable in cash in an amount equal to
100% of the principal amount of the Securities plus accrued and unpaid interest,
if any, to the date (the "Offer Date") such Offer is consummated (the "Offered
Price"), in accordance with the procedures set forth herein. To the extent that
the aggregate Offered Price of the Securities tendered pursuant to the Offer is
less than the Security Amount relating thereto or the aggregate amount of Pari
Passu Indebtedness that is purchased in a Pari Passu Offer is less than the Pari
Passu Debt Amount, the Company will use any remaining Excess Proceeds for
general corporate purposes. If the aggregate principal amount of Securities and
Pari Passu Indebtedness surrendered by holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Securities to be purchased on a
pro rata basis. Upon the completion of the purchase of all the Securities
tendered pursuant to an Offer and the completion of a Pari Passu Offer, the
amount of Excess Proceeds, if any, shall be reset at zero.
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(d) When the aggregate amount of Excess Proceeds exceeds
$7,500,000, such Excess Proceeds will, prior to any purchase of Securities
described in paragraph (c) above, be set aside by the Company in a separate
account pending (i) deposit with the depository or a paying agent of the amount
required to purchase the Securities tendered in an Offer or Pari Passu
Indebtedness tendered in a Pari Passu Offer, (ii) delivery by the Company of the
Offered Price to the holders of the Securities tendered in an Offer or Pari
Passu Indebtedness tendered in a Pari Passu Offer and (iii) the completion of
the purchase of all the Securities tendered pursuant to the Offer and the
completion of the Pari Passu Offer. Such Excess Proceeds may be invested in
Temporary Cash Investments, provided that the maturity date of any such
investment made after the amount of Excess Proceeds exceeds $7,500,000 shall not
be later than the Offer Date. The Company shall be entitled to any interest or
dividends accrued, earned or paid on such Temporary Cash Investments; provided
that the Company shall not withdraw such interest from the separate account if
an Event of Default has occurred and is continuing.
(e) If the Company becomes obligated to make an Offer pursuant
to clause (c) above, the Securities and the Pari Passu Indebtedness shall be
purchased by the Company, at the option of the holders thereof, in whole or in
part in integral multiples of $1,000, on a date that is not earlier than 30 days
and not later than 60 days from the date the notice of the Offer is given to
holders, or such later date as may be necessary for the Company to comply with
the requirements under the Exchange Act.
(f) The Company will comply with the applicable tender offer
rules, including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws or regulations in connection with an Offer.
(g) The Company will not, and will not permit any Subsidiary
to, create or permit to exist or become effective any restriction (other than
restrictions existing under Pari Passu Indebtedness) that would materially
impair the ability of the Company to make an Offer to purchase the Securities
or, if such Offer is made, to pay for the Securities tendered for purchase.
(h) Subject to paragraph (e) above, within 30 days after the
date on which the amount of Excess Proceeds equals or exceeds $7,500,000, the
Company shall send or cause to be sent by first-class mail, postage prepaid, to
the Trustee and to each Holder, at his address appearing in the Security
Register, a notice stating or including:
(1) that the Holder has the right to require the
Company to repurchase, subject to proration, such Holder's
Securities at the Offered Price;
(2) the Offer Date;
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(3) the instructions a Holder must follow in order to
have his Securities purchased in accordance with paragraph (c)
of this Section;
(4) (i) the most recently filed Annual Report on Form
10-K (including audited consolidated financial statements) of
the Company, the most recent subsequently filed Quarterly
Report on Form 10-Q, as applicable, and any Current Report on
Form 8-K of the Company filed subsequent to such Quarterly
Report, other than Current Reports describing Asset Sales
otherwise described in the offering materials (or
corresponding successor reports) (or in the event the Company
is not required to prepare any of the foregoing Forms, the
comparable information required pursuant to Section 1020),
(ii) a description of material developments, if any, in the
Company's business subsequent to the date of the latest of
such reports, (iii) if material, appropriate pro forma
financial information, and (iv) such other information, if
any, concerning the business of the Company which the Company
in good faith believes will enable such Holders to make an
informed investment decision regarding the Offer;
(5) the Offered Price;
(6) the names and addresses of the Paying Agent and
the offices or agencies referred to in Section 1002;
(7) that Securities must be surrendered prior to the
Offer Date to the Paying Agent at the office of the Paying
Agent or to an office or agency referred to in Section 1002 to
collect payment;
(8) that any Securities not tendered will continue to
accrue interest and that unless the Company defaults in the
payment of the Offered Price, any Security accepted for
payment pursuant to the Offer shall cease to accrue interest
on and after the Offer Date;
(9) the procedures for withdrawing a tender; and
(10) that the Offered Price for any Security which
has been properly tendered and not withdrawn and which has
been accepted for payment pursuant to the Offer will be paid
promptly following the Offered Date.
(i) Holders electing to have Securities purchased hereunder
will be required to surrender such Securities at the address specified in the
notice at least one Business Day prior to the Offer Date. Holders will be
entitled to withdraw their election to have their Securities purchased pursuant
to this Section 1012 if the Company receives, not later than one Business Day
prior to the Offer Date, a telegram, telex, facsimile
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transmission or letter setting forth (1) the name of the Holder, (2)
the certificate number of the Security in respect of which such notice of
withdrawal is being submitted, (3) the principal amount of the Security (which
shall be $1,000 or an integral multiple thereof) delivered for purchase by the
Holder as to which his election is to be withdrawn, (4) a statement that such
Holder is withdrawing his election to have such principal amount of such
Security purchased, and (5) the principal amount, if any, of such Security
(which shall be $1,000 or an integral multiple thereof) that remains subject to
the original notice of the Offer and that has been or will be delivered for
purchase by the Company.
(j) The Company shall (i) not later than the Offer Date,
accept for payment Securities or portions thereof tendered pursuant to the
Offer, (ii) not later than 10:00 a.m. (New York time) on the Offer Date, deposit
with the Trustee or with a Paying Agent an amount of money in same day funds (or
New York Clearing House funds if such deposit is made prior to the Offer Date)
sufficient to pay the aggregate Offered Price of all the Securities or portions
thereof which are to be purchased on that date and (iii) not later than 10:00
a.m. (New York time) on the Offer Date, deliver to the Paying Agent an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the Offered Price of the
Securities purchased from each such Holder, and the Company shall execute and
the Trustee shall promptly authenticate and mail or deliver to such Holders a
new Security equal in principal amount to any unpurchased portion of the
Security surrendered. Any Securities not so accepted shall be promptly mailed or
delivered by the Paying Agent at the Company's expense to the Holder thereof.
For purposes of this Section 1012, the Company shall choose a Paying Agent which
shall not be the Company.
Subject to applicable escheat laws, the Trustee and the Paying
Agent shall return to the Company any cash that remains unclaimed, together with
interest, if any, thereon, held by them for the payment of the Offered Price;
provided, however, that (x) to the extent that the aggregate amount of cash
deposited by the Company with the Trustee in respect of an Offer exceeds the
aggregate Offered Price of the Securities or portions thereof to be purchased,
then the Trustee shall hold such excess for the Company and (y) unless otherwise
directed by the Company in writing, promptly after the Business Day following
the Offer Date the Trustee shall return any such excess to the Company together
with interest or dividends, if any, thereon.
(k) Securities to be purchased shall, on the Offer Date,
become due and payable at the Offered Price and from and after such date (unless
the Company shall default in the payment of the Offered Price) such Securities
shall cease to bear interest. Such Offered Price shall be paid to such Holder
promptly following the later of the Offer Date and the time of delivery of such
Security (if such Security is permitted to be delivered after the Offer Date) to
the relevant Paying Agent at the office of such Paying Agent by the Holder
thereof in the manner required. Upon surrender of any such
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Security for purchase in accordance with the foregoing provisions, such Security
shall be paid by the Company at the Offered Price; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Offer Date
shall be payable to the Person in whose name the Securities (or any Predecessor
Securities) is registered as such on the relevant Regular Record Dates according
to the terms and the provisions of Section 309; provided, further, that
Securities to be purchased are subject to proration in the event the Excess
Proceeds are less than the aggregate Offered Price of all Securities tendered
for purchase, with such adjustments as may be appropriate by the Trustee so that
only Securities in denominations of $1,000 or integral multiples thereof, shall
be purchased. If any Security tendered for purchase shall not be so paid upon
surrender thereof by deposit of funds with the Trustee or a Paying Agent in
accordance with paragraph (h) above, the principal thereof (and premium, if any,
thereon) shall, until paid, bear interest from the Offer Date at the rate borne
by such Security. Any Security that is to be purchased only in part shall be
surrendered to a Paying Agent at the office of such Paying Agent (with, if the
Company, the Security Registrar or the Trustee so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Security Registrar or the Trustee duly executed by, the Holder thereof or such
Holder's attorney duly authorized in writing), and the Company shall execute and
the Trustee shall authenticate and deliver to the Holder of such Security,
without service charge, one or more new Securities of any authorized
denomination as requested by such Holder in an aggregate principal amount equal
to, and in exchange for, the portion of the principal amount of the Security so
surrendered that is not purchased. The Company shall publicly announce the
results of the Offer on or as soon as practicable after the Offer Date.
Section 1013. Limitation on Issuances of Guarantees of
Indebtedness.
(a) The Company will not permit any Subsidiary, directly or
indirectly, to guarantee, assume or in any other manner become liable with
respect to any Pari Passu Indebtedness or Subordinated Indebtedness of the
Company unless such Subsidiary simultaneously executes and delivers a
supplemental indenture to the Indenture providing for a Guarantee of the
Securities on the same terms as the guarantee of such Indebtedness except that
(A) such guarantee need not be secured unless required pursuant to Section 1011
and (B) if such Indebtedness is by its terms expressly subordinated to the
Securities, any such assumption, guarantee or other liability of such Subsidiary
with respect to such Indebtedness shall be subordinated to such Subsidiary's
Guarantee of the Securities at least to the same extent as such Indebtedness is
subordinated to the Securities.
(b) Notwithstanding the foregoing, any Guarantee by a
Subsidiary of the Securities shall provide by its terms that it (and all Liens
securing the same) shall be automatically and unconditionally released and
discharged upon 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 Subsidiary, which transaction is in
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compliance with the terms of this Indenture and pursuant to which transaction
such Subsidiary is released from all guarantees, if any, by it of other
Indebtedness of the Company or any Subsidiaries.
Section 1014. Restriction on Transfer of Assets.
The Company will not sell, convey, transfer or otherwise
dispose of its assets or property to any of its Subsidiaries, except for sales,
conveyances, transfers or other dispositions (a) made in the ordinary course of
business or (b) to any Subsidiary if such Subsidiary simultaneously executes and
delivers a supplemental indenture to the Indenture providing for a Guarantee of
the payment of the Securities by such Subsidiary on a senior basis. For purposes
of this provision, any sale, conveyance, transfer, lease or other disposition of
property or assets, having a Fair Market Value in excess of (a) $1,000,000 for
any sale, conveyance, transfer or disposition or series of related sales,
conveyances, transfers, leases and dispositions and (b) $5,000,000 in the
aggregate for all such sales, conveyances, transfers, leases or dispositions in
any fiscal year of the Company, shall not be considered "in the ordinary course
of business."
Section 1015. Purchase of Securities upon a Change of Control.
(a) If a Change of Control shall occur at any time, then each
Holder shall have the right to require that the Company purchase such Holder's
Securities in whole or in part in integral multiples of $1,000, at a purchase
price (the "Change of Control Purchase Price") in cash in an amount equal to
101% of the principal amount of such Securities, plus accrued and unpaid
interest, if any, to the date of purchase (the "Change of Control Purchase
Date"), pursuant to the offer described below in this Section 1015 (the "Change
of Control Offer") and in accordance with the other procedures set forth in
subsections (b), (c), (d) and (e) of this Section 1015.
(b) Within 30 days of any Change of Control, the Company shall
notify the Trustee thereof and give written notice (a "Change of Control
Purchase Notice") of such Change of Control to each Holder by first-class mail,
postage prepaid, at his address appearing in the Security Register, stating
among other things:
(1) that a Change of Control has occurred, the date
of such event, and that such Holder has the right to require
the Company to repurchase such Holder's Securities at the
Change of Control Purchase Price;
(2) the circumstances and relevant facts regarding
such Change of Control (including but not limited to
information with respect to pro forma historical income, cash
flow and capitalization after giving effect to such Change of
Control);
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(3) (i) the most recently filed Annual Report on
Form 10-K (including audited consolidated financial
statements) of the Company, the most recent subsequently
filed Quarterly Report on Form 10-Q, as applicable, and any
Current Report on Form 8-K of the Company filed subsequent to
such Quarterly Report (or in the event the Company is not
required to prepare any of the foregoing Forms, the
comparable information required to be prepared by the Company
and any Guarantor pursuant to Section 1020), (ii) a
description of material developments, if any, in the Company's
business subsequent to the date of the latest of such reports
and (iii) such other information, if any, concerning the
business of the Company which the Company in good faith
believes will enable such Holders to make an informed
investment decision regarding the Change of Control Offer;
(4) that the Change of Control Offer is being made
pursuant to this Section 1015 and that all Securities
properly tendered pursuant to the Change of Control Offer
will be accepted for payment at the Change of Control
Purchase Price;
(5) the Change of Control Purchase Date, which shall
be a Business Day no earlier than 30 days nor later than 60
days from the date such notice is mailed, or such later date
as is necessary to comply with requirements under the
Exchange Act;
(6) the Change of Control Purchase Price;
(7) the names and addresses of the Paying Agent and
the offices or agencies referred to in Section 1002;
(8) that Securities must be surrendered prior to the
Change of Control Purchase Date to the Paying Agent at the
office of the Paying Agent or to an office or agency referred
to in Section 1002 to collect payment;
(9) that the Change of Control Purchase Price for any
Security which has been properly tendered and not withdrawn
will be paid promptly following the Change of Control Offer
Purchase Date;
(10) the procedures that a Holder must follow
to accept a Change of Control Offer or to withdraw such
acceptance;
(11) that any Security not tendered will continue to
accrue interest; and
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(12) that, unless the Company defaults in the payment
of the Change of Control Purchase Price, any Securities
accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control
Purchase Date.
(c) Upon receipt by the Company of the proper tender of
Securities, the Holder of the Security in respect of which such proper tender
was made shall (unless the tender of such Security is properly withdrawn)
thereafter be entitled to receive solely the Change of Control Purchase Price
with respect to such Security. Upon surrender of any such Security for purchase
in accordance with the foregoing provisions, such Security shall be paid by the
Company at the Change of Control Purchase Price; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Change of
Control Purchase Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such on the relevant Regular
Record Dates according to the terms and the provisions of Section 309. If any
Security tendered for purchase in accordance with the provisions of this Section
1015 shall not be so paid upon surrender thereof, the principal thereof (and
premium, if any, thereon) shall, until paid, bear interest from the Change of
Control Purchase Date at the rate borne by such Security. Holders electing to
have Securities purchased will be required to surrender such Securities to the
Paying Agent at the address specified in the Change of Control Purchase Notice
at least one Business Day prior to the Change of Control Purchase Date. Any
Security that is to be purchased only in part shall be surrendered to a Paying
Agent at the office of such Paying Agent (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar or the Trustee, as the case may be, duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Security, without service charge, one or more new Securities of any
authorized denomination as requested by such Holder in an aggregate principal
amount equal to, and in exchange for, the portion of the principal amount of the
Security so surrendered that is not purchased.
(d) The Company shall (i) not later than the Change of Control
Purchase Date, accept for payment Securities or portions thereof tendered
pursuant to the Change of Control Offer, (ii) not later than 10:00 a.m. (New
York time) on the Change of Control Purchase Date, deposit with the Trustee or
with a Paying Agent an amount of money in same day funds (or New York Clearing
House funds if such deposit is made prior to the Change of Control Purchase
Date) sufficient to pay the aggregate Change of Control Purchase Price of all
the Securities or portions thereof which are to be purchased as of the Change of
Control Purchase Date and (iii) not later than 10:00 a.m. (New York time) on the
Change of Control Purchase Date, deliver to the Paying Agent an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment
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in an amount equal to the Change of Control Purchase Price of the Securities
purchased from each such Holder, and the Company shall execute and the Trustee
shall promptly authenticate and mail or deliver to such Holders a new Security
equal in principal amount to any unpurchased portion of the Security
surrendered. Any Securities not so accepted shall be promptly mailed or
delivered by the Paying Agent at the Company's expense to the Holder thereof.
The Company will publicly announce the results of the Change of Control Offer on
the Change of Control Purchase Date. For purposes of this Section 1015, the
Company shall choose a Paying Agent which shall not be the Company.
(e) A tender made in response to a Change of Control Purchase
Notice may be withdrawn if the Company receives, not later than one Business Day
prior to the Change of Control Purchase Date, a telegram, telex, facsimile
transmission or letter, specifying, as applicable:
(1) the name of the Holder;
(2) the certificate number of the Security in respect
of which such notice of withdrawal is being submitted;
(3) the principal amount of the Security (which shall
be $1,000 or an integral multiple thereof) delivered for
purchase by the Holder as to which such notice of withdrawal
is being submitted;
(4) a statement that such Holder is withdrawing his
election to have such principal amount of such Security
purchased; and
(5) the principal amount, if any, of such Security
(which shall be $1,000 or an integral multiple thereof) that
remains subject to the original Change of Control Purchase
Notice and that has been or will be delivered for purchase by
the Company.
(f) Subject to applicable escheat laws, the Trustee and the
Paying Agent shall return to the Company any cash that remains unclaimed,
together with interest or dividends, if any, thereon, held by them for the
payment of the Change of Control Purchase Price; provided, however, that, (x) to
the extent that the aggregate amount of cash deposited by the Company pursuant
to clause (ii) of paragraph (d) above exceeds the aggregate Change of Control
Purchase Price of the Securities or portions thereof to be purchased, then the
Trustee shall hold such excess for the Company and (y) unless otherwise directed
by the Company in writing, promptly after the Business Day following the Change
of Control Purchase Date the Trustee shall return any such excess to the Company
together with interest, if any, thereon.
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(g) The Company shall comply, to the extent applicable, with
the applicable tender offer rules, including Rule 14e-1 under the Exchange Act,
and any other applicable securities laws or regulations in connection with a
Change of Control Offer.
(h) Notwithstanding the foregoing, the Company will not be
required to make a Change of Control Offer upon a Change of Control if a third
party makes the Change of Control Offer, in the manner, at the times and
otherwise in compliance with the requirements set forth in this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
the Securities validly tendered and not withdrawn under such Change of Control
Offer.
Section 1016. Limitation on Sale and Leaseback Transactions.
The Company will not, and will not permit any Subsidiary of
the Company to, directly or indirectly, enter into any Sale and Leaseback
Transaction with respect to any property or assets (whether now owned or
hereafter acquired), except for a sale and leaseback transaction not exceeding
365 days, unless (i) the sale or transfer of such property or assets to be
leased is treated as an Asset Sale and complies with the provisions of Section
1012 and (ii) the Company or such Subsidiary would be entitled under Section
1008 to incur any Indebtedness (with the lease obligations being treated as
Indebtedness for purposes of ascertaining compliance with this covenant) in
respect of such Sale and Leaseback Transaction.
Section 1017. Limitation on Subsidiary Capital Stock.
The Company will not permit (a) any Subsidiary of the Company
to issue any Capital Stock, except for (i) Capital Stock issued or sold to, held
by or transferred to the Company or a Wholly Owned Subsidiary, and (ii) Capital
Stock issued by a Person prior to the time (A) such Person becomes a Subsidiary,
(B) such Person merges with or into a Subsidiary or (C) a Subsidiary merges with
or into such Person; provided that such Capital Stock was not issued or incurred
by such Person in anticipation of the type of transaction contemplated by
subclause (A), (B) or (C) or (b) any Person (other than the Company or a Wholly
Owned Subsidiary) to acquire Capital Stock of any Subsidiary from the Company or
any Subsidiary, except, in the case of clause (a) or (b), upon the acquisition
of all the outstanding Capital Stock of such Subsidiary in accordance with the
terms hereof.
Section 1018. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create any consensual encumbrance or
restriction on the ability of any Subsidiary to (i) pay dividends or make any
other distribution on its Capital Stock, (ii) pay any Indebtedness owed to the
Company or any other Subsidiary, (iii) make any
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Investment in the Company or any other Subsidiary or (iv) transfer any of its
properties or assets to the Company or any other Subsidiary, except for: (a) any
encumbrance or restriction pursuant to any agreement in effect on the date
hereof and listed on Schedule II hereto; (b) any encumbrance or restriction,
with respect to a Subsidiary that is not a Subsidiary of the Company on the date
of the Indenture, in existence at the time such Person becomes a Subsidiary of
the Company and not incurred in connection with, or in contemplation of, such
Person becoming a Subsidiary; and (c) any encumbrance or restriction existing
under any agreement that extends, renews, refinances or replaces the agreements
containing the encumbrances or restrictions in the foregoing clauses (a) and
(b), or in this clause (c), provided that the terms and conditions of any such
encumbrances or restrictions are no more restrictive in any material respect
than those under or pursuant to the agreement evidencing the Indebtedness so
extended, renewed, refinanced or replaced.
Section 1019. Limitations on Unrestricted Subsidiaries.
The Company will not make, and will not permit its
Subsidiaries to make, any Investment in Unrestricted Subsidiaries if, at the
time thereof, the aggregate amount of such Investments would exceed the amount
of Restricted Payments then permitted to be made pursuant to Section 1009. Any
Investments in Unrestricted Subsidiaries permitted to be made pursuant to this
covenant (i) will be treated as a Restricted Payment in calculating the amount
of Restricted Payments made by the Company and (ii) may be made in cash or
property.
Section 1020. Provision of Financial Statements.
After the earlier to occur of the consummation of the Exchange
Offer and the 165th calendar day following the date of original issue of the
Securities, whether or not the Company is subject to Section 13(a) or 15(d) of
the Exchange Act, the Company will, to the extent permitted under the Exchange
Act, file with the Commission the annual reports, quarterly reports and other
documents which the Company would have been required to file with the Commission
pursuant to Sections 13(a) or 15(d) if the Company were so subject, such
documents to be filed with the Commission on or prior to the date (the "Required
Filing Date") by which the Company would have been required so to file such
documents if the Company were so subject. The Company will also in any event (x)
within 15 days of each Required Filing Date (whether or not the Exchange Offer
has occurred or 165 days have passed since the issuance of the Securities) (i)
transmit by mail to all Holders, as their names and addresses appear in the
Security Register, without cost to such Holders and (ii) file with the Trustee
copies of the annual reports, quarterly reports and other documents which the
Company would have been required to file with the Commission pursuant to
Sections 13(a) or 15(d) of the Exchange Act if the Company were subject to
either of such Sections and (y) if filing such documents by the Company with the
Commission is not permitted under the Exchange Act, promptly upon written
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request, supply copies of such documents to any prospective Holder at the
Company's cost. If any Guarantor's financial statements would be required to be
included in the financial statements filed or delivered pursuant to the
Indenture if the Company were subject to Section 13(a) or 15(d) of the Exchange
Act, the Company shall include such Guarantor's financial statements in any
filing or delivery pursuant to the Indenture. In addition, so long as any of the
Securities remain outstanding, the Company will make available to any
prospective purchaser of Securities or beneficial owner of Securities in
connection with any sale thereof the information required by Rule 144A(d)(4)
under the Securities Act, until such time as the Company has either exchanged
the Securities for securities identical in all material respects which have been
registered under the Securities Act or until such time as the Holders thereof
have disposed of such Securities pursuant to an effective registration statement
under the Securities Act.
Section 1021. Statement by Officers as to Default.
(a) The Company will deliver to the Trustee, on or before a
date not more than 120 days after the end of each fiscal year of the Company
ending after the date hereof, and 60 days after the end of each fiscal quarter
ending after the date hereof, a written statement signed by two executive
officers of the Company, one of whom shall be the principal executive officer,
principal financial officer or principal accounting officer of the Company, as
to compliance herewith, including whether or not, after a review of the
activities of the Company during such year and of the Company's and each
Guarantor's performance under this Indenture, to the best knowledge, based on
such review, of the signers thereof, the Company and each Guarantor have
fulfilled all of their respective obligations and are in compliance with all
conditions and covenants under this Indenture throughout such year and, if there
has been a Default specifying each Default and the nature and status thereof and
any actions being taken by the Company with respect thereto.
(b) When any Default or Event of Default has occurred and is
continuing, or if the Trustee or any Holder or 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 the Company
shall deliver to the Trustee by registered or certified mail or facsimile
transmission followed by an originally executed copy of an Officers' Certificate
specifying such Default, Event of Default, notice or other action, the status
thereof and what actions the Company is taking or proposes to take with respect
thereto, within five Business Days after the occurrence of such Default or Event
of Default.
Section 1022. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Sections 1006 through 1011, 1013 and 1016
through
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1021, if, before or after the time for such compliance, the Holders of not less
than a majority in aggregate principal amount of the Securities at the time
Outstanding shall, by Act of such Holders, waive such compliance in such
instance with such covenant or provision, but no such waiver shall extend to or
affect such covenant or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such covenant or condition shall remain
in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Rights of Redemption.
(a) The Securities are subject to redemption at any time on or
after June 1, 2001, at the option of the Company, in whole or in part, subject
to the conditions, and at the Redemption Prices, specified in the form of
Security, together with accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on relevant Regular Record Dates
and Special Record Dates to receive interest due on relevant Interest Payment
Dates and Special Payment Dates).
(b) In addition, at any time prior to June 1, 2000, the
Company may, at its option, use the net proceeds of one or more Public Equity
Offerings to redeem up to an aggregate of 33 1/3% of the aggregate principal
amount of Securities originally issued under this Indenture at a redemption
price equal to 110.125% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Redemption Date; provided that at least
$65,000,000 aggregate principal amount of Securities remains outstanding
immediately after the occurrence of such redemption. In order to effect the
foregoing redemption, the Company must mail a notice of redemption no later than
60 days after the closing of the related Public Equity Offering and must
consummate such redemption within 90 days of the closing of the Public Equity
Offering.
(c) The Securities will be redeemable, at the option of the
Company, in whole or in part, at any time within 180 days after a Change of
Control upon not less than 30 nor more than 60 days' prior notice to each holder
of Securities to be redeemed, at a Redemption Price equal to the sum of (i) the
then outstanding principal amount thereof plus (ii) accrued and unpaid interest,
if any, to the Redemption Date plus (iii) the Applicable Premium.
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Section 1102. Applicability of Article.
Redemption of Securities 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 Eleven.
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant
to Section 1101 shall be evidenced by a Company Order and an Officers'
Certificate. In case of any redemption at the election of the Company, the
Company shall, not less than 45 nor more than 60 days prior to the Redemption
Date fixed by the Company (unless a shorter notice period shall be satisfactory
to the Trustee), notify the Trustee in writing of such Redemption Date and of
the principal amount of Securities to be redeemed.
Section 1104. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the
particular Securities or portions thereof to be redeemed shall be selected not
more than 30 days prior to the Redemption Date. The Trustee shall select the
Securities or portions thereof to be redeemed pro rata, by lot or by any other
method the Trustee shall deem fair and reasonable. The amounts to be redeemed
shall be equal to $1,000 or any integral multiple thereof.
The Trustee shall promptly notify the Company and the Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities 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 Securities shall
relate, in the case of any Security redeemed or to be redeemed only in part, to
the portion of the principal amount of such Security which has been or is to be
redeemed.
Section 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 days nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at its address
appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
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(c) if less than all Outstanding Securities are to be
redeemed, the identification of the particular Securities to be redeemed;
(d) in the case of a Security to be redeemed in part, the
principal amount of such Security to be redeemed and that after the Redemption
Date upon surrender of such Security, new Security or Securities in the
aggregate principal amount equal to the unredeemed portion thereof will be
issued;
(e) that Securities called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price;
(f) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security or portion thereof to be
redeemed, and that (unless the Company shall default in payment of the
Redemption Price) interest thereon shall cease to accrue on and after said date;
(g) the names and addresses of the Paying Agent and the
offices or agencies referred to in Section 1002 where such Securities are to be
surrendered for payment of the Redemption Price;
(h) the CUSIP number, if any, relating to such Securities; and
(i) the procedures that a Holder must follow to surrender the
Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
written request, by the Trustee in the name and at the expense of the Company.
If the Company elects to give notice of redemption, it shall provide the Trustee
with a certificate stating that such notice has been given in compliance with
the requirements of this Section 1105.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Security designated for redemption as a whole or
in part shall not affect the validity of the proceedings for the redemption of
any other Security.
Section 1106. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company or any of its
Affiliates is acting as Paying Agent, segregate and hold in trust as provided in
Section 1003) an amount of money in same day funds sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date or Special Payment Date) accrued
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interest on, all the Securities or portions thereof which are to be redeemed on
that date. The Paying Agent shall promptly mail or deliver to Holders of
Securities so redeemed payment in an amount equal to the Redemption Price of the
Securities purchased from each such Holder. All money, if any, earned on funds
held in trust by the Trustee or any Paying Agent shall be remitted to the
Company. For purposes of this Section 1106, the Company shall choose a Paying
Agent which shall not be the Company.
Section 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Holders will be
required to surrender the Securities to be redeemed to the Paying Agent at the
address specified in the notice of redemption at least one Business Day prior to
the Redemption Date. Upon surrender of any such Security for redemption in
accordance with said notice, such Security shall be paid by the Company at the
Redemption Price together with accrued interest 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 Securities,
or one or more Predecessor Securities, registered as such on the relevant
Regular Record Dates and Special Record Dates according to the terms and the
provisions of Section 309.
If any Security 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 such
Security.
Section 1108. Securities Redeemed or Purchased in Part.
Any Security which is to be redeemed or purchased only in part
shall be surrendered to the Paying Agent at the office or agency maintained for
such purpose pursuant to Section 1002 (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar or the Trustee, as the case may be, duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to, and in exchange for, the unredeemed portion of the principal of
the Security so surrendered that is not redeemed or purchased.
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ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201. Satisfaction and Discharge of Indenture.
This Indenture shall be discharged and shall cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of Securities as expressly provided for herein) as to all Outstanding
Securities hereunder, and the Trustee, upon Company Request and at the expense
of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(a) either
(1) all the Securities theretofore authenticated and
delivered (other than (i) lost, stolen or destroyed Securities
which have been replaced or paid as provided in Section 308 or
(ii) all Securities whose payment has theretofore been
deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from such trust as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered to
the Trustee for cancellation (i) have become due and payable,
(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 reasonably 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 has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in
trust an amount in United States dollars sufficient to pay and
discharge the entire Indebtedness on the Securities not
theretofore delivered to the Trustee for cancellation,
including the principal of, premium, if any, and accrued
interest on, such Securities at such Maturity, Stated Maturity
or Redemption Date;
(b) the Company or any Guarantor has paid or caused to be paid
all other sums payable hereunder by the Company and any Guarantor; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Independent Counsel, in form and substance
reasonably satisfactory to the Trustee, each stating that (i) all conditions
precedent herein relating to the satisfaction and discharge hereof have been
complied with and (ii) such satisfaction and discharge will not result in a
breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company, any Guarantor or
any
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Subsidiary is a party or by which the Company, any Guarantor or any Subsidiary
is bound.
Notwithstanding the satisfaction and discharge hereof, the
obligations of the Company to the Trustee under Section 606 and, if United
States dollars shall have been deposited with the Trustee pursuant to subclause
(2) of subsection (a) of this Section 1201, the obligations of the Trustee under
Section 1202 and the last paragraph of Section 1003 shall survive.
Section 1202. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all United States dollars deposited with the Trustee pursuant to Section
1201 shall be held in trust and applied by it, in accordance with the provisions
of the Securities 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 of,
premium, if any, and interest on, the Securities for whose payment such United
States dollars have been deposited with the Trustee.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.
WELLS ALUMINUM CORPORATION
By: /s/ W. Russell Asher
____________________
Name: W. Russell Asher
Title: Senior Vice President
Attest: /s/ David J. Raymonda
__________________________
Name: David J. Raymonda
Title: Secretary
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FLEET NATIONAL BANK
By: /s/ Kathy Larimore
____________________
Name: Kathy Larimore
Title: Assistant Vice President
Attest: /s/ Steve Cimalore
__________________________
Name: Steve Cimalore
Title: Vice President
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STATE OF MARYLAND )
) ss.:
COUNTY OF BALTIMORE )
On the 28 day of May, 1997, before me personally came
W. Russell Asher, to me known, who, being by me duly sworn, did depose and
say that he resides at Baltimore, MD; that he is Sr. Vice President of Wells
Aluminum Corporation, a corporation described in and which executed the
foregoing instrument; and that he signed his name thereto pursuant to authority
of the Board of Directors of such corporation.
(NOTARIAL
SEAL)
/s/
__________________________________
<PAGE>
STATE OF CONNECTICUT )
) ss.:
COUNTY OF HARTFORD )
On the _____ day of May, 1997, before me personally came
Kathy A. Larimore, to me known, who, being by me duly sworn, did depose and
say that he resides at 222 Williams St., Glastonbury, CT; that he is an AVP
of Fleet National Bank, a corporation described in and which executed the
foregoing instrument; and that he signed his name thereto pursuant to
authority of the Board of Directors of such corporation.
(NOTARIAL
SEAL)
/s/
__________________________________
~
<PAGE>
- ------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
DATED AS OF MAY 28, 1997
BETWEEN
WELLS ALUMINUM CORPORATION
AND
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
- ------------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into this 28th day of May, 1997, between Wells Aluminum Corporation, a
Maryland corporation (the "Company"), and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Initial Purchaser").
This Agreement is made pursuant to the Purchase Agreement, dated
as of May 20, 1997, between the Company and the Initial Purchaser (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial Purchaser
of an aggregate of $105 million principal amount of the Company's 10 1/8% Senior
Notes due 2005, Series A (the "Securities"). In order to induce the Initial
Purchaser to enter into the Purchase Agreement, the Company has agreed to
provide to the Initial Purchaser and their direct and indirect transferees the
registration rights set forth in this Agreement. The execution of this Agreement
is a condition to the closing under the 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.
"1934 Act" shall mean the Securities Exchange Act of l934, as
amended from time to time.
"Closing Date" shall mean the Closing Time as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any
other depositary appointed by the Company, provided, however, that such
depositary must have an address in the Borough of Manhattan, in the City
of New York.
<PAGE>
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Securities for Registrable Securities pursuant to Section 2.1
hereof.
"Exchange Offer Registration" shall mean a registration under
the 1933 Act effected pursuant to Section 2.1 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, including the Prospectus contained therein, all
exhibits thereto and all documents incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section
2.1 hereof.
"Exchange Securities" shall mean the 10 1/8% Senior Notes due
2005, Series B issued by the Company under the Indenture containing
terms identical to the Securities in all material respects (except for
references to certain interest rate provisions, restrictions on
transfers and restrictive legends), to be offered to Holders of
Securities in exchange for Registrable Securities pursuant to the
Exchange Offer.
"Holder" shall mean an Initial Purchaser, for so long as it owns
any Registrable Securities, and each of its successors, assigns and
direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture.
"Indenture" shall mean the Indenture relating to the Securities,
dated as of May 28, 1997, between the Company and Fleet National Bank,
as trustee, as the same may be amended, supplemented, waived or
otherwise modified from time to time in accordance with the terms
thereof.
"Initial Purchaser" shall have the meaning set forth in the
preamble.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of Outstanding (as defined in the Indenture)
Registrable Securities; provided that whenever the consent or approval
of Holders of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by the Company and other
obligors on the Securities or any Affiliate (as defined in the
Indenture) of the Company shall be disregarded in determining whether
such consent or approval was given by the Holders of such required
percentage amount.
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"Participating Broker-Dealer" shall mean Merrill Lynch, Pierce,
Fenner & Smith Incorporated, and any other broker-dealer which makes a
market in the Securities and exchanges Registrable Securities in the
Exchange Offer for Exchange Securities.
"Person" shall mean an individual, partnership (general or
limited), corporation, limited liability company, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"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 any such prospectus supplement with respect to the terms of
the offering of any portion of the Registrable Securities covered by a
Shelf Registration Statement, and by all other amendments and
supplements to 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.
"Registrable Securities" shall mean the Securities; provided,
however, that Securities shall cease to be Registrable Securities when
(i) a Registration Statement with respect to such Securities shall have
been declared effective under the 1933 Act and such Securities shall
have been disposed of pursuant to such Registration Statement, (ii) such
Securities have been sold to the public pursuant to Rule l44 (or any
similar provision then in force, but not Rule 144A) under the 1933 Act,
(iii) such Securities shall have ceased to be outstanding or (iv) the
Exchange Offer is consummated with respect to Securities exchanged in
the Exchange Offer (except in the case of Securities purchased from the
Company and continued to be held by the Initial Purchaser).
"Registration Expenses" shall mean any and all expenses incident
to performance of or compliance by the Company with this Agreement,
including without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. (the "NASD") registration and
filing fees, including, if applicable, the fees and expenses of any
"qualified independent underwriter" (and its counsel) that is required
to be retained by any holder of Registrable Securities in accordance
with the rules and regulations of the NASD, (ii) all fees and expenses
incurred in connection with compliance with state securities or blue sky
laws and compliance with the rules of the NASD (including reasonable
fees and disbursements of counsel for any underwriters or Holders in
connection with blue sky qualification of any of the Exchange Securities
or Registrable Securities and
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any filings with the NASD), (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments
or supplements thereto, any underwriting agreements, securities sales
agreements and other documents relating to the performance of and
compliance with this Agreement, (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable
Securities on any securities exchange or exchanges, (v) all rating
agency fees, (vi) the fees and disbursements of counsel for the
Company and of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, (vii) the
fees and expenses of the Trustee, and any escrow agent or custodian,
(viii) the reasonable fees and expenses of the Initial Purchaser in
connection with the Exchange Offer, including the reasonable fees and
expenses of counsel to the Initial Purchaser in connection therewith and
(ix) any fees and disbursements of the underwriters customarily required
to be paid by issuers or sellers of securities and the fees and expenses
of any special experts retained by the Company in connection with any
Registration Statement, but excluding underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement
of the Company which covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement, and
all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission or any
successor agency or government body performing the functions currently
performed by the United States Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant
to Section 2.2 hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2.2 of
this Agreement which covers all of the Registrable Securities on an
appropriate form under Rule 415 under the 1933 Act, or any similar rule
that may be adopted by the SEC, and all amendments and supplements to
such registration statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
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"Trustee" shall mean the trustee with respect to the Securities
under the Indenture.
2. Registration Under the 1933 Act.
2.1 Exchange Offer. The Company shall (A) prepare and, as soon
as practicable but not later than 45 days following the Closing Date, file with
the SEC an Exchange Offer Registration Statement on an appropriate form under
the 1933 Act with respect to a proposed Exchange Offer and the issuance and
delivery to the Holders, in exchange for the Registrable Securities, a like
principal amount of Exchange Securities, (B) use its best efforts to cause the
Exchange Offer Registration Statement to be declared effective under the 1933
Act within 130 days of the Closing Date, (C) use its best efforts to keep the
Exchange Offer Registration Statement effective until the closing of the
Exchange Offer and (D) use its best efforts to cause the Exchange Offer to be
consummated not later than 165 days following the Closing Date. The Exchange
Securities will be issued under the Indenture. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company shall promptly commence the
Exchange Offer, it being the objective of such Exchange Offer to enable each
Holder eligible and electing to exchange Registrable Securities for Exchange
Securities (assuming that such Holder (a) is not an affiliate of the Company
within the meaning of Rule 405 under the 1933 Act, (b) is not a broker-dealer
tendering Registrable Securities acquired directly from the Company for its own
account, (c) acquires the Exchange Securities in the ordinary course of such
Holder's business and (d) has no arrangements or understandings with any person
to participate in the Exchange Offer for the purpose of distributing the
Exchange Securities) to transfer such Exchange Securities 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 Company shall:
(a) 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;
(b) keep the Exchange Offer open for acceptance
for a period of not less than 30 calendar days after the date notice thereof is
mailed to the Holders (or longer if required by applicable law) (such period
referred to herein as the "Exchange Period");
(c) utilize the services of the Depositary for
the Exchange Offer;
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(d) permit Holders to withdraw tendered
Registrable Securities at any time prior to 5:00 p.m. (Eastern Standard Time),
on the last business day of the Exchange Period, 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
Securities delivered for exchange, and a statement that such Holder is
withdrawing his election to have such Securities exchanged;
(e) notify each Holder that any Registrable
Security not tendered will remain outstanding and continue to accrue interest,
but will not retain any rights under this Agreement (except in the case of the
Initial Purchasers and Participating Broker-Dealers as provided herein); and
(f) otherwise comply in all respects with all
applicable laws relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer,
the Company shall:
(i) accept for exchange all Registrable Securities
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 shall
be an exhibit thereto;
(ii) deliver to the Trustee for cancellation all
Registrable Securities so accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and
deliver Exchange Securities to each Holder of Registrable
Securities so accepted for exchange in a principal amount equal
to the principal amount of the Registrable Securities of such
Holder so accepted for exchange.
Interest on each Exchange Security will accrue from the last
date on which interest was paid on the Registrable Securities surrendered in
exchange therefor or, if no interest has been paid on the Registrable
Securities, from the date of original issuance. 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 violate applicable law or any applicable
interpretation of the staff of the SEC, (ii) the due tendering of Registrable
Securities in accordance with the Exchange Offer, (iii) that each Holder of
Registrable Securities exchanged in the Exchange Offer shall have represented
that it is not an affiliate, directly or indirectly, of the Company, all
Exchange Securities to be received by it shall be acquired in the ordinary
course of its business and that at the time of the consummation of the Exchange
Offer it shall have no arrangement or
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understanding with any person to participate in the distribution (within the
meaning of the 1933 Act) of the Exchange Securities and shall have made such
other representations as may be reasonably necessary under applicable SEC
rules, regulations or interpretations to render the use of Form S-4 or other
appropriate form under the 1933 Act available and (iv) that no action or
proceeding shall have been instituted or threatened in any court or by or
before any governmental agency with respect to the Exchange Offer which, in
the Company's judgment, would reasonably be expected to impair the ability of
the Company to proceed with the Exchange Offer. The Company shall inform the
Initial Purchaser of the names and addresses of the Holders to whom the Exchange
Offer is made, and the Initial Purchaser shall have the right to contact such
Holders and otherwise facilitate the tender of Registrable Securities in the
Exchange Offer.
2.2 Shelf Registration. (i) If, because of any changes in law,
SEC rules or regulations or applicable interpretations thereof by the staff of
the SEC, the Company is not permitted to effect the Exchange Offer as
contemplated by Section 2.1 hereof, (ii) if for any other reason the Exchange
Offer Registration Statement is not declared effective within 130 days following
the original issue of the Registrable Securities or the Exchange Offer is not
consummated for all of the Registrable Securities within 165 days after the
original issue of the Registrable Securities, (iii) upon the request of the
Initial Purchaser or (iv) if a Holder is not permitted to participate in the
Exchange Offer or does not receive fully tradable Exchange Securities pursuant
to the Exchange Offer, then in case of each of clauses (i) through (iv) the
Company shall, at its cost:
(a) As promptly as practicable, file with the SEC, and
thereafter shall use its best efforts to cause to be declared
effective as promptly as practicable but no later than (i) 165
days after the original issue of the Registrable Securities if
an Exchange Offer has not been consummated or (ii) the later of
(1) 165 days after the original issue of the Registrable
Securities or (2) 90 days after the Company becomes obligated to
file a Shelf Registration Statement, if an Exchange Offer has
been consummated, a Shelf Registration Statement relating to the
offer and sale of the Registrable Securities by the Holders from
time to time in accordance with the methods of distribution
elected by the Majority Holders participating in the Shelf
Registration and set forth in such Shelf Registration Statement.
(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 date the Shelf Registration
Statement is declared effective by the SEC, or for such shorter
period that will terminate when all Registrable Securities
covered by the Shelf Registration Statement have been sold
pursuant to the Shelf
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Registration Statement or cease to be outstanding or otherwise
to be Registrable Securities.
(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
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 necessary in
order to make the statements, in light of the circumstances
under which they were made, not misleading.
The Company further agrees, if necessary, to supplement or amend
the Shelf Registration Statement, as required by Section 3(b) below, and to
furnish to the Holders of Registrable Securities copies of any such supplement
or amendment promptly after its being used or filed with the SEC.
2.3 Expenses. The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2.1 or 2.2. Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement.
2.4. Effectiveness. (a) The Company will be deemed not
have used its best efforts to cause the Exchange Offer Registration Statement
or the Shelf Registration Statement, as the case may be, to become, or to
remain, effective during the requisite period if the Company voluntarily takes
any action that would, or omits to take any action which omission would,
result in any such Registration Statement not being declared effective or
in the holders of Registrable Securities covered thereby not being able to
exchange or offer and sell such Registrable Securities during that period as
and to the extent contemplated hereby, unless such action is required by
applicable law.
(b) An Exchange Offer Registration Statement pursuant to Section
2.1 hereof or a Shelf Registration Statement pursuant to Section 2.2 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
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Securities pursuant to a Shelf Registration Statement is interfered with by any
stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will be deemed not
to have become effective during the period of such interference, until the
offering of Registrable Securities pursuant to such Registration Statement may
legally resume.
2.5 Interest. The Indenture executed in connection with the
Securities will provide that in the event that either (a) the Exchange Offer
Registration Statement is not filed with the Commission on or prior to the 45th
calendar day following the date of original issue of the Securities, (b) the
Exchange Offer Registration Statement has not been declared effective on or
prior to the 130th calendar day following the date of original issue of the
Securities or (c) the Exchange Offer is not consummated, or if an Exchange Offer
has not been consummated, a Shelf Registration Statement is not declared
effective, in either case, on or prior to the 165th calendar day following the
date of original issue of the Securities or (d) if an Exchange Offer has been
consummated, any required Shelf Registration Statement is not declared effective
on or prior to the later of (i) the 165th calendar day after the date of
original issue of the Securities or (ii) the 90th calendar day after the date
the Company becomes obligated to file a Shelf Registration Statement (each such
event referred to in clauses (a) through (d) above, a "Registration Default"),
the interest rate borne by the Securities shall be increased by one-quarter of
one percent per annum upon the occurrence of each Registration Default, which
rate will increase by one quarter of one percent each 90-day period that such
additional interest continues to accrue under any such circumstance, with an
aggregate maximum increase in the interest rate equal to one percent (1%) per
annum. Following the cure of all Registration Defaults the accrual of additional
interest will cease and the interest rate will revert to the original rate.
3. Registration Procedures.
In connection with the obligations of the Company with respect
to Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Company
shall:
(a) prepare and file with the SEC a Registration Statement,
within the relevant time period specified in Section 2, on the appropriate form
under the 1933 Act, which form (i) shall be selected by the Company, (ii) shall,
in the case of a Shelf Registration, be available for the sale of the
Registrable Securities by the selling Holders thereof, (iii) 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 or incorporated by reference therein, and (iv) shall
comply in all respects with the requirements of Regulation S-T under the
Securities Act, and use its best efforts to cause such Registration Statement to
become effective and remain effective in accordance with Section 2 hereof;
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(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary
under applicable law to keep such Registration Statement effective for the
applicable period; and cause each Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
under the 1933 Act and comply with the provisions of the 1933 Act applicable to
them 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 Securities, at least five business days prior to filing, that a
Shelf Registration Statement with respect to the Registrable Securities is being
filed and advising such Holders that the distribution of Registrable Securities
will be made in accordance with the method selected by the Majority Holders
participating in the Shelf Registration; (ii) furnish to each Holder of
Registrable Securities and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and, if the
Holder so requests, all exhibits in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) hereby consent to the use
of the Prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Securities in connection with the offering and sale of
the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Securities shall reasonably request by the time the applicable Registration
Statement is declared effective by the SEC, and do any and all other acts and
things which may be reasonably necessary or advisable to enable each such Holder
and underwriter to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that the Company
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 where it
is not then so subject;
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(e) notify promptly each Holder of Registrable Securities under
a Shelf Registration or any Participating Broker-Dealer who has notified the
Company that it is utilizing the Exchange Offer Registration Statement as
provided in paragraph (f) below and, if requested by such Holder or
Participating Broker-Dealer, 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) in the case of a Shelf Registration, if,
between the effective date of a Registration Statement and the closing of any
sale of Registrable Securities covered thereby, the representations and
warranties of the Company contained in any underwriting agreement, securities
sales agreement or other similar agreement, if any, relating to the offering
cease to be true and correct in all material respects, (v) of the happening of
any event or the discovery of any facts during the period a Shelf Registration
Statement is effective which makes any statement made in such Registration
Statement or the related Prospectus untrue in any material respect or which
requires the making of any changes in such Registration Statement or Prospectus
in order to make the statements therein not misleading and (vi) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities or the Exchange Securities, as the
case may be, for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose;
(f) (A) in the case of the Exchange Offer Registration Statement
(i) include in the Exchange Offer Registration Statement a section entitled
"Plan of Distribution" which shall contain a summary statement of the positions
taken or policies made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer that holds Registrable Securities
acquired for its own account as a result of market-making activities or other
trading activities and that will be the beneficial owner (as defined in Rule
13d-3 under the Exchange Act) of Exchange Securities to be received by such
broker-dealer in the Exchange Offer, whether such positions or policies have
been publicly disseminated by the staff of the SEC or such positions or
policies, in the reasonable judgment of the Initial Purchaser and its counsel,
represent the prevailing views of the staff of the SEC, including a statement
that any such broker-dealer who receives Exchange Securities for Registrable
Securities pursuant to the Exchange Offer may be deemed a statutory underwriter
and must deliver a prospectus meeting the requirements of the 1933 Act in
connection with any resale of such Exchange Securities, (ii) furnish to each
Participating Broker-Dealer who has delivered to the Company the notice referred
to in Section 3(e), without charge, as many copies of each Prospectus included
in the Exchange Offer Registration Statement, including any
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preliminary prospectus, and any amendment or supplement thereto, as such
Participating Broker-Dealer may reasonably request, (iii) hereby consent to the
use of the Prospectus forming part of the Exchange Offer Registration Statement
or any amendment or supplement thereto, by any person subject to the prospectus
delivery requirements of the SEC, including all Participating Broker-Dealers,
in connection with the sale or transfer of the Exchange Securities covered by
the Prospectus or any amendment or supplement thereto, and (iv) 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 exchange offeree is a broker-dealer holding Registrable
Securities acquired for its own account as a result of
market-making activities or other trading activities, it will
deliver a prospectus meeting the requirements of the 1933 Act in
connection with any resale of Exchange Securities received in
respect of such Registrable Securities pursuant to the Exchange
Offer;" and
(y) a statement to the effect that by a broker-dealer making the acknowledgment
described in clause (x) and by delivering a Prospectus in connection with the
exchange of Registrable Securities, the broker-dealer will not be deemed to
admit that it is an underwriter within the meaning of the 1933 Act; and
(B) in the case of any Exchange Offer
Registration Statement, the Company agrees to deliver to the Initial Purchaser
on behalf of the Participating Broker-Dealers (if any Participating
Broker-Dealers are participating in the Exchange Offer Registration Statement)
upon the effectiveness of the Exchange Offer Registration Statement (i) a
customary opinion of outside counsel or opinions of outside counsel
substantially in the form attached hereto as Exhibit A, (ii) an officers'
certificate substantially in the form customarily delivered in a public
offering of debt securities and (iii) a comfort letter or comfort letters in
customary form if permitted by Statement on Auditing Standards No. 72 of the
American Institute of Certified Public Accountants (or if such a comfort
letter is not permitted, an agreed upon procedures letter in customary form)
at least as broad in scope and coverage as the comfort letter or comfort
letters delivered to the Initial Purchaser in connection with the initial sale
of the Securities to the Initial Purchaser;
(g) (i) in the case of an Exchange Offer, endeavor to furnish
counsel for the Initial Purchaser and (ii) in the case of a Shelf Registration,
furnish counsel for the Holders of Registrable Securities copies of any comment
letters received from the SEC or any other request by the SEC or any state
securities authority for amendments or supplements to a Registration Statement
and Prospectus or for additional information;
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(h) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
(i) in the case of a Shelf Registration, furnish to each Holder
of Registrable Securities, and each underwriter, if any, without charge, at
least one conformed copy of each Registration Statement and any post-effective
amendment thereto, including financial statements and schedules (without
documents incorporated therein by reference and all exhibits thereto, unless
requested);
(j) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends; and enable such Registrable Securities to
be in such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the underwriters, if any, may
reasonably request at least three business days prior to the closing of any sale
of Registrable Securities;
(k) in the case of a Shelf Registration, upon the occurrence of
any event or the discovery of any facts, each as contemplated by Sections
3(e)(v) and 3(e)(vi) hereof, use its best efforts to prepare a supplement or
post-effective amendment to the Registration Statement or the related Prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Securities or Participating Broker-Dealers, 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 light of the
circumstances under which they were made, not misleading or will remain so
qualified;
(l) in the case of a Shelf Registration, a reasonable time prior
to the filing of any Registration Statement, any Prospectus, any amendment to a
Registration Statement or amendment or supplement to a Prospectus or any
document which is to be incorporated by reference into a Registration Statement
or a Prospectus after initial filing of a Registration Statement, provide copies
of such document to the Initial Purchaser on behalf of such Holders; and make
representatives of the Company as shall be reasonably requested by the Holders
of Registrable Securities, or the Initial Purchaser on behalf of such Holders,
available for discussion of such document;
(m) obtain a CUSIP number for all Exchange Securities or
Registrable Securities, as the case may be, not later than the effective date of
a Registration Statement, and provide the Trustee with printed certificates for
the Exchange Securities or the Registrable Securities, as the case may be, in a
form eligible for deposit with the Depositary;
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(n) (i) cause the Indenture to be qualified under the Trust
Indenture Act of 1939 (the "TIA") in connection with the registration of the
Exchange Securities or Registrable Securities, as the case may be, (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;
(o) in the case of a Shelf Registration, enter into agreements
(including underwriting agreements) and take all other customary and appropriate
actions in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration, in a manner that is reasonable and practicable and not overly
burdensome to the Company:
(i) make such representations and warranties to the
Holders of such Registrable Securities 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 outside counsel to the Company
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 Securities 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 and such other matters as
may be reasonably requested by such Holders and underwriters;
(iii) obtain "cold comfort" letters and updates thereof
from the Company's independent certified public accountants
addressed to the underwriters, if any, and use reasonable
efforts to have such letter addressed to the selling Holders of
Registrable Securities (to the extent consistent with Statement
on Auditing Standards No. 72 of the American Institute of
Certified Public Accounts), provided that the requesting
Holders, underwriters or such other financial intermediary
furnish any reasonable undertaking required by the accountants,
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;
14
<PAGE>
(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
Securities, which agreement shall be in form, substance and
scope customary for similar offerings;
(v) if an underwriting agreement is entered into,
cause the same to set forth indemnification provisions and
procedures substantially equivalent to the indemnification
provisions and procedures set forth in Section 4 hereof with
respect to the underwriters and all other parties to be
indemnified pursuant to said Section or, at the request of any
underwriters, in the form customarily provided to such
underwriters in similar types of transactions; and
(vi) deliver such documents and certificates as may be
reasonably requested and as are customarily delivered in similar
offerings to the Holders of a majority in principal amount of
the Registrable Securities being sold and the managing
underwriters, if any.
The above shall be done at (i) the effectiveness of such Registration Statement
(and each post-effective amendment thereto) and (ii) each closing under any
underwriting or similar agreement as and to the extent required thereunder;
(p) in the case of a Shelf Registration, make available for
inspection by representatives of the Holders of the Registrable Securities and
any underwriters participating in any disposition pursuant to a Shelf
Registration Statement and any counsel or accountant retained by such Holders or
underwriters, all financial and other records, pertinent corporate documents and
properties of the Company reasonably requested by any such persons, and cause
the respective officers, directors, employees, and any other agents of the
Company to supply all information reasonably requested by any such
representative, underwriter, special counsel or accountant in connection with a
Registration Statement, and make such representatives of the Company available
for discussion of such documents as shall be reasonably requested by the Initial
Purchaser;
(q) (i) in the case of an Exchange Offer Registration Statement,
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 such Prospectus,
provide copies of such document to the Initial Purchaser (on behalf of the
Holders of Registrable Securities), and make the representatives of the Company
available for discussion of such documents as shall be reasonably requested by
the Initial Purchaser; and
15
<PAGE>
(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 Securities, to counsel on behalf of the Holders and to
the underwriter or underwriters of an underwritten offering of Registrable
Securities, if any, make such changes in any such document prior to the filing
thereof as the counsel to the Holders or the underwriter or underwriters
reasonably request and not file any such document in a form to which the
Majority Holders on behalf of the Holders of Registrable Securities or any
underwriter may reasonably object and make the representatives of the Company
available for discussion of such document as shall be reasonably requested by
the Holders of Registrable Securities, the Initial Purchaser on behalf of such
Holders, or any underwriter.
(r) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Securities to be listed on any securities exchange on
which similar debt securities issued by the Company are then listed if requested
by the Majority Holders, or if requested by the underwriter or underwriters of
an underwritten offering of Registrable Securities, if any;
(s) in the case of a Shelf Registration, use its best efforts to
cause the Registrable Securities to be rated by the appropriate rating agencies,
if so requested by the Majority Holders, or if requested by the underwriter or
underwriters of an underwritten offering of Registrable Securities, if any;
(t) 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 earnings statement covering at least 12
months which shall satisfy the provisions of Section 11(a) of the 1933 Act and
Rule 158 thereunder; and
(u) cooperate and assist in any filings required to be made with
the NASD and, in the case of a Shelf Registration, in the performance of any due
diligence investigation by any underwriter and its counsel (including any
"qualified independent underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD); and
In the case of a Shelf Registration Statement, the Company may
(as a condition to such Holder's participation in the Shelf Registration)
require each Holder of Registrable Securities to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder of
such Registrable Securities as the Company may from time to time reasonably
request in writing.
16
<PAGE>
In the case of a Shelf Registration Statement, each Holder
agrees that, upon receipt of any notice from the Company of the happening of any
event or the discovery of any facts, each of the kind described in Section
3(e)(v) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 3(k) hereof, and, if so directed by the Company, such Holder will
deliver to the Company (at its expense) all copies in such Holder's possession,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice. If the Company shall give any such notice to suspend the
disposition of Registrable Securities pursuant to a Shelf Registration Statement
as a result of the happening of any event or the discovery of any facts, each of
the kind described in Section 3(e)(v) hereof, the Company shall be deemed to
have used its best efforts to keep the Shelf Registration Statement effective
during such period of suspension provided that the Company shall use its best
efforts to file and have declared effective (if an amendment) as soon as
practicable an amendment or supplement to the Shelf Registration Statement and
shall extend the period during which the Shelf 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.
In the event that the Company fails to effect the Exchange Offer
or file any Shelf Registration Statement and maintain the effectiveness of any
Shelf Registration Statement as provided herein, the Company shall not file any
Registration Statement with respect to any securities (within the meaning of
Section 2(1) of the 1933 Act) of the Company other than Registrable Securities.
If any of the Registrable Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
underwriter or underwriters and manager or managers that will manage such
offering will be selected by the Majority Holders of such Registrable Securities
included in such offering and shall be acceptable to the Company. No Holder of
Registrable Securities may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
17
<PAGE>
4. Indemnification; Contribution.
(a) The Company agrees to indemnify and hold harmless the Initial
Purchaser, each Holder, each Participating Broker-Dealer, each Person who
participates as an underwriter (any such Person being an "Underwriter") and each
Person, if any, who controls any Holder or Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment or supplement thereto) pursuant
to which Exchange Securities or Registrable Securities were registered
under the 1933 Act, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 4(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by any
indemnified party), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above; provided,
however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information
furnished to the Company by the Initial Purchaser, such Holder or
Underwriter expressly for use in a Registration
18
<PAGE>
Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto).
(b) Each Holder severally, but not jointly, agrees to indemnify
and hold harmless the Company, the Initial Purchaser, each Underwriter and the
other selling Holders, and each of their respective directors and officers, and
each Person, if any, who controls the Company, the Initial Purchaser, any
Underwriter or any other selling Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 4(a)
hereof, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Shelf Registration Statement
(or any amendment thereto) or any Prospectus included therein (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company expressly for use in the Shelf Registration
Statement (or any amendment thereto) or such Prospectus (or any amendment or
supplement thereto); provided, however, that no such Holder shall be liable for
any claims hereunder in excess of the amount of net proceeds received by such
Holder from the sale of Registrable Securities pursuant to such Shelf
Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding
commenced against it in respect of which indemnity may be sought hereunder, but
failure so to notify an indemnifying party shall not relieve such indemnifying
party from any liability hereunder to the extent it is not materially prejudiced
as a result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying party or parties be liable
for the fees and expenses of more than one counsel (in addition to no more than
one local counsel in any jurisdiction) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 4 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include
19
<PAGE>
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 4(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 4 is
for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand, the Holders on another hand, and the Initial Purchaser on another hand,
from the offering of the Securities, the Exchange Securities and the Registrable
Securities (taken together) included in such offering or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand, the
Holders on another hand and the Initial Purchaser on another hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative benefits received by the Company from the offering of the
Securities, the Exchange Securities and the Registrable Securities (taken
together) included in such offering shall in each case be deemed to include the
proceeds received by the Company in connection with the offering of the
Securities pursuant to the Purchase Agreement. The parties hereto agree that any
underwriting discount or commission or reimbursement of fees paid to the Initial
Purchaser pursuant to the Purchase Agreement shall not be deemed to be a benefit
received by the Initial Purchaser in connection with the offering of the
Exchange Securities or Registrable Securities included in such offering.
The relative fault of the Company on the one hand, the Holders on
another hand, and the Initial Purchaser on another hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the
20
<PAGE>
Company, the Holders or the Initial Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Holders and the Initial Purchaser agree that it would
not be just and equitable if contribution pursuant to this Section 4 were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
Section 4. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
4 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 4, the Initial Purchaser
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Securities sold by it were offered exceeds the
amount of any damages which the Initial Purchaser has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4, each person, if any, who controls the
Initial Purchaser or Holder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
Initial Purchaser or Holder, and each director of the Company, and each person,
if any, who controls the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Company.
5. Miscellaneous.
5.1 Rule 144 and Rule 144A. The Company covenants that it will
upon the request of any Holder of Registrable Securities (a) make publicly
available such information as is necessary to permit sales pursuant to Rule 144
under the 1933 Act, (b) deliver such information to a prospective purchaser as
is necessary to permit sales pursuant to Rule 144A under the 1933 Act and it
will take such further action as any Holder of Registrable Securities may
reasonably request, and (c) take such further action that is reasonable in the
circumstances, in each case, to the extent required from time to time to enable
such Holder to sell its Registrable Securities without registration under the
1933 Act within the limitation of the exemptions provided by (i) Rule 144
21
<PAGE>
under the 1933 Act, as such Rule may be amended from time to time, (ii) Rule
144A under the 1933 Act, as such Rule may be amended from time to time, or
(iii) any similar rules or regulations hereafter adopted by the SEC. Upon the
request of any Holder of Registrable Securities, the Company will deliver to
such Holder a written statement as to whether it has complied with such
requirements.
5.2 No Inconsistent Agreements. The Company has not entered
into and the Company will not after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with the rights granted to the holders of the Company's other issued
and outstanding securities under any such agreements.
5.3 Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or departure.
5.4 Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (a) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 5.4, which address initially is the address set forth in the Purchase
Agreement with respect to the Initial Purchaser; and (b) if to the Company,
initially at the Company's address set forth in the Purchase Agreement, and
thereafter at such other address of which notice is given in accordance with the
provisions of this Section 5.4.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; two business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person giving the same to the Trustee
under the Indenture, at the address specified in such Indenture.
5.5 Successor and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties,
22
<PAGE>
including, without limitation and without the need for an express assignment,
subsequent Holders; provided that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Registrable Securities in
violation of the terms of the Purchase Agreement. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held
subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement, 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.
5.6 Third Party Beneficiaries. The Initial Purchaser (even if
the Initial Purchaser is not Holders of Registrable Securities) shall be a third
party beneficiary to the agreements made hereunder between the Company, on the
one hand, and the Holders, on the other hand, and shall have the right to
enforce such agreements directly to the extent they deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder. Each Holder of Registrable Securities shall be a third party
beneficiary to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchaser, 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 hereunder.
5.7 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.
5.8 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
5.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
5.10 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.
23
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
WELLS ALUMINUM CORPORATION
By: /s/ W. Russell Asher
________________________________
Name: W. Russell Asher
Title: Senior Vice President
Confirmed and accepted as
of the date first above
written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:/s/ Pascal-Andre J. Maeter
__________________________________
Name: Pascal-Andre J. Maeter
Title: Vice President
24
<PAGE>
=============================================================================
AMENDED AND RESTATED
CREDIT AGREEMENT
Among
WELLS ALUMINUM CORPORATION
and
CREDIT AGRICOLE INDOSUEZ, AS AGENT,
and
THE LENDING INSTITUTIONS LISTED HEREIN
--------------------
Dated as of December 21, 1994
and
Amended and Restated as of
May 28, 1997
--------------------
$15,000,000
==============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. Amount and Terms of Credit........................................................................2
1.01 Commitments...................................................................................2
1.02 Minimum Amount of Each Borrowing; Maximum Number of Borrowings................................2
1.03 Notice of Borrowings..........................................................................3
1.04 Disbursement of Funds.........................................................................3
1.05 Notes.........................................................................................4
1.06 Conversions...................................................................................5
1.07 Pro Rata Borrowings...........................................................................6
1.08 Interest......................................................................................6
1.09 Interest Periods..............................................................................7
1.10 Special Provisions Governing LIBOR Loans......................................................8
1.11 Capital Requirements.........................................................................12
1.12 Total Loan Commitments; Limitations on Outstanding Loan Amounts..............................13
1.13 Letters of Credit.............................................................................13
1.14 Restatement Effective Date; Effect of Restatement.............................................22
SECTION 2. Commitments......................................................................................24
2.01 Voluntary Reduction of Commitments...........................................................24
2.02 Mandatory Adjustments of Commitments, etc....................................................24
2.03 Commitment Commission........................................................................24
SECTION 3. Payments..........................................................................................24
3.01 Voluntary Prepayments.........................................................................25
3.02 Mandatory Prepayments........................................................................25
3.03 Method and Place of Payment...................................................................27
3.04 Net Payments.................................................................................28
SECTION 4. Conditions Precedent.............................................................................30
4.01 Conditions Precedent to Effectiveness of Agreement...........................................30
4.02 Conditions Precedent to All Loans.............................................................36
4.03 Conditions Precedent to All Letters of Credit.................................................38
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SECTION 5. Representations, Warranties and Agreements.......................................................39
5.01 Corporate Status..............................................................................39
5.02 Corporate Power and Authority; Business.......................................................39
5.03 No Violation..................................................................................40
5.04 Litigation....................................................................................41
5.05 Use of Proceeds...............................................................................41
5.06 Governmental Approvals, etc...................................................................41
5.07 Investment Company Act........................................................................42
5.08 Public Utility Holding Company Act............................................................42
5.09 True and Complete Disclosure..................................................................42
5.10 Financial Condition; Financial Statements; Projections........................................43
5.11 Security Interests............................................................................45
5.12 Tax Returns and Payments......................................................................45
5.13 ERISA.........................................................................................46
5.14 Subsidiaries..................................................................................47
5.15 Patents, etc..................................................................................47
5.16 Compliance with Laws, etc.....................................................................48
5.17 Properties....................................................................................48
5.18 Securities....................................................................................48
5.19 Collective Bargaining Agreements..............................................................48
5.20 Indebtedness Outstanding......................................................................49
5.21 Environmental Matters.........................................................................49
5.22 Environmental Investigations..................................................................51
SECTION 6. Affirmative Covenants.............................................................................51
6.01 Information Covenants.........................................................................51
6.02 Books, Records and Inspections................................................................57
6.03 Maintenance of Property; Insurance............................................................57
6.04 Payment of Taxes..............................................................................58
6.05 Corporate Franchises..........................................................................58
6.06 Compliance with Statutes, etc.................................................................58
6.07 ERISA.........................................................................................59
6.08 Performance of Obligations....................................................................59
6.09 Fiscal Quarters; Fiscal Year..................................................................60
6.10 Use of Proceeds...............................................................................60
6.11 Intentionally Omitted.........................................................................60
6.12 No Further Negative Pledges...................................................................60
6.13 Lender Meeting................................................................................60
6.14 Pledge of Additional Collateral...............................................................60
6.15 Security Interests............................................................................61
6.16 Environmental Events..........................................................................61
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SECTION 7. Negative Covenants...............................................................................62
7.01 Changes in Business...........................................................................62
7.02 Amendments or Waivers of Certain Documents....................................................62
7.03 Liens.........................................................................................63
7.04 Indebtedness..................................................................................65
7.05 Capital Expenditures..........................................................................65
7.06 Advances, Investments and Loans...............................................................66
7.07 Prepayments of Indebtedness, etc..............................................................66
7.08 Dividends, etc................................................................................67
7.09 Transactions with Affiliates..................................................................68
7.10 Total Interest Coverage Ratio.................................................................68
7.11 Fixed Charge Coverage Ratio...................................................................69
7.12 Leverage Ratio................................................................................70
7.13 Minimum Net Worth.............................................................................70
7.14 Current Ratio.................................................................................71
7.15 Disposition of Assets.........................................................................71
7.16 Contingent Obligations........................................................................72
7.17 ERISA.........................................................................................72
7.18 Merger and Consolidations.....................................................................73
7.19 Sale and Lease-Backs..........................................................................73
7.20 Sale or Discount of Receivables...............................................................73
7.21 Issuance of Subsidiary Stock..................................................................74
7.22 Speculative Transactions......................................................................74
7.23 Subsidiaries..................................................................................74
SECTION 8. Events of Default................................................................................74
8.01 Payments......................................................................................75
8.02 Representations, etc..........................................................................75
8.03 Covenants.....................................................................................75
8.04 Default Under Other Agreements................................................................75
8.05 Bankruptcy, etc...............................................................................76
8.06 ERISA.........................................................................................76
8.07 Security Documents............................................................................77
8.08 Judgments.....................................................................................77
8.09 Ownership.....................................................................................78
SECTION 9. Definitions.....................................................................................79
SECTION 10. The Agent.....................................................................................105
10.01 Appointment.................................................................................105
10.02 Delegation of Duties........................................................................105
10.03 Exculpatory Provisions......................................................................105
10.04 Reliance by the Agent.......................................................................106
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10.05 Notice of Default...........................................................................107
10.06 Non-Reliance on Agent and Other Banks.......................................................107
10.07 Indemnification.............................................................................108
10.08 The Agent in Its Individual Capacity........................................................108
10.09 Successor Agent.............................................................................109
10.10 Resignation, Transfer by Agent..............................................................109
SECTION 11. Miscellaneous..................................................................................110
11.01 Payment of Expenses, etc....................................................................110
11.02 Right of Setoff.............................................................................111
11.03 Notices.....................................................................................111
11.04 Benefit of Agreement........................................................................112
11.05 No Waiver; Remedies Cumulative..............................................................114
11.06 Payments Pro Rata...........................................................................114
11.07 Calculations; Computations..................................................................115
11.08 Governing Law; Submission to Jurisdiction; Venue............................................115
11.09 Counterparts................................................................................116
11.10 Effectiveness...............................................................................116
11.11 Headings Descriptive........................................................................117
11.12 Amendment or Waiver.........................................................................117
11.13 Survival....................................................................................117
11.14 Domicile of Loans...........................................................................117
11.15 Waiver of Jury Trial........................................................................117
11.16 Independence of Covenants...................................................................118
ANNEX I - List of Banks
ANNEX II - Bank Addresses
Schedule 4.01J - Schedule of Corporate Insurance Policies
Schedule 4.01K(a) - Schedule of Liens
Schedule 4.01K(b) - Schedule of Restrictions
Schedule 5.01 - Schedule of Consents
Schedule 5.03 Violations
Schedule 5.04 - Schedule of Litigation
Schedule 5.16 - Schedule of Violations
Schedule 5.19 - Schedule of Collective Bargaining Agreements
Schedule 5.20 - Indebtedness Outstanding
Schedule 5.21 - Environmental Matters
EXHIBIT A - Form of Revolving Note
EXHIBIT B-1 - Form of Opinion of Kramer, Levin, Naftalis & Frankel
EXHIBIT B-2 - Form of Opinion of Local Counsel
EXHIBIT C - Form of Amended General Security Agreement
EXHIBIT D-1 - Form of Notice of Assignment
-iv-
<PAGE>
EXHIBIT D-2 - Form of Assignment and Assumption Agreement
EXHIBIT E - Form of Notice of Borrowing
EXHIBIT F - Form of Notice of Conversion/Continuation
EXHIBIT G - Form of Notice of Issuance
EXHIBIT H - Form of Borrowing Base Certificate
EXHIBIT I-1 - Form of Officers' Certificate Regarding Conditions Precedent
EXHIBIT I-2 - Form of Officers' Certificate Regarding Environmental Review
EXHIBIT I-3 - Form of Officers' Solvency Certificate
</TABLE>
-v-
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 21, 1994
and amended and restated as of May 28, 1997 (the "Agreement"), among WELLS
ALUMINUM CORPORATION, a Maryland corporation ("Borrower"), the lending
institutions listed in Annex I (each a "Bank" and, collectively, the "Banks")
and CREDIT AGRICOLE INDOSUEZ ("Indosuez") as agent and collateral agent for the
Banks (in such capacity, the "Agent"). Unless otherwise defined herein, all
capitalized terms used herein and defined in Section 9 are used herein as so
defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower, the Agent and the lending institutions party
thereto have entered into a Credit Agreement dated as of December 21, 1994 and
as amended to date (the "Existing Credit Agreement"); and
WHEREAS, the Borrower has issued $105 million of its 10 1/8% Senior
Notes due 2005 (the "Senior Notes"); and
WHEREAS, Borrower desires (a) to repay all of the Borrower's
obligations, including accrued interest and prepayment premiums, under (i) the
Existing Credit Agreement and (ii) the Borrower's outstanding 14.125% Senior
Subordinated Notes due 2001 (the "Subordinated Notes") (together, the
"Refinancing"), and (b) to pay a special cash dividend of $62.00 per share to
the holders of its common stock, to settle existing employee stock options and
to repurchase shares of its common stock (as more fully defined herein, the
"Distributions") and, in each case, to pay related fees and expenses (the
Refinancing and the Distributions together, the "Recapitalization"); and
WHEREAS, as part of the Refinancing, Borrower has requested that the
Banks amend and restate the Existing Credit Agreement to permanently terminate
all Term Loan Commitments (as defined in the Existing Credit Agreement) and
make available to Borrower the revolving credit facilities described herein;
and
WHEREAS, as part of the Refinancing, Borrower has requested that the
Banks amend the General Security Agreement to provide security only with
respect to inventory and accounts receivable and release all other security
interests; and
WHEREAS, the Banks are willing to make available the credit facilities
provided for herein.
<PAGE>
-2-
SECTION 1. Amount and Terms of Credit.
1.01 Commitments. Subject to and upon the terms and
conditions herein set forth, each Bank severally agrees at any time and from
time to time on and after the Closing Date and prior to the Final Revolving
Loan Maturity Date, to make a Loan or Loans to the Borrower under the Loan
Facility (each a "Revolving Loan" and, collectively, the "Revolving Loans")
which (i) shall be made at any time and from time to time on and after the
Closing Date and prior to the Final Revolving Loan Maturity Date, (ii) except
as hereinafter provided, shall initially be made as Base Rate Loans but may,
at the Borrower's option and subject to the terms hereof, thereafter be
converted into LIBOR Loans; provided that all Revolving Loans made by all
Banks pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, consist entirely of Loans of the same Type, (iii) may be
repaid and reborrowed in accordance with the provisions hereof, (iv) shall
not exceed for any Bank at any time outstanding the Revolving Loan Commitment
of such Bank at such time and (v) shall not be made if the aggregate principal
amount of Revolving Loans then outstanding, after giving effect to the
Revolving Loan requested by the relevant Notice of Borrowing, plus the then
outstanding Letters of Credit Usage, after giving effect to the issuance of
all Letters of Credit subject to outstanding Requests for Issuance, would
exceed the lesser of the Borrower's Borrowing Base as shown in the Borrowing
Base Certificate that was last required to be delivered pursuant to Section
6.01 or the Total Revolving Loan Commitment.
1.02. Minimum Amount of Each Borrowing; Maximum Number of
Borrowings. The minimum aggregate principal amount of a Borrowing of Loans
shall be $100,000 and Borrowings in excess thereof shall be in integral
multiples of $100,000. At no time shall there be more than six (6) Borrowings
of LIBOR Loans.
1.03 Notice of Borrowings. Whenever the Borrower
desires that the Banks make Loans under the Loan Facility it shall give the
Agent at the Agent's Office (i) prior to 10:00 A.M. (New York time) at least
three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing of LIBOR Loans and (ii) at least one
Business Day's prior written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing of Base Rate Loans; provided that if written notice
(or telephonic notice promptly confirmed in writing) is given prior to 10:00
A.M. (New York time) on the day of a requested Borrowing, Borrowings of Base
Rate Loans may be made
<PAGE>
-3-
available on a same-day basis. Each such notice, which shall be
substantially in the form of Exhibit E hereto (each a "Notice of Borrowing")
shall be irrevocable, shall be deemed a representation by the Borrower that all
conditions precedent to such Borrowing have been satisfied and shall specify
(a) the aggregate principal amount in U.S. dollars of the Loans to be made
pursuant to such Borrowing, all of which shall be specified in such manner as
is necessary to comply with all limitations on Revolving Loans outstanding
hereunder, including without limitation, availability under the Borrowing Base,
(b) the requested date of Borrowing (which shall be a Business Day) and (c)
whether the respective Borrowing shall consist of Base Rate Loans or LIBOR
Loans and, if LIBOR Loans, the requested Interest Period to be initially
applicable thereto. The Agent shall as promptly as practicable give each Bank
written notice (or telephonic notice promptly confirmed in writing) of each
proposed Borrowing, of such Bank's proportionate share thereof and of the other
matters covered by the Notice of Borrowing.
1.04 Disbursement of Funds. (a) No later than 1:00 P.M.
(New York time) on the date specified in each Notice of Borrowing, each Bank
will make available to the Agent in New York, N.Y. its pro rata portion of
each Borrowing requested to be made on such date in the manner provided below.
(b) Each Bank shall make available all amounts it is to fund
under any Borrowing on or after the Closing Date in immediately available funds
to the Agent to the account specified therefor by the Agent or if no account is
so specified at the Agent's Office and the Agent will make such funds available
to the Borrower by depositing to the account specified therefor by the Borrower
or if no account is so specified to its account at the Agent's Office the
aggregate of the amounts so made available in the type of funds received.
Unless the Agent shall have been notified by any Bank prior to the date of any
such Borrowing that such Bank does not intend to make available to the Agent
its portion of the Borrowing or Borrowings to be made on such date, the Agent
may assume that such Bank has made such amount available to the Agent on such
date of Borrowing, and the Agent, in reliance upon such assumption, may (in its
sole discretion and without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Agent by such Bank and the Agent has made available same
to the Borrower, the Agent shall be entitled to recover such corresponding
amount from such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall promptly notify the
Borrower, and the Borrower shall immediately pay such corresponding amount to
the
<PAGE>
-4-
Agent. The Agent shall also be entitled to recover from such Bank or the
Borrower, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Agent to the Borrower to the date such corresponding amount is recovered by the
Agent, at a rate per annum equal to (x) if paid by such Bank, the Federal Funds
Rate or (y) if paid by the Borrower (and/or one or more other Credit Parties),
the then applicable rate of interest, calculated in accordance with Section
1.08, for the respective Loans. The Agent shall also be entitled to recover
from any Bank an amount equal to any other losses incurred by the Agent as a
result of the failure of such Bank to provide such amount as provided in this
Agreement.
(c) Nothing herein shall be deemed to relieve any Bank from
its obligation to fulfill its commitment hereunder or to prejudice any rights
which the Borrower or any other Credit Party may have against any Bank as a
result of any default by such Bank hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the
principal of and interest on all the Loans made to it by each Bank shall be
evidenced by a promissory note (each, a "Revolving Note" and, collectively, the
"Revolving Notes") duly executed and delivered by the Borrower substantially in
the form of Exhibit A hereto, with blanks appropriately completed in conformity
herewith.
(b) The Revolving Note of the Borrower issued to each Bank
shall (i) be executed by the Borrower, (ii) be payable to the order of such
Bank and be dated the Closing Date, (iii) be in a stated principal amount equal
to the Revolving Loan Commitment of such Bank and be payable in the aggregate
principal amount of the Revolving Loans evidenced thereby, (iv) mature, with
respect to each Loan evidenced thereby, on the Final Revolving Loan Maturity
Date, (v) be subject to mandatory prepayment as provided in Section 3.02, (vi)
bear interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and LIBOR Loans, as the case may be, evidenced thereby
and (vii) be entitled to the benefits of this Agreement and the other
applicable Credit Documents.
(c) Each Bank will note on its internal records the amount of
each Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby; provided, however,
that failure to make any such notation shall not affect the Borrower's or
<PAGE>
-5-
any Credit Party's obligations hereunder or under the other applicable Credit
Documents in respect of such Loans.
1.06 Conversions. Subject to the provisions of Section
1.10 hereof, the Borrower shall have the option (i) to convert on any Business
Day all or any part of its outstanding Base Rate Loans equal to at least
$100,000 and integral multiples of $100,000 in excess of such amount, to LIBOR
Loans, (ii) to convert on any Business Day all or any part of its outstanding
LIBOR Loans equal to at least $100,000 and integral multiples of $100,000 in
excess of that amount, to Base Rate Loans; provided that (a) except as
otherwise provided in Section 1.10(b), LIBOR Loans may be converted into Base
Rate Loans only on the last day of an Interest Period applicable thereto, (b)
no such partial conversion of LIBOR Loans shall reduce the outstanding
principal amount of LIBOR Loans under the Loan Facility (or Portion thereof)
made pursuant to a single Borrowing to less than $100,000, (c) a Loan may only
be continued as or converted into LIBOR Loans if no Default or Event of Default
is in existence on the date of the conversion and (d) Borrowings resulting from
conversions pursuant to this Section 1.06 shall be limited in amount and number
as provided in Section 1.02; or (iii) upon the expiration of any Interest
Period applicable to LIBOR Loans, to continue all or any portion of such Loans
equal to at least $100,000 and integral multiples of $100,000 in excess of that
amount, as LIBOR Loans, and succeeding Interest Period(s) of such continued
Loans shall commence on the last day of the Interest Period of the Loans to be
continued. Each such conversion/continuation shall be effected by the Borrower
by giving the Agent at the Agent's Office prior to 10:00 A.M. (New York time)
at least three Business Days' (or one Business Day in the case of a conversion
into Base Rate Loans) prior written notice (or telephonic notice promptly
confirmed in writing) (each a "Notice of Conversion/Continuation"),
substantially in the form of Exhibit F hereto, specifying the Loans to be so
converted, the Type of Loans to be converted into, the proposed
conversion/continuation date, and, if to be converted into LIBOR Loans, the
requested Interest Period or Interest Periods to be initially applicable
thereto. The Agent shall give each Bank notice as promptly as practicable of
any such proposed conversion affecting any of its Loans. Notwithstanding the
foregoing or the provisions of Section 1.09, if a Default or Event of Default
is in existence at the time any Interest Period in respect of any Borrowing of
LIBOR Loans is to expire, such Loans may not be continued as LIBOR Loans but
instead shall be automatically converted on the last day of such Interest
Period into Base Rate Loans. If no Notice of Conversion/Continuation has been
duly delivered with respect to a LIBOR Loan on or before the third Business Day
prior to the
<PAGE>
-6-
last day of the Interest Period applicable thereto, such LIBOR Loan shall be
automatically converted into a Base Rate Loan.
Except as provided in Section 1.10 hereof, a Notice of
Conversion/Continuation for conversion to or continuation of LIBOR Loans or for
conversion to Base Rate Loans shall be irrevocable.
The giving to the Agent of a Notice of
Conversion/Continuation with respect to Loans which are to be converted to or
continued as LIBOR Loans shall be deemed to be a representation by the Borrower
on the date of such Notice of Conversion/Continuation that no Default or Event
of Default has occurred and is continuing under this Agreement.
1.07 Pro Rata Borrowings. All Borrowings under this
Agreement shall be loaned by the Banks pro rata on the basis of their Revolving
Loan Commitments. No Bank shall be responsible for any default by any other
Bank in its obligation to make Loans hereunder and each Bank shall be obligated
to make the Loans provided to be made by it hereunder, regardless of the
failure of any other Bank to fulfill its commitments hereunder.
1.08 Interest. (a) Subject to the provisions of
paragraph (c) below, the unpaid principal amount of each Base Rate Loan shall
bear interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) (or unless sooner converted into a LIBOR Loan) at a
rate per annum equal to the sum of (i) the Base Rate in effect from time to
time and (ii) the applicable Interest Margin.
(b) Subject to the provisions of paragraph (c) below, the
unpaid principal amount of each LIBOR Loan shall bear interest from the date of
the Borrowing thereof until maturity (whether by acceleration or otherwise) (or
unless sooner converted to a Base Rate Loan) at a rate per annum equal to the
Adjusted LIBOR Rate.
(c) Interest at a rate per annum equal to the rate of
interest applicable as provided in paragraphs (a) or (b) above plus 2%, shall
accrue and be payable in respect of each Loan upon (i) the unpaid principal
amount of each Loan, upon the occurrence and during the continuance of an Event
of Default described in Section 8.01 or 8.03(a), (ii) overdue principal and
(iii) to the extent permitted by law, overdue interest.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment
<PAGE>
-7-
thereof and shall be payable (i) in respect of each Base Rate Loan, quarterly
in arrears on the last Business Day of each March, June, September and
December beginning June 30, 1997; (ii) in respect of each LIBOR Loan, in
arrears on the last day of each Interest Period applicable thereto and, in the
case of an Interest Period in excess of three months, on each date occurring
at three-month intervals after the first date of such Interest Period; and
(iii) in respect of each Loan, on any prepayment (on the amount prepaid), at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(e) All computations of interest hereunder shall be made
in accordance with Section 11.07(b).
(f) The Agent, upon determining the interest rate for any
Borrowing of LIBOR Loans for any Interest Period, shall promptly notify the
Borrower and the Banks thereof. Such determination shall, absent manifest
error, be final, conclusive and binding upon all parties hereto.
1.09 Interest Periods. At the time the Borrower gives a
Notice of Borrowing or Notice of Conversion/Continuation in respect of the
making of, conversion into, or continuation of, a Borrowing of LIBOR Loans, it
shall have the right to elect, by giving the Agent written notice (or
telephonic notice promptly confirmed in writing), the Interest Period
applicable to such Borrowing, which Interest Period shall, at the option of the
Borrower, be a one, two, three or six month period.
(a) the initial Interest Period for any Borrowing of LIBOR
Loans shall commence on the date of such Borrowing (including the date
of any conversion from a Borrowing of Base Rate Loans) and each
Interest Period occurring thereafter (including continuations thereof)
in respect of such Borrowing shall commence on the date on which the
next preceding Interest Period expires;
(b) if any Interest Period relating to a Borrowing of LIBOR
Loans begins on a date for which there is no numerically corresponding
date in the calendar month in which such Interest Period ends, such
Interest Period shall end on the last Business Day of such calendar
month;
(c) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that if any Interest Period in
respect of a LIBOR Loan would otherwise expire on a day which is not a
Business Day but is a
<PAGE>
-8-
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding
Business Day; and
(d) no Interest Period shall extend beyond the Final
Revolving Loan Maturity Date.
1.10 Special Provisions Governing LIBOR Loans.
Notwithstanding other provisions of this Agreement, the following provisions
shall govern with respect to LIBOR Loans as to the matters covered:
(a) On an Interest Rate Determination Date, the Agent shall
determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties hereto) the interest rate
which shall apply to the LIBOR Loans for which an interest rate is
then being determined for the applicable Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in
writing) to the Borrower and to each Bank.
(b) In the event that (x) in the case of clause (i) below,
the Agent or (y) in the case of clause (ii) or (iii) below, any Bank,
shall have determined (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties hereto):
(i) on any Interest Rate Determination Date that,
by reason of any changes arising on or after the Closing Date
affecting the interbank eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of LIBOR;
(ii) at any time that such Bank shall incur
increased costs or reductions in the amounts received or
receivable hereunder with respect to any LIBOR Loans or its
obligation to make LIBOR Loans because of (x) any change
since the Closing Date (including changes proposed or
published prior to the Closing Date) in any applicable law,
governmental rule, regulation, guideline, request or order,
whether or not having the force of law, or in the
interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
guideline, request or order, such as, for example, but not
limited to: (A) a change in the basis of taxation of payments
to any Bank of the principal of or interest on the Notes or
any
<PAGE>
-9-
other amounts payable hereunder (except for changes in
the rate of tax on, or determined by reference to, the net
income or profits of such Bank pursuant to the laws of the
jurisdiction in which it is organized or in which its
principal office or applicable lending office is located or
any subdivision thereof or therein) or (B) a change in
official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included
in the computation of Adjusted LIBOR and/or (y) other
circumstances since the date of this Agreement affecting such
Bank or the interbank Eurodollar market or the position of
such Bank in such market; or
(iii) at any time that the making or continuance of
any LIBOR Loan has become unlawful by compliance by such Bank
in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such
governmental rule, regulation, guideline or order not having
the force of law even though the failure to comply therewith
would not be unlawful), or has become impracticable as a
result of a contingency occurring after the Closing Date
which materially and adversely affects the interbank
eurodollar market;
then, and in any such event, the Agent in the case of clause (i) above
or such Bank in the case of clause (ii) or (iii) above shall on such
date give notice (by telephone confirmed in writing) to the Borrower
of the Loan affected and, in the case of clause (ii) or (iii) to the
Agent, of such determination (which notice the Agent shall promptly
transmit to each of the other Banks). Thereafter (x) in the case of
clause (i) above, LIBOR Loans shall no longer be available until such
time as the Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Agent no longer exist,
and any Notice of Borrowing or Notice of Conversion/Continuation given
by the Borrower with respect to the borrowing of or conversion into
(including continuance of) LIBOR Loans which have not yet been
incurred shall be deemed rescinded by the Borrower, (y) in the case of
clause (ii) above, the Borrower of the Loan affected shall pay to such
Bank, upon written demand therefor, such additional amounts (in the
form of an increased rate of, or a different method of calculating,
interest or otherwise as such Bank in its reasonable discretion shall
determine) as shall be required to compensate such Bank for such
increased costs or reductions in amounts receivable hereunder (a
written notice as to the additional amounts
<PAGE>
-10-
owed to such Bank, showing the basis for the calculation thereof,
submitted to the Borrower of the Loan affected by such Bank shall,
absent manifest error, be final, conclusive and binding upon all
parties hereto) and (z) in the case of clause (iii) above, the
Borrower of the Loan affected shall take one of the actions specified
in Section 1.10(c) as promptly as possible and, in any event, within
the time period required by law.
(c) At any time that any LIBOR Loan is affected by the
circumstances described in Section 1.10(b)(ii) or (iii), the Borrower
may (and in the case of a LIBOR Loan affected pursuant to Section
1.10(b)(iii) shall) either (i) if a Notice of Borrowing or Notice of
Conversion/Continuation has been given with respect to the affected
LIBOR Loan, cancel said Notice of Borrowing or Notice of
Conversion/Continuation by giving the Agent telephonic notice
(confirmed promptly in writing) thereof on the same date that such
Borrower was notified by a Bank pursuant to Section 1.10(b)(ii) or
(iii), or (ii) if the affected LIBOR Loan is then outstanding, upon at
least three Business Days' notice to the Agent, require the affected
Bank to convert each such LIBOR Loan into a Base Rate Loan, or prepay
such LIBOR Loan; provided that if more than one Bank is affected at
any time, then all affected Banks must be treated the same pursuant to
this Section 1.10(c); and provided, further, that the Borrower shall
compensate any such affected Banks as set forth in Section 1.10(f).
(d) Anything herein to the contrary notwithstanding, if on
any Interest Rate Determination Date no LIBOR rate is available by
reason of the inability of the Agent to determine such interest rate
in accordance with the definition thereof, the Agent shall give the
Borrower and each Bank prompt notice thereof and the Loans requested
to be made as LIBOR Loans shall, subject to the applicable notice
requirements, be made as Base Rate Loans.
(e) Each Bank agrees that, as promptly as practicable after
it has actual knowledge of the occurrence of any event or the
existence of a condition that would cause it to be an affected Bank
under Section 1.10(b)(ii) or (iii), it will, to the extent not
inconsistent with such Bank's internal policies, use reasonable
efforts to make, fund or maintain the affected LIBOR Loans of such
Bank through another lending office of such Bank if as a result
thereof the additional moneys which would otherwise be required to be
paid in respect of such Loans pursuant to Section 1.10(b)(ii)
<PAGE>
-11-
would be materially reduced or the illegality or other adverse
circumstances which would otherwise require prepayment of such Loans
pursuant to Section 1.10(b)(iii) would cease to exist, and if, as
determined by such Bank, in its reasonable discretion, the making,
funding or maintaining of such Loans through such other lending
office would not otherwise materially adversely affect such Loans or
such Bank. The Borrower hereby agrees to promptly pay all reasonable
expenses incurred by any Bank in utilizing another lending office of
such Bank pursuant to this Section 1.10(e).
(f) The Borrower shall compensate each Bank, upon written
request by that Bank, for all reasonable losses, expenses and
liabilities (including, without limitation, such factors as any
interest paid by that Bank to lenders of funds borrowed by it to make
or carry its LIBOR Loans and any loss sustained by that Bank in
connection with re-employment of such funds (based upon the difference
between the amount earned in connection with the re-employment of such
funds and the amount payable by the Borrower if such funds had been
borrowed or remained outstanding)) which that Bank may sustain with
respect to the Borrower's LIBOR Loans: (i) if for any reason (other
than a default or error by that Bank) a Borrowing of any LIBOR Loan
does not occur on a date specified therefor in a Notice of Borrowing,
a Notice of Conversion/Continuation or a telephonic request for
borrowing, conversion or continuation, or a successive Interest Period
does not commence after notice therefor is given pursuant to Section
1.6 hereof (whether or not withdrawn by the Borrower or deemed
withdrawn pursuant to Section 1.10(b)(i)); or (ii) if any prepayment
or repayment (as required by Section 3.01 or 3.02 hereof, by
acceleration or otherwise) or conversion of any of such Bank's LIBOR
Loans occurs on a date which is not the last day of the Interest
Period applicable to that Loan; or (iii) if any prepayment or
repayment of any such Bank's LIBOR Loans is not made on any date
specified in a notice of prepayment or repayment given by the
Borrower; or (iv) as a consequence of (x) any other failure by the
Borrower to repay such Bank's LIBOR Loans when required by the terms
of this Agreement or (y) any election made pursuant to Section
1.10(b)(ii). Compensation owing under this Section 1.10(f) shall be
equal to the amount of interest which would have accrued on the amount
of principal prepaid or repaid or converted or not borrowed for the
period from the date of such prepayment or repayment or conversion or
failure to borrow or prepay or repay to the last day of the then
current Interest Period for the relevant LIBOR Loan (or, in the case
of a failure to
<PAGE>
-12-
borrow, the Interest Period for such LIBOR Loan which would have
commenced on the date of such failure to borrow) at the
applicable rate of interest for such LIBOR Loan provided for herein
minus any amount such Bank, in good faith and in its sole discretion,
determines is realizable upon the re-employment of such funds. A
certificate as to the amount of such losses, expenses and liabilities
submitted to the Borrower by such Bank shall, absent manifest error,
be final, conclusive and binding for all purposes.
(g) Any Bank may make, carry or transfer LIBOR Loans at, to
or for the account of any of its branch offices or the office of an
Affiliate of that Bank; provided that any increased costs associated
therewith shall be borne by such Bank.
(h) During the continuance of a Default or Event of Default,
the Borrower may not elect to have a Loan made or maintained as, or
converted into, a LIBOR Loan after the expiration of any Interest
Period then in effect for that Loan.
1.11 Capital Requirements. If any Bank shall have
determined that the adoption or effectiveness after the Closing Date of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Bank or such
Bank's parent with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency (including in each case any such change proposed or published
prior to the date hereof), has or would have the effect of reducing the rate of
return on such Bank's or such Bank's parent's capital or assets as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank or such Bank's parent could have achieved but for such adoption,
effectiveness or change or as a consequence of an increase in the amount of
capital required to be maintained by such Bank (including in each case, without
limitation, with respect to any Bank's Commitment or any Loan), then from time
to time, within 15 days after demand by such Bank (with a copy to the Agent),
the Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank or such Bank's parent, as the case may be, for such
reduction. Each Bank, upon determining in good faith that any additional
amounts will be payable pursuant to this Section 1.11, will give prompt written
notice thereof to the Borrower, which notice shall set
<PAGE>
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forth in reasonable detail the basis of the calculation of such additional
amounts, although any delay in giving any notice shall not release or diminish
any of the Borrower's obligations to pay additional amounts pursuant to this
Section 1.11.
1.12 Total Loan Commitments; Limitations on Outstanding
Loan Amounts. The amount of the Total Revolving Loan Commitment is $15,000,000,
including up to $5,000,000 of Letters of Credit. Anything contained in this
Agreement to the contrary notwithstanding, (a) in no event shall the sum of the
aggregate principal amount of all Revolving Loans and Letter of Credit
Participations of any Bank at any time exceed such Bank's pro rata share of the
Total Revolving Loan Commitment, (b) in no event shall the sum of the aggregate
principal amount of all Revolving Loans and Letter of Credit Participations
from all Banks at any time exceed the Total Revolving Loan Commitment and (c)
in no event shall the Total Utilization of Revolving Loan Commitment plus
outstanding Letter of Credit Participations exceed the lesser of the Total
Revolving Loan Commitment or the Borrowing Base.
1.13 Letters of Credit.
(A) Letters of Credit. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of the
Borrower set forth herein and in the other Documents, in addition to requesting
that the Banks make Revolving Loans pursuant to Section 1.03, the Borrower may
request, in accordance with the provisions of this Section 1.13, that one or
more Issuing Banks issue Letters of Credit for the account of the Borrower;
provided that (i) the Borrower shall not request that an Issuing Bank issue any
Letter of Credit and an Issuing Bank shall not issue any Letter of Credit, if,
after giving effect to such issuance the sum of (a) the then outstanding
Letters of Credit Usage, after giving effect to the issuance of all Letters of
Credit subject to outstanding requests for issuance of a Letter of Credit, plus
(b) the aggregate principal amount of Revolving Loans then outstanding, after
giving effect to the making of all Revolving Loans then requested by all
outstanding but unfunded Notices of Borrowing, would exceed the lesser of the
Borrower's Borrowing Base as shown in the Borrowing Base Certificate that was
last required to be delivered pursuant to Section 6.01 or the Total Revolving
Loan Commitment then in effect, (ii) in no event shall any Issuing Bank issue
(w) any Letter of Credit having an expiration date later than thirty (30)
Business Days prior to the Final Revolving Loan Maturity Date after giving
effect to any possible renewal of such Letter of Credit pursuant to the proviso
of the following clause (ii)(x),
<PAGE>
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(x) subject to the foregoing clause (ii)(w), any Letter of Credit
having an expiration date more than one year after its date of issuance;
provided that, subject to the foregoing clause (ii)(w), this clause (x) shall
not prevent any Issuing Bank from issuing a Letter of Credit containing a
provision to the effect that such Letter of Credit will automatically be
renewed annually for a period not to exceed one year, so long as such renewable
Letter of Credit provides that it shall not at any time be renewed for an
additional year if (I) the Borrower notifies the Issuing Bank in writing one
Business Day prior to the applicable renewal date that the Borrower elects to
allow the Letter of Credit to expire without being renewed, or (II) the Issuing
Bank or the Required Banks notify the Borrower in writing, prior to the date
set forth in such Letter of Credit as the date by which the beneficiary thereof
is to be notified whether such Letter of Credit is to be renewed, that such
Letter of Credit shall not be so renewed, in which case such Letter of Credit
shall not be so renewed, (y) any Letter of Credit, the initial stated amount of
which is less than $100,000, or (z) any Letter of Credit (I) as to which a
drawing can be made in a location other than in the United States of America,
(II) which is governed by laws other than the laws of the State of New York,
without regard to the principles of conflicts of laws or (III) as to which the
beneficiary is not required, by acceptance of the Letter of Credit, to be
subject to the exclusive jurisdiction of any competent state or federal court
in the State of New York with regard to such Letter of Credit and (iii) the
Borrower shall not request that any Issuing Bank issue and no Issuing Bank
shall issue any Letter of Credit if, after giving effect to such issuance and
the issuance of all other requested Letters of Credit, the then outstanding
Letters of Credit Usage in respect of all Letters of Credit would exceed
$5,000,000.
The issuance of any Letter of Credit in accordance with the
provisions of this Section 1.13 shall be given effect in the calculation of the
aggregate principal amount of Revolving Loans outstanding and the Letters of
Credit Usage and shall require the satisfaction of each condition set forth in
Sections 4.02 and 4.03; provided that the Borrower shall pay interest, charges
and commissions on such issued Letters of Credit only pursuant to this Section
1.13.
Immediately upon the issuance of each Letter of Credit, each
Bank other than the Issuing Bank or Banks shall be deemed to, and hereby agrees
to, have irrevocably purchased from the Issuing Bank a participation (such
participation of each Bank in each Letter of Credit being hereinafter referred
to as its "Letter of Credit Participation") in such Letter of Credit and
<PAGE>
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each drawing thereunder in an amount equal to such Bank's pro rata share
(determined on the basis of such Bank's Revolving Loan Commitment) of the
maximum amount which is or at any time may become available to be drawn
thereunder.
Each Letter of Credit may provide that the Issuing Bank may
(but shall not be required to) pay the beneficiary thereof upon the occurrence
of an Event of Default and the acceleration of the maturity of the Loans or, if
payment is not then due to the beneficiary, provide for the deposit of funds in
an account to secure payment to the beneficiary and that any funds so deposited
shall be paid to the beneficiary of the Letter of Credit if conditions to such
payment are satisfied or returned to the Issuing Bank for distribution to the
Banks (or, if all Obligations shall have been indefeasibly paid in full, to the
Borrower) if no payment to the beneficiary has been made and the final date
available for drawings under the Letter of Credit has passed. Each payment or
deposit of funds by an Issuing Bank as provided in this paragraph shall be
treated for all purposes of this Agreement as a drawing duly honored by such
Issuing Bank under the related Letter of Credit.
(B) Request for Issuance. Whenever the Borrower desires the
issuance of a Letter of Credit, it shall deliver to the Agent a request for
issuance of a Letter of Credit (a "Notice of Issuance"), substantially in the
form of Exhibit G hereto, no later than 10:00 A.M. (New York time) at least
three Business Days, or such shorter period as may be agreed to by any Issuing
Bank in any particular instance, in advance of the proposed date of issuance.
The Notice of Issuance with respect to any Letter of Credit shall specify (i)
the proposed date of issuance (which shall be a Business Day under the laws of
the jurisdiction of the Issuing Bank) of such Letter of Credit, (ii) the face
amount of such Letter of Credit, (iii) the expiration date of such Letter of
Credit and (iv) the name and address of the beneficiary of such Letter of
Credit. As soon as practicable after delivery of such request for issuance of a
Letter of Credit, the Issuing Bank for such Letter of Credit shall be
determined as provided in Section 1.13(C). At least two Business Days prior to
the date of issuance, or such shorter period as may be agreed to by any Issuing
Bank in any particular instance, the Borrower shall specify a precise
description of the documents and the verbatim text of any certificate to be
presented by the beneficiary of such Letter of Credit which, if presented by
such beneficiary prior to the expiration date of the Letter of Credit, would
require the Issuing Bank to make payment under the Letter of Credit; provided
that the Issuing Bank, in its sole judgment, may require changes in any such
documents and certificates; and provided, further, that
<PAGE>
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no Letter of Credit shall require payment against a conforming draft to be
made thereunder earlier than 1:00 P.M. in the time zone of the Issuing
Bank on the Business Day (which shall be a Business Day under the laws of the
jurisdiction of the Issuing Bank) next succeeding the Business Day (which shall
be a Business Day under the laws of the jurisdiction of the Issuing Bank) that
such draft is presented. In determining whether to pay under any Letter of
Credit, the Issuing Bank shall be responsible only to determine that the
documents and certificates required to be delivered under that Letter of Credit
have been delivered and that they comply on their face with the requirements of
that Letter of Credit. Promptly after receipt of a Notice of Issuance and the
determination of the Issuing Bank thereof, the Agent shall notify each Bank of
the proposed issuance, the identity of the Issuing Bank and the amount of each
other Bank's respective participation therein, determined in accordance with
Section 1.13(A).
(C) Determination of Issuing Bank.
(1) Upon receipt by the Agent of a Notice of Issuance
pursuant to Section 1.13(B), in the event the Agent elects to issue such Letter
of Credit, the Agent shall so notify the Borrower, and the Agent shall be the
Issuing Bank with respect thereto. In the event that the Agent, in its sole
discretion, elects not to issue such Letter of Credit, the Agent shall promptly
so notify the Borrower, and the Borrower may request any other Bank to issue
such Letter of Credit. Each such Bank so requested to issue such Letter of
Credit shall promptly notify the Borrower and the Agent whether or not, in its
sole discretion, it has elected to issue such Letter of Credit, and any such
Bank that so elects to issue such Letter of Credit shall be the Issuing Bank
with respect thereto, it being expressly understood that no Bank will have any
obligation to issue any Letter of Credit. No Issuing Bank shall issue any
Letter of Credit denominated in a currency other than Dollars.
(2) Each Issuing Bank that elects to issue a Letter of Credit
shall promptly give written notice to the Agent and each other Bank of the
information required under Section 1.13(B)(i)-(iv) relating to the Letter of
Credit.
(D) Payment of Amounts Drawn Under Letters of Credit. In the
event of any request for drawing under any Letter of Credit by the beneficiary
thereof, the Issuing Bank shall notify the Borrower and the Agent on or before
the date on which such Issuing Bank intends to honor such drawing, and the
Borrower shall reimburse such Issuing Bank on the day on which such drawing is
honored in an amount in same day funds equal to the amount
<PAGE>
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of such drawing; provided that, anything contained in this Agreement
to the contrary notwithstanding, (i) unless the Borrower shall have notified
the Agent and such Issuing Bank prior to 10:00 A.M. (New York time) on the
Business Day immediately prior to the date of such drawing that the Borrower
intends to reimburse such Issuing Bank for the amount of such drawing with
funds other than the proceeds of Revolving Loans, the Borrower shall be deemed
to have timely given a Notice of Borrowing to the Agent requesting the Banks to
make Revolving Loans that are Base Rate Loans on the date on which such drawing
is honored in an amount equal to the amount of such drawing, and (ii) subject
to satisfaction or waiver of the conditions specified in Section 4.02, the
Banks shall, on the date of such drawing, make Revolving Loans that are Base
Rate Loans in the amount of such drawing, the proceeds of which shall be
applied directly by the Agent to reimburse such Issuing Bank for the amount of
such drawing; and further provided that if, for any reason, proceeds of
Revolving Loans are not received by such Issuing Bank on such date in an amount
equal to the amount of such drawing, the Borrower shall reimburse such Issuing
Bank, on the Business Day (which shall be a Business Day under the laws of the
jurisdiction of such Issuing Bank) immediately following the date of such
drawing, in an amount in same day funds equal to the excess of the amount of
such drawing over the amount of such Revolving Loans, if any, that are so
received, plus accrued interest on such amount at the rate set forth in Section
1.13(F)(1)(i).
(E) Payment by Banks. In the event that the Borrower shall
fail to reimburse an Issuing Bank as provided in Section 1.13(D) in an amount
equal to the amount of any drawing honored by such Issuing Bank under a Letter
of Credit issued by it, such Issuing Bank shall promptly notify each Bank of
the unreimbursed amount of such drawing and of such Bank's respective
participation therein. Each Bank shall make available to such Issuing Bank an
amount equal to its respective participation in same day funds, at the office
of such Issuing Bank specified in such notice, not later than 1:00 P.M. (New
York time) on the Business Day (which shall be a Business Day under the laws of
the jurisdiction of such Issuing Bank) after the date notified by such Issuing
Bank. In the event that any Bank fails to make available to such Issuing Bank
the amount of such Bank's participation in such Letter of Credit as provided in
this Section 1.13(E), such Issuing Bank shall be entitled to recover such
amount on demand from such Bank together with interest at the customary rate
set by the Agent for the correction of errors among banks for three Business
Days and thereafter at the Base Rate. Each Issuing Bank shall distribute to
each other Bank which has paid all amounts payable by it under this Section
1.13(E) with respect to any Let-
<PAGE>
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ter of Credit issued by such Issuing Bank such other Bank's pro rata share of
all payments received by such Issuing Bank from the Borrower in reimbursement
of drawings honored by such Issuing Bank under such Letter of Credit when such
payments are received. Nothing in this Section 1.13(E) shall be deemed to
relieve any Bank from its obligation to pay all amounts payable by it under
this Section 1.13(E) with respect to any Letter of Credit issued by an Issuing
Bank or to prejudice any rights that the Borrower or any other Bank may have
against a Bank as a result of any default by such Bank hereunder and no Bank
shall be responsible for the failure of any other Bank to pay its pro rata
share payable under this Section 1.13(E).
(F) Compensation.
(1) The Borrower agrees to pay the following amount
with respect to all Letters of Credit:
(i) with respect to drawings made under any Letter of
Credit, interest, payable on demand, on the amount paid by such
Issuing Bank in respect of each such drawing from and including the
date of the drawing through the date such amount is reimbursed by the
Borrower (including any such reimbursement out of the proceeds of
Revolving Loans pursuant to Section 1.13(D)) at a rate which is at all
times equal to 2% per annum in excess of the rate of interest
otherwise payable under this Agreement for Base Rate Loans during such
period; provided that amounts reimbursed after 12:00 noon (New York
time) on any date shall be deemed to be reimbursed on the next
succeeding Business Day; and
(ii) with respect to the issuance, amendment or transfer of
each Letter of Credit and each drawing made thereunder, documentary
and processing charges in accordance with such Issuing Bank's standard
schedule for such charges in effect at the time of such issuance,
amendment, transfer or drawing, as the case may be.
(2) The Borrower agrees to pay to the Agent for distribution
to each Bank in respect of all Letters of Credit outstanding such Bank's pro
rata share of a commission equal to 2% per annum of the maximum amount
available from time to time to be drawn under such outstanding Letters of
Credit, payable in arrears on and through the last Business Day of each March,
June, September and December and calculated on the basis of a 365-day year and
the actual number of days elapsed. Upon the happening and during the
continuance of an Event of Default described in
<PAGE>
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Section 8.01 or 8.03(a), the commission referred to in the preceding sentence
shall be 4% per annum.
(3) The Borrower agrees to pay to each Issuing Bank in
respect of all Letters of Credit outstanding issued by each such Issuing Bank a
commission equal to .25% per annum of the maximum amount available from time to
time to be drawn under each outstanding Letter of Credit issued by such Issuing
Bank, payable in arrears on and through the last Business Day of each March,
June, September and December and calculated on the basis of a 365-day year and
the actual number of days elapsed.
Amounts payable under clauses (1)(i) and (2) of this Section
1.13(F) shall be paid to the Agent on behalf of the Banks. The Agent shall
distribute to each Bank its pro rata share of such amount. Amounts payable
under clauses (1)(ii) and (3) of this Section 1.13(F) shall be paid directly to
the Issuing Bank.
(G) Obligations Absolute. The obligation of the Borrower to
reimburse each Issuing Bank for drawings made under the Letters of Credit
issued by it and the obligations of the Banks under Section 1.13(E) shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including, without limitation,
the following circumstances:
(1) any lack of validity or enforceability of any
Letter of Credit;
(2) the existence of any claim, setoff, defense or other
right that the Borrower or any Affiliate of the Borrower or any other
Person may have at any time against a beneficiary or any transferee of
any Letter of Credit (or any persons or entities for whom any such
beneficiary or transferee may be acting), such Issuing Bank, any Bank
or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction;
(3) any draft, demand, certificate or any other document
presented under any 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;
(4) payment by such Issuing Bank under any Letter of Credit
against presentation of a demand, draft or certifi-
<PAGE>
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cate or other document that does not comply with the terms of such
Letter of Credit unless such Issuing Bank shall have acted with
willful misconduct or gross negligence in issuing such payment;
(5) any other circumstance or happening whatsoever that is
similar to any of the foregoing; or
(6) the fact that a Default or Event of Default shall have
occurred and be continuing.
(H) Additional Payments. If by reason of (a) any change after
the Closing Date in applicable law, regulation, rule, decree or regulatory
requirement or any change in the interpretation or application by any judicial
or regulatory authority of any law, regulation, rule, decree or regulatory
requirement or (b) compliance by any Issuing Bank or any Bank with any
direction, request or requirement (whether or not having the force of law) of
any governmental or monetary authority including, without limitation,
Regulation D:
(i) such Issuing Bank or any Bank shall be subject to any
Non-Excluded Tax or other levy or charge of any nature or to any
variation thereof or to any penalty with respect to the maintenance or
fulfillment of its obligations under this Section 1.13, whether
directly or by such being imposed on or suffered by such Issuing Bank
or any Bank;
(ii) any reserve, deposit or similar requirement is or
shall be applicable, imposed or modified in respect of any Letter of
Credit issued by such Issuing Bank or participations therein purchased
by any Bank; or
(iii) there shall be imposed on such Issuing Bank or any
Bank any other condition regarding this Section 1.13, any Letter of
Credit or any participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to such Issuing Bank or any Bank of issuing, making or maintaining any Letter
of Credit or of purchasing or maintaining any participation therein, or to
reduce the amount receivable in respect thereof by such Issuing Bank or any
Bank, then and in any such case such Issuing Bank or such Bank shall, at any
time within a reasonable period after the additional cost is incurred or the
amount received is reduced, notify the Borrower and the Borrower shall pay on
demand such amounts as such Issuing Bank or such Bank may specify to be
necessary to compensate such Issuing Bank or such Bank for such additional cost
or
<PAGE>
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reduced receipt, together with interest on such amount from the date
demanded until payment in full thereof at a rate per annum equal at all times
to the rate applicable to Base Rate Loans then in effect; provided that the
failure of any Bank to timely give such notice shall not affect the obligation
of the Borrower to pay such amounts. A certificate in reasonable detail as to
the amount of such increased cost or reduced receipt, submitted to the Borrower
and the Agent by that Issuing Bank or any Bank, as the case may be, shall,
except for manifest error, be final, conclusive and binding for all purposes.
(I) Indemnification; Nature of Issuing Bank's Duties. In
addition to amounts payable as elsewhere provided in this Section 1.13, without
duplication, the Borrower hereby agrees to protect, indemnify, pay and save
each Issuing Bank harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees and allocated costs of internal counsel) which such Issuing
Bank may incur or be subject to as a consequence, direct or indirect, of (i)
the issuance of the Letters of Credit or (ii) the failure of such Issuing Bank
to honor a drawing under any Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto government or Governmental Authority (all such acts or omissions herein
called "Government Acts").
As between the Borrower and each Issuing Bank, the Borrower
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit issued by such Issuing Bank by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing, such
Issuing Bank shall not be responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effects of any document submitted by any party
in connection with the application for and issuance of such Letters of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, that may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
any such Letter of Credit to comply fully with conditions required in order to
draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they are in cipher; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required
<PAGE>
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in order to make a drawing under any such Letter of Credit or of the
proceeds thereof; (vii) for the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing under such Letter of Credit;
and (viii) for any consequences arising from causes beyond the control of such
Issuing Bank, including, without limitation, any Government Acts. None of the
above shall affect, impair, or prevent the vesting of any of such Issuing
Bank's rights or powers hereunder.
In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by any
Issuing Bank in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith, shall not put such
Issuing Bank under any resulting liability to the Borrower.
Notwithstanding anything to the contrary contained in this
Section 1.13(I), the Borrower shall have no obligation to indemnify any Issuing
Bank in respect of any liability incurred by such Issuing Bank arising solely
out of the gross negligence or willful misconduct of such Issuing Bank or out
of the wrongful dishonor by such Issuing Bank of a proper demand for payment
under the Letters of Credit issued by it.
(J) Computation of Interest. Interest payable pursuant to
this Section 1.13 shall be computed on the basis of a 365-day year and the
actual number of days elapsed in the period during which it accrues.
1.14 Restatement Effective Date; Effect of Restatement.
(a) This Agreement shall become effective as provided in
Section 11.10.
(b) Upon the effectiveness of this Agreement in accordance
with the terms hereof:
(i) the terms and conditions of the Existing Credit
Agreement shall be restated in their entirety, but only with respect
to the rights, duties and obligations among the Agent, the Banks and
the Borrower accruing from and after the Closing Date;
(ii) this Agreement shall not in any way release or
impair the rights, duties, obligations or Liens with respect to the
Collateral created pursuant to the Existing Credit Agreement or any
other Credit Document or affect the
<PAGE>
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relative priorities thereof, in each case to the extent in force and
effect hereunder and thereunder as of the Amendment Date and except
as modified hereby or thereby or by documents, instruments and
agreements executed and delivered in connection herewith or
therewith, and all of such rights, duties, obligations and Liens
with respect to the Collateral are ratified and affirmed by the
parties hereto;
(iii) notwithstanding any other provisions of this
Agreement, all indemnification obligations of the Borrower under the
Existing Credit Agreement and any other Credit Document shall survive
the execution and delivery of this Agreement and shall continue in
full force and effect for the benefit of the Agent and the Banks;
(iv) the obligations incurred under the Existing
Credit Agreement shall, to the extent outstanding on the Closing Date,
continue to be outstanding under this Agreement and shall not be
deemed to be paid, released, discharged or otherwise satisfied by the
execution of this Agreement, and this Agreement shall not be deemed to
constitute a refinancing, substitution or novation of such
obligations;
(v) the execution, delivery and effectiveness of
this Agreement shall not operate as a waiver of any right, power or
remedy of any of the Banks or the Agent under the Existing Credit
Agreement, nor constitute a waiver of any covenant, agreement or
obligation of the Borrower under the Existing Credit Agreement, except
to the extent that any such covenant, agreement or obligation is no
longer set forth in this Agreement or is modified hereby;
(vi) any and all references in the Credit Documents
to the Existing Credit Agreement shall, without further action of the
parties, be deemed a reference to the Existing Credit Agreement as
restated by this Agreement, and as this Agreement shall be further
amended or amended and restated from time to time hereafter.
SECTION 2. Commitments.
2.01 Voluntary Reduction of Commitments. Upon at least
one Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) to the Agent at the Agent's Office (which notice the
Agent shall promptly transmit to each of the Banks), the Borrower shall have
the right, without premium or
<PAGE>
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penalty, to terminate the unutilized portion of the Total Revolving Loan
Commitment, in part or in whole; provided that (x) any such termination shall
apply to proportionately and permanently reduce the Revolving Loan Commitment
of each of the Banks and (y) any partial reduction pursuant to this Section
2.01 shall be in the amount of at least $250,000 and integral multiples of
$100,000 in excess of that amount; provided, further, that the Total Revolving
Loan Commitment shall not be reduced to an amount less than the aggregate
Revolving Loans and Letters of Credit Usage then outstanding.
2.02 Mandatory Adjustments of Commitments, etc.
The Total Revolving Loan Commitment shall terminate on the Final Revolving
Loan Maturity Date.
2.03 Commitment Commission. The Borrower agrees to pay
the Agent a commitment commission ("Commitment Commission") for the account of
each Bank for the period from and including the Closing Date to but not
including the date the Total Revolving Loan Commitments have been terminated,
computed at a rate equal to 3/8% per annum on the daily average Unutilized
Commitment of such Bank. Accrued Commitment Commissions shall be due and
payable in arrears on the last Business Day of each March, June, September and
December, commencing June 30, 1997, and on the Maturity Date based on the
actual number of days elapsed over a year of 360 days.
SECTION 3. Payments.
3.01 Voluntary Prepayments. The Borrower shall have the right
to prepay Revolving Loans in whole or in part from time to time, without
premium or penalty, on the following terms and conditions: (i) The Borrower
shall give the Agent at the Agent's Office written notice (or telephonic notice
promptly confirmed in writing) of its intent to prepay the Loans, the amount of
such prepayment and, in the case of LIBOR Loans, the specific Borrowing or
Borrowings pursuant to which made, which notice shall be given by the Borrower
at least one Business Day prior to the date of such prepayment and which notice
shall promptly be transmitted by the Agent to each of the Banks; (ii) each
partial prepayment of any Borrowing shall be in an aggregate principal amount
of at least $250,000 and integral multiples of $100,000 in excess of such
amount; provided that no partial prepayment of LIBOR Loans made pursuant to a
single Borrowing under the Loan Facility (or Portion thereof) shall reduce the
outstanding Loans made pursuant to such Borrowing to an amount less than
$100,000; provided, further, that only one Revolving Loan Borrowing may be
<PAGE>
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voluntarily prepaid on any one day; and (iii) LIBOR Loans may only be prepaid
pursuant to this Section 3.01 on the last day of an Interest Period applicable
thereto.
3.02 Mandatory Prepayments.
(A) Requirements:
(a) The Borrower shall prepay the outstanding principal
amount of the Revolving Loans on any date on which the aggregate
outstanding principal amount of such Loans (after giving effect to any
other repayments or prepayments on such day and together with the
outstanding principal amount of Letters of Credit Usage) exceeds the
Total Revolving Loan Commitments in the amount of such excess.
(b) If the aggregate principal amount of outstanding
Revolving Loans and Letters of Credit Usage exceeds the Borrowing Base
as set forth in the Borrower's most recent Borrowing Base Certificate
required to be delivered pursuant to Section 6.01 of this Agreement
(such amount is hereinafter referred to as the "Excess"), then the
Borrower shall prepay its Revolving Loans in a principal amount equal
to such Excess no later than two (2) Business Days after Borrower has
delivered, or was required to deliver, such Borrowing Base Certificate
to the Agent and the Banks; provided that if there are no Revolving
Loans then outstanding, the Borrower shall cash collateralize Letters
of Credit, if any, on terms satisfactory to the Agent, in a principal
amount equal to such Excess.
(c) Within one Business Day of the date of funds being made
available to the Borrower and/or any of the Borrower's Subsidiaries,
as the case may be, of Net Cash Proceeds, an amount equal to 100% of
such Net Cash Proceeds or Net Financing Proceeds in excess of $250,000
shall be applied as provided in Section 3.02(B)(a); provided that Net
Cash Proceeds with respect to sales of assets that comply with clauses
(iii) and (iv) of Section 7.15 shall not be required to be so applied.
(d) Within one Business Day of the date of the receipt
thereof by the Borrower and/or any of its Subsidiaries, an amount
equal to 100% of the proceeds in excess of $250,000 received by the
Borrower (including capital contributions to the Borrower) or such
Subsidiary (net of underwriting discounts and commissions and other
costs and expenses directly associated therewith) from the sale after
the Closing Date
<PAGE>
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of equity (other than equity securities sold or issued to the
Borrower's management employees in connection with a
management incentive program or as provided for in the Indenture in
connection with an optional redemption of Senior Notes) shall be
applied as provided in Section 3.02(B)(a).
(e) On the date of funds being made available to the Borrower
and/or any of the Borrower's Subsidiaries, an amount equal to 100% of
(i) any surplus assets of any Pension Plan returned to the Borrower or
any of the Borrower's Subsidiaries and (ii) any tax refunds made to
the Borrower shall be applied as provided in Section 3.02(B)(a);
provided that no such surplus assets or tax refunds shall be required
to be so applied in any given fiscal year of the Borrower until the
aggregate of all such surplus assets or tax refunds, as the case may
be, in such year equals or exceeds $250,000.
(f) At the Agent's discretion, on the date of receipt thereof
by the Borrower, an amount equal to 100% of any insurance proceeds
received less any portion of such proceeds not in excess of $250,000
that is promptly applied to repair or replace the damaged property
which is the subject of such proceeds shall be applied as provided in
Section 3.02(B)(a).
(B) Application:
(a) Prepayments to be applied pursuant to this Section
3.02(B)(a) shall be applied first to prepay Revolving Loans and second
to cash collateralize Letters of Credit, if any, on terms satisfactory
to the Agent.
(b) With respect to each prepayment of Loans required by
Section 3.02(A), the Borrower shall give the Agent two Business Days
notice and may designate the Types of Loans and the specific Borrowing
or Borrowings which are to be prepaid; provided that (i)(x) LIBOR
Loans may be designated for prepayment pursuant to this Section 3.02
only on the last day of an Interest Period applicable thereto unless
all LIBOR Loans with Interest Periods ending on such date of required
prepayment and all Base Rate Loans have been or are concurrently being
paid in full and (y) if any prepayment of LIBOR Loans made pursuant to
a single Borrowing shall reduce the outstanding Loans made pursuant to
such Borrowing to an amount less than $100,000, such Borrowing shall
immediately be converted into Base Rate Loans; and (ii) each
prepayment of any Loans made pursuant to a single Borrowing shall be
applied pro rata among such Loans. In the absence of a des-
<PAGE>
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ignation by the Borrower, the Agent shall, subject to the above, make
such designation in its sole discretion. All prepayments shall include
payment of accrued interest on the principal amount so prepaid, shall
be applied to the payment of interest before application to principal
and shall include amounts payable, if any, under Section 1.10(f).
3.03 Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments under this Agreement shall be made
to the Agent, for the ratable account of the Banks entitled thereto, not later
than 1:00 P.M. (New York time) on the date when due and shall be made in
immediately available funds in lawful money of the United States of America
to the account specified therefor by the Agent or if no account has been so
specified at the Agent's Office, it being understood that written notice by the
Borrower to the Agent to make a payment from the funds in the Borrower's
account at the Agent's Office shall constitute the making of such payment to
the extent of such funds held in such account. The Agent will thereafter cause
to be distributed on the same day (if payment is actually received by the Agent
in New York prior to 1:00 P.M. (New York time) on such day) funds relating to
the payment of principal or interest or fees ratably to the Banks entitled to
receive any such payment in accordance with the terms of this Agreement. If and
to the extent that any such distribution shall not be so made by the Agent in
full on the same day (if payment is actually received by the Agent prior to
1:00 P.M. (New York time) on such day), the Agent shall pay to each Bank its
ratable amount thereof and each such Bank shall be entitled to receive from the
Agent, upon demand, interest on such amount at the Federal Funds Rate for each
day from the date such amount is paid to the Agent until the date the Agent
pays such amount to such Bank.
(b) Any payments under this Agreement which are made by the
Borrower later than 1:00 P.M. (New York time) shall be deemed to have been made
on the next succeeding Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension at
the applicable rate in effect immediately prior to such extension, except that
with respect to LIBOR Loans, if such next succeeding applicable Business Day is
not in the same month as the date on which such payment would otherwise be due
hereunder or under any Note, the due date with respect thereto shall be the
next preceding applicable Business Day.
<PAGE>
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3.04 Net Payments. (a) All payments by the Borrower under
this Agreement or under any Credit Document shall be made without set-off
or counterclaim and in such amounts as may be necessary in order that all such
payments (after deduction or withholding for or on account of any present or
future taxes, levies, imposts, duties or other charges of whatsoever nature
imposed by any government or any political subdivision or taxing authority
thereof, other than any tax on the net income of a Bank pursuant to the income
tax laws of the United States or jurisdictions where such Bank's principal or
lending office is located (collectively, such non-excluded taxes are
hereinafter referred to as "Non-Excluded Taxes")) shall not be less than the
amounts otherwise specified to be paid under this Agreement and/or any Credit
Document. If the Borrower is required by law to make any deduction or
withholding on account of Non-Excluded Taxes from any payment due hereunder or
under the Notes, then (i) the Borrower shall timely remit such Taxes to the
Governmental Authority imposing the same and (ii) the amount payable hereunder
or under the Notes will be increased to such amount which, after deduction from
such increased amount of all amounts required to be deducted or withheld
therefrom, will not be less than the amount otherwise due and payable. A
certificate as to the calculation of any additional amounts payable to a Bank
under this Section 3.04 submitted to the Borrower by such Bank shall, absent
manifest error, be final, conclusive and binding for all purposes upon all
parties hereto. With respect to each deduction or withholding for or on account
of any Non-Excluded Taxes, the Borrower shall promptly furnish to each Bank
such certificates, receipts and other documents as may be required (in the
judgment of such Bank) to establish any tax credit to which such Bank may be
entitled.
(b) Without prejudice to the provisions of paragraph (a) of
this Section 3.04, if any Bank, or the Agent on its behalf, is required to make
any payment on account of Non-Excluded Taxes on or in relation to any sum
received or receivable under this Agreement and/or the other Credit Documents
by such Bank, or the Agent on its behalf, or any liability for Non-Excluded
Taxes in respect of any such payment is imposed, levied or assessed against any
Bank, or the Agent on its behalf, the Borrower will promptly indemnify such
Person against such Non-Excluded Tax payment or liability, together with any
interest, penalties and expenses (including counsel fees and expenses) payable
or incurred in connection therewith. The Borrower shall also reimburse each
Bank, upon the written request of such Bank, for taxes imposed on or measured
by the net income of such Bank pursuant to the laws of the jurisdiction in
which the principal office or lending office of such Bank is located or under
the laws of any political subdivision or taxing authority of any such
jurisdiction as such
<PAGE>
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Bank shall determine are payable by such Bank in respect of Non-Excluded
Taxes paid to or on behalf of such Bank pursuant to this Section 3.04. For
purposes of this Section, the term "Non-Excluded Taxes" includes interest,
penalties and expenses payable or incurred in connection therewith. A
certificate by such Bank, or the Agent on its behalf, as to the calculation
and amount of such payments shall, absent manifest error, be final,
conclusive and binding upon all parties hereto for all purposes. With respect
to each deduction or withholding for or on account of any Non-Excluded Taxes,
the Borrower shall promptly furnish to each Bank such certificates, receipts
and other documents as may be required (in the judgment of such Bank) to
establish any tax credit to which such Bank may be entitled.
(c) Each Bank organized under the laws of a jurisdiction
outside the United States (hereinafter, a "Non-U.S. Bank") shall, on or before
the date the first payment is due from Borrower on any Borrowings made
hereunder and from time to time thereafter if requested in writing by the
Borrower (but only so long as such Bank remains lawfully able to do so),
provide the Borrower with IRS Form W-8, Form 1001, or Form 4224, as
appropriate, or any successor form prescribed by the IRS, indicating that such
Non-U.S. Bank is entitled to complete or partial exemption from withholding on
all payments to be received by it under this Agreement. If the form provided by
such Bank indicates that such Bank is entitled to benefits under an income tax
treaty to which the United States is a party and which reduces the rate of the
withholding tax on payments made hereunder below the U.S. statutory rate then
in effect, such reduced withholding tax will be included in "Non-Excluded
Taxes" as defined in this Section 3.04.
(d) For any period with respect to which a Non-U.S. Bank has
failed to provide the Borrower with the appropriate form (unless such failure
is due to a change in treaty, law or regulation occurring subsequent to the
date of this Agreement), such Non-U.S. Bank shall not be entitled to
indemnification under Section 3.04(a) or 3.04(b) with respect to withholding
taxes imposed by the United States; provided, however, that should a Bank which
is otherwise exempt from or subject to a reduced rate of withholding tax become
subject to Non-Excluded Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Bank shall reasonably
request to assist such Bank to recover such Non-Excluded Taxes.
(e) In the event a Non-U.S. Bank at the time of an assignment
is entitled to the benefit of payments pursuant to Section 3.04(a) or Section
3.04(b), the assignee of such Non-U.S. Bank shall be entitled to the same
benefits (including further
<PAGE>
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benefit of payments that may arise with respect to such assignee) that would
have been available to the assignor Non-U.S. Bank in the absence of such
assignment, but only to the extent the relevant amounts are incurred by or
with respect to such assignee.
(f) If the Borrower is required to pay additional amounts to
for the account of any Bank pursuant to this Section 3.04, then such Bank shall
take efforts to change the jurisdiction of its lending office so as to
eliminate or reduce any such additional amounts which may thereafter accrue if
such change would not, in the sole judgment of such Bank, result in any cost to
such Bank.
(g) Nothing contained in this Section 3.04 shall require any
Bank to make available any of its tax returns or any other information that it
deems to be confidential or proprietary.
SECTION 4. Conditions Precedent.
4.01 Conditions Precedent to Effectiveness of
Agreement. The effectiveness of this Agreement is subject (except as
otherwise hereinafter indicated), to the satisfaction of the following
conditions:
(A) Officers' Certificate. The Agent shall have received a
certificate dated the Closing Date, substantially in the form of Exhibit I-1
annexed hereto, and signed by an appropriate officer of the Borrower on behalf
of the Borrower stating that all of the applicable conditions set forth in this
Section 4.01 (in each case disregarding any reference therein that such
condition be deemed satisfactory by the Agent and/or the Required Banks) have
been satisfied or waived as of such date.
(B) Opinions of Counsel. The Agent shall have received an
opinion or opinions addressed to each of the Banks and dated the Closing Date,
each in form and substance satisfactory to the Agent, from (i) Kramer, Levin,
Naftalis & Frankel, counsel to the Borrower, which opinion shall address the
matters contained in Exhibit B-1 hereto, and (ii) local counsel to the Borrower
in each jurisdiction in which Collateral is located, which opinions shall
address the matters contained in Exhibit B-2 hereto.
(C) Corporate Proceedings. (i) All corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by the Documents shall be sat-
<PAGE>
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isfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all certificates, documents and papers,
including records of corporate proceedings and governmental approvals, if any,
which the Agent may have requested from the Borrower and any of its Affiliates
or in connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities. Without limiting
the foregoing, the Agent shall have received:
(a) resolutions of the Board of Directors of the Borrower
which shall include, without limitation, resolutions approving such
documents and actions as are contemplated hereby and by the other
Documents, and resolutions as to the due authorization, execution and
delivery of this Agreement and each of the other Documents, in each
case, certified by the Borrower's corporate secretary or an assistant
secretary as being, on the Closing Date, in full force and effect,
without modification or amendment. Such resolutions shall be in form
and substance satisfactory to the Agent; and
(b) signature and incumbency certificates of each officer of
the Borrower executing instruments, documents or agreements required
to be executed in connection with the transactions contemplated by
this Agreement and the other Documents.
(ii) Prior to the Closing Date, the Agent shall have
received evidence, satisfactory to the Agent, as to the due incorporation of
the Borrower in the State of Maryland, including, without limitation, the
Borrower's certificate of incorporation as set forth in paragraph (F)(1) of
this Section 4.01.
(D) Refinancing. (i) The terms and conditions of and
any agreements and arrangements relating to the Refinancing shall be
satisfactory to the Agent and the Banks.
(ii) Proceeds of the issuance of the Senior Notes sufficient
to redeem all of the Borrower's outstanding Subordinated Notes shall have been
deposited in an escrow account, the form, substance and terms of which shall be
satisfactory to the Agent and the Banks.
(E) Credit Documents. Each of this Agreement and each other
Credit Document shall (i) be in form and substance satisfactory to the Agent
and (ii) have been, on or prior to the Closing Date, duly authorized, executed
and delivered by each of the parties signatory thereto.
<PAGE>
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(F) Organizational Documentation, etc. The Banks shall have
received copies of a true and complete certified copy of the following
documents of the Borrower and each of its Subsidiaries, the provisions of which
shall be satisfactory to the Agent and the Required Banks:
(1) Copies of its respective Certificate of Incorporation
which shall be certified and be accompanied by a good standing
certificate from the Secretary of State of the State of Maryland and
good standing certificates from the jurisdictions in which it is
qualified to do business as a foreign corporation, each to be dated a
recent date prior to the Closing Date;
(2) Copies of its By-laws certified as of a recent date
prior to the Closing Date by its corporate secretary.
(G) Notes. There shall have been delivered to the Agent for
the account of each of the Banks the Revolving Notes executed by the Borrower
in the amount and maturity and as otherwise provided herein.
(H) Certain Fees. All costs, fees and expenses (including,
without limitation, legal fees and expenses) payable to Indosuez by the
Borrower pursuant to the letter agreement between the Borrower and Indosuez
dated May 1, 1997 shall have been paid in full, and the Borrower shall have
paid or have caused to be paid the commitment and other fees and expenses
(including, without limitation, legal fees and expenses) contemplated hereby
and/or in connection with the Recapitalization and the other Documents. On or
prior to the Closing Date, the Borrower shall have delivered to the Agent
evidence satisfactory to the Agent that the fees and expenses (including,
without limitation, legal fees and expenses and fees and expenses payable to
Gibbons, Goodwin, van Amerongen ("GGvA")) in connection with the consummation
of the transactions contemplated by the Documents shall not exceed in the
aggregate $4.75 million.
(I) Financial Statements, etc. Prior to the Closing Date, the
Agent shall have received from the Borrower (i) audited financial statements
including a balance sheet and statements of income and cash flow of the
Borrower for each of the twelve months ended December 31, 1994, 1995 and 1996,
together with unqualified opinions of Ernst & Young LLP; (ii) unaudited
financial statements for the 3 months ended March 30, 1997 (together with the
financial statements in (i) above, the "Financial Statements"); (iii) the pro
forma opening balance sheet of the Borrower as at March 30, 1997 after giving
effect to the Recapitali-
<PAGE>
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zation and the Borrowings under this Agreement; (iv) financial projections
with respect to the Borrower, accompanied by a statement by the Borrower that
such projections are based on assumptions believed by the Borrower in good
faith to be reasonable as to the future financial performance of the Borrower,
satisfactory to the Agent and to the Required Banks and that since the time of
the preparation of such financial projections, no fact or facts have come to
the attention of the Borrower to cause the Borrower to believe that any of the
estimates and assumptions on which such projections are based are not
reasonable; and (v) the Borrower's consolidated plan for the succeeding five
twelve-month fiscal periods following the Closing Date, in each case prepared
in accordance with the Borrower's normal accounting procedures (which will
represent management's reasonable estimate of the Borrower's projected
performance during such periods). Each of the items delivered pursuant to
clauses (i) through (v) above shall be satisfactory to the Agent, in its sole
discretion. In addition, the Agent shall have received a letter from Ernst &
Young LLP stating that they have performed agreed upon procedures to the pro
forma opening balance sheet as of March 30, 1997 after giving effect to the
Recapitalization and the Borrowings under this Agreement, which such letter
shall be satisfactory in form and substance to the Agent.
(J) Insurance. Set forth on Schedule 4.01J is a summary of
all insurance policies maintained by the Borrower and its Subsidiaries. The
insurance coverage provided for the Borrower and its Subsidiaries by such
insurance policies shall be satisfactory to the Agent.
(K) Indebtedness, etc. Each of the Borrower and its
Subsidiaries shall have received all necessary consents or waivers or amended,
supplemented or otherwise modified, repaid, redeemed or defeased its
outstanding Indebtedness in a manner and on terms satisfactory to the Agent
such that there exists no default or potential default (including, without
limitation, as a result of the consummation of the Recapitalization or of any
Borrowing hereunder) with respect to such Indebtedness or under any note,
evidence of indebtedness, mortgage, deed of trust, security document or other
agreement relating to such Indebtedness and such indentures, notes, evidences
of indebtedness, mortgages, deeds of trust or other agreements relating to such
Indebtedness shall not contain any restriction on the ability of the Borrower
to enter into the Pledge Agreements or any other Security Documents or the
granting of any Lien in favor of the Banks in connection therewith, or, other
than as set forth on Schedule 4.01K(a), contain any financial covenants,
agreements or tests applicable to the Borrower or any of its Subsidiaries.
Sched-
<PAGE>
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ule 4.01K(b) sets forth a true list of all Liens other than Permitted
Encumbrances on the property of the Borrower and its Subsidiaries as of the
Closing Date. The obligations of the Borrower, with respect to its outstanding
Indebtedness, under this Section 4.01(K) shall be in addition to its
obligations under Section 4.01(D) hereof.
(L) Security Documents. Amendments to the Security Documents
shall have been duly executed and delivered by the respective parties thereto
and except to the extent previously provided, there shall have been delivered
to the Agent (i) certificates representing all Pledged Securities, if any,
together with executed and undated stock powers and/or assignments in blank,
(ii) evidence of the filing and due execution of appropriate financing
statements under the provisions of the UCC, applicable foreign, domestic or
local laws, rules or regulations in each of the offices where such filing is
necessary or appropriate to grant the Collateral Agent a perfected first
priority Lien (or comparable interest under foreign law in the case of foreign
Collateral) in such Collateral superior to and prior to the rights of all third
persons and subject to no other Liens except Prior Liens, (iii) to the extent
inventory is maintained on a leased premise, agreements from the respective
landlords of such of the Real Property which is being leased by the Borrower or
its Subsidiaries confirming that such landlords have subordinated their
landlord liens in the Borrower's (or such Subsidiaries', as applicable)
personal property to the security interests held by the Collateral Agent
pursuant to applicable Security Documents and that such landlords will provide
the Collateral Agent with reasonable access to such facilities to exercise, to
the extent permitted by law, the Collateral Agent's remedies pursuant to such
applicable Security Documents, and (iv) such other security and other documents
as may be necessary or, in the opinion of the Collateral Agent, desirable to
perfect the Liens in favor of the Collateral Agent created, or purported or
intended to be created, by the Security Documents.
(M) Consents, etc. All material governmental and third party
approvals and consents (including, without limitation, all material approvals
and consents required in connection with any environmental statutes, rules or
regulations), if any, in connection with the Recapitalization, the transactions
contemplated by the Documents and otherwise referred to herein or therein to be
completed on or before the Closing Date shall have been obtained and remain in
effect, and all applicable waiting periods shall have expired without any
action being taken by any competent authority which restrains, prevents or
imposes, in the judgment of the Agent or the Required Banks, materially adverse
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conditions upon the consummation of the Refinancing. There shall not exist any
judgment, order, injunction or other restraint issued or filed with respect to
the making of the Loans hereunder or the consummation of the Recapitalization.
(N) Environmental Review. At or prior to the Closing Date,
there shall have been delivered to the Agent and each of the Banks an Officer's
Certificate of the Borrower in substantially the form of Exhibit I-2 annexed
hereto.
(O) Borrowing Base Certificate. The Agent and the Banks shall
have received and the Required Banks shall be satisfied (both as to form and
substance) with a Borrowing Base Certificate which shall be substantially in
the form of Exhibit H hereto and shall be prepared as of a date prior to the
Closing Date that is satisfactory to the Agent.
(P) Litigation. There shall be no litigation pending or
threatened involving the Borrower or any of its Subsidiaries, or any of their
respective properties or assets, that would impair the Recapitalization or the
consummation of the transactions contemplated by the Documents, or that, in the
good faith judgment of the Agent or the Required Banks, could be reasonably
expected to have a Materially Adverse Effect.
(Q) Capital Leases. All Capital Leases and Operating Leases
of the Borrower outstanding immediately prior to the Recapitalization shall
remain outstanding after giving effect to the Recapitalization, on terms
satisfactory to the Agent.
(R) Solvency. On the Closing Date, the Agent and each of the
Banks shall have received the Officers' Solvency Certificate.
(S) Senior Notes. Substantially contemporaneously with the
closing of this transaction, the Borrower shall have issued and sold $105
million of its Senior Notes and applied a portion of the proceeds to the
repayment in full of all existing indebtedness under the Existing Credit
Agreement.
(T) Equity Capitalization. As of the Closing Date the
Borrower shall have Consolidated Net Worth of not less than $(32.5) million.
For purposes of this Section 4.01(T), the calculation of such equity
capitalization shall exclude adjustments arising from the adoption by the
Borrower of Statement of Financial Accounting Standards No. 106.
<PAGE>
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The effectiveness of this Agreement shall constitute a
representation and warranty by each Credit Party to each of the Banks that all
of the applicable conditions specified above have been satisfied or waived as
of that time and that, at the time of the effectiveness of this Agreement, the
conditions specified in Section 4.01 have been satisfied or waived. All of the
certificates, legal opinions and other documents and papers referred to in this
Section 4.01, unless otherwise specified, shall be delivered to the Agent at
the Agent's Office (or such other location as may be specified by the Agent)
for the account of each of the Banks and in sufficient counterparts for each of
the Banks and shall be satisfactory in form and substance to the Agent.
4.02 Conditions Precedent to All Loans. The obligation of the
Banks to make all Loans (which term shall not include a conversion or
continuation of a Loan) is subject, at the time of each such Loan, to the
satisfaction of the following conditions:
(A) Effectiveness. This Agreement shall have become
effective as provided in Section 11.10.
(B) No Default; Representations and Warranties. At the time
of the making of each Loan and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and
warranties contained herein and in each of the other Credit Documents in effect
at such time shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and as of
the date of the making of such Loan, unless such representation and warranty
expressly indicates that it is being made as of any other specific date in
which case on and as of such other date.
(C) Adverse Change, etc. (a) Since the date of the Offering
Memorandum, nothing shall have occurred or become known which the Required
Banks or the Agent shall have determined (i) has had or could be reasonably
expected to have a Materially Adverse Effect or (ii) indicates that there has
been or could be reasonably expected to be a material adverse change in the
industries in which the Borrower and its Subsidiaries compete which could be
reasonably expected to have a Materially Adverse Effect; each such
determination shall be made both before and after giving effect to the
Recapitalization and the making of the Loans hereunder.
(b) All material governmental and third party approvals and
consents (including, without limitation, all material ap-
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provals and consents required in connection with any environmental statutes,
rules or regulations), if any, in connection with the conduct of the business
of the Borrower and its Subsidiaries shall have been obtained and remain in
effect.
(c) There shall not exist any judgment, order, injunction or
other restraint issued or filed with respect to the making of any Loans
hereunder the effect of which judgment, order, injunction or restraint is
adverse to any Bank.
(D) Documentation and Opinions of Counsel. The Agent, upon
request, shall have received such documentation and opinion or opinions,
addressed to each of the Banks, (i) from counsel to each Credit Party as may be
reasonably required, with reasonable notice under the circumstances, which
shall be satisfactory to the Agent, and (ii) appropriate local counsel, which
opinions shall cover such matters as reasonably requested by, and be in form
and substance reasonably satisfactory to, the Agent.
(E) Margin Rules. On the date of each Borrowing of Loans,
neither the making of any Loan nor the use of the proceeds thereof will violate
the provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
(F) Borrowing Base Certificate. The Agent and the Banks shall
have received and the Agent and the Required Banks shall be reasonably
satisfied (both as to form and substance) with the Borrowing Base Certificate
last delivered to the Banks.
The acceptance of the proceeds of each Borrowing of Loans
shall constitute a representation and warranty by each Credit Party to each of
the Banks that all of the applicable conditions specified in Section 4.02 have
been satisfied or waived.
All of the certificates, legal opinions and other documents
and papers referred to in this Section 4.02, unless otherwise specified, shall
be delivered to the Agent at the Agent's Office (or such other location as may
be specified by the Agent) for the account of each of the Banks and in
sufficient counterparts for each of the Banks and shall be satisfactory in form
and substance to the Agent.
4.03 Conditions Precedent to All Letters of Credit. The right
of the Borrower to obtain the issuance of any Letter of Credit that the
relevant Issuing Bank determines to issue in its sole discretion hereunder is
subject to prior or concurrent satisfaction of all of the following conditions:
<PAGE>
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(A) Required Documentation. On or prior to the date of
issuance of a Letter of Credit, the Agent shall have received, in
accordance with the provisions of Section 1.13(B), a request for
issuance with respect to such Letter of Credit (the furnishing by the
Borrower of each such request for issuance shall be deemed to
constitute a representation and warranty of the Borrower to the effect
that the conditions set forth in Section 4.02 are satisfied as of the
date of delivery and will be satisfied on the relevant date of
issuance), all other information specified in Section 1.13(B), and
such other documents as the Issuing Bank may reasonably require in
connection with the issuance of such Letter of Credit.
(B) Conditions. On the date of issuance of each such Letter
of Credit, all conditions precedent described in Section 4.02 shall be
satisfied to the same extent as though the issuance of such Letter of
Credit were the making of a Loan.
SECTION 5. Representations, Warranties and Agreements. In
order to induce the Banks to enter into this Agreement and to make the Loans
provided for herein, the Borrower makes the following representations and
warranties to, and agreements with, the Banks, all of which shall survive the
execution and delivery of this Agreement and the making of the Loans (with the
execution and delivery of this Agreement and the making of each Loan thereafter
being deemed to constitute a representation and warranty that the matters
specified in this Section 5 are true and correct in all material respects both
before and after giving effect to the Recapitalization and the related
transactions and as of the date of each such Loan unless such representation
and warranty expressly indicates that it is being made as of any specific
date):
5.01 Corporate Status. Each Credit Party (i) is a duly
organized and validly existing corporation in good standing under the laws of
its jurisdiction of its organization; (ii) has the corporate or other
organizational power and authority and, except as set forth on Schedule 5.01,
has obtained all requisite governmental licenses, authorizations, consents and
approvals to own and operate its property and assets and to transact the
business in which it is engaged and presently proposes to engage, including,
without limitation, those in compliance with or required by the Environmental
Laws except for those governmental licenses, authorizations, consents or
approvals the failure of which to be so obtained would not have a Materially
Adverse Effect and
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(iii) is duly qualified and authorized to do business and is in good standing
in all jurisdictions where it is required to be so qualified except where the
failure to be so qualified would not have a Materially Adverse Effect.
5.02 Corporate Power and Authority; Business. (a) Each Credit
Party has the corporate power and authority to execute, deliver and carry out
the terms and provisions of the Documents to which it is a party and has taken
all necessary corporate action to authorize the execution, delivery and
performance of the Documents to which it is a party. Each Credit Party has duly
executed and delivered each Document to which it is a party and each such
Document constitutes the legal, valid and binding obligation of such Person
enforceable in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally or by
equitable principles relating to enforceability.
(b) The Borrower was incorporated on November 6, 1967. From
July 3, 1987 to the Closing Date, the Borrower will not have engaged in any
business or incurred any liabilities except for activities, expenses and
liabilities incident to the operations of its businesses which are set forth in
the Offering Memorandum and which would not have a Materially Adverse Effect.
5.03 No Violation. Except as set forth on Schedule 5.03,
neither the execution, delivery or performance by any Credit Party of the
Documents to which it is a party nor compliance with the terms and provisions
thereof nor the consummation of the transactions contemplated therein (i) will
contravene any applicable provision of any law, statute, rule, regulation,
order, writ, injunction or decree of any court or governmental instrumentality,
(ii) conflicts or will conflict or be inconsistent with, results or will result
in any breach or violation of any of the terms, covenants, conditions or
provisions of, or constitutes or will constitute a default under, or (other
than pursuant to the Security Documents) results or will result in the creation
or imposition of (or the obligation to create or impose) any Lien upon any of
the property or assets of any Credit Party pursuant to the terms of any
indenture, mortgage, deed of trust, agreement or other instrument to which any
Credit Party or any of its Subsidiaries is a party or by which it or any of its
property or assets is bound or to which it may be subject or any applicable
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any court or governmental instrumentality, or (iii) will violate any
provision of the charter or by-laws of any Credit Party or its Subsidiaries,
except where such contra-
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vention, conflict, inconsistency, breach, default, creation, imposition,
obligation or violation would not have a Materially Adverse Effect. Neither
the execution, delivery or performance of the Refinancing Documents or the
consummation of the Refinancing nor the terms of the financing in connection
therewith conflicts or will conflict or be inconsistent with, results or will
result in any breach or violation of any of the terms, covenants, conditions
or provisions of, or constitutes or will constitute a default under, or
results or will result in the creation or imposition of (or the obligation to
create or impose) any Lien (except pursuant to the Security Documents) upon
any of the property or assets of any Credit Party pursuant to the terms of,
any indenture, mortgage, deed of trust, instrument or agreement relating to
Indebtedness for borrowed money or the equivalent thereof or other material
agreement to which any Credit Party is a party or by which it or any of its
property or assets is bound or to which it may be subject or any law, statute,
rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality referred to in clause (i) above, except where
such conflict, inconsistency, breach, default, creation, imposition or
obligation would not have a Materially Adverse Effect.
5.04 Litigation. Except as set forth on Schedule 5.04, there
are no actions, judgments, suits, investigations or proceedings by any
administrative, governmental or other public authority or other Person pending
or, to the Borrower's knowledge, threatened, with respect to any Credit Party
or any of their respective assets (both before and after giving effect to the
Recapitalization) that (a) challenges the consummation of the Recapitalization
or the validity of any of the Documents or the transactions contemplated
thereby, including the making of any Loans or (b) individually or in the
aggregate, are likely to have a Materially Adverse Effect.
5.05 Use of Proceeds. (a) Except for the $2.0 million which
may be paid as a part of the Distributions, all the proceeds of all Revolving
Loans to be made after the Closing Date to the Borrower hereunder shall be
utilized for working capital and other general corporate purposes.
(b) Neither the making of any Loan hereunder, nor the use of
the proceeds therefrom, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System.
5.06 Governmental Approvals, etc. No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption or other action by
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or notice to, any third party or any foreign or domestic, administrative,
governmental or public body or authority, or by any subdivision thereof (other
than those orders, consents, approvals, licenses, authorizations or validations
which, if not obtained or made, would not have a Materially Adverse Effect or
which have previously been obtained or made and except for filings to perfect
security interests granted pursuant to the Security Documents, all of which will
be accomplished on or prior to the Closing Date), is necessary or required to
authorize or is required in connection with (i) the execution, delivery and
performance of any Document or the transactions contemplated therein or (ii) the
legality, validity, binding effect or enforceability of any Document. At the
Closing Date, there does not exist any judgment, order, injunction or other
restraint issued or filed with respect to the transactions contemplated hereby,
the consummation of the Recapitalization or the making of Loans or the
performance by the Credit Parties of their obligations under the Documents.
5.07 Investment Company Act. The Borrower is not, nor will
be, after giving effect to the transactions contemplated hereby or by any of
the other Documents, an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended, or subject to any federal or local statute or regulation limiting
its ability to incur indebtedness for money borrowed or guarantee such
indebtedness as contemplated hereby or by any other Document.
5.08 Public Utility Holding Company Act. The Borrower is not,
nor will be after giving effect to the transactions contemplated hereby or by
any of the other Documents, a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
5.09 True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf of
the Credit Parties in writing to any Bank (including, without limitation, all
information contained in the Documents and the Offering Memorandum) for
purposes of or in connection with this Agreement or any transaction
contemplated herein is (or was, on the Closing Date), and all other such
factual information (taken as a whole) hereafter furnished by or on behalf of
any such Person in writing to any Bank will be, true and accurate in all
material respects on the date as of which such information is dated or
certified and does not contain any
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untrue statement of a material factor omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and the Offering
Memorandum will be at the Closing Date true and accurate in all material
respects and will not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
The projections and pro forma financial information contained
in such materials are based on good faith estimates and assumptions believed by
such Persons to be reasonable at the time made, it being recognized by the
Banks 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. There is no fact known to
any Credit Party which could have a Materially Adverse Effect which has not
been disclosed herein, in the Offering Memorandum or in such other documents,
certificates and written statements furnished to the Banks for use in
connection with the transactions contemplated hereby.
5.10 Financial Condition; Financial Statements; Projections.
(a) No Credit Party is entering into the arrangements contemplated hereby or by
the other Credit Documents, or intends to make any transfer or incur any
obligations hereunder or thereunder, with intent to hinder, delay or defraud
either present or future creditors. On and as of the Closing Date, on a pro
forma basis after giving effect to the Recapitalization and to all Indebtedness
incurred and Liens created, or to be created, by each Credit Party in
connection with the Recapitalization (including Indebtedness incurred
hereunder), (w) the Borrower does not expect that final judgments against any
Credit Party in actions for money damages with respect to pending or threatened
litigation will be rendered at a time when, or in an amount such that, such
Credit Party will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered and the cash available to such Credit Party,
after taking into account all other anticipated uses of the cash of such Credit
Party (including the payments on or in respect of debts (including its
Contingent Obligations))); (x) no Credit Party will have incurred or intends
to, or believes that it will, incur debts beyond its ability to pay such debts
as such debts mature (taking into account the timing and amounts of cash to be
received by such Credit Party from any source, and of amounts to be
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payable on or in respect of debts of such Person and the amounts referred to in
the preceding clause (w)); (y) each Credit Party, after taking into account all
other anticipated uses of the cash of such Credit Party, anticipates being able
to pay all amounts on or in respect of debts of such Credit Party when such
amounts are required to be paid; and (z) each Credit Party will have sufficient
capital with which to conduct its present and proposed business and the property
of such Credit Party does not constitute unreasonably small capital with which
to conduct its present or proposed business. For purposes of this Section 5.10,
"debt" means any liability on a claim, and "claim" means a (i) right to payment
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured; or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured. On the date of each
Borrowing (and after giving effect to all Borrowings as of such date), the
representations set forth in this Section 5.10(a) shall be true and correct with
respect to the Borrower on such date.
(b) The Borrower has heretofore delivered to the Banks the
financial statements described in Section 4.01(I)(i) and (ii). All such
financial statements referred to in the preceding sentence were prepared in
accordance with GAAP consistently applied, except in the case of interim
financial statements for normal year-end adjustments and the absence of
footnote disclosures. Such financial statements present fairly the financial
position of the Borrower for each of the periods covered thereby. There has
also been delivered the pro forma opening balance sheet (after giving effect to
the Recapitalization and the Borrowings under this Agreement), of the Borrower
as at March 30, 1997, which presents a good faith estimate of the consolidated
pro forma financial condition of the Borrower at the date thereof. Except as
contemplated hereby, since March 30, 1997 (on a pro forma basis after giving
effect to the Recapitalization and the Borrowings under this Agreement) no
event or events have occurred that are likely to have a Materially Adverse
Effect. The assumptions made in preparing such pro forma opening balance sheet
are reasonable as of the Closing Date and all material assumptions are set
forth therein.
(c) There have heretofore been delivered to the Banks pro
forma consolidated income projections for the Borrower, pro forma consolidated
balance sheet projections for the Borrower and pro forma consolidated cash flow
projections for the Borrower for
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the seven month period from the Closing Date through the end of the fiscal year
ended December 31, 1997 and for the five twelve-month fiscal periods following
the fiscal year ended December 31, 1997, inclusive (collectively, the "Projected
Financial Statements"), which give effect to the Recapitalization and all
Indebtedness and Liens incurred or created in connection with the
Recapitalization (including all Indebtedness incurred hereunder). The Projected
Financial Statements are reasonable and present a good faith estimate of the
consolidated financial information contained therein at the date thereof.
(d) As of the Closing Date, except as fully reflected or
reserved against in the financial statements and the notes thereto described in
Section 5.10(b), there were no liabilities or obligations with respect to the
Borrower or its Subsidiaries of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) which, either
individually or in aggregate, would be material to the Borrower or its
Subsidiaries, taken as a whole. As of the Closing Date the Borrower does not
know of any basis for the assertion against the Borrower of any liability or
obligation of any nature whatsoever that is not fully reflected in the
financial statements described in Section 5.10(b) or (c) or in the Offering
Memorandum or any schedules thereto or otherwise disclosed therein, except as
incurred by any Credit Party in connection with the Recapitalization, which,
either individually or in the aggregate, could reasonably be expected to be
material to the Borrower.
5.11 Security Interests. The Security Documents, once
executed and delivered, will create, in favor of the Collateral Agent for the
benefit of the Banks, as security for the obligations purported to be secured
thereby, a valid and enforceable perfected first priority security interest in
and Lien upon all of the Collateral, superior to and prior to the rights of all
third persons and subject to no Liens except the Prior Liens applicable to such
Collateral. The respective pledgor or assignor, as the case may be, has (or, on
and after the time it executes the respective Security Document, will have)
good and marketable title to all items of Collateral (including all such
Collateral located in Alabama) covered by such Security Document free and clear
of all Liens other than Liens expressly permitted under the applicable Security
Document. No filings or recordings are required in order to perfect the
security interests created under any Security Document except for filings or
recordings required in connection with any such Security Document which shall
have been made prior to or contemporaneously with the execution and delivery
thereof.
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5.12 Tax Returns and Payments. Each of the Borrower and its
Subsidiaries has filed all tax returns required to be filed by it (which are
true and correct in all material respects) and has paid all taxes and
assessments shown to be due thereon, other than those not yet delinquent and
except for those contested in good faith and for which adequate reserves have
been established. Each of the Borrower and its Subsidiaries has paid, or has
provided adequate reserves (in accordance with GAAP) for the payment of, all
federal, state, local and foreign income taxes (including, without limitation,
franchise taxes based upon income) applicable for all prior fiscal years and
for the current fiscal year to the date hereof. The Borrower knows of no
proposed tax assessment against the Borrower or any of its Subsidiaries that
could reasonably be expected to have a Materially Adverse Effect which is not
being actively contested in good faith by such Person to the extent affected
thereby in good faith and by appropriate proceedings; provided that such
reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
5.13 ERISA. (A) Each of the Borrower and the ERISA Affiliates
is in compliance in all respects with all applicable provisions of ERISA and
the regulations and published interpretations thereunder with respect to all
employee benefit plans, Pension Plans and Multiemployer Plans except for
noncompliance that could not be expected to have a Materially Adverse Effect.
(B) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan which resulted or would
result in a liability to the Borrower or any ERISA Affiliate that could be
expected to have a Materially Adverse Effect.
(C) The sum of the amount of unfunded benefit liabilities
(determined in accordance with Statement of Financial Accounting Standards No.
87) under all Title IV Plans (excluding each Title IV Plan with an amount of
unfunded benefit liabilities of zero or less) is not more than $3,000,000. As
of the Closing Date, the sum of the amount of unfunded benefit liabilities
(within the meaning of Section 4001(a)(18) of ERISA) under all Title IV Plans
(excluding each Pension Plan with an amount of unfunded benefit liabilities of
zero or less) is not more than $5,500,000.
(D) As of the Closing Date, neither the Borrower nor any
ERISA Affiliate has any obligation to contribute to or any liability or
potential liability (including, but not limited to, actual or potential
withdrawal liability) with respect to any
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Multiemployer Plan or any employee benefit plan described in Sections 4063 and
4064 of ERISA or in Section 413(c) of the Code. As of the Closing Date, the
Borrower and its ERISA Affiliates have complied with the requirements of ERISA
Section 515 with respect to each Multiemployer Plan. As of the Closing Date, the
aggregate potential withdrawal payments, as determined in accordance with Title
IV of ERISA, of the Borrower, its Subsidiaries and its ERISA Affiliates with
respect to all Multiemployer Plans was $0. Neither the Borrower nor any ERISA
Affiliate has incurred or reasonably expects to incur any withdrawal liability
under Section 4201 et seq. of ERISA to any Multiemployer Plan or any employee
benefit plan described in Sections 4063 and 4064 of ERISA or in Section 413(c)
of the Code that could be expected to have a Materially Adverse Effect.
(E) No Pension Plan has an accumulated funding deficiency
(whether or not waived).
(F) Neither the Borrower nor any ERISA Affiliate has or
reasonably expects to become subject to a Lien in favor of any Pension Plan
under Section 302(f) or 307 of ERISA or Section 401(a)(29) or 412(n) of the
Code.
(G) Assuming that no portion of the Loans to be advanced
hereunder is attributable, directly or indirectly, to the assets of any
employee benefit plan, the execution, performance and delivery of the Credit
Documents by any party thereto will not involve any prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Code for
which an exemption therefrom is not available.
As used in this Section 5.13, the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412
of the Code, and the term "employee benefit plan" has the meaning specified in
Section 3(3) of ERISA.
5.14 Subsidiaries. As of the Closing Date, the Borrower has
no Subsidiaries.
5.15 Patents, etc. Each Credit Party owns or possesses
adequate licenses or other rights to use all patents, patent applications,
trademarks, trademark applications, servicemarks, servicemark applications,
trade names, copyrights, trade secrets and know-how (collectively, the
"Intellectual Property"), that are necessary for the operation of its
respective businesses as presently conducted and as proposed to be conducted.
No claim is pending or threatened to the effect that any Credit Party infringes
upon or conflicts with the asserted rights of any other
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Person under any Intellectual Property, and there is no basis for any such claim
(whether or not pending or threatened). No claim is pending or threatened to the
effect that any such Intellectual Property owned or licensed by any Credit Party
or which any Credit Party otherwise has the right to use is invalid or
unenforceable by such Credit Party, and there is no basis for any such claim
(whether or not pending or threatened).
5.16 Compliance with Laws, etc. Except as set forth in
Schedule 5.16 hereto and other than those the non-compliance with which would
not have a Materially Adverse Effect, each Credit Party is in compliance with
all laws and regulations, including, without limitation, those relating to
pollution and environmental control, equal employment opportunity and employee
safety, in all jurisdictions in which it is presently doing business, and each
Credit Party will comply and cause each of its Subsidiaries to comply with all
such laws and regulations which may be imposed in the future in jurisdictions
in which it or such Subsidiary may then be doing business.
5.17 Properties. The Borrower and each of its Subsidiaries
have good and marketable title to and beneficial ownership of all their
respective properties and assets owned by them, including after the Closing
Date all property reflected in the most recent balance sheet referred to in
Section 5.10(b) (except as sold or otherwise disposed of since the date of such
balance sheet in the ordinary course of business), free and clear of all Liens
other than the Liens contemplated by the applicable Security Documents. The
Borrower and each of its Subsidiaries hold all material licenses, certificates
of occupancy or operation and similar certificates and clearances of municipal
and other authorities necessary to own and operate their respective properties
in the manner and for the purposes currently operated by each such party. Each
Real Property is suitable for its intended purposes and is served by such
utilities as are necessary for the operation thereof. There are no actual,
alleged or, to the knowledge of the Borrower, threatened defaults with respect
to any leases of real property under which the Borrower, or any of its
Subsidiaries, is lessor or lessee.
5.18 Securities. All of the outstanding capital stock of the
Borrower (and each of its Subsidiaries) has been duly authorized, issued and
delivered and is fully paid, nonassessable and free of preemptive rights.
Except as set forth in the Offering Memorandum, there are not, as of the
Closing Date and thereafter, any existing options, warrants, calls,
subscriptions, convertible or exchangeable securities, agreements, commitments
or arrangements for any Person to acquire any capital stock of the
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Borrower or any of its Subsidiaries or any other securities convertible into,
exchangeable for or evidencing the right to subscribe for any such capital
stock.
5.19 Collective Bargaining Agreements. Set forth on Schedule
5.19 hereto is a list and description (including dates of termination) of all
collective bargaining or similar agreements between or applicable to the
Borrower and/or any of its Subsidiaries as of the date hereof and any union,
labor organization or other bargaining agent in respect of the employees of the
Borrower and/or any of its Subsidiaries on the date indicated on Schedule 5.19
hereto.
5.20 Indebtedness Outstanding. Set forth on Schedule 5.20
hereto is a list and description of (a) all Indebtedness of the Borrower (other
than the Loans) that will be outstanding immediately after the Closing Date
("Existing Indebtedness") and (b) all Indebtedness of the Borrower that will be
repaid, redeemed, defeased, transferred or otherwise terminated on or prior to
the Closing Date or, in the case of the Subordinated Notes, on the later of (i)
30 days after the consummation of the offering of the Senior Notes and (ii)
July 15, 1997.
5.21 Environmental Matters. Except as set forth on Schedule
5.21 hereto or described in the Offering Memorandum, and except as would not
have a Materially Adverse Effect:
(A) Each of the Borrower and its Subsidiaries has obtained
all permits, licenses and other authorizations (collectively, "Authorizations")
which are required with respect to the operation of their respective businesses
and assets, and the use, ownership and operation of Real Property of the
Borrower and its Subsidiaries, in each case taken as a whole, under any
Environmental Law and each such authorization is in full force and effect.
(B) Each of the Borrower and its Subsidiaries is in
compliance with all terms and conditions of the Authorizations specified in
subsection 5.21(A) above, and is also in compliance with, and not subject to
liability under, any Environmental Laws applicable to it and its business,
assets, operations and Real Property (including, without limitation, compliance
with standards, schedules and timetables therein).
(C) There is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or, to the knowledge
of the Borrower or any of its
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Subsidiaries, threatened against the Borrower or any of its Subsidiaries under
any Environmental Law.
(D) Neither the Borrower nor any of its Subsidiaries has
received notice that it has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), or any comparable state law, nor has the
Borrower or any of its Subsidiaries received any notification that any
Hazardous Materials that it, or any of its Subsidiaries, or any of their
respective predecessors in interest has used, generated, stored, treated,
handled, transported or disposed of, or arranged for disposal or treatment of,
or arranged with a transporter for transport for disposal or treatment of, have
been found at any site at which any Governmental Authority or private party is
conducting or plans to conduct a remedial investigation or other action
pursuant to any Environmental Law.
(E) There have been no releases (i.e., any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping) of Hazardous
Materials by the Borrower or any of its Subsidiaries or their respective
predecessors in interest on, at, upon, into or from any of the Real Properties.
To the knowledge of the Borrower and each of its Subsidiaries, there have been
no such releases on, at, upon, under, from or into any real property in the
vicinity of any of the Real Properties that, through soil, air, surface water
or groundwater migration or contamination, may have migrated to or under such
Real Properties.
(F) No friable asbestos is present in, on, or at any Real
Properties or any facility or equipment of the Borrower or any of its
Subsidiaries.
(G) No Real Properties of the Borrower or any of its
Subsidiaries or any of their respective predecessors in interest are (i) listed
or proposed for listing on the National Priorities List under CERCLA or (ii)
listed on the Comprehensive Environmental Response, Compensation and Liability
Information System under CERCLA or (iii) included on any comparable lists
maintained by any Governmental Authority having jurisdiction over the Borrower,
any of its Subsidiaries, any of their respective predecessors or any of the
assets or properties of any of the foregoing.
(H) There are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent compliance with any Environmental Law, or which may
give rise to any liability under any En-
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vironmental Law, including, without limitation, liability under CERCLA or
similar state, local or foreign laws, or otherwise form the basis of any claim,
action, demand, suit, proceeding, hearing or notice of violation, notice of
potential liability or investigation, based on or related to the manufacture,
processing, distribution, use, generation, treatment, storage, disposal,
transport, shipping or handling, or the emission, discharge, release or
threatened release into the environment, of any Hazardous Materials.
(I) No Lien has been recorded under any Environmental Law
with respect to any assets, facility, inventory or Real Property owned,
operated, leased or controlled by any of the Borrowers or any of their
respective Subsidiaries.
5.22 Environmental Investigations. All environmental
investigations, studies, audits, assessments or reviews directed to be
conducted by the Borrower or in the possession of the Borrower in relation to
the current or prior business or assets of the Borrower or any Subsidiary or
any Real Property, assets or facility now or previously owned, operated,
leased, used or controlled by the Borrower or any Subsidiary have been
delivered to the Agent.
SECTION 6. Affirmative Covenants. The Borrower covenants and
agrees that on the Closing Date and thereafter for so long as this Agreement is
in effect and until the Commitments have terminated and the Loans together with
interest, fees and all other Obligations incurred hereunder are paid in full:
6.01 Information Covenants. The Borrower will furnish or
cause to be furnished to each Bank:
(a) As soon as available and in any event within 90 days
after the close of each fiscal year of the Borrower, the audited
consolidated balance sheets of the Borrower and its Subsidiaries as at
the end of such fiscal year and the related consolidated statements of
operations, of cash flows and of stockholders' equity for such fiscal
year, setting forth comparative consolidated figures for the preceding
fiscal year, and a report on such consolidated balance sheets and
financial statements by a "Big Six" accounting firm or another firm of
independent public accountants of nationally recognized standing that
is satisfactory to the Agent, which report shall not be qualified as
to the scope of audit or as to the status of the Borrower and its
Subsidiaries as a going concern and shall state that such con-
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solidated financial statements present fairly, in all material
respects, the consolidated financial position of the Borrower and its
Subsidiaries as at the dates indicated and the consolidated results of
their operations and their cash flows for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years
(except for such changes with which the independent certified public
accountants concur) and the audit by such accountants was conducted in
accordance with generally accepted auditing standards.
(b) As soon as practicable and in any event within 30 days
after the end of each month, commencing with the first full month
ending after the Closing Date, (i) the consolidated balance sheet of
the Borrower as at the end of such period and (ii) the related
statements of income and cash flows of the Borrower, in each case for
such fiscal month and (in the case of the third, sixth, ninth and
twelfth fiscal months) for the Fiscal Quarter then ended and for the
period from the beginning of the then current fiscal year to the end
of such fiscal month and, as the case may be, Fiscal Quarter, setting
forth in comparative form the corresponding periods of the prior
fiscal year, all in reasonable detail and certified by a principal
financial officer of the Borrower as presenting fairly, in accordance
with GAAP (except for the absence of notes thereto) applied (except as
specifically set forth therein) on a basis consistent with such prior
fiscal periods, the information contained therein, subject to changes
resulting from normal year-end audit adjustments.
(c) Together with each delivery of financial statements of
the Borrower and its Subsidiaries pursuant to subsection (a) above, a
written statement by the independent public accountants giving the
report thereon stating that in connection with their audit nothing has
come to their attention which causes them to believe that as of the
end of such fiscal year of the Borrower there existed a Default or an
Event of Default related to the breach of any covenant set forth in
Section 6 or 7 (having reviewed Sections 6, 7, 8 and 9 hereof and the
Compliance Certificate delivered within 45 days after the end of the
Borrower's fourth Fiscal Quarter) as they relate to accounting matters
and if such a condition or event has come to their attention,
specifying the nature thereof.
(d) Prior to the commencement of each fiscal year, budgets of
the Borrower and its Subsidiaries in reasonable
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detail for each month of such fiscal year, as customarily prepared by
management for its internal use, setting forth, with appropriate
discussion, the principal assumptions upon which such budgets are
based, accompanied by an Officers' Certificate certifying that such
budgets are reasonable and present a good faith estimate of the
consolidated information therein at the date thereof. Together with
each delivery of financial statements pursuant to Section 6.01(b)
hereof, a comparison of the most recent month's and the current year to
date financial results against the budgets required to be submitted
pursuant to this subsection (d) shall be presented to the Agent.
(e) As soon as practicable and in any event within 45 days
after the end of each of the Borrower's Fiscal Quarters, a certificate
of the chief financial officer, controller, chief accounting officer
or other Authorized Officer of the Borrower to the effect that such
financial statements are fairly presented in all material respects and
that no Default or Event of Default exists, or, if any Default or
Event of Default does exist, specifying the nature and extent thereof
and what action the Borrower has taken, is taking and proposes to take
with respect thereto, which certificate shall be accompanied by a
Compliance Certificate in a form reasonably acceptable to the Agent
setting forth the calculations required to establish (i) whether the
Borrower and its Subsidiaries were in compliance with the covenants in
this Agreement (including without limitation the covenants set forth
in Sections 7.05 and 7.10 through 7.14 inclusive) and (ii) the
applicable Interest Margin pursuant to the definition thereof, in each
case, as at the end of such fiscal period or year, as the case may be.
(f) Promptly upon receipt thereof, a copy of each annual
"management letter" and of each other report submitted to the Borrower
by its independent accountants in connection with any annual audit and
any interim or special audit made by them of the books of the Borrower
or any of its Subsidiaries.
(g) Promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or
made available generally by the Borrower or any Subsidiary of the
Borrower to its security holders, of all regular and periodic reports
and all registration statements and prospectuses, if any, filed by the
Borrower or any of its Subsidiaries with any securities exchange or
with the SEC and of all press releases and other statements made
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available generally by the Borrower or any Subsidiary of the Borrower
to the public concerning material developments in the business of the
Borrower and its Subsidiaries.
(h) Immediately upon any officer of the Borrower or any of
its Subsidiaries obtaining knowledge (w) of any condition or event
which constitutes a Default or Event of Default, or becoming aware
that any Bank has given any notice or taken any other action with
respect to a claimed Default or Event of Default under this Agreement,
(x) that any Person has given any notice to the Borrower or any
Subsidiary of the Borrower or taken any other action with respect to a
claimed default or event or condition of the type referred to in
Section 8.04, or (y) of a material adverse change in the business,
operations, properties, assets, nature of assets, condition (financial
or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole, an Officers' Certificate specifying the nature and period
of existence of any such condition or event, or specifying the notice
given or action taken by such holder or Person and the nature of such
claimed Default, Event of Default, event or condition, or material
adverse change, and what action the Borrower has taken, is taking and
proposes to take with respect thereto.
(i) (i) Promptly upon any officer of the Borrower or any of
its Subsidiaries obtaining knowledge of the institution of, or threat
of, any action, suit, proceeding, governmental investigation or
arbitration against or affecting the Borrower or any of its
Subsidiaries or any property of the Borrower or any of its
Subsidiaries not previously disclosed to the Banks, which action,
suit, proceeding, governmental investigation or arbitration seeks (or
in the case of multiple actions, suits, proceedings, governmental
investigations or arbitrations arising out of the same general
allegations or circumstances which seek) recovery from the Borrower or
any of its Subsidiaries aggregating $500,000 or more (exclusive of
claims covered by insurance policies of the Borrower or any of its
Subsidiaries unless the insurers of such claims have disclaimed
coverage or reserved the right to disclaim coverage on such claims),
the Borrower shall give notice thereof to the Banks and provide such
other information as may be reasonably available to enable the Banks
and their counsel to evaluate such matters; (ii) as soon as
practicable and in any event within 45 days after the end of each
Fiscal Quarter, the Borrower shall provide a quarterly report to the
Banks covering the institution of, or threat of, any action, suit,
proceeding, governmental investigation or arbitration (not previously
reported) against or affect-
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ing the Borrower or any of its Subsidiaries or any property of the
Borrower or any of its Subsidiaries, which action, suit, proceedings,
governmental investigation or arbitration seeks (or in the case of
multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or
circumstances which seek) recovery from the Borrower or any of its
Subsidiaries aggregating $250,000 or more (exclusive of claims covered
by insurance policies of the Borrower or any of its Subsidiaries unless
the insurers of such claims have disclaimed coverage or reserved the
right to disclaim coverage on such claims), and shall provide such
other information at such time as may be reasonably available to enable
the Banks and their counsel to evaluate such matters; (iii) in addition
to the requirements set forth in clauses (i) and (ii) of this Section
6.01(i), the Borrower upon request shall promptly give notice of the
status of any action, suit, proceeding, governmental investigation or
arbitration covered by a report delivered to the Banks pursuant to
clause (i) or (ii) above to the Banks and provide such other
information as may be reasonably available to it to enable the Banks
and their counsel to evaluate such matters and (iv) promptly upon any
officer of the Borrower or any of its Subsidiaries obtaining knowledge
of any dispute in respect of or the institution of, or threat of, any
action, suit, proceeding, governmental investigation or arbitration in
respect of any material contract of the Borrower or any of its
Subsidiaries, the Borrower shall give notice thereof to the Banks and
shall provide such other information as may be reasonably available to
enable the Banks and their counsel to evaluate such matters.
(j) Within 45 days of the last day of each fiscal year of the
Borrower, a report in form and substance reasonably satisfactory to
the Agent outlining all material insurance coverage maintained as of
the date of such report by the Borrower and its Subsidiaries and
outlining all material insurance coverage planned to be maintained by
the Borrower and its Subsidiaries in the subsequent fiscal year.
(k) As soon as practicable and in any event within ten days
after the making of any amendment or waiver, copies of amendments or
waivers with respect to Indebtedness of the Borrower or any of its
Subsidiaries.
(l) On or prior to the Closing Date, the Borrower's
consolidated plan for the remainder of the fiscal year ending 1997 and
for the next succeeding five fiscal years, in
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each case prepared in accordance with the Borrower's normal accounting
procedures (and which will represent management's reasonable estimate
of the Borrower's projected performance during such periods) applied on
a consistent basis, including, without limitation, (A) forecasted
consolidated balance sheets and consolidated statements of operations
and of cash flows of the Borrower and its Subsidiaries, (B) the amount
of forecasted capital expenditures for such fiscal periods, and (C)
forecasted compliance with Sections 7.05 and 7.10 through 7.14
inclusive; provided that if any such forecast indicates that the
Borrower may not be in compliance with any provision of this Agreement
at some future date, such forecast shall not constitute a Default or an
Event of Default or anticipatory or other breach thereof; and provided
further that the Borrower shall provide an Officers' Certificate
specifying the action the Borrower proposes to take with respect
thereto.
(m) Within twenty (20) days after the last Business Day of
each fiscal month of the Borrower, the Borrower shall deliver to Agent
for distribution to each Bank a borrowing base certificate in the form
of Exhibit H hereto (the "Borrowing Base Certificate") detailing the
Borrower's Eligible Accounts Receivable and Eligible Inventory as of
the last day of such month, certified as complete and correct on
behalf of the Borrower by the Borrower's chief executive officer,
chief financial officer, controller or other Authorized Officer. In
addition, each Borrowing Base Certificate shall have attached to it
such additional schedules and/or other information as the Agent may
reasonably request. If the Borrower fails to deliver any such
Borrowing Base Certificate within twenty (20) days after the end of
any such month, then the Borrower's Borrowing Base shall be deemed to
be $0 until such time as the Borrower shall deliver such required
Borrowing Base Certificate. The Borrower shall also deliver on a
monthly basis an accounts receivable aging analysis and an inventory
breakout in form and substance reasonably satisfactory to the Agent.
(n) With reasonable promptness, such other information and
data with respect to the Borrower or any of its Subsidiaries or any
other similar entity in which the Borrower or any Subsidiary has an
investment, as from time to time may be reasonably requested by any
Bank.
(o) (i) On or prior to the Closing Date and within 30 days
after the commencement of each fiscal year, a complete and accurate
list of the officers and directors of the Bor-
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rower and (ii) within 30 days of any change in personnel affecting the
accuracy of such list, a notice specifying such change in personnel.
(p) The Borrower will promptly furnish to the Agent all
financial statements, information and reports which the Borrower
furnishes or causes to be furnished to any holder of Senior Notes (or
any agreement or instrument evidencing Indebtedness issued in exchange
for, or to refund or refinance Indebtedness outstanding under, the
Senior Notes).
6.02 Books, Records and Inspections. The Borrower will, and
will cause each of its Subsidiaries to, keep true books of records and accounts
in which full and correct entries will be made of all their business
transactions, and will reflect in its financial statements adequate accruals
and appropriations to reserves, all in accordance with GAAP. The Borrower will,
and will cause each of its Subsidiaries to, permit, upon reasonable prior
notice to the chief financial officer, controller or any other Authorized
Officer of the Borrower, officers and designated representatives of the Agent
or any Bank to visit and inspect any of the properties or assets of the
Borrower and any of its Subsidiaries in whomsoever's possession, and to examine
the books of account of the Borrower and any of its Subsidiaries and discuss
the affairs, finances and accounts of the Borrower and of any of its
Subsidiaries with, and be advised as to the same by, its and their officers and
independent accountants (in the presence of such officers), all at such times
and intervals and to such extent as the Agent or any Bank may reasonably
request.
6.03 Maintenance of Property; Insurance. (a) The Borrower
will, and will cause each of its Subsidiaries to, exercise commercially
reasonable efforts to maintain or cause to be maintained in good repair,
working order and condition (subject to normal wear and tear) all properties
used in their businesses (including, without limitation, each Real Property)
and from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof and will maintain and renew as necessary all
material licenses, permits and other clearances necessary to use and occupy
such properties of the Borrower and each Subsidiary, as the case may be.
(b) The Borrower will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by corporations
of established reputation engaged in the same or similar businesses and
similarly
<PAGE>
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situated, of such types and in such amounts as are customarily carried under
similar circumstances by such other corporations to the extent that such types
and such amounts of insurance are available at commercially reasonable rates.
The Borrower will, and will cause each of its Subsidiaries to, furnish to each
Bank, upon reasonable request, information as to the insurance carried, and will
not cancel any such insurance without the consent of the Required Banks.
(c) Without limiting subsection 6.03(b) above, the Borrower
will, and will cause each of its Subsidiaries to, maintain in full force the
insurance coverages specified in the Security Documents.
6.04 Payment of Taxes. The Borrower will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien or charge upon any properties of the Borrower or any of its
Subsidiaries or cause a failure or forfeiture of title thereto; provided that
neither the Borrower nor any of its Subsidiaries shall be required to pay any
such tax, assessment, charge, levy or claim that is being contested in good
faith and by proper proceedings promptly instituted and diligently conducted if
it has maintained adequate reserves with respect thereto in accordance with
GAAP.
6.05 Corporate Franchises. The Borrower will do, and will
cause each Subsidiary to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, rights and authority,
except where such failure to keep in full force and effect such rights and
authority would not have a Materially Adverse Effect.
6.06 Compliance with Statutes, etc. The Borrower will, and
will cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls) other than non-compliance which would not have a Materially Adverse
Effect.
6.07 ERISA. The Borrower will furnish to each of the Banks:
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(a) promptly upon the Borrower knowing or having reason to
know of the occurrence of any (i) Termination Event, or (ii)
"prohibited transaction," within the meaning of Section 406 of ERISA
or Section 4975 of the Code, in connection with any Pension Plan or
any trust created thereunder, which in the case of all such events
described in clause (i) or (ii) results or could reasonably be
expected to result in a liability of the Borrower or its ERISA
Affiliates in the aggregate in excess of $100,000, a written notice
specifying the nature thereof, what action the Borrower or its ERISA
Affiliates have taken, are taking or propose to take with respect
thereto, and, when known, any action taken or threatened by the
Internal Revenue Service, Department of Labor, PBGC or Multiemployer
Plan sponsor with respect thereto.
(b) with reasonable promptness copies of (i) all notices
received by the Borrower or any of its ERISA Affiliates of PBGC's
intent to terminate any Title IV Plan or to have a trustee appointed
to administer any Title IV Plan, the notice of which event is required
pursuant to the preceding paragraph (a); (ii) upon the request of the
Agent each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) filed by the Borrower or any of its ERISA
Affiliates with the Internal Revenue Service with respect to each
Pension Plan; (iii) upon the request of the Agent, the most recent
actuarial valuation report for each Title IV Plan; and (iv) all
notices received by the Borrower or any of its ERISA Affiliates from a
Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA, the notice of
which event is required pursuant to the preceding paragraph (a) above.
6.08 Performance of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, perform in all material respects all of
their respective obligations under the terms of each mortgage, indenture,
security agreement, other debt instrument and material contract by which it is
bound or to which it is a party, except where such nonperformance would not
have a Materially Adverse Effect.
6.09 Fiscal Quarters; Fiscal Year. The Borrower will, for
financial reporting purposes, and will cause each of its Subsidiaries to, have
its fourth fiscal quarters and its fiscal years end on December 31 and its
first fiscal quarter end on the 13th Sunday following such date and each of its
second and third fiscal quarters end on the 13th Sunday following the end of
the preceding quarter.
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6.10 Use of Proceeds. All proceeds of the Loans shall be
used as provided in Section 5.05.
6.11 Intentionally Omitted.
6.12 No Further Negative Pledges. Except with respect to
Existing Indebtedness and except with respect to prohibitions against other
encumbrances on specific property encumbered to secure payment of particular
Indebtedness permitted hereunder (which Indebtedness relates solely to the
acquisition or improvement of such specific property), neither the Borrower nor
any of its Subsidiaries shall enter into any agreement prohibiting the creation
or assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired.
6.13 Lender Meeting. The Borrower will participate in a
meeting of the Banks once during each fiscal year to be held at a location and
a time selected by the Borrower and reasonably acceptable to the Agent.
6.14 Pledge of Additional Collateral. Subject to Section
6.12, promptly, and in any event within 30 days after the acquisition of assets
of the type that would have constituted Collateral (if the Person acquiring
such assets had executed an appropriate Security Document on the Closing Date)
at the Closing Date (the "Additional Collateral"), the Borrower will, and will
cause each of its Subsidiaries to, execute all necessary documents and take all
necessary action, including, without limitation, the filing of appropriate
financing statements under the provisions of the UCC, applicable foreign,
domestic or local laws, rules or regulations in each of the offices where such
filing is necessary or appropriate to grant the Collateral Agent a perfected
Lien in such Collateral (or comparable interest under foreign law in the case
of foreign Collateral) pursuant to and to the full extent required by the
Security Documents and this Agreement. All actions taken by the parties in
connection with the pledge of Additional Collateral, including, without
limitation, costs of counsel for the Agent, shall be for the account of the
Borrower, which shall pay all sums due on demand.
6.15 Security Interests. The Borrower will, and will cause
each of its Subsidiaries to, perform any and all acts and execute any and all
documents (including, without limitation, the execution, amendment or
supplementation of any financing statement and continuation statement) for
filing in any appropriate jurisdiction under the provisions of the UCC, local
law or any statute, rule or regulation of any applicable jurisdiction which are
necessary in order to maintain or confirm in favor of the
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Collateral Agent for the ratable benefit of the Banks a valid and perfected Lien
on the Collateral and any Additional Collateral, subject to no Liens except for
Prior Liens and Liens permitted by the applicable Security Documents. The
Borrower shall, as promptly as practicable after the filing of any financing
statements, deliver to the Agent acknowledgment copies of, or copies of lien
search reports confirming the filing of, financing statements duly filed under
the UCC of all jurisdictions as may be necessary or, in the reasonable opinion
of the Agent, desirable to perfect the Lien created, or purported or intended to
be created, by each Security Document.
6.16 Environmental Events. (i) The Borrower will promptly
give notice to the Agent upon becoming aware thereof, in each case to the
extent such occurrence would have a Materially Adverse Effect, (a) of any
violation of any Environmental Law, (b) of any inquiry, proceeding,
investigation or other action, including a request for information or a notice
of potential liability under any Environmental Law from any Person or (c) of
the discovery of the release or threatened release of any Hazardous Material
at, on, upon, under or from any of the Real Properties or any facility or
equipment thereat in excess of reportable quantities or allowable standards or
levels under any Environmental Law, or in a manner and/or amount which could
reasonably be expected to result in liability under any Environmental Law.
(ii) In the event of the presence of any Hazardous Material
on, at, upon or under any of the Real Properties which is in violation of, or
which could reasonably be expected to result in liability under, any
Environmental Law, in each case which would have a Materially Adverse Effect,
the Borrower or any of its Subsidiaries, upon discovery thereof, shall take all
necessary steps to initiate and expeditiously complete all response, corrective
and other action required under any Environmental Law to mitigate and eliminate
any such adverse effect.
(iii) The Borrower shall as promptly as practicable, but in
any event within 15 days, notify the Agent of the occurrence of any event
specified in Section 6.16(ii) and shall thereafter keep the Agent informed on a
periodic basis of any actions taken in response to such event and the results
of such actions.
(iv) The Borrower shall provide the Agent with copies of
any notice, submittal or documentation provided by any Borrower or any of its
respective Subsidiaries to any governmental authority or third party under any
Environmental Law if the matter which is the subject of the notice, submittal
or other documentation could reasonably be expected to result in a Materially
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Adverse Effect. Such notice, submittal or documentation shall be provided to
the Agent promptly and, in any event, within 5 business days after such
material is provided to the governmental authority or third party.
SECTION 7. Negative Covenants. The Borrower hereby covenants
and agrees that as of the Closing Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated and until the
Loans together with interest, fees and all other Obligations incurred hereunder
are paid in full:
7.01 Changes in Business. The Borrower will not, and the
Borrower will not permit any of its Subsidiaries to, materially alter the
character of its businesses from that conducted by the Borrower or such
Subsidiary, as the case may be, at the Closing Date.
7.02 Amendments or Waivers of Certain Documents. After the
Closing Date, the Borrower will not, and the Borrower will not permit any of
its Subsidiaries to, amend or otherwise change the terms of any of the
Refinancing Documents, its Certificate of Incorporation (including, without
limitation, by the filing of a certificate of designation) or By-laws or any
agreement entered into by the Borrower or any of its Subsidiaries with respect
to its capital stock in any manner adverse to the Banks.
7.03 Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Lien upon or with respect to any item constituting
Collateral, whether now owned or hereafter acquired, except for the Lien of the
Security Document relating thereto, Prior Liens applicable thereto and other
Liens expressly permitted by such Security Document. The Borrower will not, and
will not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Lien upon or with respect to any property or assets of the Borrower
or any of its Subsidiaries which does not constitute Collateral, whether now
owned or hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets or assign any right to receive income, or file or permit the
filing of any financing statement under the UCC or any other similar notice of
Lien under any similar recording or notice statute, except the following, which
are herein collectively referred to as "Permitted Encumbrances":
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(a) Liens for taxes, assessments or governmental charges or
claims not yet delinquent or Liens for taxes, assessments or
governmental charges or claims being contested in good faith and by
appropriate proceedings for which adequate reserves, as may be
required by GAAP, have been established;
(b) Liens in respect of property or assets of the Borrower or
any of its Subsidiaries imposed by law (i) which were incurred in the
ordinary course of business, such as carriers', warehousemen's and
mechanics' Liens and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate materially
detract from the value of such property or assets or materially impair
the use thereof in the operation of the business of the Borrower or
any of its Subsidiaries or (y) which are being contested in good faith
by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or asset subject to
such Lien or (ii) which do not relate to material liabilities of the
Borrower and its Subsidiaries and do not, in the aggregate, materially
detract from the value of the property and assets of the Borrower and
its Subsidiaries taken as a whole;
(c) Liens in connection with any attachment or judgment
(including judgment or appeal bonds) not in excess of $250,000 in the
aggregate (exclusive of any amount adequately covered by insurance as
to which the insurance company has acknowledged coverage) unless the
judgment it secures shall, within 60 days after the entry thereof, not
have been discharged or execution thereof not stayed pending appeal,
or shall not have been discharged within 30 days after the expiration
of any such stay;
(d) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business 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 (exclusive of
obligations in respect of the payment for borrowed money or the
equivalent);
(e) Subject to the provisions of Section 7.19, Leases with
respect to the assets or properties of the Borrower entered into in
the ordinary course of the Borrower's business
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and subordinate in all respects to the Liens granted and evidenced by
the Security Documents;
(f) easements, rights of way, restrictions, minor defects or
irregularities in title not interfering in any material respect with
the business of the Borrower or any of its Subsidiaries, and which do
not materially impair the operations, value or utility of the Real
Property to which it relates for such Real Property's intended
purposes; and
(g) Liens upon real or tangible personal property acquired by
the Borrower or its Subsidiaries after the date hereof; provided that
(i) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, the cost of the
item of property subject thereto, (ii) the principal amount of the
Indebtedness secured by such Lien does not exceed 100%, of the fair
value (as determined in good faith by the board of directors of the
Borrower) of the respective property at the time it was so acquired,
(iii) such Lien does not extend to or cover any other property other
than such item of property and (iv) the incurrence of such
Indebtedness secured by such Lien is permitted by Section 7.04.
The Borrower shall use its best efforts to obtain the waiver
of any Lien referred to in clause (b)(i) above on or in respect of any
Equipment or Inventory. The term "Permitted Encumbrances" shall mean, with
respect to Collateral, Liens permitted under the applicable Security Documents.
7.04 Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume, become liable for
(contingently or otherwise) or suffer to exist any Indebtedness, except:
(a) Indebtedness incurred pursuant to the Credit Documents;
provided that the aggregate Indebtedness incurred pursuant to this
Agreement shall in no event exceed the Total Commitments;
(b) Existing Indebtedness and any refinancing thereof or
guarantees with respect thereto; provided that any such refinancing of
Existing Indebtedness shall be on terms which, both taken as a whole
and specifically as such terms relate to the identity of the obligors,
repayments of principal, covenants, events of default and security in
property of the debtor, are in each event no less favorable to the
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Banks than the correlative terms of the Existing Indebtedness;
(c) Interest Rate Agreements;
(d) $2.5 million of Indebtedness, in the aggregate at any
time outstanding, incurred to finance the cost of the acquisition of
real or personal tangible property (including Capital Leases);
provided that such Indebtedness shall not exceed 100% of the fair
value of such property; and provided, further, that such Indebtedness
is not secured by any Lien other than a Lien referred to in clause (g)
of Section 7.03;
(e) other unsecured Indebtedness not exceeding $500,000 in the
aggregate at any time outstanding; and
(f) the Subordinated Notes, provided that the Subordinate
Notes are repurchased no later than the later of (i) 30 days after the
consummation of the offering of the Senior Notes and (ii) July 15, 1997.
7.05 Capital Expenditures. The Borrower will not, and will
not permit any of its Subsidiaries to, make Consolidated Capital Expenditures
for any purpose, in excess of $3.5 million in any fiscal year; provided further
that if the Borrower and its Subsidiaries have made Consolidated Capital
Expenditures in the immediately preceding fiscal year less than the maximum
amount set forth above for such immediately preceding fiscal year (a
"deficiency amount"), the Borrower and its Subsidiaries may make Consolidated
Capital Expenditures in the current fiscal year in an amount not to exceed the
sum of (i) the amount set forth for such current fiscal year and (ii) the
deficiency amount for the immediately preceding fiscal year; provided that a
deficiency amount may only be carried over to such fiscal year and may not be
aggregated with any other deficiency amount.
7.06 Advances, Investments and Loans. The Borrower will not,
and will not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to
any Person, except:
(a) investments in Cash and Cash Equivalents;
(b) receivables owing to them and advances to customers and
suppliers, in each case if created, acquired or made
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in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms;
(c) investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course
of business; and
(d) additional loans, advances and/or investments of a nature
not contemplated by the foregoing clauses (a) through (c); provided
that all loans, advances and investments made pursuant to this clause
(d) shall not exceed $500,000 in the aggregate at any time
outstanding; and provided, that all Securities or other instruments
evidencing such loans, investments or advances shall be pledged
pursuant to an appropriate Security Document in the event that such
Securities or other instruments shall have been acquired for aggregate
consideration in excess of $250,000.
7.07 Prepayments of Indebtedness, etc. Except with respect to
the Senior Notes in accordance with Section 7.08, the Borrower will not, and
will not permit any of its Subsidiaries to: (i) after the issuance thereof,
amend or modify (or permit the amendment or modification of) any of the terms
or provisions of any of the Indebtedness (or any agreement relating thereto) of
the type described in Section 7.04(b) (except as permitted under Section 7.02
with respect to the Refinancing Documents); (ii) make (or give any notice in
respect of) any voluntary or optional payment or prepayment or redemption or
acquisition for value of (including, without limitation, by way of depositing
with any trustee with respect thereto money or securities before such
Indebtedness is due for the purpose of paying such Indebtedness when due), or
exchange of, any such Indebtedness or any capital stock, as the case may be;
and (iii) pay interest on the Existing Indebtedness (other than in accordance
with the terms thereof).
7.08 Dividends, etc. Except for the Distributions, the
Borrower will not, and will not permit any of its Subsidiaries to, declare or
pay any dividends or return any capital to, its stockholders or authorize or
make any other distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for any consideration, any shares of any class of its
capital stock now or hereafter outstanding (or any warrants for or options or
stock appreciation rights in respect of any of such shares), or make any
loans or advances to Affiliates, or set
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aside any funds for any of the foregoing purposes, or permit any of its
Subsidiaries to purchase or otherwise acquire for consideration any shares of
any class of the capital stock of the Borrower or any other of the Borrower's
Subsidiaries, as the case may be, now or hereafter outstanding (or any options
or warrants or stock appreciation rights issued by such Person with respect to
its capital stock) (all of the foregoing, together with the optional redemption
or repurchase of the Senior Notes in accordance with the terms of the Indenture,
"Dividends"), unless (1) immediately before and immediately after giving effect
to such proposed Dividends on a pro forma basis, no Default or Event of Default
shall have occurred and be continuing and such Dividend shall not be an event
which is, or after notice or lapse of time would be, an "event of default" under
the terms of any Indebtedness of the Borrower or its Subsidiaries and (2) after
giving effect to the proposed Dividend, the aggregate amount of all such
Dividends declared or made since the Closing Date, does not exceed 50% of the
aggregate Consolidated Net Income of the Borrower accrued on a cumulative basis
during the period beginning on the first day of the fiscal quarter beginning
after the Closing Date and ending on the last day of the Borrower's last fiscal
quarter ending prior to the date of the Dividend, provided that the aggregate
amount of such Dividends shall not exceed $5.0 million in any twelve-month
period; and except that (i) any Subsidiary of the Borrower may pay Dividends to
its parent corporation if such parent corporation is the Borrower or a
Wholly-Owned Subsidiary of the Borrower, and (ii) any Subsidiary of the Borrower
may pay to the Borrower any amounts required for the payment of any taxes
payable (x) by the Borrower or (y) by the Borrower and/or its Subsidiaries on a
consolidated, combined or unitary basis.
7.09 Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiaries to, enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any
holder of 5% or more of any class of equity securities of any Credit Party or
with any Affiliate of any Credit Party other than on terms and conditions
substantially as favorable to the Borrower or such Subsidiary as would be
obtainable by the Borrower or such Subsidiary at the time in a comparable
arm's-length transaction with a Person other than a holder of 5% or more of any
class of equity securities of a Credit Party or an Affiliate; provided that the
foregoing restrictions shall not apply to (i) transactions between the Borrower
and any of its Wholly-Owned Subsidiaries and between Wholly-Owned Subsidiaries
of the Borrower, (ii) the payment of fees (including any fees described in
Section 11.04 hereof) to Indosuez and its Affiliates for financial services,
such fees not to exceed the usual and customary fees of Indosuez for similar
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services, (iii) the payment of a fee to GGvA for financial advisory services in
connection with the Recapitalization not to exceed $500,000 and (iv) the
payment of fees to GGvA for financial advisory services not to exceed, in any
year, $500,000 plus reasonable expenses actually incurred by GGvA with respect
thereto.
7.10 Total Interest Coverage Ratio. The Borrower will not
permit the ratio of (i) Consolidated EBITDA of the Borrower during any Test
Period to (ii) Consolidated Interest Expense of the Borrower during the shorter
of (a) any Test Period or (b) the period consisting of the number of days
elapsed since the Closing Date, in each case ending on the last day of any
Fiscal Quarter listed below, to be less than the ratio set forth opposite such
fiscal quarter, provided that, for purposes of (b), Consolidated Interest
Expense shall be equal to the product of the amount of Consolidated Interest
Expense for such period and a fraction, the numerator of which is 365 and the
denominator of which is the number of days elapsed during such period since the
Closing Date:
Fiscal Quarter Ratio
-------------- -----
Third Fiscal Quarter of 1997 1.60 to 1.00
Last Fiscal Quarter of 1997 1.60 to 1.00
First Fiscal Quarter of 1998 1.60 to 1.00
Second Fiscal Quarter of 1998 1.60 to 1.00
Third Fiscal Quarter of 1998 1.60 to 1.00
Last Fiscal Quarter of 1998 1.60 to 1.00
First Fiscal Quarter of 1999 1.60 to 1.00
Second Fiscal Quarter of 1999 1.60 to 1.00
Third Fiscal Quarter of 1999 1.60 to 1.00
Last Fiscal Quarter of 1999 1.60 to 1.00
First Fiscal Quarter of 2000 1.60 to 1.00
Second Fiscal Quarter of 2000 1.60 to 1.00
Third Fiscal Quarter of 2000 1.60 to 1.00
Last Fiscal Quarter of 2000 1.60 to 1.00
First Fiscal Quarter of 2001 1.60 to 1.00
Second Fiscal Quarter of 2001 1.60 to 1.00
Third Fiscal Quarter of 2001 1.60 to 1.00
First Fiscal Quarter of 2002 1.60 to 1.00
Second Fiscal Quarter of 2002 1.60 to 1.00
7.11 Fixed Charge Coverage Ratio. The Borrower will not
permit the ratio of (i) Consolidated EBITDAC of the Borrower minus cash income
taxes paid by the Borrower during any Test Period to (ii) Consolidated Interest
Expense of the Borrower plus the amount of scheduled mandatory payments on
account of principal of Indebtedness of the Borrower during the shorter of (a)
any Test Period or (b) the period consisting of the number of days
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elapsed since the Closing Date, in each case ending on the last day of any
Fiscal Quarter listed below, to be less than the ratio set forth opposite such
fiscal quarter, provided that, for the purposes of (b), Consolidated Interest
Expense shall be equal to the product of the amount of Consolidated Interest
Expense for such period and a fraction, the numerator of which is 365 and the
denominator of which is the number of days elapsed during such period since the
Closing Date.
Fiscal Quarter Ratio
-------------- ------
Third Fiscal Quarter of 1997 1.10 to 1.00
Last Fiscal Quarter of 1997 1.10 to 1.00
First Fiscal Quarter of 1998 1.10 to 1.00
Second Fiscal Quarter of 1998 1.10 to 1.00
Third Fiscal Quarter of 1998 1.10 to 1.00
Last Fiscal Quarter of 1998 1.10 to 1.00
First Fiscal Quarter of 1999 1.10 to 1.00
Second Fiscal Quarter of 1999 1.10 to 1.00
Third Fiscal Quarter of 1999 1.10 to 1.00
Last Fiscal Quarter of 1999 1.10 to 1.00
First Fiscal Quarter of 2000 1.10 to 1.00
Second Fiscal Quarter of 2000 1.10 to 1.00
Third Fiscal Quarter of 2000 1.10 to 1.00
Last Fiscal Quarter of 2000 1.10 to 1.00
First Fiscal Quarter of 2001 1.10 to 1.00
Second Fiscal Quarter of 2001 1.10 to 1.00
Third Fiscal Quarter of 2001 1.10 to 1.00
First Fiscal Quarter of 2002 1.10 to 1.00
Second Fiscal Quarter of 2002 1.10 to 1.00
7.12 Leverage Ratio. The Borrower will not permit the ratio
of (i) Indebtedness of the Borrower and its Subsidiaries to (ii) the
Consolidated EBITDA of the Borrower during any Test Period ending on the last
day of any Fiscal Quarter listed below to be more than the ratio set forth
opposite such fiscal quarter:
Fiscal Quarter Ratio
-------------- -----
Third Fiscal Quarter of 1997 5.75 to 1.00
Last Fiscal Quarter of 1997 5.75 to 1.00
First Fiscal Quarter of 1998 5.75 to 1.00
Second Fiscal Quarter of 1998 5.75 to 1.00
Third Fiscal Quarter of 1998 5.75 to 1.00
Last Fiscal Quarter of 1998 5.75 to 1.00
First Fiscal Quarter of 1999 5.75 to 1.00
Second Fiscal Quarter of 1999 5.75 to 1.00
Third Fiscal Quarter of 1999 5.75 to 1.00
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Fiscal Quarter Ratio
-------------- -----
Last Fiscal Quarter of 1999 5.75 to 1.00
First Fiscal Quarter of 2000 5.75 to 1.00
Second Fiscal Quarter of 2000 5.75 to 1.00
Third Fiscal Quarter of 2000 5.75 to 1.00
Last Fiscal Quarter of 2000 5.75 to 1.00
First Fiscal Quarter of 2001 5.75 to 1.00
Second Fiscal Quarter of 2001 5.75 to 1.00
Third Fiscal Quarter of 2001 5.75 to 1.00
First Fiscal Quarter of 2002 5.75 to 1.00
7.13 Minimum Net Worth. The Borrower will maintain a
Consolidated Net Worth (to be calculated for the purposes of this Section 7.13
excluding gains, net of income taxes related thereto (but not losses, net of
income taxes related thereto) resulting from Asset Sales) of at least the
amount set forth below as of the last day of each of the fiscal years set forth
below and during the three Fiscal Quarters immediately following each such
fiscal year:
Amount in
Fiscal Year: $ Millions
----------- ----------
1997...................................................... $(33.00)
1998...................................................... (30.50)
1999...................................................... (30.00)
2000 ..................................................... (29.00)
2001...................................................... (27.00)
2002...................................................... (25.00)
7.14 Current Ratio. Borrower will not, at any time, permit
the ratio of (i) Consolidated Current Assets of the Borrower to (ii)
Consolidated Current Liabilities of the Borrower to be less than 1.50:1 as
determined on the last day of each fiscal month of the Borrower, for any two
consecutive fiscal months of the Borrower. In the event that any such ratio so
determined is less than 1.50:1 for any two consecutive fiscal months of the
Borrower, the Borrower will provide written notice of such to the Agent within
15 days of the last day of such second fiscal month.
7.15 Disposition of Assets. The Borrower will not, and will
not permit any of its Subsidiaries to, dispose of all or any part of its
interest in any asset, except that the Borrower and its Subsidiaries may sell
assets so long as (i) such sales are approved by the Required Banks and the
sales price thereof is, in the reasonable judgment of the Agent, at least equal
to
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the fair market value of such assets, (ii) subject to Section 7.21, such sales
are for at least the fair market value of such assets and the aggregate amount
of such asset sales is less than $1,000,000 for any fiscal year of the Borrower
and, in any such case, the Borrower or such Subsidiary complies with the
mandatory prepayment provisions and, in the case of Collateral, so long as the
conditions to the release of Collateral described herein and in the applicable
Security Documents are met, (iii) such sales are of inventory and raw materials
and in the ordinary course of business, or (iv) such sales are (A) of obsolete
equipment, (B) for at least the fair market value of such equipment and (C) the
proceeds of such sales are used within 90 days of such sales to (1) purchase
equipment used in substantially similar lines of business or (2) to repay
Indebtedness under this Credit Agreement pursuant to Section 3.01.
The consideration received by the Borrower and its
Subsidiaries from each sale of assets permitted above shall be received in
whole at the time of sale and at least 70% of the consideration from each sale
shall consist of Cash or Cash Equivalents or, other than with respect to
Section 7.15(iii), to the extent of its fair market value, equipment used in
substantially similar lines of business.
7.16 Contingent Obligations. The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly, create or become
or be liable with respect to any Contingent Obligation except:
(i) guarantees resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(ii) Interest Rate Agreements;
(iii) obligations arising as a direct consequence of the
Refinancing;
(iv) other Contingent Obligations not to exceed $250,000
outstanding at any one time; and
(v) guarantees of the Senior Notes as provided in the
indenture relating thereto.
7.17 ERISA. The Borrower will not, and will not permit any of
its ERISA Affiliates to:
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(i) engage in any transaction in connection with which
the Borrower could be subject to either a tax imposed by Section
4975(a) of the Code or the corresponding civil penalty assessed
pursuant to Section 502(i) of ERISA, which penalties and taxes for all
such transactions could reasonably be expected to be in an aggregate
amount in excess of $250,000;
(ii) permit to exist any failure to make contributions or
any unfunded benefits liability which creates, or with the passage of
time would create, a statutory lien or requirement to provide security
under ERISA or the Code in favor of the PBGC or any Pension Plan,
Multiemployer Plan or other entity;
(iii) permit the sum of the amount of unfunded benefit
liabilities (determined in accordance with Statement of Financial
Accounting Standards No. 87) under all Title IV Plans (excluding each
Title IV Plan with an amount of unfunded benefit liabilities of zero
or less) to exceed $3,500,000 for a period in excess of twelve months;
or
(iv) fail to make any payment to any Multiemployer Plan
that it or any of its ERISA Affiliates may be required to make under
such Multiemployer Plan, any agreement relating to such Multiemployer
Plan, or any law pertaining thereto that would have a Materially
Adverse Effect.
As used in this Section 7.17, the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412
of the Code, and the term "amount of unfunded benefit liabilities" has the
meaning specified in Section 4001(a)(18) of ERISA.
7.18 Merger and Consolidations. Neither the Borrower nor any
of its Subsidiaries will merge or consolidate with or into any other entity.
7.19 Sale and Lease-Backs. The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly, become or
thereafter remain liable as lessee or as guarantor or other surety with respect
to the lessee's obligations under any lease, whether an Operating Lease or a
Capital Lease, of any property (whether real or personal or mixed) whether now
owned or hereafter acquired, (i) which the Borrower or any of its Subsidiaries
has sold or transferred or is to sell or transfer to any other Person or (ii)
which the Borrower or any such Subsidiary intends to use for substantially the
same purpose as any
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other property which has been or is to be sold or transferred by the Borrower or
any such Subsidiary to any Person in connection with such lease, if in the case
of clause (i) or (ii) above, such sale and such lease are part of the same
transaction or a series of related transactions or such sale and such lease
occur within one year of each other or are with the same other Person.
7.20 Sale or Discount of Receivables. The Borrower will not,
nor will it permit any of its Subsidiaries to, sell, with or without recourse,
or discount (other than in connection with trade discounts necessitated by the
creditworthiness of the other party, in each case, in the ordinary course of
business consistent with past practice) or otherwise sell for less than the
face value thereof, notes or accounts receivable; provided that the Borrower or
its Subsidiaries may employ a collection agent in connection with collection of
accounts receivable not to exceed $250,000 in any fiscal year of the Borrower
which have been unpaid for at least 90 days after the original payment date.
7.21 Issuance of Subsidiary Stock. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, issue,
sell, assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other securities (or warrants, rights or options to acquire capital
stock or convertible securities or other equity securities) of any such
Subsidiary.
7.22 Speculative Transactions. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, enter into
speculative use of derivatives and commodity and hedging transactions; provided
that the Borrower or its Subsidiaries may enter into agreements consistent with
the Borrower's present practice of hedging future aluminum purchases associated
with customer forward sales contracts and purchase commitments.
7.23 Subsidiaries. The Borrower shall not form, acquire or
permit any Person to become a Subsidiary of the Borrower unless (i) such
Subsidiary has executed and delivered a Guarantee with respect to all of the
Borrower's obligations hereunder and such Security Documents as are necessary
or desirable, in the sole judgment of the Agent, to grant to the Banks a
perfected first priority Lien on all of the assets of such Person which would
otherwise constitute Collateral, in each case in form and substance acceptable
to the Agent and (ii) the Borrower has executed and delivered or has caused its
Subsidiaries to execute and deliver, as appropriate, such Pledge Agreements and
other Security Documents as are necessary or desirable, in the sole judg-
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ment of the Agent, to grant to the Banks a perfected first priority Lien on all
of the Pledged Securities issued by such newly-formed Subsidiary, in each case
in form and substance acceptable to the Agent.
SECTION 8. Events of Default. Upon the occurrence and during
the continuance of any of the following specified events (each an "Event of
Default"):
8.01 Payments. The Borrower shall (i) default in the payment
when due of any principal of the Loans, (ii) default, and such default shall
continue for two or more Business Days, in the payment when due of any interest
on the Loans or under any other Credit Document or (iii) fail to pay any other
amounts owing hereunder for five days after receiving notice thereof; or
8.02 Representations, etc. Any representation, warranty or
statement made or deemed made by any Credit Party herein or in any other Credit
Document or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove to be untrue in any material
respect on the date as of which made or deemed made; or
8.03 Covenants. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 6.12, 6.14, 6.15 or Section 7 hereof or (b) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement, any other Credit Documents or any Security
Document (other than those referred to in Section 8.01, 8.02 or clause (a) of
this Section 8.03) and such defaults under this clause (b) shall continue
unremedied for a period of at least fifteen days after the date of such
default; or
8.04 Default Under Other Agreements. (a) Any Credit Party
shall (i) default in any payment with respect to any Indebtedness or preferred
stock having a principal amount or liquidation value, as the case may be, in
excess of $250,000 individually or $500,000 in the aggregate for all Credit
Parties, beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness or preferred stock was created, or (ii)
default in the observance or performance of any agreement or condition relating
to any such Indebtedness or preferred stock or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit (with or without notice,
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lapse of time or both) the holder or holders of such Indebtedness (or a trustee
or agent on behalf of such holder or holders) or preferred stock to cause any
such Indebtedness or preferred stock to become due (whether by acceleration,
redemption, etc.) prior to its stated maturity; or (b) any such Indebtedness or
preferred stock of the Borrower or any of its Subsidiaries shall be declared to
be due and payable, required to be prepaid or redeemed other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof; or
8.05 Bankruptcy, etc. Any Credit Party shall commence a
voluntary case concerning itself under Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto
(the "Bankruptcy Code"); or an involuntary case is commenced against any Credit
Party or any of its Subsidiaries and the petition is not controverted within 10
days, or is not dismissed within 60 days, after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of any Credit Party or any of its
Subsidiaries; or any Credit Party or any of its Subsidiaries commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to any Credit Party or
any of its Subsidiaries; or there is commenced against any Credit Party or any
of its Subsidiaries any such proceeding which remains undismissed for a period
of 60 days; or any Credit Party or any of its Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or any Credit Party or any of its Subsidiaries
suffers any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of 60
days; or any Credit Party or any of its Subsidiaries makes a general assignment
for the benefit of creditors; or any corporate action is taken by any Credit
Party or any of its Subsidiaries for the purpose of effecting any of the
foregoing; or
8.06 ERISA. (i) Other than the Recapitalization, any
"reportable event" as described in Section 4043 of ERISA or the regulations
thereunder (excluding those events for which the requirement for notice has
been waived by the PBGC), or any other event or condition, which the Required
Banks determine constitutes reasonable grounds under Section 4042 of ERISA for
the termination of any Pension Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer or
liquidate any Title IV Plan shall have occurred; or
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(ii) A trustee shall be appointed by a United States District
Court to administer any Title IV Plan; or
(iii) The PBGC shall institute proceedings to terminate any
Title IV Plan or to appoint a trustee to administer any Title IV Plan; or
(iv) The Borrower or any of its ERISA Affiliates shall become
liable to the PBGC or any other party under Section 4062, 4063 or 4064 of ERISA
with respect to any Title IV Plan; or
(v) The Borrower or any of its ERISA Affiliates shall become
liable to any Multiemployer Plan under Section 4201 et seq. of ERISA;
if the sum of each of the Borrower's and its ERISA Affiliates' (which are
Subsidiaries of the Borrower) various liabilities (and including any
liabilities of the Borrower's ERISA Affiliates which are not Subsidiaries of
the Borrower which reasonably could be expected to result in a liability to the
Borrower) (such liabilities to include, without limitation, any liability to
the PBGC or to any other party under Section 4062, 4063 or 4064 of ERISA with
respect to any Title IV Plan, or to any Multiemployer Plan under Section 4201
et seq. of ERISA, and to be calculated after giving effect to the tax
consequences thereof) as a result of such events listed in subclauses (i)
through (v) above exceeds $250,000 and is unpaid for a period of 45 days; or
8.07 Security Documents. Any Security Document shall cease to
be in full force and effect in all material respects, or shall cease to give
the Collateral Agent, the Liens, rights, powers and privileges purported to be
created thereby, in favor of the Collateral Agent, superior to and prior to the
rights of all third Persons and subject to no Liens other than Prior Liens and
Liens expressly permitted by the applicable Security Document, or any judgment
creditor having a Lien against any item of Collateral shall commence legal
action to foreclose such Lien or otherwise exercise its remedies against any
item of Collateral; or
8.08 Judgments. One or more judgments or decrees shall be
entered against any Credit Party or any of the Borrower's Subsidiaries
involving a liability of $250,000 or more in the case of any one such judgment
or decree and $500,000 or more in the aggregate for all such judgments and
decrees for all Credit Parties and their Subsidiaries (in either case in excess
of the amount covered by insurance as to which the insurance company has
acknowledged coverage) and any such judgments or decrees
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shall not have been vacated, discharged, stayed or bonded pending appeal within
60 days from the entry thereof; or
8.09 Ownership. (i) The Permitted Holders cease to own at
least 51% of the total voting power or the Voting Stock of the Borrower, par
value $.01 per share and any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), is or becomes the "beneficial
owner" (as such term is used in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have beneficial ownership of all shares
that such person has a right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of 30%
or more of the total voting power or the Voting Stock of the Borrower; (ii)
individuals who constituted the Board of Directors of the Borrower on the
Closing Date (together with any new directors whose proposal for election by
the shareholders of the Borrower was approved by a vote of 51% of the directors
of the Borrower then still in office who either were directors on the Closing
Date or whose election or nomination for election was previously so approved)
shall cease for any reason to constitute a majority of the members of the Board
of Directors of the Borrower still in office; (iii) any "person" or "group" (as
defined in clause (i) above) shall have the right to designate or ability to
appoint or nominate a greater number of the members of the Board of Directors
of the Borrower than the Permitted Holder shall have; (iv) the Borrower
conveys, transfers or leases all or substantially all of its assets to any
Person; (v) the Permitted Holders cease to own at least 51% of the total voting
power or the Voting Stock of the Borrower, par value $.01 per share; or (vi)
the approval by stockholders of the Borrower of any plan or proposal for the
liquidation, dissolution or winding up of the Borrower; provided that the
distribution of Voting Stock by a Permitted Holder to the partners of such
Permitted Holder on a pro rata (in relation to each such partner's interest in
the partnership) basis in accordance with the terms of the partnership
agreement of such Permitted Holder as in effect on the date hereof shall not be
deemed to be a violation of clause (v) of this Section 8.09;
Then, and in any such event, and at any time thereafter, if
any Event of Default shall then be continuing, the Agent shall, upon the
written request of the Required Banks, by written notice to the Borrower, take
any or all of the following actions, without prejudice to the rights of the
Agent or any Bank to enforce its claims against the Borrower, except as
otherwise specifically provided for in this Agreement (provided that an Event
of Default specified in Section 8.05 shall occur, with respect to any Credit
Party, automatically without the giving of any no-
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tice): (i) declare the Total Revolving Loan Commitments terminated, whereupon
the Commitment of each Bank shall forthwith terminate immediately and any
accrued and unpaid Commitment Commission shall forthwith become due and payable
without any other notice of any kind; (ii) declare the principal of and accrued
interest in respect of all Loans and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; and/or (iii) enforce, as Collateral
Agent (or direct the Collateral Agent to enforce), any or all of the remedies
created pursuant to the Security Documents. In addition, upon demand by the
Agent or the Required Banks after the occurrence and during the continuance of
any Default or Event of Default, the Borrower shall deposit with the Agent for
the ratable benefit of the Banks with respect to each Letter of Credit then
outstanding, promptly upon such demand, Cash or Cash Equivalents in an amount
equal (taken together with any Cash or Cash Equivalents previously provided by
Borrower for such purpose, if any) to the greatest amount for which each such
Letter of Credit may be drawn. Such deposit shall be held by the Agent for the
ratable benefit of the Banks as security for, and to provide for the payment of,
outstanding Letters of Credit. If an Event of Default is cured or waived in
accordance with the terms of the Agreement, it ceases (and, if waived, pursuant
to the terms, and to the extent, of such waiver).
SECTION 9. Definitions. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Account" means each of the Borrower's "accounts" (as that
term is defined in Section 9-106 of the Uniform Commercial Code as in effect in
the State of New York), whether or not such Account has been earned by
performance and whether now existing or existing in the future, including,
without limitation, all (i) accounts receivable, including, without limitation,
all accounts created by or arising from all of the Borrower's sales of goods or
rendition of services made under any of the Borrower's trademarks or trade
names; (ii) unpaid seller's rights (including rescission, replevin, reclamation
and stopping in transit) relating to the foregoing or arising therefrom; (iii)
rights to any goods represented by any of the foregoing, including returned or
repossessed goods; (iv) reserves and credit balances held by the Borrower with
respect to any such accounts receivable or any ac-
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count debtor; (v) guarantees or collateral for any of the foregoing; and (vi)
insurance policies or rights relating to any of the foregoing.
"Additional Collateral" shall have the meaning provided in
Section 6.14.
"Adjusted LIBOR Rate" shall mean, with respect to any LIBOR
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (i) the sum of
(a) the LIBOR in effect for such Interest Period and (b) the applicable
Interest Margin and (ii) Statutory Reserves, if any.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and executive officers of such Person), controlled by, or under
direct or indirect common control with such Person; provided that neither
Indosuez nor any Affiliate of Indosuez shall be deemed to be an Affiliate of
any Credit Party. A Person shall be deemed to control a corporation for the
purposes of this definition if such Person possesses, directly or indirectly,
the power (i) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (ii) to direct or
cause the direction of the management and policies of such corporation, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean Indosuez, or any successor thereto
appointed in accordance herewith, in its capacity as agent and collateral agent
for the Banks.
"Agent's Office" means the office of the Agent located at
1211 Avenue of the Americas, New York, New York 10036, or such other office in
New York as the Agent may hereafter designate in writing as such to the other
parties hereto.
"Agreement" shall mean this Credit Agreement, as the same may
after its execution be amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof.
"Asset Sale" shall mean the sale, transfer or other
disposition, to the extent consummated after the Closing Date, (x) by the
Borrower of any of the Securities of its Subsidiaries to any Person or (y) by
the Borrower or any Subsidiary of the Borrower to any Person other than the
Borrower or any Wholly-Owned Subsidiary of the Borrower of any asset of the
Bor-
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rower or such Subsidiary (other than transactions included in the definition of
Net Financing Proceeds and sales, transfers or other dispositions of inventory
in the ordinary course of business and/or of obsolete equipment effected in
compliance with Section 7.15(iv)).
"Authorized Officer" shall mean any senior officer of the
Borrower, designated as such in writing to the Agent by the Borrower, to the
extent acceptable to the Agent.
"Bank" shall have the meaning provided in the first paragraph
of this Agreement and in Section 11.04.
"Bankruptcy Code" shall have the meaning provided in Section
8.05.
"Base Rate" shall mean the higher of (x) 1/2% per annum in
excess of the Federal Funds Rate and (y) the rate which the Agent announces
from time to time as its prime lending rate, as in effect from time to time.
The rate the Agent announces as its prime lending rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. The Agent may make commercial loans or other loans at rates of
interest at, above or below the rate it announces as its prime lending rate.
"Base Rate Loan" shall mean each Loan bearing interest at the
rate provided in Section 1.08(a).
"Borrower" shall have the meaning set forth in the
introductory paragraph of this Agreement.
"Borrowing" shall mean the incurrence pursuant to a Notice of
Borrowing and to the Loan Facility of one Type of Loan by the Borrower from all
of the Banks on a pro rata basis on a given date (or resulting from conversions
on a given date), having in the case of LIBOR Loans the same Interest Periods.
"Borrowing Base" means an amount equal to the sum of (i) 80%
of the Eligible Accounts Receivable and (ii) 50% of the Eligible Inventory.
"Borrowing Base Certificate" shall have the meaning provided
in Section 6.01(m).
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal
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holiday or a day on which banking institutions are authorized by law or other
governmental actions to close and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
LIBOR Loans, any day which is a Business Day described in clause (i) and which
is also a day for trading by and between banks in U.S. dollar deposits in the
interbank Eurodollar market.
"Capital Lease" of any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is, or is required to be, accounted for as a capital
lease on the balance sheet of that Person, together with any renewals of such
leases (or entry into new leases) on substantially similar terms.
"Capitalized Lease Obligations" of any Person shall mean all
obligations under Capital Leases of such Person or any of its Subsidiaries in
each case taken at the amount thereof accounted for as liabilities in
accordance with GAAP.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents" shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having maturities
of not more than three years from the date of acquisition, (ii) marketable
direct obligations issued by any State of the United States of America or any
local government or other political subdivision thereof rated (at the time of
acquisition of such security) at least AA by Standard & Poor's Corporation
("S&P") or the equivalent thereof by Moody's Investors Service, Inc.
("Moody's") having maturities of not more than one year from the date of
acquisition, (iii) U.S. dollar denominated time deposits, certificates of
deposit and bankers' acceptances of (x) any Bank, (y) any domestic commercial
bank of recognized standing having capital and surplus in excess of
$250,000,000 or (z) any bank whose short-term commercial paper rating (at the
time of acquisition of such security) by S&P is at least A-1 or the equivalent
thereof or by Moody's is at least P-1 or the equivalent thereof (any such bank,
an "Approved Bank"), in each case with maturities of not more than six months
from the date of acquisition, (iv) commercial paper and variable or fixed rate
notes issued by any Bank or Approved Bank or by the parent company of any Bank
or Approved Bank and commercial paper and variable rate notes issued by, or
guaranteed by, any industrial or financial company with a short-term
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commercial paper rating (at the time of acquisition of such security) of at
least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's, or guaranteed by any industrial company with a long-term
unsecured debt rating (at the time of acquisition of such security) of at least
AA or the equivalent thereof by S&P or the equivalent thereof by Moody's and in
each case maturing within one year after the date of acquisition and (v)
repurchase agreements with any Bank or any primary dealer maturing within one
year from the date of acquisition that are fully collateralized by investment
instruments that would otherwise be Cash Equivalents; provided that the terms of
such repurchase agreements comply with the guidelines set forth in the Federal
Financial Institutions Examination Council Supervisory Policy -- Repurchase
Agreements of Depository Institutions With Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985.
"Closing Date" shall mean May 28, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall mean all of the Pledged Collateral and
Pledged Securities.
"Collateral Agent" means Indosuez in its capacity as
collateral agent for the Banks.
"Collective Bargaining Agreement" shall mean each Collective
Bargaining Agreement set forth on Schedule 5.19.
"Commercial Letter of Credit" means any letter of credit or
similar instrument issued for the account of the Borrower, for the purpose of
providing the primary payment mechanism in connection with the purchase of any
materials, goods or services by the Borrower or any of its Subsidiaries in the
ordinary course of business of the Borrower or such Subsidiaries.
"Commitment" shall mean, with respect to each Bank, such
Bank's Revolving Loan Commitment.
"Commitment Commission" shall have the meaning provided in
Section 2.03.
"Compliance Certificate" shall mean a certificate issued
pursuant to Section 6.01(e) signed by a chief financial officer, controller,
chief accounting officer or other Authorized Officer of the Borrower.
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"Consolidated Amortization Expense" for any Person shall
mean, for any period, the consolidated amortization expense of such Person for
such period, determined on a consolidated basis for such Person and its
Subsidiaries in conformity with GAAP.
"Consolidated Capital Expenditures" of any Person shall mean,
for any period, the aggregate gross increase during that period, in the
property, plant or equipment reflected in the consolidated balance sheet of
such Person and its consolidated Subsidiaries, in conformity with GAAP, but
excluding expenditures made in connection with the replacement, substitution or
restoration of assets (i) to the extent financed from insurance proceeds paid
on account of the loss of or damage to the assets being replaced or restored,
(ii) with awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced or (iii) with regard to equipment
that is purchased simultaneously with the trade-in of existing equipment, fixed
assets or improvements, the credit granted by the seller of such equipment for
the trade-in of such equipment, fixed assets or improvements; provided that
Consolidated Capital Expenditures shall in any event include the purchase price
paid in connection with the acquisition of any other Person (including through
the purchase of all of the capital stock or other ownership interests of such
Person or through merger or consolidation) to the extent allocable to property,
plant and equipment.
"Consolidated Current Assets" shall mean, with respect to any
Person as at any date of determination, the total assets of such Person and its
consolidated Subsidiaries which may properly be classified as current assets on
a consolidated balance sheet of such Person and its Subsidiaries in accordance
with GAAP; provided that the determination of the value of inventory shall be
made without giving effect to reserves relating to the Borrower's LIFO (as
defined under GAAP) accounting policy made solely as a result of fluctuations
in the price of aluminum and in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, with respect
to any Person as at any date of determination, the total liabilities of such
Person and its consolidated Subsidiaries which may properly be classified as
current liabilities (other than the current portion of any Loans and other than
interest accrued on the Subordinated Notes) on a consolidated balance sheet of
such Person and its consolidated Subsidiaries in accordance with GAAP.
"Consolidated Depreciation Expense" for any Person shall
mean, for any period, the consolidated depreciation expense
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of such Person for such period, determined on a consolidated basis for such
Person and its consolidated Subsidiaries in conformity with GAAP.
"Consolidated EBITDA" for any Person shall mean, for any
period, the amount equal to (A) the sum of the amounts for such period of (i)
Consolidated Net Income, (ii) Consolidated Tax Expense, (iii) Consolidated
Interest Expense, (iv) Consolidated Amortization Expense and (v) Consolidated
Depreciation Expense (with respect to clauses (ii) through (iv), to the extent
such amounts were deducted in computing Consolidated Net Income) less (B) the
sum of the amounts for such period of (i) interest income (net of income taxes)
and (ii) gains on sales of assets (net of income taxes) to the extent included
in Consolidated Net Income, whether or not extraordinary (excluding sales in
the ordinary course of business) and other extraordinary gains, all as
determined on a consolidated basis for such Person and its consolidated
Subsidiaries in accordance with GAAP.
"Consolidated EBITDAC" for any Person shall mean, for any
period, Consolidated EBITDA minus Consolidated Capital Expenditures.
"Consolidated Interest Expense" for any Person shall mean,
for any period, the sum of (x) total interest expense (including that
attributable to Capital Leases in accordance with GAAP) and (y) total cash
dividends paid on any preferred stock, in each case of such Person and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness and preferred stock of such Person and its Subsidiaries,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, but excluding, however, any amortization of deferred financing
costs, all as determined on a consolidated basis for such Person and its
consolidated Subsidiaries in accordance with GAAP. For purposes of clause (y)
above, dividend requirements shall be increased to an amount representing the
pretax earnings that would be required to cover such dividend requirements;
accordingly, the increased amount shall be equal to such dividend requirements
multiplied by a fraction, the numerator of which is such dividend requirement
and the denominator of which is 1 minus the applicable actual combined Federal,
state, local and foreign income tax rate of such Person and its subsidiaries
(expressed as a decimal), on a consolidated basis, for the fiscal year
immediately preceding the date of the transaction giving rise to the need to
calculate Consolidated Interest Expense.
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"Consolidated Net Income" for any Person shall mean, for any
period, the net income (or loss) of such Person and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period
determined on a consolidated basis for such Person and its consolidated
Subsidiaries in conformity with GAAP; provided that there shall be excluded (i)
the income (or loss) of any other Person (other than consolidated Subsidiaries
of such Person) in which any third Person (other than such Person or any of its
consolidated Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to such Person or any
of its Subsidiaries by such other Person during such period, (ii) the income
(or loss) of any other Person accrued prior to the date it becomes a
consolidated Subsidiary of such Person or is merged into or consolidated with
such Person or any of its consolidated Subsidiaries or such other Person's
assets are acquired by such Person or any of its consolidated Subsidiaries,
(iii) the income of any consolidated Subsidiary of such Person to the extent
that the declaration or payment of dividends or similar distributions by that
consolidated Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
consolidated Subsidiary, and (iv) the effect of any provision (net of income
taxes) relating to the Borrower's LIFO (as defined under GAAP) accounting
policy made solely as a result of fluctuations in the price of aluminum and in
accordance with GAAP.
"Consolidated Net Worth" of any Person shall mean, at any
time for the determination thereof, the sum of the capital stock and additional
paid-in capital plus retained earnings (or minus accumulated deficit) of such
Person and its consolidated Subsidiaries, all as determined on a consolidated
basis for such Person and its consolidated Subsidiaries in conformity with
GAAP; provided that such calculation shall be made without giving effect to
provisions (net of income taxes) relating to the Borrower's LIFO (as defined
under GAAP) accounting policy made solely as a result of fluctuations in the
price of aluminum and in accordance with GAAP.
"Consolidated Tax Expense" for any Person shall mean, for any
period, the consolidated tax expense of such Person for such period, determined
on a consolidated basis for such Person and its consolidated Subsidiaries in
conformity with GAAP; provided that such calculation shall be made without
giving effect to provisions (net of income taxes) relating to the Borrower's
LIFO (as defined under GAAP) accounting policy made solely as a
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result of fluctuations in the price of aluminum and in accordance with GAAP.
"Contingent Obligations" shall mean, as to any Person,
without duplication, any obligation of such Person guaranteeing or intended to
guarantee any Indebtedness, leases, dividends or other obligations ("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, (a) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(b) to advance or supply funds (i) fo the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) 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 or (d)
otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business and amounts that are included in
Section 7.16. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the maximum amount that such Person may be obligated to expend
pursuant to the terms of such Contingent Obligation or, if such Contingent
Obligation is not so limited, the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"Credit Documents" shall mean (i) this Agreement, (ii) each
Note and (iii) each Security Document.
"Credit Party" shall mean the Borrower and each Person (other
than the Banks and their respective Affiliates) party to any Credit Document.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Deposit Account" means a demand, time, savings, passbook or
like account with a bank, savings and loan association,
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credit union or like organization, other than an account evidenced by a
negotiable certificate of deposit.
"Distributions" shall mean, within six months of the Closing
Date, (i) a special cash dividend (the "Special Dividend") to the holders of
the Borrower's common stock of $62.00 per share (approximately $56 million
based on the 903,063 shares outstanding as of March 30, 1997), (ii) the
settlement of existing employee stock options through a combination of (x) the
payment of the difference between the amount of the Special Dividend per share
and the exercise price per share and (y) the issuance of shares of common stock
of the Borrower (including the payment of a bonus to option holders receiving
shares in settlement of their options designed to enable them to satisfy a
portion of the income tax incurred by virtue of their receipt of shares of
common stock), and (iii) the repurchase of all of the shares of common stock
held by certain stockholders to the extent, if any, of the remaining proceeds
from the issuance of the Senior Notes; provided that the amount of such
Distribution shall not exceed the net amount received by the Borrower from the
issuance and sale of the Senior Notes less any amounts used to repay
Indebtedness plus up to $2.0 million of Loans made within 30 days of the
Closing Date.
"Dividends" shall have the meaning provided in Section 7.08.
"Documents" shall mean each Credit Document and Refinancing
Document.
"Dollars" means United States Dollars.
"Eligible Accounts Receivable" shall mean, as at any
applicable date of determination, the aggregate face amount of the Borrower's
Accounts included in clause (i) of the definition of Account hereunder
(excluding any Accounts set forth in clause (ii) through (vi) of such
definition), without duplication, in each case less (without duplication) the
aggregate amount of all reserves, limits and deductions with respect to such
Accounts set forth below or as otherwise provided in this Agreement and less
the aggregate amount of all returns, discounts, claims, credits, charges
(including warehouseman's charges) and allowances of any nature with respect to
such Accounts (whether issued, owing, granted or outstanding). Unless otherwise
approved in writing by the Agent in its sole discretion (or, if the aggregate
amount of approvals exceeds $500,000 at any one time, the approval of the
Required Banks), no individual Account shall be deemed to be an Eligible
Account Receivable if:
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(a) the Borrower does not have legal and valid title to the
Account; or
(b) the Account is not the valid, binding and legally
enforceable obligation of the account debtor subject, as to
enforceability, only to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect
affecting the enforceability of creditors' rights generally and (ii)
judicial discretion in connection with the remedy of specific
performance and other equitable remedies; or
(c) the Account arises out of a sale made by the Borrower to
an Affiliate of the Borrower; or
(d) (i) the Account is unpaid more than 30 days after the
original payment date; provided, however, that the aggregate amount of
all invoices providing for payment more than 60 days from the date of
the invoice that may constitute Eligible Accounts Receivable shall not
exceed $250,000 at any one time; or
(e) the Account, when aggregated with all other Accounts of
the same account debtor (or any Affiliate thereof), exceeds 20 percent
in face value of all Accounts of the Borrower then outstanding, to the
extent of such excess; or
(f) (i) the account debtor is also a creditor of the
Borrower, to the extent of the amount owed by the Borrower to the
account debtor, (ii) the Account is subject to any claim on the part
of the account debtor disputing liability under such Account in whole
or in part, to the extent of the amount of such dispute or (iii) the
Account otherwise is or is reasonably likely to become subject to any
right of setoff or any counterclaim, claim or defense by the account
debtor, to the extent of the amount of such setoff or counterclaim,
claim or defense; or
(g) the account debtor has commenced a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
or made an assignment for the benefit of creditors or if a decree or
order for relief has been entered by a court having jurisdiction in
the premises in respect of the account debtor in an involuntary case
under the federal bankruptcy laws, as now constituted or hereafter
amended, or if any other petition or other application for relief
under the federal bankruptcy laws has been filed by
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or against the account debtor, or if the account debtor has failed,
suspended business, ceased to be solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or
for all or a significant portion of its assets or affairs; or
(h) the Agent does not have a valid and perfected first
priority security interest in such Account (subject only to a tax lien
being contested in good faith and by appropriate proceedings and
permitted by Section 7.03(a)); or
(i) the sale to the account debtor is on a consignment,
bill-and-hold, sale on approval, guaranteed sale or sale-and-return
basis or pursuant to any written agreement providing for repurchase or
return; or
(j) it is from the same account debtor (or any Affiliate
thereof) and fifty percent (50%) or more, in face amount, of other
Accounts from either such account debtor or any Affiliate thereof are
due or unpaid for more than 60 days after the original invoice date;
or
(k) fifty percent (50%) or more, in face amount, of other
Accounts from the same account debtor are not deemed Eligible Accounts
Receivable hereunder; or
(l) with respect to the Account, the account debtor is a
foreign government or any agency, department or instrumentality
thereof; or
(m) the Account is an Account a security interest in which
would be subject to the Federal Assignment of Claims Act of 1940, as
amended (31 U.S.C. ss. 3727 et seq.), unless the Borrower has assigned
the Account to the Agent in compliance with the provisions of such
Act; or
(n) the sale is to an account debtor outside the continental
United States or incorporated in or conducting substantially all of
its business in any jurisdiction located outside the United States,
unless the sale is (i) on letter of credit, guaranty or acceptance
terms, in each case acceptable to the Agent, or (ii) otherwise
approved by and acceptable to the Agent; or
(o) the Agent determines in good faith in accordance with its
internal credit policies that (i) collection of the Account is
insecure or (ii) the Account may not be paid by reason of the account
debtor's financial inability to pay;
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provided, however, that any Account referred to in this clause (o)
shall not become ineligible until the Agent shall have given the
Borrower three Business Days' advance notice of such determination; or
(p) the goods giving rise to such Account have not been
shipped and delivered to and accepted by the account debtor or the
services giving rise to such Account have not been performed by the
Borrower and accepted by the account debtor or the Account otherwise
does not represent a final sale; or
(q) the Account does not comply in all material respects with
all applicable legal requirements, including, where applicable, the
Federal Consumer Credit Protection Act, the Federal Truth in Lending
Act and Regulation Z of the Board of Governors of the Federal Reserve
System, in each case as amended.
"Eligible Assignee" means a commercial bank or financial
institution having total assets in excess of $250,000,000.
"Eligible Inventory" shall mean (A) the gross amount of the
Borrower's Inventory, valued at the lower of cost (on a FIFO basis) or market,
which (i) is owned solely by the Borrower and with respect to which the
Borrower has good, valid and marketable title; (ii) is stored on property that
is either (a) owned or leased by the Borrower or (b) owned or leased by a
warehouseman that has contracted with the Borrower to store Inventory on such
warehouseman's property (provided that, with respect to Inventory stored on
property leased by the Borrower, the Borrower shall have delivered in favor of
the Agent an acknowledgment agreement executed by the lessor of such property,
and, with respect to the Inventory stored on property owned or leased by a
warehouseman, the Borrower shall have delivered to the Agent acknowledgment
agreements executed by such warehouseman); (iii) is subject to a valid,
enforceable and first priority Lien in favor of the Agent subject to a tax lien
being contested in good faith and by appropriate proceedings and permitted by
Section 7.03(a), except with respect to Eligible Inventory stored at sites
described in clause (ii)(b) above, for Liens for normal and customary
warehouseman charges; (iv) is located in the United States; and (v) is not, in
the reasonable judgment of the Agent, obsolete or slow moving, and which
otherwise conforms to the warranties and standards for eligibility contained
herein; (B) less any goods returned or rejected by the Borrower's customers and
goods in transit to third parties (other than to the Borrower's agents or
warehousemen that comply with clause (A)(ii)(b) above); and (C) less any
reserves
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required by the Agent for special order goods and market value declines. In
addition to the foregoing, Eligible Inventory shall include such items of the
Borrower's Inventory as the Borrower shall request and that the Agent approves
in advance, in writing and in its sole discretion (or if the aggregate amount of
approvals exceeds $500,000 at any one time, the approval of the Required Banks);
provided that this definition of Eligible Inventory shall under no circumstances
include work in process and finished goods which exceed in the aggregate 50% of
the book value of all of the Inventory of the Borrower and its Subsidiaries.
"Environmental Laws" means the common law and all federal,
state, local and foreign laws or regulations, codes, orders, decrees, judgments
or injunctions issued, promulgated, approved or entered thereunder, now or
hereafter in effect, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
Hazardous Materials into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata),
(ii) the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of Hazardous Materials, and (iii)
underground and above ground storage tanks, and related piping, and emissions,
discharges, releases or threatened releases therefrom.
"ERISA" shall mean 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" shall mean any entity, whether or not
incorporated, which is under common control or would be considered a single
employer with the Borrower within the meaning of Section 414(b), (c) or (m) of
the Code and regulations promulgated under those sections or within the meaning
of section 4001(b) of ERISA and regulations promulgated under that section.
"Event of Default" shall have the meaning provided in Section
8.
"Excess" shall have the meaning provided in Section
3.02(A)(b).
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"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Existing Indebtedness" shall have the meaning provided in
Section 5.20.
"Federal Funds Rate" means on any one day the weighted
average of the rate on overnight Federal funds transactions with members of the
Federal Reserve System only arranged by Federal funds brokers as published as
of such day by the Federal Reserve Bank of New York, or if not so published,
the rate then used by first-class banks in extending overnight loans to other
first-class banks.
"Final Revolving Loan Maturity Date" shall mean the last
Business day of June, 2002.
"Financial Statements" shall have the meaning provided in
Section 4.01(I).
"Financing Proceeds" means the cash (other than Net Cash
Proceeds) received by any Credit Party, directly or indirectly, from any
financing transaction of whatever kind or nature, including without limitation
from any incurrence of Indebtedness, any mortgage or pledge of an asset or
interest therein (including a transaction which is the substantial equivalent
of a mortgage or pledge), from the sale of tax benefits, from a lease to a
third party and a pledge of the lease payments due thereunder to secure
Indebtedness, from a joint venture arrangement, from an exchange of assets and
a sale of the assets received in such exchange, or any other similar
arrangement or technique whereby a Credit Party obtains Cash in respect of an
asset, net of direct costs associated therewith. Financing Proceeds shall not
include any amounts with respect to the refinancing of the Total Revolving Loan
Commitment.
"FIRREA" means the Financial Institutions Reform, Recovery &
Enforcement Act of 1989, as amended from time to time, and any successor
statute.
"Fiscal Quarter" shall mean, with respect to any Person, each
of such Person's fiscal quarters, and with respect to the Borrower and each of
its Subsidiaries, the fiscal quarters required pursuant to Section 6.09.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect on the Closing Date, it being
understood and agreed that determinations in ac-
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cordance with GAAP for purposes of Section 7, including defined terms as used
therein, are subject (to the extent provided therein) to Section 11.07(a).
"General Security Agreement" shall mean the Amended General
Security Agreement substantially in the form of Exhibit C hereto, except for
such changes therein as shall have been approved by the Agent and the Required
Banks, as the same may after its execution be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"General Security Agreements" shall mean and include, once
executed and delivered, the General Security Agreement and any other general
security agreements delivered pursuant to Section 6.14 or 6.15.
"GGvA" shall have the meaning provided in Section 4.01(H).
"Government Acts" shall have the meaning provided in Section
1.13(I).
"Governmental Authority" means any federal, state, local,
foreign or other governmental or administrative (including self-regulatory)
body, instrumentality, department or agency or any court, tribunal,
administrative hearing body, arbitration panel, commission, or other similar
dispute-resolving panel or body including, without limitation, those governing
the regulation and protection of the environment, whether now or hereafter in
existence, or any officer or official thereof.
"Guarantee" shall mean a guarantee of all of the Borrower's
Obligations hereunder in favor of the Banks in form and substance satisfactory
to the Agent and the Required Banks.
"Hazardous Materials" means any pollutant, contaminant,
chemical or industrial, toxic or hazardous substance, constituent or waste,
including, without limitation, petroleum including crude oil or any fraction
thereof, or any petroleum product, subject to regulation under any
Environmental Law.
"Indebtedness" of any Person shall mean, without duplication,
(i) all indebtedness of such Person for borrowed money, (ii) the deferred
purchase price of assets or services which in accordance with GAAP would be
shown on the liability side of the balance sheet of such Person, (iii) the face
amount of all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder, (iv) all Indebtedness
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of a second Person secured by any Lien on any property owned by such first
Person, whether or not such Indebtedness has been assumed by such first Person,
(v) all Capitalized Lease Obligations of such Person, (vi) all obligations of
such Person to pay a specified purchase price for goods or services whether or
not delivered or accepted, i.e., take-or-pay and similar obligations, (vii) all
obligations of such Person under Interest Rate Agreements and (viii) all
Contingent Obligations of such Person; provided that Indebtedness shall not
include trade payables, accrued expenses, accrued dividends and accrued income
taxes, in each case arising in the ordinary course of business.
"Indenture" shall mean the indenture relating to the Senior
Notes, dated as of May 28, 1997 between the Borrower and Fleet National Bank,
as trustee.
"Indosuez" shall mean Credit Agricole Indosuez.
"Interest Margin" shall mean, in respect of (i) Base Rate
Loans, 1.00%; and (ii) LIBOR Loans, 2.25%.
"Interest Period" shall mean, with respect to any LIBOR Loan,
the interest period applicable thereto, as determined pursuant to Section 1.09
hereof.
"Interest Rate Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement,
interest rate futures contract, interest rate option contract or other similar
agreement or arrangement to which the Borrower is a party, designed to protect
the Borrower or any of its Subsidiaries against fluctuations in interest rates.
"Interest Rate Determination Date" means, with respect to a
LIBOR Loan, the date which is two Business Days prior to the commencement of
the Interest Period for such Borrowing.
"Inventory" shall mean all of the inventory of the Borrower
including without limitation: (i) all raw materials, work in process, parts,
components, assemblies, supplies and materials used or consumed in the
Borrower's business; (ii) all goods, wares and merchandise, finished or
unfinished, held for sale or lease or leased or furnished or to be furnished
under contracts of service; and (iii) all goods returned or repossessed by the
Borrower.
"Issuing Bank" shall mean the Bank that agrees to issue a
Letter of Credit, determined as provided in Section 1.13(C).
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"Lease" shall mean any lease, sublease, franchise agreement,
license, occupancy or concession agreement.
"Letter of Credit" or "Letters of Credit" means (i) Standby
Letter or Letters of Credit and (ii) Commercial Letter or Letters of Credit, in
each case, issued or to be issued by Issuing Banks for the account of the
Borrower pursuant to Section 1.13.
"Letter of Credit Participation" has the meaning assigned to
that term in Section 1.13(A).
"Letters of Credit Usage" means, as at any date of
determination, the sum of (i) the maximum aggregate amount that is or at any
time thereafter may become available under all Letters of Credit then
outstanding plus (ii) the aggregate amount of all drawings under Letters of
Credit honored by all Issuing Banks and not theretofore reimbursed by the
Borrower; provided, however, the Letters of Credit Usage of an Issuing Bank
shall be deemed to be only such portion of the Letters of Credit Usage of such
Issuing Bank which Banks have not bought by participation pursuant to Section
1.13(A).
"LIBOR" means, with respect to any LIBOR Loan for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the rate at which U.S. Dollar deposits
approximately equal in principal amount to the applicable Loan of the Agent, in
its capacity as Lender, included in such LIBOR Loan and for a maturity
comparable to such Interest Period are offered to the principal London office
of the Agent in the London interbank market at approximately 11:00 A.M., London
time, on the Interest Rate Determination Date for such LIBOR Loan.
"LIBOR Loan" means any Loan bearing interest at a rate
determined by reference to Adjusted LIBOR in accordance with the provisions of
Section 1.08(b) hereof.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien, claim, hypothecation, assignment for security or charge of
any kind (including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement or any lease in the nature thereof).
"Loan" shall mean each and every Revolving Loan.
"Loan Facility" shall mean the credit facility evidenced by
the Total Revolving Loan Commitment.
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"Materially Adverse Effect" means, (i) with respect to the
Borrower, any materially adverse effect (both before and after giving effect to
the Refinancing and the financing thereof and the other transactions
contemplated hereby and by the other Documents) with respect to the operations,
business, properties, assets, nature of assets, liabilities (contingent or
otherwise), financial condition or prospects of the Borrower or the Borrower
and its Subsidiaries taken as a whole, or (ii) any fact or circumstance
(whether or not the result thereof would be covered by insurance) as to which
singly or in the aggregate there is a reasonable likelihood of (w) a materially
adverse change described in clause (i) with respect to either the Borrower or
the Borrower and its Subsidiaries, taken as a whole, (x) the inability of any
Credit Party to perform in any material respect its Obligations hereunder or
under any of the other Documents or the inability of the Lenders to enforce in
any material respect their rights purported to be granted hereunder or under
any of the other Documents or the Obligations (including realizing on the
Collateral), or (y) a materially adverse effect on the ability to effect
(including hindering or unduly delaying) the Refinancing and the other
transactions contemplated hereby and by the Documents on the terms contemplated
hereby and thereby.
"Maturity Date" shall mean the Final Revolving Loan Maturity
Date.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA with respect to which the Borrower or any of its
ERISA Affiliates is or has been required to contribute.
"Net Cash Proceeds" shall mean with respect to any Asset
Sale, the aggregate cash payments received by the Borrower and/or any of the
Borrower's Subsidiaries, as the case may be, from such Asset Sale, net of
direct expenses of sale; provided, however, that with respect to taxes,
expenses shall only include taxes to the extent that taxes are payable in cash
in the current year or in the next succeeding year with respect to the current
year as a result of such Asset Sale; provided, further, that Net Cash Proceeds
shall not include any amounts or items included in the definition of Financing
Proceeds or Net Financing Proceeds (including in any proviso appearing therein
or exclusion therefrom).
"Net Financing Proceeds" means Financing Proceeds, net of
direct expenses of the transaction and net of taxes (including income taxes)
currently paid or payable in cash as a result thereof in the current year or in
the next succeeding year with
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respect to the current year as a result of the transaction generating Net
Financing Proceeds.
"Non-Excluded Taxes" shall have the meaning provided in
Section 3.04.
"Notes" shall mean any Revolving Note.
"Notice of Borrowing" shall have the meaning provided in
Section 1.03.
"Notice of Conversion/Continuation" shall have the meaning
provided in Section 1.06.
"Notice of Issuance" shall have the meaning provided in
Section 1.13(B).
"Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time existing,
owing to the Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document or secured by any of the Security Documents.
"Offering Memorandum" shall mean the final Offering
Memorandum, dated May 20, 1997, prepared by the Borrower in connection with the
offering and sale of the Senior Notes, and provided to the Banks prior to the
Closing Date.
"Officers' Certificate" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its Chairman of the
Board (if an officer) or its President or one of its Vice Presidents and by its
Chief Financial Officer or its Treasurer or any Assistant Treasurer (in such
Person's capacity as an officer and not individually); provided that every
Officers' Certificate with respect to compliance with a condition precedent to
the making of any Loan hereunder shall include (i) a statement that the
officers making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement relating
thereto, (ii) a statement that, in the opinion of the signers, they have made
or have caused to be made such examination or investigation as is necessary to
enable them to express an informed opinion as to whether or not such condition
has been complied with, and (iii) a statement as to whether, in the opinion of
the signers, such condition has been complied with.
"Officers' Solvency Certificate" means the Officers' Solvency
Certificate in the form of Exhibit I-3 hereto.
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"Operating Lease" of any Person shall mean any lease
(including, without limitation, leases which may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) by such Person as
Lessee which is not a Capital Lease.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Pension Plan" means any pension plan as defined in Section
3(2) of ERISA (other than a Multiemployer Plan) which is or has been maintained
by or to which contributions are or have been made by the Borrower or any of
its ERISA Affiliates.
"Permitted Encumbrances" shall have the meaning provided in
Section 7.03.
"Permitted Holders" shall mean (i) Gibbons, Goodwin, van
Amerongen ("GGvA"), (ii) Edward W. Gibbons, Todd Goodwin, Lewis W. van
Amerongen and Elizabeth Varley Camp (the "GGvA Partners"), (iii) trusts created
for the benefit of any of the GGvA Partners or the spouse, issue, parents or
other relatives of any such GGvA Partner, (iv) entities controlled by any of
such GGvA Partners, and (v) in the event of the death of any of the GGvA
Partners, the heirs or testamentary legatees of such GGvA Partner.
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or
instrumentality thereof.
"Pledge Agreement" shall mean a Securities Pledge Agreement
in form and substance satisfactory to the Agent and the Required Banks,
delivered pursuant to Section 7.23, as the same may after its execution be
amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"Pledge Agreements" shall mean and include, once executed and
delivered, the Pledge Agreement and any securities pledge agreements delivered
pursuant to Section 6.14 or 6.15.
"Pledged Collateral" shall mean all the Pledged Collateral as
defined in the General Security Agreements.
"Pledged Securities" shall mean all the Pledged Collateral as
defined in the Pledge Agreements which shall include,
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without limitation, (i) all issued and outstanding shares of capital stock or
any Person from time to time owned or held by the Borrower and its Subsidiaries,
(ii) all intercompany notes from time to time owned or held by the Borrower and
its Subsidiaries, (iii) all dividends, cash, options, warrants, rights,
instruments, distributions, returns of capital, income, profits and other
property, interests or proceeds from time to time received, receivable or
otherwise distributed to the Borrower and its Subsidiaries in respect of or in
exchange for any or all of the foregoing and (iv) all Proceeds (as defined under
the Uniform Commercial Code as in effect in any relevant jurisdiction or under
other relevant law) of any of the foregoing.
"Portion" shall mean the Revolving Portion.
"Prior Liens" shall mean Liens which, pursuant to the
provisions of any Security Document, are or may be superior to the Lien of such
Security Document.
"Projected Financial Statements" shall have the meaning
provided in Section 5.10(c).
"Real Property" shall mean all right, title and interest of
the Borrower or any of its Subsidiaries (including, without limitation, any
leasehold estate) in and to a parcel of real property owned or operated by the
Borrower or any of its Subsidiaries together with, in each case, all
improvements and appurtenant fixtures, equipment, personal property, easements
and other property and rights incidental to the ownership, lease or operation
thereof.
"Recapitalization" shall have the meaning provided in the
Recitals hereto.
"Refinancing" shall have the meaning provided in the Recitals
hereto.
"Refinancing Documents" shall mean all documentation required
in connection with the redemption of the Subordinated Notes and the issuance of
the Senior Notes.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of
Governors of the Federal Reserve System as from time to time in
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effect and any successor to all or a portion thereof establishing margin
requirements.
"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Required Banks" shall mean at any time two or more Banks (if
at the time there are at least two Banks) holding at least 51% of the Total
Commitments held by Banks (or, if the Total Commitments shall have been
terminated, Banks holding at least 51% of the outstanding Loans and Letters of
Credit Usage); provided that for the purposes of Section 4, the requirement
that any document, agreement, certificate or other writing is to be
satisfactory to the Required Banks shall be satisfied if (x) such document,
agreement, certificate or other writing was delivered in its final form to the
Banks prior to the Closing Date (or if amended or modified thereafter, the
Agent has reasonably determined such amendment or modification not to be
material), (y) such document, agreement, certificate or other writing is
satisfactory to the Agent and (z) Banks holding more than 66-2/3% of the Total
Commitments held by Banks have not objected in writing to such document,
agreement, certificate or other writing to the Agent prior to the Closing Date.
"Revolving Loan Commitment" shall mean, with respect to each
Bank, the amount set forth below such Bank's name on the signature pages hereto
directly below the column entitled "Revolving Loan Commitment," as same may be
reduced from time to time pursuant to Sections 2.01, 3.02 and/or 8.
"Revolving Loans" shall have the meaning provided in Section
1.01.
"Revolving Note" shall have the meaning provided in Section
1.05(a) (and shall include any amendments of or substitutions for such notes).
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"Revolving Portion" shall mean, at any time, the portion of
the Loan Facility evidenced by the Total Revolving Loan Commitment.
"SEC Regulation D" shall mean Regulation D as promulgated
under the Securities Act, as the same may be in effect from time to time.
"Secured Parties" shall have the meaning specified in the
Security Documents.
"Securities" shall mean any stock, shares, voting trust
certificates, bonds, debentures, options, warrants, notes, or other evidences
of indebtedness, secured or unsecured, convertible, subordinated or otherwise,
or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Security Documents" shall mean each of the Pledge
Agreements, the General Security Agreements and any other documents utilized to
pledge any other property or assets of whatever kind or nature as Collateral
for the Obligations.
"Senior Notes" shall have the meaning provided in the Recitals
hereto.
"Standby Letter of Credit" means any standby letter of credit
or similar instrument issued for the purpose of supporting (i) workers'
compensation liabilities of the Borrower or any of its Subsidiaries, (ii) the
obligations of third-party insurers of the Borrower or any of its Subsidiaries
arising by virtue of the laws of any jurisdiction requiring third-party
insurers to obtain such letters of credit, or (iii) performance, payment,
deposit or surety obligations of the Borrower or any of its Subsidiaries if
required by law or governmental rule or regulation or in accordance with custom
and practice in the industry.
"Statutory Reserves" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board of Governors of the Federal Reserve
System of
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the United States or by any other Governmental Authority, domestic or foreign,
with jurisdiction over the Agent or any Bank (including any branch, Affiliate or
other funding office thereof making or holding a Loan) with respect to the
Adjusted LIBOR applicable to any Borrowing, for any category of liabilities
which includes deposits by reference to which the Adjusted LIBOR in respect of
such Borrowing is determined. Such reserve percentages shall include those
imposed pursuant to Regulation D. For purposes of this definition, LIBOR Loans
shall be deemed to constitute "Eurocurrency Liabilities" within the meaning of
Regulation D and to be subject to such reserve requirements without benefit of
or credit for proration, exemptions or offsets which may be available from time
to time to any Bank under such Regulation D. Statutory Reserves shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.
"Subordinated Notes" shall have the meaning provided in the
Recitals hereto.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person
directly or indirectly through Subsidiaries and (ii) any partnership,
association, joint venture or other entity in which such Person directly or
indirectly through Subsidiaries has more than a 50% equity interest at the
time.
"Termination Event" means (i) other than the
Recapitalization, a "reportable event" described in Section 4043 of ERISA or in
the regulations thereunder (excluding events for which the requirement for
notice of such reportable event has been waived by the PBGC) with respect to a
Title IV Plan, or (ii) the withdrawal of the Borrower or any of its ERISA
Affiliates from a Title IV Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the
filing of a notice of intent to terminate a Title IV Plan or the treatment of a
Title IV Plan amendment as a termination under Section 4041 of ERISA, or (iv)
the institution of proceedings by the PBGC to terminate a Title IV Plan or to
appoint a trustee to administer a Title IV Plan, or (v) any other event or
condition which might constitute reasonable grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Title IV Plan, or (vi) the complete or partial withdrawal (within the meaning
of Sections 4203 and 4205,
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respectively, of ERISA) of the Borrower or any of its ERISA Affiliates from a
Multiemployer Plan, or (vii) the insolvency or reorganization (within the
meaning of Sections 4245 and 4241, respectively, of ERISA) or termination of any
Multiemployer Plan, or (viii) the failure to make any payment or contribution to
any Pension Plan or Multiemployer Plan or the making of any amendment to any
Pension Plan which could result in the imposition of a lien or the posting of a
bond or other security.
"Test Period" shall mean the four consecutive complete Fiscal
Quarters of the Borrower then last ended.
"Title IV Plan" means any plan (other than a Multiemployer
Plan) described in Section 4021(a) of ERISA, and not excluded under Section
4021(b) of ERISA, which is or has been maintained by, or to which contributions
are or have been made by, the Borrower or any of its ERISA Affiliates.
"Total Revolving Loan Commitment" shall mean the sum of the
Revolving Loan Commitment of each of the Banks.
"Total Utilization of Revolving Loan Commitment" shall mean,
at any date of determination, the sum of the aggregate principal amount of all
Revolving Loans.
"Type" shall mean a Base Rate Loan or LIBOR Loan.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York.
"Unutilized Commitment" for any Bank at any time shall mean,
on and after the Closing Date, the unutilized Revolving Loan Commitment of such
Bank, after taking into effect the Letters of Credit Usage.
"Voting Stock" means all classes of capital stock of a
corporation then outstanding and normally entitled to vote in the election of
directors.
"Wholly-Owned Subsidiary" of any Person shall mean any
Subsidiary of such Person to the extent all of the capital stock or other
ownership interests in such Subsidiary, other than directors' or nominees'
qualifying shares, is owned directly or indirectly by such Person.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, telecopier device,
telegraph or cable.
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SECTION 10. The Agent.
10.01 Appointment. Each Bank hereby irrevocably designates
and appoints Indosuez as Agent (such term to include the Agent acting as
Collateral Agent) of such Bank to act as specified herein and in the other
Credit Documents and such Bank hereby irrevocably authorizes such Agent to take
such action on its behalf under the provisions of this Agreement and the other
Credit Documents and to exercise such powers and perform such duties as are
expressly delegated to such Agent by the terms of this Agreement and the other
Credit Documents, together with such other powers as are reasonably incidental
thereto. Such Agent agrees to act as such upon the express conditions contained
in this Section 10. Notwithstanding any provision to the contrary elsewhere in
this Agreement, such Agent shall not have any duties or responsibilities,
except those expressly set forth herein or in the other Credit Documents, or
any fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against such Agent. The provisions of this Section
10 are solely for the benefit of such Agent and the Banks, and no Credit Party
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, such Agent
shall act solely as an agent of the Banks and does not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust with
or for any Credit Party.
For purposes of this Section 10 and Section 11.05, the term
"Agent" shall refer to each of the Agent and the Collateral Agent.
10.02 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Credit Document by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care except to the extent otherwise required by Section 10.03.
10.03 Exculpatory Provisions. Neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible
in any manner to any of the Banks for any recit-
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als, statements, representations or warranties by the Borrower, any Subsidiary
of the Borrower or any of their respective officers contained in this Agreement,
any other Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Document or for any failure of the Borrower or
any Subsidiary of the Borrower or any of their respective officers to perform
its obligations hereunder or thereunder. The Agent shall be under no obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement, or to
inspect the properties, books or records of the Borrower or any Subsidiary of
the Borrower. The Agent shall not be responsible to any Bank for the
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any Credit Document or for any representations,
warranties, recitals or statements made herein or therein or made in any written
or oral statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by such Agent to the Banks or by or on behalf of the Borrower
to such Agent or any Bank or be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained herein or therein or as to the use of the proceeds of
the Loans or of the existence or possible existence of any Default or Event of
Default.
10.04 Reliance by the Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Credit Parties),
independent accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Credit Document unless it shall first receive such
advice or concurrence of the Required Banks as it deems appropriate or it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Credit Documents in accordance with a request of the Required Banks (or
to the extent specifically provided in Section 11.12, all the
<PAGE>
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Banks), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Banks.
10.05 Notice of Default. The Agent shall be deemed not to
have knowledge of the occurrence of any Default or Event of Default, other than
a default in the payment of principal or interest on the Loans hereunder,
unless it has received notice from a Bank or the Borrower or any other Credit
Party referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default." In the event that the
Agent receives such a notice, the Agent shall give prompt notice thereof to the
Banks. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Banks; provided
that, unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Banks.
10.06 Non-Reliance on Agent and Other Banks. Each Bank
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower or any Subsidiary of
the Borrower, shall be deemed to constitute any representation or warranty by
the Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon any the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of the
Borrower and its Subsidiaries and made its own decision to make its Loans
hereunder and enter into this Agreement and the other agreements contemplated
hereby. Each Bank also represents that it will, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Borrower and its
Subsidiaries. Except for notices, reports and other documents expressly
required to be furnished to the Banks by the Agent hereunder, the Agent shall
have no duty or responsibility to provide any Bank with any credit or other
information concerning the business, operations,
<PAGE>
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assets, property, financial and other conditions, prospects or creditworthiness
of the Borrower or any of its Subsidiaries which may come into the possession of
any Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
10.07 Indemnification. The Banks agree to indemnify the Agent
in its capacity as such or in any other representative capacity under any other
Credit Document ratably according to their aggregate Commitments, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, reasonable expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Obligations) be imposed on, incurred by or
asserted against the Agent in its capacity as such in any way relating to or
arising out of this Agreement or any other Credit Document, or any documents
contemplated by or referred to herein or the transactions contemplated hereby
or any action taken or omitted to be taken by the Agent under or in connection
with any of the foregoing, but only to the extent that any of the foregoing is
not paid by the Borrower or any of its Subsidiaries; provided that no Bank
shall be liable to the Agent for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from any the Agent's
gross negligence or willful misconduct. If any indemnity furnished to the Agent
for any purpose shall, in the opinion of the Agent, be insufficient or become
impaired, the Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished. The agreements in this Section 10.07 shall survive the payment of
all Obligations.
10.08 The Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower, its Subsidiaries and other Affiliates of
the Borrower as though such Agent were not the Agent hereunder. With respect to
the Loans made by it and all Obligations owing to it, the Agent shall have the
same rights and powers under this Agreement as any Bank and may exercise the
same as though it were not the Agent, and the terms "Bank" and "Banks" shall
include the Agent in its individual capacity.
10.09 Successor Agent. Upon the acceptance of any appointment
as an Agent hereunder by a successor Agent, the term "Agent" shall include such
successor agent effective upon its appointment, and the resigning Agent's
rights, powers and duties as Agent shall be terminated, without any other or
further act or
<PAGE>
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deed on the part of such former Agent or any of the parties to this Agreement.
After the retiring Agent's resignation hereunder as Agent, the provisions of
this Section 10 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.
10.10 Resignation, Transfer by Agent. (A) The Agent may
resign from the performance of all its functions and duties hereunder at any
time by giving 20 Business Days' prior written notice to the Borrower and the
Banks. Such resignation shall take effect upon the acceptance by a successor
Agent of appointment pursuant to subsections B and C below or as otherwise
provided below.
(B) Upon any such notice of resignation of an Agent, the
Required Banks shall appoint a successor Agent acceptable to the Borrower and
which shall be an incorporated bank or trust company or other qualified
financial institution with operations in the United States and total assets of
at least $1 billion.
(C) If a successor Agent shall not have been so appointed
within said 15 Business Day period, the resigning Agent with the consent of the
Borrower shall then appoint a successor Agent (which shall be an incorporated
bank or trust company or other qualified financial institution with operations
in the United States and total assets of at least $1 billion) who shall serve
as a successor Agent until such time, if any, as the Required Banks appoint a
successor Agent as provided above.
(D) If no successor Agent has been appointed pursuant to
Section 10.10(B) or (C) by the twentieth Business Day after the date such
notice of resignation was given by the resigning Agent, such Agent's
resignation shall become effective and the Required Banks shall thereafter
perform all the duties of Agent hereunder until such time, if any, as the
Required Banks appoint a successor Agent as provided above.
(E) Notwithstanding anything to the contrary contained in
this Section 10, Indosuez, as Agent, may transfer its rights and obligations to
perform all of its functions and duties hereunder to its parent company or to
any Affiliate of it or its parent company.
SECTION 11. Miscellaneous.
11.01 Payment of Expenses, etc. The Borrower agrees to: (i)
whether or not the transactions herein contemplated are
<PAGE>
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consummated, pay all reasonable out-of-pocket costs and expenses of the Agent in
connection with the negotiation, preparation, execution and delivery of the
Credit Documents and the documents and instruments referred to therein and any
amendment, waiver or consent relating thereto (including, without limitation,
the reasonable fees and disbursements of Cahill Gordon & Reindel and, in each
jurisdiction in which any Collateral is located, one local counsel to the Banks)
with prior notice to the Borrower of the engagement of any counsel and of each
of the Banks in connection with the enforcement of the Credit Documents
(including in connection with any "work-out" or other restructuring of the
Borrower's Obligations or in connection with any bankruptcy, reorganization or
similar proceeding with respect to any Credit Party or its Subsidiaries) and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and disbursements of counsel for each of the Banks) with
prior notice to the Borrower of the engagement of any counsel and the fees and
expenses of any appraisers or any consultants or other advisors engaged with
prior notice to the Borrower of any such engagement with respect to
environmental or other matters; (ii) pay and hold each of the Banks harmless
from and against any and all present and future stamp and other similar taxes
with respect to the foregoing matters and save each of the Banks harmless from
and against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to such Bank) to pay such
taxes; (iii) indemnify each Bank, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses (including, without
limitation, any and all losses, liabilities, claims, damages or expenses arising
under Environmental Laws) incurred by any of them as a result of, or arising out
of, or in any way related to, or by reason of, any investigation, litigation or
other proceeding (whether or not any Bank is a party thereto) related to the
entering into and/or performance of any Document or the use of the proceeds of
any Loans hereunder or the Refinancing or the consummation of any other
transactions contemplated in any Credit Document, including, without limitation,
the reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified); and (iv) pay all reasonable out-of-pocket costs and expenses of
the Agent in connection with the assignment or attempted assignment to any other
Person of all or any portion of Indosuez's interest under this Agreement
pursuant to Section 11.04 incurred prior to 180 days following the Closing Date.
<PAGE>
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11.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of an Event of Default, each Bank is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to
any Credit Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general
or special) and any other Indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of such Bank wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of such Credit Party to such Bank
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations of such Credit Party purchased
by such Bank pursuant to Section 11.06(b), and all other claims of any nature
or description arising out of or connected with this Agreement or any other
Credit Document, irrespective of whether or not such Bank shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any
of them, shall be contingent or unmatured.
11.03 Notices. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower,
Wells Aluminum Corporation, 809 Gleneagles Court, Suite 300, Baltimore,
Maryland 21286, Attention: Chief Financial Officer, with a copy to: Kramer,
Levin, Naftalis, Nessin, Kamin & Frankel, 919 Third Avenue, New York, New York
10022, Attention: Michael S. Nelson, or if to another Credit Party, to its
address specified in the other relevant Credit Documents, as the case may be;
if to any Bank, at its address specified for such Bank on Annex II hereto; or,
at such other address as shall be designated by any party in a written notice
to the other parties hereto. All such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective two days after being deposited in the mails, when
delivered to the telegraph company, cable company or overnight courier, as the
case may be, or when sent by telex or telecopier, except that notices and
communications to the Agent shall not be effective until received by the Agent.
11.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
parties hereto, all future holders of the Notes,
<PAGE>
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and their respective successors and assigns; provided that no Credit
Party may assign or transfer any of its interests hereunder without the
prior written consent of the Banks; and provided, further, that the
rights of each Bank to transfer, assign or grant participations in its
rights and/or obligations hereunder shall be limited as set forth below
in this Section 11.04; provided that nothing in this Section 11.04
shall prevent or prohibit any Bank from (i) pledging its Loans
hereunder to a Federal Reserve Bank in support of borrowings made by
such Bank from such Federal Reserve Bank and (ii) granting
participations in or assignments of such Bank's Loans, Notes and/or
Commitments hereunder to its parent company and/or to any Affiliate of
such Bank that is at least 50% owned by such Bank or its parent
company. The Borrower shall issue new Notes to such assignees in
conformity with Section 1.05 and the assignor shall return the old
Notes to the Borrower. Upon the effectiveness of any assignment in
accordance with clause (ii) above, the assignee, if not a Bank, will
become a "Bank" for all purposes of this Agreement and the other Credit
Documents and, to the extent of such assignment, the assigning Bank
shall be relieved of its obligations hereunder with respect to the
Commitments being assigned. In the case of any participation in
accordance with clause (ii) above, the participant shall not have any
rights under this Agreement or any of the other Credit Documents (the
participant's rights against the granting Bank in respect of such
participation to be those set forth in the agreement with such Bank
creating such participation) and all amounts payable by the Borrower
hereunder shall be determined as if such Bank had not sold such
participation; provided that such participant shall be considered to be
a "Bank" for purposes of Sections 11.02 and 11.06(b).
(b) Each Bank shall have the right to transfer, assign or
grant participations in all or any part of its remaining Loans, Notes and/or
Commitments hereunder on the basis set forth below in this clause (b). Each
Bank may furnish any information concerning the Borrower in the possession of
such Bank from time to time to assignees and participants (including
prospective assignees and participants).
(A) Assignments. Each Bank, with the written consent of the
Agent, which shall not be unreasonably withheld, which shall be
evidenced on the notice in the form of Exhibit D-1 hereto, may assign
pursuant to an Assignment Agreement substantially in the form of
Exhibit D-2 hereto all or a portion of its Loans, Notes and/or
Commitments
<PAGE>
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hereunder pursuant to this clause (b)(A) to (x) one or more Banks or
(y) one or more Eligible Assignees, in each case, in minimum amounts of
$5,000,000, or all of its Loans, Notes and/or Commitments; provided
that any assignment pursuant to clause (y) shall not result in the
Borrower paying additional amounts pursuant to Section 3.04 as of the
time of such assignment. Any assignment pursuant to this clause (b)(A)
will become effective five Business Days after the Agent's receipt of
(i) a written notice in the form of Exhibit D-1 hereto from the
assigning Bank and the assignee Bank or Eligible Assignee, and (ii) a
processing and recordation fee of $2,000 from the assigning Bank in
connection with the Agent's recording of such sale, assignment,
transfer or negotiation; provided that such fee shall only be payable
if the assignment is between a Bank and a party that is not a Bank
prior to the assignment. The Borrower shall issue new Notes to the
assignee Bank or Eligible Assignee in conformity with Section 1.05 and
the assignor shall return the old Notes to the Borrower. Upon the
effectiveness of any assignment in accordance with this clause (b)(A),
the assignee, if not a Bank, will become a "Bank" for all purposes of
this Agreement and the other Credit Documents and, to the extent of
such assignment, the assigning Bank shall be relieved of its
obligations hereunder with respect to the Commitments being assigned.
(B) Participations. Each Bank may transfer, grant or assign
participations in all or any part of such Bank's Loans, Notes and/or
Commitments hereunder pursuant to this clause (b)(B) to any Person;
provided that (i) such Bank shall remain a "Bank" for all purposes of
this Agreement and the transferee of such participation shall not
constitute a Bank hereunder and (ii) no participant under any such
participation shall have rights to approve any amendment to or waiver
of this Agreement or any other Credit Document except to the extent
such amendment or waiver would (x) change the scheduled final maturity
date of any of the Loans, Notes or Commitments in which such
participant is participating or (y) reduce the principal amount,
interest rate or fees applicable to any of the Loans, Notes or
Commitments in which such participant is participating or postpone the
payment of any interest or fees or (z) release all or substantially
all of the Collateral. In the case of any such participation, the
participant shall not have any rights under this Agreement or any of
the other Credit Documents (the participant's rights against the
granting Bank in respect of such participation to be those set forth
in the agreement with such Bank creating such participation) and all
amounts payable by the
<PAGE>
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Borrower hereunder shall be determined as if such Bank had not sold
such participation; provided that such participant shall be considered
to be a "Bank" for purposes of Sections 11.02 and 11.06(b).
11.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of any Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and any Agent or any Bank shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power, or privilege
hereunder or under any other Credit Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which any Agent or any
Bank would otherwise have. No notice to or demand on any Credit Party in any
case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of any
Agent or the Banks to any other or further action in any circumstances without
notice or demand.
11.06 Payments Pro Rata. (a) The Agent agrees that promptly
after its receipt of each payment from or on behalf of any Credit Party in
respect of any Obligations of such Credit Party, it shall distribute such
payment to the Banks pro rata based upon their respective shares, if any, of
the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security,
by the exercise of the right of setoff or banker's lien, by counterclaim or
cross action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans, of a sum which with respect to the related sum or sums received
by other Banks is in a greater proportion than the total of such Obligations
then owed and due to such Bank bears to the total of such Obligations then owed
and due to all of the Banks immediately prior to such receipt, then such Bank
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Banks an interest in the Obligations of the respective
Credit Party to such Banks in such amount as shall result in a proportional
participation by all of the Banks in such amount; provided that if all or any
portion of such excess amount is thereafter recovered from such Bank, such
<PAGE>
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purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
11.07 Calculations; Computations. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be made and
prepared in accordance with GAAP consistently applied throughout the periods
involved (except as set forth in the notes thereto or as otherwise disclosed in
writing by the Borrower to the Banks); provided that, except as otherwise
specifically provided herein, all computations determining compliance with
Section 7 and all definitions used herein for any purpose shall utilize
accounting principles and policies in effect at the time of the preparation of,
and in conformity with those used to prepare, the historical financial
statements delivered to the Banks pursuant to Section 4.01(I).
(b) All computations of interest and fees hereunder shall be
made on the actual number of days elapsed over a year of 365 days; provided,
however, that all computations of interest on LIBOR Loans and of fees payable
pursuant to Section 2.03 hereof shall be made on the actual number of days
elapsed over a year of 360 days.
11.08 Governing Law; Submission to Jurisdiction; Venue. (a)
This Agreement and the rights and obligations of the parties hereunder shall be
construed and enforced in accordance with and be governed by the laws of the
State of New York applicable to contracts made and to be performed wholly
therein. Any legal action or proceeding with respect to this Agreement or any
other Credit Document may be brought in the courts of the State of New York or
of the United States for the Southern District of New York, and, by execution
and delivery of this Agreement, each Credit Party hereby irrevocably accepts
for itself and in respect of its property, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts. Each Credit Party further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the respective Credit Party,
at its address for notices pursuant to Section 11.03, such service to become
effective 30 days after such mailing. Each Credit Party hereby irrevocably
appoints the Borrower and such other Persons as may hereafter be selected by
the Borrower irrevocably agreeing in writing to serve as its agent for service
of process in respect of any such action or proceeding. Nothing herein shall
affect the right of the Agent or any Bank to serve process in any other manner
permitted by law or to commence legal proceedings or oth-
<PAGE>
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erwise proceed against any Credit Party in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Credit Document brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
11.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall be
lodged with the Borrower and the Agent.
11.10 Effectiveness. This Agreement shall become effective on
the date on which the Borrower and each of the Banks shall have signed a copy
hereof (whether the same or different copies) and shall have delivered the same
to the Agent at the Agent's Office or, in the case of the Banks, shall have
given to the Agent telephonic (confirmed in writing), written, telex or
telecopy notice (actually received) at such office that the same has been
signed and mailed to it. The Agent will give the Borrower and each Bank prompt
written notice of the effectiveness of this Agreement.
11.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
11.12 Amendment or Waiver. Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by the Required Banks; provided that no such change,
waiver, discharge or termination shall, without the consent of each affected
Bank and the Agent, (i) extend the scheduled final maturity date of any Loan,
or any portion thereof, or reduce the rate or extend the time of payment of
interest thereon or fees or reduce the principal amount thereof, or increase
the Commitments of any Bank over the amount thereof then in effect (it being
understood that a
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waiver of any Default or Event of Default or of a mandatory reduction in the
Total Commitment shall not constitute a change in the terms of any Commitment of
any Bank), (ii) release all or substantially all of the Collateral (except as
expressly permitted by the Credit Documents), (iii) amend, modify or waive any
provision of this Section, or Section 1.10, 1.11, 3.04, 8, 10.07, 11.01, 11.02,
11.04, 11.06, 11.07(b) or 11.13, (iv) reduce any percentage specified in, or
otherwise modify, the definition of Required Banks or (v) consent to the
assignment or transfer by any Credit Party of any of its rights and obligations
under this Agreement. No provision of Section 10 may be amended without the
consent of the Agent.
11.13 Survival. All indemnities set forth herein including,
without limitation, in Section 1.11, 3.04, 10.07 or 11.01 shall survive the
execution and delivery of this Agreement and the making of the Loans, the
repayment of the Obligations and the termination of the Total Commitments.
11.14 Domicile of Loans. Each Bank may transfer and carry its
Loans at, to or for the account of any branch office, subsidiary or Affiliate
of such Bank.
11.15 Waiver of Jury Trial. Each of the parties to this
agreement hereby irrevocably waives all right to a trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement, the
Credit Documents or the transactions contemplated hereby or thereby.
11.16 Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be permitted
by an exception to, or be otherwise within the limitation of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
WELLS ALUMINUM CORPORATION
By: /s/ W. Russell Asher
___________________________
Name: W. Russell Asher
Title: Senior Vice President
<PAGE>
Credit Agreement among Wells Aluminum Corporation, Credit Agricole
Indosuez and the Banks listed herein
CREDIT AGRICOLE INDOSUEZ, as Agent
By: /s/
______________________________
Name:
Title:
By: /s/ Haynes Chidsey
______________________________
Name:
Title:
Revolving Loan Commitment:$
<PAGE>
SUMMIT BANK
By: /s/
________________________
Name:
Title:
Revolving Loan Commitment:$
<PAGE>
AMENDED AND RESTATED GENERAL SECURITY AGREEMENT
This AMENDED AND RESTATED GENERAL SECURITY AGREEMENT (the
"Agreement"), dated as of May __, 1997, made by WELLS ALUMINUM CORPORATION, a
Maryland corporation having an office at 809 Gleneagles Court, Suite 300,
Towson, Maryland 21286 ("Pledgor"), in favor of CREDIT AGRICOLE INDOSUEZ
(successor to Banque Indosuez), having an office at 1211 Avenue of the
Americas, 7th Floor, New York, New York 10036, as pledgee, assignee and secured
party, in its capacity as collateral agent (in such capacities and together
with any successors in such capacity, "Collateral Agent") for the lending
institutions (the "Banks") under the Credit Agreement (as hereinafter defined).
R E C I T A L S :
- - - - - - - -
A. Pursuant to a certain credit agreement, dated as of December 21,
1994 (as amended prior to the date hereof, the "Original Credit Agreement"), by
and among Pledgor, the Banks and Banque Indosuez, New York Branch, as Agent for
the Banks, the Banks agreed (i) to make to or for the account of Pledgor
certain Term Loans up to an aggregate principal amount of $40,000,000 and
certain Revolving Loans up to an aggregate principal amount of $22,000,000 and
(ii) to issue certain Letters of Credit for the account of Pledgor.
B. To secure its obligations under the Original Credit Agreement,
Pledgor entered into a certain general security agreement, dated as of December
21, 1994 (as amended prior to the date hereof, the "Original General Security
Agreement"), in favor of Banque Indosuez, New York Branch, as Collateral Agent
for its benefit and the benefit of the Banks.
C. The parties to the Original Credit Agreement are amending and
restating the Original Credit Agreement pursuant to a certain amended and
restated credit agreement, dated as of the date hereof (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Amended
and Restated Credit Agreement"; unless otherwise defined herein, capitalized
terms used herein have the meanings assigned to them in the Amended and
Restated Credit Agreement), pursuant to which Pledgor and the Banks have agreed
to the repayment and
<PAGE>
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termination of the Term Loans under the Original Credit Agreement and the
reduction in the Total Revolving Loan Commitment to $15,000,000.
D. Contemporaneously with the execution and delivery of the Amended
and Restated Credit Agreement, the parties to the Original General Security
Agreement desire to amend and restate that agreement to reflect the termination
and reduction of loans under the Amended and Restated Credit Agreement and the
release of certain of the Pledged Collateral under the Original General
Security Agreement.
E. Pledgor is the legal and beneficial owner of the Pledged
Collateral (as hereinafter defined).
F. It is a condition to the obligations of the Banks to make the
Loans under the Amended and Restated Credit Agreement and a condition to any
Bank issuing Letters of Credit under the Amended and Restated Credit Agreement
that Pledgor execute and deliver this Agreement.
G. This Agreement is given by Pledgor in favor of Collateral Agent
for its benefit and the benefit of the Banks and the Agent (collectively, the
"Secured Parties") to secure the payment and performance of all of the Secured
Obligations (as defined in Section 2).
A G R E E M E N T :
- - - - - - - - -
NOW, THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Pledgor and Collateral Agent hereby agree as follows:
Section 1. Pledge. As collateral security for the payment and
performance when due of all the Secured Obligations, Pledgor hereby pledges,
assigns, transfers and grants to Collateral Agent for its benefit and the
benefit of the Secured Parties, a continuing first priority security interest
(except as set forth in Schedule A hereto) in and to all of the right, title
and interest of Pledgor in, to and under the following (collectively, the
"Pledged Collateral"):
(a) each and every Receivable (as herein-
after defined) now existing or hereafter arising
from time to time;
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(b) all Inventory (as hereinafter defined)
now existing or hereafter acquired from time to
time;
(c) all books, records, ledgers, printouts, file materials and
other papers containing information relating to Inventory or Receivables
and any account debtors in respect thereof, together with all Contracts
(as hereinafter defined) relating to Inventory or Receivables now
existing or hereafter arising from time to time;
(d) all Documents (as hereinafter defined)
relating to Inventory or Receivables now existing
or hereafter acquired from time to time;
(e) all Instruments (as hereinafter
defined) relating to Inventory or Receivables now
existing or hereafter acquired from time to time;
and
(f) all Proceeds (as hereinafter defined)
of any and all of the foregoing.
To the extent that items or types of property constituting "Pledged
Collateral" under the Original General Security Agreement do not constitute
Pledged Collateral hereunder, such items or types of property are released from
the Lien of the Original General Security Agreement and are not subject to the
Lien hereunder.
Section 2. Secured Obligations. This Agreement secures, and the
Pledged Collateral is collateral security for, the payment and performance in
full when due, whether at stated maturity, by acceleration or otherwise
(including, without limitation, the payment of interest and other amounts which
would accrue and become due but for the filing of a petition in bankruptcy or
the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. Section 362(a)), of (i) all Obligations of Pledgor now existing
or hereafter arising under or in respect of the Amended and Restated Credit
Agreement (including, without limitation, the obligations of Pledgor to pay
principal, interest and all other charges, fees, expenses, commissions,
reimbursements, premiums, indemnities and other payments related to or in
respect of the Obligations contained in the Amended and Restated Credit
Agreement) and (ii) without duplication of the amounts described in clause
(i), all
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obligations of Pledgor now existing or hereafter arising under or in respect of
this Agreement, including, without limitation, all charges, fees, expenses,
commissions, reimbursements, premiums, indemnities and other payments related
to or in respect of the obligations contained in this Agreement whether in the
regular course of business or otherwise (the obligations described in clauses
(i) and (ii) of this Section 2, collectively, the "Secured Obligations").
Section 3. No Release. Nothing set forth in this Agreement shall
relieve Pledgor from the performance of any term, covenant, condition or
agreement on Pledgor's part to be performed or observed under or in respect of
any of the Pledged Collateral or from any liability to any Person under or in
respect of any of the Pledged Collateral or shall impose any obligation on
Collateral Agent or any Secured Party to perform or observe any such term,
covenant, condition or agreement on Pledgor's part to be so performed or
observed or shall impose any liability on Collateral Agent or any Secured Party
for any act or omission on the part of Pledgor relating thereto or for any
breach of any representation or warranty on the part of Pledgor contained in
this Agreement, or under or in respect of the Pledged Collateral or made in
connection herewith or therewith. The obligations of Pledgor contained in this
Section 3 shall survive the termination of this Agreement and the discharge of
Pledgor's other obligations under this Agreement.
Section 4. Supplements by Collateral Agent. Pledgor hereby
authorizes Collateral Agent, without relieving Pledgor of any obligations
hereunder, to file financing statements, continuation statements, amendments
thereto and other documents, relative to all or any part thereof, without the
signature of Pledgor where permitted by law, and Pledgor agrees to do such
further acts and things, and to execute and deliver to Collateral Agent such
additional assignments, agreements, powers and instruments, as Collateral Agent
may deem necessary or appropriate, in order to perfect and preserve the rights
and interests granted to Collateral Agent hereunder or to carry into effect the
purposes of this Agreement or better to assure and confirm unto Collateral
Agent its respective rights, powers and remedies hereunder. All of the
foregoing shall be at the sole cost and expense of Pledgor.
Section 5. Representations, Warranties and Covenants. Pledgor
represents, warrants and covenants as follows:
<PAGE>
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(a) Necessary Filings. Upon filing of UCC-1 financing statements in
the appropriate filing offices under the Uniform Commercial Code as
enacted in any and all relevant jurisdictions (the "UCC"), the security
interest granted to Collateral Agent for the benefit of the Secured
Parties pursuant to this Agreement in and to the Pledged Collateral will
constitute a valid and duly perfected security interest in and to the
Pledged Collateral, superior and prior to the rights of all other Persons
therein and subject to no Liens other than the Liens identified in
Schedule A relating to the items of Pledged Collateral identified on such
schedule (collectively, "Prior Liens").
(b) No Liens. Pledgor is as of the date hereof, and, as to Pledged
Collateral acquired by it from time to time after the date hereof,
Pledgor will be, the owner of all Pledged Collateral free from any Lien
or other right, title or interest of any Person other than (i) Prior
Liens, (ii) the Lien and security interest created by this Agreement,
(iii) Liens of the type described in clauses (b), (d) and (g) of the
definition of Permitted Encumbrances; provided, however, that with
respect to the Liens described in clauses (b) and (d) of the definition
of Permitted Encumbrances, Pledgor shall comply with the provisions of
subsection 7(d) of this Agreement; and (iv) Liens for taxes, assessments,
governmental charges or claims being contested in accordance with the
provisions of subsection 7(d) of this Agreement. Pledgor shall defend the
Pledged Collateral against all claims and demands of all Persons at any
time claiming any interest therein adverse to Collateral Agent or any
Secured Party.
(c) Other Financing Statements. There is no financing statement (or
similar statement or instrument of registration under the law of any
jurisdiction) covering or purporting to cover any interest of any kind in
the Pledged Collateral other than financing statements relating to Prior
Liens, and so long as any of the Secured Obligations remain unpaid or the
Commitments of the Banks to make any Loan or to issue any Letter of
Credit shall not have expired or been sooner terminated, Pledgor shall
not execute, authorize or permit to be filed in any public office any
financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) or statements relating to the Pledged
Collateral, except, in each case, financing statements filed or to be
filed in respect of and covering (i) the security
<PAGE>
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interests granted by Pledgor pursuant to this Agreement, (ii) Prior Liens
and (iii) Liens of the type described in clause (iii) of subsection 5(b)
of this Agreement.
(d) Chief Executive Office; Records. The chief executive office
of Pledgor is located at 809 Gleneagles Court, Baltimore, Maryland 21286.
Pledgor shall not move its chief executive office except to such new
location as Pledgor may establish in accordance with the last sentence of
this subsection 5(d). All tangible evidence of all Receivables and the
only original books of account and records of Pledgor relating thereto
are, and will continue to be, kept at such chief executive office, or at
such new location for such chief executive office as Pledgor may establish
in accordance with the last sentence of this subsection 5(d). All
Receivables of Pledgor are, and will continue to be, controlled and
monitored (including, without limitation, for general accounting purposes)
from such chief executive office location shown above, or such new
location as Pledgor may establish in accordance with the last sentence of
this subsection 5(d). Pledgor shall not establish a new location for its
chief executive office nor shall it change its name until (i) it shall
have given Collateral Agent not less than thirty (30) days' prior written
notice of its intention so to do, clearly describing such new location or
name and providing such other information in connection therewith as
Collateral Agent or any Secured Party may request and (ii) with respect to
such new location or name, Pledgor shall have taken all action
satisfactory to Collateral Agent and the Secured Parties to maintain the
perfection and priority of the security interest of Collateral Agent for
the benefit of the Secured Parties in the Pledged Collateral intended to
be granted hereby, including, without limitation, obtaining waivers of
landlord's or warehouseman's liens with respect to such new location, if
applicable.
(e) Location of Inventory. All Inventory held on the date hereof by
Pledgor is located at one of the locations shown in Schedule B hereto,
except for Inventory in transit in the ordinary course of business to or
from one or more of such locations. All Inventory now held or subsequently
acquired shall be kept at one of the locations shown in Schedule B hereto,
except for Inventory in transit in the ordinary course of business to or
from one or more of such locations, or at such new location as Pledgor may
establish if (i) it shall have given to Collateral
<PAGE>
-7-
Agent at least thirty (30) days' prior written notice of its intention so
to do, clearly describing such new location and providing such other
information in connection therewith as Collateral Agent or any Secured
Party may reasonably request and (ii) with respect to such new location,
Pledgor shall have taken all action satisfactory to Collateral Agent and
the Secured Parties to maintain the perfection and priority of the
security interest in the Pledged Collateral intended to be granted hereby,
including, without limitation, obtaining waivers of landlord's or
warehouseman's liens with respect to such new location, if applicable.
(f) Authorization, Enforceability. Pledgor has the requisite
corporate power, authority and legal right to pledge and grant a security
interest in all the Pledged Collateral pursuant to this Agreement, and
this Agreement constitutes the legal, valid and binding obligation of
Pledgor, enforceable against Pledgor in accordance with its terms.
(g) No Consents, etc. No consent of any party (including, without
limitation, stockholders or creditors of Pledgor or any account debtor
under a Receivable) and no consent, authorization, approval, or other
action by, and no notice to or filing with, any Governmental Authority or
regulatory body or other Person is required (x) for the pledge by Pledgor
of the Pledged Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement by Pledgor, or (y) for the
exercise by Collateral Agent of the rights provided for in this Agreement
or (z) for the exercise by Collateral Agent of the remedies in respect of
the Pledged Collateral pursuant to this Agreement.
(h) Pledged Collateral. All information set forth herein, including
the Schedules annexed hereto, and all information contained in any
documents, schedules and lists heretofore delivered to any Secured Party
in connection with this Agreement, in each case, relating to the Pledged
Collateral is accurate and complete in all respects.
<PAGE>
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Section 6. Special Provisions Concerning Receivables.
(a) Special Representations and Warranties. As of the time when
each of its Receivables arises, Pledgor shall be deemed to have represented and
warranted that such Receivable and all records, papers and documents relating
thereto (i) are genuine and correct and in all respects what they purport to
be, (ii) to the best of Pledgor's knowledge, represent the legal, valid and
binding obligation of the account debtor, evidencing indebtedness unpaid and
owed by such account debtor, arising out of the performance of labor or
services or the sale or lease and delivery of the merchandise listed therein or
out of an advance or a loan, (iii) will, in the case of a Receivable, except
for the original or duplicate original invoice sent to a purchaser evidencing
such purchaser's account, be the only original writings evidencing and
embodying such obligation of the account debtor named therein, (iv) constitute
and evidence true and valid obligations, enforceable in accordance with their
respective terms, not subject to the fulfillment of any contract or condition
whatsoever or to any defenses, set-offs or counterclaims except with respect to
refunds, returns and allowances in the ordinary course of business, or stamp or
other taxes and (v) are in compliance and conform with all applicable federal,
state and local laws and applicable laws of any relevant foreign jurisdiction.
(b) Maintenance of Records. Pledgor shall keep and maintain at its
own cost and expense complete records of each Receivable, in a manner
consistent with prudent business practice, including, without limitation,
records of all payments received, all credits granted thereon, all merchandise
returned and all other documentation relating thereto, and Pledgor shall make
the same available to Collateral Agent or any Secured Party for inspection upon
prior notice to Pledgor, at such reasonable times as Collateral Agent or any
Secured Party may request. Pledgor shall, at Pledgor's sole cost and expense,
upon Collateral Agent's demand made at any time after the occurrence of any
Event of Default, deliver all tangible evidence of Receivables, including,
without limitation, all documents evidencing Receivables and any books and
records relating thereto to Collateral Agent or to its representatives (copies
of which evidence and books and records may be retained by Pledgor). Upon the
occurrence of an Event of Default, Collateral Agent may transfer a full and
complete copy of Pledgor's books, records, credit information, reports,
memoranda and all other writings relating to the Receivables to and for the use
<PAGE>
-9-
by any Person that has acquired or is contemplating acquisition of an interest
in the Receivables or Collateral Agent's security interest therein without the
consent of Pledgor.
(c) Legend. Pledgor shall legend, at the request of Collateral
Agent and in form and manner satisfactory to Collateral Agent, the Receivables
and other books, records and documents of Pledgor evidencing or pertaining to
the Receivables with an appropriate reference to the fact that the Receivables
have been assigned to Collateral Agent for the benefit of the Secured Parties
and that Collateral Agent has a security interest therein.
(d) Modification of Terms, etc. Pledgor shall not rescind or cancel
any indebtedness evidenced by any Receivable or modify any term thereof or make
any adjustment with respect thereto except in the ordinary course of business
consistent with prudent business practice, or extend or renew any such
indebtedness except in the ordinary course of business consistent with prudent
business practice or compromise or settle any dispute, claim, suit or legal
proceeding relating thereto or sell any Receivable or interest therein without
the prior written consent of Collateral Agent. Pledgor shall timely fulfill
all obligations on its part to be fulfilled under or in connec-
tion with the Receivables.
(e) Collection. Pledgor shall cause to be collected from the
account debtor of each of the Receivables, as and when due (including, without
limitation, Receivables that are delinquent, such Receivables to be collected
in accordance with generally accepted commercial collection procedures), any
and all amounts owing under or on account of such Receivable, and apply
forthwith upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Receivable, except that prior to the occurrence of
an Event of Default Pledgor may, with respect to a Receivable, allow in the
ordinary course of business (i) a refund or credit due as a result of returned
or damaged or defective merchandise and (ii) such extensions of time to pay
amounts due in respect of Receivables and such other modifications of payment
terms or settlements in respect of Receivables as shall be commercially
reasonable in the circumstances, all in accordance with Pledgor's ordinary
course of business consistent with its collection practices as in effect from
time to time. The costs and expenses (including, without limitation, attorneys'
fees) of collection, in any case, whether incurred by Pledgor, Collateral Agent
or any Secured Party, shall be paid by Pledgor.
<PAGE>
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(f) Instruments. Pledgor shall deliver to Collateral Agent, within
five (5) days after receipt thereof by Pledgor any Instrument evidencing
Receivables which is in the principal amount of $500,000 or more. Any
Instrument delivered to Collateral Agent pursuant to this subsection 6(f) shall
be appropriately endorsed (if applicable) to the order of Collateral Agent, as
agent for the Secured Parties, and shall be held by Collateral Agent as further
security hereunder.
(g) Cash Collateral. Upon the occurrence of an Event of Default, if
Collateral Agent so directs, Pledgor shall cause all payments on account of the
Receivables to be held by Collateral Agent as cash collateral, upon
acceleration or otherwise. Without notice to or assent by Pledgor, Collateral
Agent may apply any or all amounts then or thereafter held as cash collateral
in the manner provided in Section 11. The costs and expenses (including,
without limitation, attorneys' fees) of collection, whether incurred by
Collateral Agent or any Secured Party, shall be paid by Pledgor.
Section 7. Provisions Concerning All Pledged Collateral.
(a) Protection of Collateral Agent's Security. Pledgor shall not
take any action that impairs the rights of Collateral Agent or any Secured
Party in the Pledged Collateral. Pledgor shall at all times keep the Inventory
insured, at Pledgors' own expense, to Collateral Agent's satisfaction against
fire, theft and all other risks to which the Pledged Collateral may be subject,
in such amounts and with such deductibles as would be maintained by operators
of businesses similar to the business of Pledgor or as Collateral Agent may
otherwise reasonably require. Each policy or certificate with respect to such
insurance shall be endorsed to Collateral Agent's satisfaction for the benefit
of Collateral Agent (including, without limitation, by naming Collateral Agent
as an additional named insured and sole loss payee as Collateral Agent may
request) and such policy or certificate shall be delivered to Collateral Agent.
Each such policy shall state that it cannot be cancelled without thirty (30)
days' prior written notice to Collateral Agent. At least thirty (30) days prior
to the expiration of any such policy of insurance, Pledgor shall deliver to
Collateral Agent an extension or renewal policy or an insurance certificate
evidencing renewal or extension of such policy. If Pledgor shall fail to insure
such Pledged Collateral to Collateral Agent's satisfaction or if Pledgor shall
fail so to endorse and deposit, or extend or
<PAGE>
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renew, all such insurance policies or certificates with respect thereto,
Collateral Agent shall have the right (but shall be under no obligation) to
advance funds to procure or renew or extend such insurance and Pledgor agrees
to reimburse Collateral Agent for all costs and expenses thereof, with interest
on all such funds from the date advanced until paid in full at the highest rate
then in effect under the Amended and Restated Credit Agreement.
(b) Insurance Proceeds. So long as no Event of Default shall have
occurred, Pledgor shall have the option (i) to apply any proceeds of insurance
received by it as Net Cash Proceeds in accordance with Section 3.02(B)(a) of
the Amended and Restated Credit Agreement or (ii) to apply the proceeds of such
insurance to the repair or replacement of the item or items of Pledged
Collateral in respect of which such proceeds were received. In the event that
Pledgor elects to apply such proceeds to the repair or replacement of any item
of Pledged Collateral pursuant to clause (ii) of the preceding sentence,
Pledgor shall upon its receipt of such proceeds from Collateral Agent promptly
commence and diligently continue to perform such repair or promptly effect such
replacement. Upon the occurrence of an Event of Default, Collateral Agent shall
have the option to apply any proceeds of insurance received by Pledgor in
respect of the Pledged Collateral toward the payment of the Secured Obligations
in accordance with Section 11 hereof or to continue to hold such proceeds as
additional collateral to secure the performance by Pledgor of the Secured
Obligations.
(c) Payment of Taxes; Claims. Pledgor shall pay promptly when due
all property and other taxes, assessments and governmental charges or levies
imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Pledged Collateral. Notwithstanding the foregoing,
Pledgor may at its own expense contest the amount or applicability of any of
the obligations described in the preceding sentence by appropriate legal or
administrative proceedings, prosecution of which operates to prevent the
collection thereof and the sale or forfeiture of the Pledged Collateral or any
part thereof to satisfy the same; provided, however, that in connection with
such contest, Pledgor shall (a) have made provision for the payment of such
contested amount on Pledgor's books if and to the extent required by generally
accepted accounting principles and (b) at the option and upon the request of
Collateral Agent, have deposited with Collateral Agent a sum sufficient to pay
<PAGE>
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and discharge such obligation and Collateral Agent's estimate of all interest
and penalties related thereto.
(d) Further Actions. Pledgor shall, at its sole cost and expense,
make, execute, endorse, acknowledge, file or refile and/or deliver to
Collateral Agent from time to time such lists, descriptions and designations of
the Pledged Collateral, copies of warehouse receipts, receipts in the nature of
warehouse receipts, bills of lading, documents of title, vouchers, invoices,
schedules, confirmatory assignments, supplements, additional security
agreements, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Pledged Collateral and other property or
rights covered by the security interest hereby granted, which Collateral Agent
reasonably deems necessary or appropriate to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Collateral and to perfect,
preserve or protect the security interest in the Pledged Collateral created and
granted by this Agreement.
(e) Financing Statements. Pledgor shall sign and deliver to
Collateral Agent such financing and continuation statements, in form acceptable
to Collateral Agent, as may from time to time be required to continue and
maintain a valid, enforceable, first priority security interest in the Pledged
Collateral as provided herein and the other rights, as against third parties,
provided hereby, all in accordance with the UCC or any other relevant law.
Pledgor shall pay any applicable filing fees and other expenses related to the
filing of such financing and continuation statements. Pledgor authorizes
Collateral Agent to file any such financing or continuation statements without
the signature of Pledgor where permitted by law.
(f) Warehouse Receipts Non-Negotiable. If any warehouse receipt or
receipt in the nature of a warehouse receipt is issued with respect to any of
the Inventory, Pledgor shall not permit such warehouse receipt or receipt in
the nature thereof to be "negotiable" (as such term is used in Section 7-104 of
the UCC or under other relevant law).
Section 8. Transfers and Other Liens. Pledgor shall not (i) sell,
convey, assign or otherwise dispose of, or grant any option with respect to,
any of the Pledged Collateral other than Inventory in the ordinary course of
business except as permitted by the Amended and Restated Credit Agreement or
(ii) create or permit to exist any Lien upon or with respect to any
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of the Pledged Collateral other than (i) Prior Liens, (ii) the Lien and
security interest granted to Collateral Agent under this Agreement and (iii)
Liens of the type described in clauses (iii) and (iv) of subsection 5(b) of
this Agreement.
Section 9. Reasonable Care. Collateral Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equivalent to that which Collateral Agent, in its individual
capacity, accords its own property, it being understood that Collateral Agent
shall not have responsibility for taking any necessary steps to preserve rights
against any Person with respect to any Pledged Collateral.
Section 10. Remedies Upon Default; Obtaining the Pledged
Collateral Upon Event of Default. (a) If an Event of Default shall have
occurred, then and in every such case, Collateral Agent may:
(i) Personally, or by agents or attorneys, immediately take
possession of the Pledged Collateral or any part thereof, from Pledgor or
any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon
Pledgor's premises where any of the Pledged Collateral is located and
remove such Pledged Collateral and use in connection with such removal
any and all services, supplies, aids and other facilities of Pledgor.
(ii) Instruct the obligor or obligors on any agreement, instrument
or other obligation (including, without limitation, the Receivables and
Contracts) constituting the Pledged Collateral to make any payment
required by the terms of such instrument or agreement directly to
Collateral Agent; provided, however, that in the event that any such
payments are made directly to Pledgor, prior to receipt by any such
obligor of such instruction, Pledgor shall segregate all amounts received
pursuant thereto in a separate account and pay the same promptly to
Collateral Agent.
(iii) Sell, assign or otherwise liquidate, or direct Pledgor to sell,
assign or otherwise liquidate, any or all investments made in whole or in
part with the Pledged Collateral or any part thereof, and take possession
of the proceeds of any such sale, assignment or liquidation.
<PAGE>
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(iv) Take possession of the Pledged Collateral or any part thereof,
by directing Pledgor in writing to deliver the same to Collateral Agent
at any place or places so designated by Collateral Agent, in which event
Pledgor shall at its own expense: (a) forthwith cause the same to be
moved to the place or places designated by Collateral Agent and there
delivered to Collateral Agent; (b) store and keep any Pledged Collateral
so delivered to Collateral Agent at such place or places pending further
action by Collateral Agent; and (c) while the Pledged Collateral shall be
so stored and kept, provide such security and maintenance services as
shall be necessary to protect the same and to preserve and maintain them
in good condition. Pledgor's obligation to deliver the Pledged Collateral
is of the essence of this Agreement. Upon application to a court of
equity having jurisdiction, Collateral Agent shall be entitled to a
decree requiring specific performance by Pledgor of such obligation.
(b) Remedies; Disposition of the Pledged Collateral.
(i) Upon the occurrence of an Event of Default, Collateral Agent
may from time to time exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on
default under the UCC, and Collateral Agent may also in its sole
discretion, without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of Collateral
Agent's offices or elsewhere, for cash, on credit or for future delivery,
and at such price or prices and upon such other terms as Collateral Agent
may deem commercially reasonable. Collateral Agent or any other Secured
Party or any of their respective Affiliates may be the purchaser of any
or all of the Pledged Collateral at any such sale and shall be entitled,
for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold at
such sale, to use and apply any of the Secured Obligations owed to such
Person as a credit on account of the purchase price of any Pledged
Collateral payable by such Person at such sale. Each purchaser at any
such sale shall acquire the property sold absolutely free from any claim
or right on the part of Pledgor, and Pledgor hereby waives, to the
fullest extent permitted by law, all rights of redemption, stay and/or
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appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. Collateral
Agent shall not be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given. Collateral Agent may
adjourn any public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
Pledgor hereby waives, to the fullest extent permitted by law, any claims
against Collateral Agent arising by reason of the fact that the price at
which any Pledged Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale,
even if Collateral Agent accepts the first offer received and does not
offer such Pledged Collateral to more than one offeree.
(ii) Pledgor acknowledges and agrees that, to the extent notice of
sale shall be required by law, ten (10) days' notice to Pledgor of the
time and place of any public sale or of the time after which any private
sale or other intended disposition is to take place shall be commercially
reasonable notification of such matters. No notification need be given to
Pledgor if it has signed, after the occurrence of an Event of Default, a
statement renouncing or modifying any right to notification of sale or
other intended disposition.
(c) Waiver of Claims. Pledgor hereby waives, to the fullest extent
permitted by applicable law, notice or judicial hearing in connection with
Collateral Agent's taking possession or Collateral Agent's disposition of any
of the Pledged Collateral, including, without limitation, any and all prior
notice and hearing for any prejudgment remedy or remedies and any such right
which Pledgor would otherwise have under law, and Pledgor hereby further
waives, to the fullest extent permitted by applicable law: (i) all damages
occasioned by such taking of possession; (ii) all other requirements as to the
time, place and terms of sale or other requirements with respect to the
enforcement of Collateral Agent's rights hereunder; and (iii) all rights of
redemption, appraisal, valuation, stay, extension or moratorium now or
hereafter in force under any applicable law. Any sale of, or the grant of
options to purchase, or any other realization upon, any Pledged Collateral
shall operate to divest all right, title, interest, claim and demand, either at
law or in equity, of Pledgor therein and
<PAGE>
-16-
thereto, and shall be a perpetual bar both at law and in equity against Pledgor
and against any and all Persons claiming or attempting to claim the Pledged
Collateral so sold, optioned or realized upon, or any part thereof, from,
through or under Pledgor.
(d) Certain Sales of Pledged Collateral. Pledgor recognizes that,
by reason of certain prohibitions contained in law, rules, regulations or
orders of any foreign Governmental Authority, Collateral Agent may be
compelled, with respect to any sale of all or any part of the Pledged
Collateral, to limit purchasers to those who meet the requirements of such
foreign Governmental Authority. Pledgor acknowledges that any such sales may be
at prices and on terms less favorable to Collateral Agent than those obtainable
through a public sale without such restrictions, and, notwithstanding such
circumstances, agrees that any such restricted sale shall be deemed to have
been made in a commercially reasonable manner.
Section 11. Application of Proceeds. The proceeds received by
Collateral Agent in respect of any sale of, collection from or other
realization upon all or any part of the Pledged Collateral pursuant to the
exercise by Collateral Agent of its remedies as a secured creditor as provided
in Section 10 hereof shall be applied, together with any other sums then held
by Collateral Agent pursuant to this Agreement, promptly by Collateral Agent as
follows:
First, to the payment of all costs and expenses, fees, commissions
and taxes of such sale, collection or other realization, including,
without limitation, compensation to Collateral Agent and its agents and
counsel, and all expenses, liabilities and advances made or incurred by
Collateral Agent in connection therewith, together with interest on each
such amount at the highest rate then in effect under the Amended and
Restated Credit Agreement from and after the date such amount is due,
owing or unpaid until paid in full;
Second, to the payment of all other costs and expenses of such
sale, collection or other realization, including, without limitation,
compensation to the Banks and their agents and counsel and all costs,
liabilities and indebtedness made or incurred by the Banks in connection
therewith, together with interest on each such amount at the highest rate
then in effect under the Amended and
<PAGE>
-17-
Restated Credit Agreement from and after the date such amount is due,
owing or unpaid until paid in full;
Third, without duplication of amounts applied pursuant to clauses
First and Second above, to the indefeasible payment in full in cash of
the Secured Obligations in accordance with the terms of the Amended and
Restated Credit Agreement; and
Fourth, the balance, if any, to the Person lawfully entitled
thereto (including Pledgor or its successors or assigns).
Section 12. Expenses. Pledgor will upon demand pay to Collateral
Agent the amount of any and all reasonable expenses, including the fees and
expenses of its counsel and the reasonable fees and expenses of any experts and
agents which Collateral Agent may incur in connection with (i) the collection
of the Secured Obligations, (ii) the enforcement and administration of this
Agreement, (iii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Pledged Collateral, (iv) the
exercise or enforcement of any of the rights of Collateral Agent or any Secured
Party hereunder or (v) the failure by Pledgor to perform or observe any of the
provisions hereof. All amounts payable by Pledgor under this Section 12 shall
be due upon demand and shall be part of the Secured Obligations. Pledgor's
obligations under this Section shall survive the termination of this Agreement
and the discharge of Pledgor's other obligations hereunder.
Section 13. No Waiver; Cumulative Remedies.
(a) No failure on the part of Collateral Agent to exercise, no
course of dealing with respect to, and no delay on the part of Collateral Agent
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law.
(b) In the event Collateral Agent shall have instituted any
proceeding to enforce any right, power or remedy under this Agreement by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned
<PAGE>
-18-
for any reason or shall have been determined adversely to Collateral Agent,
then and in every such case, Pledgor, Collateral Agent and each holder of any
of the Secured Obligations shall be restored to their respective former
positions and rights hereunder with respect to the Pledged Collateral, and all
rights, remedies and powers of Collateral Agent and the Secured Parties shall
continue as if no such proceeding had been instituted.
Section 14. Collateral Agent. Collateral Agent has been appointed
as collateral agent pursuant to the Amended and Restated Credit Agreement. The
actions of Collateral Agent hereunder are subject to the provisions of the
Amended and Restated Credit Agreement. Collateral Agent shall have the right
hereunder to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking action (including,
without limitation, the release or substitution of Pledged Collateral), in
accordance with this Agreement and the Amended and Restated Credit Agreement.
Collateral Agent may resign and a successor Collateral Agent may be appointed
in the manner provided in the Amended and Restated Credit Agreement. Upon the
acceptance of any appointment as Collateral Agent by a successor Collateral
Agent, that successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent under this Agreement, and the retiring Collateral Agent shall
thereupon be discharged from its duties and obligations under this Agreement.
After any retiring Collateral Agent's resignation, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was Collateral Agent.
Section 15. Collateral Agent May Perform; Collateral Agent
Appointed Attorney-in-Fact. If Pledgor shall fail to do any act or thing that
it has covenanted to do hereunder or if any warranty on the part of Pledgor
contained herein shall be breached, Collateral Agent or any Secured Party may
(but shall not be obligated to) do the same or cause it to be done or remedy
any such breach, and may expend funds for such purpose. Any and all amounts so
expended by Collateral Agent or such Secured Party shall be paid by Pledgor
promptly upon demand therefor, with interest at the highest rate then in effect
under the Amended and Restated Credit Agreement during the period from and
including the date on which such funds were so expended to the date of
repayment. Pledgor's obligations under this Section 15 shall survive the
termination of this Agreement
<PAGE>
-19-
and the discharge of Pledgor's other obligations under this Agreement, the
Amended and Restated Credit Agreement, any Interest Rate Agreement and the
other Credit Documents. Pledgor hereby appoints Collateral Agent its
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor, or otherwise, from time to time in Collateral Agent's
discretion to take any action and to execute any instrument consistent with the
terms of this Agreement and the other Credit Documents which the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement. The foregoing grant of authority is a power of attorney coupled with
an interest and such appointment shall be irrevocable for the term of this
Agreement. Pledgor hereby ratifies all that such attorney shall lawfully do or
cause to be done by virtue hereof.
Section 16. Indemnity.
(a) Indemnity. Pledgor agrees to indemnify, pay and hold harmless
the Collateral Agent and each of the Secured Parties and the officers,
directors, employees, agents and affiliates of the Collateral Agent and each of
the Secured Parties (collectively called the "Indemnitees") from and against
any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs (including, without limitation,
settlement costs), reasonable expenses or disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto), which may
be imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of this Agreement, any Interest Rate Agreement or
any other Credit Document (including, without limitation, any misrepresentation
by Pledgor in this Agreement, any Interest Rate Agreement or any other Credit
Document) (the "Indemnified Liabilities"); provided, however, that Pledgor
shall have no obligation to an Indemnitee hereunder with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of that
Indemnitee. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, Pledgor shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
<PAGE>
-20-
(b) Survival. The obligations of Pledgor contained in this
Section 16 shall survive the termination of this Agreement and the discharge of
Pledgor's other obligations under this Agreement, any Interest Rate Agreement
and under the other Credit Documents.
(c) Reimbursement. Any amounts paid by any Indemnitee as to which
such Indemnitee has the right to reimbursement shall constitute Secured
Obligations secured by the Pledged Collateral.
Section 17. Modification in Writing. No amendment, modification,
supplement, termination or waiver of or to any provision of this Agreement, nor
consent to any departure by Pledgor therefrom, shall be effective unless the
same shall be made in accordance with the terms of the Amended and Restated
Credit Agreement and unless in writing and signed by Collateral Agent. Any
amendment, modification or supplement of or to any provision of this Agreement,
any waiver of any provision of this Agreement and any consent to any departure
by Pledgor from the terms of any provision of this Agreement shall be effective
only in the specific instance and for the specific purpose for which made or
given. Except where notice is specifically required by this Agreement or any
other Credit Document, no notice to or demand on Pledgor in any case shall
entitle Pledgor to any other or further notice or demand in similar or other
circumstances.
Section 18. Termination; Release. When all the Secured Obligations
have been paid in full and the Commitments of the Banks to make any Loan or to
issue any Letter of Credit under the Amended and Restated Credit Agreement
shall have expired or been sooner terminated, this Agreement shall terminate.
Upon termination of this Agreement or any release of Pledged Collateral in
accordance with the provisions of the Amended and Restated Credit Agreement,
Collateral Agent shall, upon the request and at the sole cost and expense of
Pledgor, forthwith assign, transfer and deliver to Pledgor, against receipt and
without recourse to or warranty by Collateral Agent, such of the Pledged
Collateral to be released (in the case of a release) as may be in possession of
Collateral Agent and as shall not have been sold or otherwise applied pursuant
to the terms hereof, and, with respect to any other Pledged Collateral, proper
instruments (including UCC termination statements on Form UCC-3) acknowledging
the termination of this Agreement or the release of such Pledged Collateral, as
the case may be.
<PAGE>
-21-
Section 19. Definitions. The following terms shall have the
following meanings. All such definitions shall be equally applicable to the
singular and plural forms of the terms defined.
"Documents" shall have the meaning assigned to that term under
the UCC.
"Instrument" shall have the meaning assigned that term under
the UCC.
"Inventory" shall mean, all "inventory", as such term is defined in
the UCC, and, in any event, shall include, without limitation, wherever
located, and whether now existing or hereafter acquired, all raw materials,
work in process, returned goods, finished goods, samples and consigned goods to
the extent of the consignee's interest therein, materials and supplies of any
kind or nature which are or might be used in connection with the manufacture,
printing, publication, packing, shipping, advertising, selling or finishing of
any such goods, and all other products, goods, materials and supplies.
"Proceeds" shall mean all "proceeds", as such term is defined in
the UCC, and, in any event, shall include, without limitation, any and all (i)
proceeds of any insurance (except payments made to a Person which is not a
party to this Agreement), indemnity, warranty or guaranty payable to Collateral
Agent or to Pledgor from time to time with respect to any of the Pledged
Collateral, (ii) payments (in any form whatsoever) made or due and payable to
Pledgor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Pledged
Collateral by any Governmental Authority (or any person acting on behalf of a
Governmental Authority), (iii) instruments representing obligations to pay
amounts in respect of Inventory or Receivables, (iv) products of the Pledged
Collateral and (v) other amounts from time to time paid or payable under or in
connection with any of the Pledged Collateral.
"Receivables" shall mean all of Pledgor's rights to payment for
goods sold or leased or services performed by Pledgor or any other party,
whether now in existence or arising from time to time hereafter, including any
"account", as such term is defined in the UCC, and all rights evidenced by an
account, contract, security agreement, chattel paper, or other evidence of
indebtedness or security together with (i) all security pledged, assigned,
hypothecated or granted to or held
<PAGE>
-22-
by Pledgor to secure the foregoing, (ii) general intangibles arising out of
Pledgor's rights in any goods, the sale of which gave rise thereto, (iii) all
guarantees, endorsements and indemnifications on, or of, any of the foregoing,
(iv) all powers of attorney for the execution of any evidence of indebtedness
or security or other writing in connection therewith and (v) all evidences of
the filing of financing statements and other statements and the registration of
other instruments in connection therewith and amendments thereto, notices to
other creditors or secured parties, and certificates from filing or other
registration officers.
Section 20. Notices. Unless otherwise provided herein, all notices
and other communications provided for hereunder shall be in writing (including
telegraphic, telex, telecopier or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered, if to Pledgor, at Wells Aluminum
Corporation, 809 Gleneagles Court, Suite 300, Towson, Maryland 21286,
Attention: Chief Financial Officer, with a copy to: Kramer, Levin, Naftalis,
Nessin, Kamin & Frankel, 919 Third Avenue, New York, New York 10022, Attention:
Michael S. Nelson , if to Collateral Agent, at Banque Indosuez, New York
Branch, 1211 Avenue of the Americas, 7th Floor, New York, New York 10036,
Attention: R. Haynes Chidsey or, at such other address as shall be designated
by either party in a written notice to the other party complying as to delivery
with the terms of this Section 20. All such notices and communications shall,
when mailed, telegraphed, telecopied, or cabled or sent by overnight courier,
be effective two days after being deposited in the mails, when delivered to the
telegraph company, cable company or overnight courier, as the case may be, or
when sent by telex or telecopier, except that notices and communications to
Pledgee shall not be effective until received by Pledgee.
Section 21. Continuing Security Interest; Assignment. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (i) be binding upon Pledgor, its successors and assigns and (ii)
inure, together with the rights and remedies of Collateral Agent hereunder, to
the benefit of Collateral Agent and the other Secured Parties and each of their
respective successors, transferees and assigns; no other Persons (including,
without limitation, any other creditor of Pledgor) shall have any interest
herein or any right or benefit with respect hereto. Without limiting the
generality of the foregoing clause (ii), any Bank may assign or otherwise
transfer any indebtedness held by it secured by this
<PAGE>
-23-
Agreement to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Bank, herein or
otherwise, subject however, to the provisions of the Amended and Restated
Credit Agreement and any applicable Interest Rate Agreement.
Section 22. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS,
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PROPERTY ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 23. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE
OF NEW YORK AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT PLEDGOR ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
PLEDGOR DESIGNATES AND APPOINTS MICHAEL S. NELSON, ESQ., c/o KRAMER, LEVIN,
NAFTALIS, NESSEN, KAMEN & FRANKEL, 919 THIRD AVENUE, NEW YORK, NEW YORK 10022
AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY PLEDGOR IRREVOCABLY
AGREEING IN WRITING TO SO SERVE, AS ITS AGENT TO RECEIVE ON ITS BEHALF, SERVICE
OF ALL PROCESS IN ANY SUCH PROCEEDING, SUCH SERVICE BEING HEREBY ACKNOWLEDGED
BY PLEDGOR TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF SUCH
PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO PLEDGOR AT ITS ADDRESS
PROVIDED FOR IN SECTION 20 HEREOF EXCEPT THAT UNLESS OTHERWISE PROVIDED BY
APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF
SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY PLEDGOR REFUSES TO ACCEPT
SERVICE, PLEDGOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE
SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF COLLATERAL AGENT
TO BRING PROCEEDINGS AGAINST PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION.
Section 24. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without
<PAGE>
-24-
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 25. Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original, but all such counterparts together shall constitute one and the
same agreement.
Section 26. Headings. The Section headings used in this Agreement
are for convenience of reference only and shall not affect the construction of
this Agreement.
Section 27. Obligations Absolute. All obligations of Pledgor
hereunder shall be absolute and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of either of Pledgor
or any other Credit Party;
(ii) any lack of validity or enforceability of the Amended and
Restated Credit Agreement, any Interest Rate Agreement, any Letter of
Credit or any other Credit Document, or any other agreement or instrument
relating thereto;
(iii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Amended
and Restated Credit Agreement, any Letter of Credit or any other
agreement or instrument relating thereto;
(iv) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guarantee, for all or any of the Secured Obligations;
(v) any exercise or non-exercise, or any waiver of any right,
remedy, power or privilege under or in respect of this Agreement, except
as specifically set forth in a waiver granted pursuant to the provisions
of Section 17 hereof; or
<PAGE>
-25-
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Pledgor.
Section 28. Collateral Agent's Right to Sever Indebtedness. (a)
Pledgor acknowledges that (i) the Pledged Collateral does not constitute the
sole source of security for the payment and performance of the Secured
Obligations and that the Secured Obligations are also secured by other types of
property of Pledgor and its Affiliates in other jurisdictions (all such
property, collectively, the "Collateral"), (ii) the number of such
jurisdictions and the nature of the transaction of which this instrument is a
part are such that it would have been impracticable for the parties to allocate
to each item of Collateral a specific loan amount and to execute in respect of
such item a separate credit agreement and (iii) Pledgor intends that Collateral
Agent have the same rights with respect to the Pledged Collateral, in any
judicial proceeding relating to the exercise of any right or remedy hereunder
or otherwise, that Collateral Agent would have had if each item of Collateral
had been pledged or encumbered pursuant to a separate credit agreement and
security instrument. In furtherance of such intent, Pledgor agrees to the
greatest extent permitted by law that Collateral Agent may at any time by
notice (an "Allocation Notice") to Pledgor allocate a portion of the Secured
Obligations (the "Allocated Indebtedness") to all or a specified portion of the
Pledged Collateral and sever from the remaining Secured Obligations the
Allocated Indebtedness. From and after the giving of an Allocation Notice with
respect to any of the Pledged Collateral, the Secured Obligations hereunder
shall be limited to the extent set forth in the Allocation Notice and (as so
limited) shall, for all purposes, be construed as a separate credit obligation
of Pledgor unrelated to the other transactions contemplated by the Amended and
Restated Credit Agreement, any Interest Rate Agreement, any other Credit
Document or any document related to any thereof. To the extent that the
proceeds of any judicial proceeding relating to the exercise of any right or
remedy hereunder of the Pledged Collateral shall exceed the Allocated
Indebtedness, such proceeds shall belong to Pledgor and shall not be available
hereunder to satisfy any Secured Obligations of Pledgor other than the
Allocated Indebtedness. In any action or proceeding to exercise any right or
remedy under this Agreement which is commenced after the giving by Collateral
Agent of an Allocation Notice, the Allocation Notice shall be conclusive proof
of the limits of the Secured Obligations hereby secured, and Pledgor may
introduce, by way of defense or counterclaim, evidence thereof
<PAGE>
-26-
in any such action or proceeding. Notwithstanding any provision of this Section
28, the proceeds received by Collateral Agent pursuant to this Agreement shall
be applied by Collateral Agent in accordance with the provisions of Section 11
hereof.
(b) Pledgor hereby waives to the greatest extent permitted under
law the right to a discharge of any of the Secured Obligations under any
statute or rule of law now or hereafter in effect which provides that the
exercise of any particular right or remedy as provided for herein (by judicial
proceedings or otherwise) constitutes the exclusive means for satisfaction of
the Secured Obligations or which makes unavailable any further judgment or any
other right or remedy provided for herein because Collateral Agent elected to
proceed with the exercise of such initial right or remedy or because of any
failure by Collateral Agent to comply with laws that prescribe conditions to
the entitlement to such subsequent judgment or the availability of such
subsequent right or remedy. In the event that, notwithstanding the foregoing
waiver, any court shall for any reason hold that such subsequent judgment or
action is not available to Collateral Agent, Pledgor shall not (i) introduce in
any other jurisdiction any judgment so holding as a defense to enforcement
against Pledgor of any remedy in the Amended and Restated Credit Agreement, any
Interest Rate Agreement or any other Credit Document or (ii) seek to have such
judgment recognized or entered in any other jurisdiction, and any such judgment
shall in all events be limited in application only to the state or jurisdiction
where rendered and only with respect to the collateral referred to in such
judgment.
(c) In the event any instrument in addition to the Allocation
Notice is necessary to effectuate the provisions of this Section 28, including,
without limitation, any amendment to this Agreement, any substitute promissory
note or affidavit or certificate of any kind, Collateral Agent may execute and
deliver such instrument as the attorney-in-fact of Pledgor. Such power of
attorney is coupled with an interest and is irrevocable.
(d) Notwithstanding anything set forth herein to the contrary, the
provisions of this Section 28 shall be effective only to the maximum extent
permitted by law.
Section 29. Future Advances. This Agreement shall
secure the payment of any amounts advanced from time to time
pursuant to the Amended and Restated Credit Agreement.
<PAGE>
IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly
executed and delivered by its duly authorized officer as of the date first
above written.
WELLS ALUMINUM CORPORATION,
as Pledgor
By: /s/
____________________________
Name:
Title:
CREDIT AGRICOLE INDOSUEZ,
as Collateral Agent
By: /s/
____________________________
Name:
Title:
By: /s/
____________________________
Name:
Title:
<PAGE>
EXHIBIT 12.1
WELLS ALUMINUM CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
----------------- -----------------------------
1997 1996 1996 1995 1994
-------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
EARNINGS
Earnings before income taxes and
extraordinary item (Note 1)........... $3,202 $2,794 $15,902 $14,843 $ 6,202
Interest expense ...................... 1,167 1,441 5,176 7,087 8,443
Portion of rent expense representative
of an interest factor................. 123 129 499 478 449
-------- -------- --------- --------- ---------
Adjusted earnings (Note 1) ............ $4,492 $4,364 $21,577 $22,408 $15,094
======== ======== ========= ========= =========
FIXED CHARGES
Interest expense ...................... $1,167 $1,441 $ 5,176 $ 7,087 $ 8,443
Portion of rent expense representative
of an interest factor................. 123 129 499 478 449
-------- -------- --------- --------- ---------
Total fixed charges ................... $1,290 $1,570 $ 5,675 $ 7,565 $ 8,892
======== ======== ========= ========= =========
RATIO OF EARNINGS TO FIXED CHARGES
(Note 1).............................. 3.48 2.78 3.80 2.96 1.70
======== ======== ========= ========= =========
</TABLE>
Note 1: In 1994, the Company recognized an extraordinary loss of $1,092 on
the refinancing of debt.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 14, 1997, in the Registration Statement
and related Prospectus of Wells Aluminum Corporation for the registration of
$105,000,000 10 1/8% Series B Senior Notes due 2005.
/s/ Ernst & Young LLP
Baltimore, Maryland
July 8, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> DEC-31-1995 JAN-01-1997
<PERIOD-END> DEC-31-1996 MAR-30-1997
<CASH> 277 1,164
<SECURITIES> 0 0
<RECEIVABLES> 23,449 28,445
<ALLOWANCES> 1,170 1,223
<INVENTORY> 19,838 20,312
<CURRENT-ASSETS> 43,332 49,677
<PP&E> 54,562 54,834
<DEPRECIATION> 27,839 28,453
<TOTAL-ASSETS> 108,726 114,296
<CURRENT-LIABILITIES> 25,157 33,722
<BONDS> 40,078 35,178
0 0
0 0
<COMMON> 9 9
<OTHER-SE> 34,463 36,307
<TOTAL-LIABILITY-AND-EQUITY> 108,726 114,296
<SALES> 228,161 55,337
<TOTAL-REVENUES> 228,161 55,337
<CGS> 191,206 47,194
<TOTAL-COSTS> 207,083 50,968
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 549 38
<INTEREST-EXPENSE> 5,176 1,167
<INCOME-PRETAX> 15,902 3,202
<INCOME-TAX> 7,059 1,358
<INCOME-CONTINUING> 8,843 1,844
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 8,843 1,844
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
