<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14 1994
REGISTRATION NOS. 33-51317
33-47867
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
POST-EFFECTIVE AMENDMENT NO. 2 ON FORM S-3 TO
REGISTRATION STATEMENT ON FORM S-1 (NO. 33-51317)
AND
POST-EFFECTIVE AMENDMENT NO. 2 ON FORM S-3 TO
REGISTRATION STATEMENT ON FORM S-1 (NO. 33-47867)
UNDER THE SECURITIES ACT OF 1933
---------------------------
LEAR SEATING CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3714 13-3386776
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of Classification Code Number) Identification No.)
incorporation or
organization)
</TABLE>
21557 TELEGRAPH ROAD
SOUTHFIELD, MICHIGAN 48034
(810) 746-1500
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
JAMES H. VANDENBERGHE
21557 TELEGRAPH ROAD
SOUTHFIELD, MICHIGAN 48034
(810) 746-1500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------
Copies to:
<TABLE>
<S> <C>
Bruce A. Toth David O. Brownwood
Winston & Strawn Cravath, Swaine & Moore
35 W. Wacker Drive 825 Eighth Avenue
Chicago, Illinois 60601 New York, New York 10019
(312) 558-5600 (212) 474-1000
</TABLE>
---------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /
---------------------------
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE
MARKET-MAKING PROSPECTUS INCLUDED IN THIS REGISTRATION STATEMENT, WHICH IS A
COMBINED MARKET-MAKING PROSPECTUS TO BE USED BY LEHMAN BROTHERS INC. IN
CONNECTION WITH CERTAIN MARKET-MAKING TRANSACTIONS, RELATES TO MARKET-MAKING
TRANSACTIONS REGISTERED UNDER THE REGISTRANT'S REGISTRATION STATEMENTS (NO.
33-51317) AND (NO. 33-47867).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
LEAR SEATING CORPORATION
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM OF FORM S-3 PROSPECTUS CAPTION OR LOCATION
------------------------------------------- -------------------------------------------
<S> <C> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus..... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front Cover Page; Outside Back Cover
Page; Available Information
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............... Ratio of Earnings to Fixed Charges; Certain
Considerations
4. Use of Proceeds............................ Not Applicable
5. Determination of Offering Price............ Not Applicable
6. Dilution................................... Not Applicable
7. Selling Security Holders................... Not Applicable
8. Plan of Distribution....................... Outside Front Cover Page; Plan of
Distribution
9. Description of Securities to be
Registered................................. Outside Front Cover Page; Prospectus
Summary; Description of the Notes;
Description of the Senior Subordinated
Notes
10. Interests of Named Experts and Counsel..... Legal Matters; Experts
11. Material Changes...........................
12. Incorporation of Certain Information by
Reference.................................. Incorporation of Certain Information by
Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Not Applicable
</TABLE>
<PAGE> 3
EXPLANATORY NOTES
Lear Seating Corporation ("Lear") filed a Registration Statement on Form
S-1 (Registration No. 33-51317) (the "1994 Registration Statement"), which was
declared effective by the Securities and Exchange Commission (the "Commission")
on January 27, 1994, covering $145 million aggregate principal amount of 8 1/4%
Subordinated Notes due 2002 of Lear for sale in an underwritten public offering
(the "Offering") and for certain market-making transactions by Lehman Brothers
Inc. The 1994 Registration Statement contained a complete Prospectus relating to
the Offering (the "1994 Offering Prospectus"), together with certain alternate
pages to the Offering Prospectus relating solely to such market-making
transactions (the "1994 Market-Making Prospectus"). Lear also filed a
Registration Statement on Form S-1 (Registration No. 33-47867) (the "1992
Registration Statement"), which was declared effective by the Commission on July
24, 1992, covering $125 million aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2000 of Lear for sale in an underwritten public offering
(the "Senior Subordinated Debt Offering") and for certain market-making
transactions by Lehman Brothers Inc. The 1992 Registration Statement contained a
complete Prospectus relating to the Senior Subordinated Debt Offering (the "1992
Offering Prospectus"), together with certain alternate pages to the 1992
Offering Prospectus relating solely to such market-making transactions (the
"1992 Market-Making Prospectus"). This Post-Effective Amendment No. 2 on Form
S-3 relates to both the 1994 Registration Statement and the 1992 Registration
Statement and is being filed solely to update the 1994 Market-Making Prospectus
and the 1992 Market-Making Prospectus. This Post-Effective Amendment No. 2 shall
not amend in any way the 1994 Offering Prospectus or the 1992 Offering
Prospectus previously filed by Lear with the Commission.
<PAGE> 4
PROSPECTUS
[LOGO]
LEAR SEATING CORPORATION
$125,000,000 11 1/4% SENIOR SUBORDINATED NOTES DUE 2000
INTEREST PAYABLE JANUARY 15 AND JULY 15
$145,000,000 8 1/4% SUBORDINATED NOTES DUE 2002
INTEREST PAYABLE FEBRUARY 1 AND AUGUST 1
This Prospectus will be used by Lehman Brothers Inc. (the "Market-maker")
in connection with offers and sales in market-making transactions of the 11 1/4%
Senior Subordinated Notes due 2000 (the "Senior Subordinated Notes") and the
8 1/4% Subordinated Notes due 2002 (the "Notes") of Lear Seating Corporation
("Lear" or the "Company"). The Market-maker may act as a principal or agent in
such transactions. The Senior Subordinated Notes and the Notes may be offered in
negotiated transactions or otherwise. Sales will be made at prices related to
prevailing market prices at the time of sale.
-------------------------
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.
June , 1994
<PAGE> 5
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations not contained in this Prospectus,
and, if given or made, such information or representations must not be relied
upon as having been authorized by Lear or the Market-maker. This Prospectus does
not constitute an offer of any securities other than those to which it relates
or an offer to sell, or a solicitation of an offer to buy, to any person in any
jurisdiction where such an offer or solicitation would be unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information contained herein is
correct as of any time subsequent to the date hereof.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
The Company........................................................................... 2
Incorporation of Certain Information by Reference..................................... 2
Available Information................................................................. 3
Certain Considerations................................................................ 4
Ratio of Earnings to Fixed Charges.................................................... 6
Description of the Senior Subordinated Notes.......................................... 7
Description of the Notes.............................................................. 22
Plan of Distribution.................................................................. 40
Legal Matters......................................................................... 40
Experts............................................................................... 41
</TABLE>
<PAGE> 6
On December 31, 1993, Lear Seating Corporation, which was a wholly-owned
subsidiary of Lear Holdings Corporation ("Holdings"), merged with and into
Holdings (the "Merger"). As used in this Prospectus, unless the context
otherwise requires, the "Company" or "Lear" refers to Lear Seating Corporation
and its consolidated subsidiaries after giving effect to the Merger, together
with its predecessors.
THE COMPANY
Lear is the largest independent supplier of automobile and light truck seat
systems in North America and is one of the largest independent suppliers of such
systems and components worldwide. The Company's principal products include
finished automobile and light truck seat systems, automobile and light truck
seat frames, seat covers and other seat components. The Company's principal
executive offices are located at 21557 Telegraph Road, Southfield, Michigan
48034, and its telephone number is (810) 746-1500. Lear was incorporated in
Delaware on January 13, 1987.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-11311) are incorporated in this Prospectus by reference and made a part
hereof:
(a) Annual Report on Form 10-K for Lear Holdings Corporation for fiscal
year ended June 30, 1993
(b) Annual Report on Form 10-K for Lear Seating Corporation for fiscal year
ended June 30, 1993
(c) Transition Report on Form 10-K for Lear Seating Corporation for period
from July 1, 1993 to December 31, 1993
(d) Quarterly Report on Form 10-Q for Lear Holdings Corporation for fiscal
quarter ended October 2, 1993
(e) Quarterly Report on Form 10-Q for Lear Seating Corporation for fiscal
quarter ended October 2, 1993
(f) Amendment to Quarterly Report on Form 10-Q/A for Lear Holdings
Corporation for fiscal quarter ended October 2, 1993
(g) Amendment to Quarterly Report on Form 10-Q/A for Lear Seating
Corporation for fiscal quarter ended October 2, 1993
(h) Amendment to Quarterly Report on Form 10-Q/A2 for Lear Holdings
Corporation for fiscal quarter ended October 2, 1993
(i) Current Report on Form 8-K dated February 8, 1994 for Lear Seating
Corporation.
(j) Quarterly Report on Form 10-Q for Lear Seating Corporation for the
fiscal quarter ended April 2, 1994.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c) 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the
date of this Prospectus and prior to the termination of the offering or
offerings made by this Prospectus, shall be deemed to be incorporated in this
Prospectus by reference and to be a part hereof from the respective dates of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference in this Prospectus shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated by reference in this
Prospectus modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents that have been or
may be incorporated in this Prospectus by reference, other than certain exhibits
to such documents. Such requests should be directed to Leslie Touma, Director of
Investor Relations, Lear Seating Corporation, 21557 Telegraph Road, Southfield,
Michigan 48034 (telephone number 810/746-1500).
2
<PAGE> 7
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files periodic reports and other information with the Securities and
Exchange Commission (the "Commission"). The registration statements relating to
the Senior Subordinated Notes and the Notes (the "Registration Statements")
(which term encompasses any amendments thereto) and the exhibits thereto filed
by the Company with the Commission, as well as the reports, proxy statements and
other information filed by the Company with the Commission, may be inspected at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and is also
available for inspection and copying at the regional offices of the Commission
located at Seven World Trade Center, 13th Floor, New York, New York 10048; and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material may also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. In addition, reports, proxy statements and other information
concerning the Company may be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York.
The Company has filed with the Commission the Registration Statements under
the Securities Act of 1933, as amended (the "Securities Act") with respect to
the Senior Subordinated Notes and the Notes. This Prospectus does not contain
all the information set forth in the Registration Statements and the exhibits
and schedules thereto, to which reference is hereby made. Statements made in
this Prospectus as to the contents of any contract, agreement, or other document
referred to are not necessarily complete. With respect to each such contract,
agreement, or other document filed as an exhibit to the Registration Statements,
reference is hereby made to the exhibit for a more complete description of the
matter involved and each such statement shall be deemed qualified in its
entirety by such reference.
3
<PAGE> 8
CERTAIN CONSIDERATIONS
A prospective investor should consider carefully all of the information
contained in this Prospectus before deciding whether to purchase the Senior
Subordinated Notes and the Notes and, in particular, should consider the
following:
LEVERAGE
Holdings effected the leveraged acquisition (the "1988 Acquisition") of all
of the outstanding stock of Lear Seating Corporation (formerly known as Lear
Siegler Seating Corp.) and certain of its affiliates in August 1988. On November
1, 1993, Lear purchased certain portions of the North American seat cover and
seat system business (the "NAB") of the Ford Motor Company ("Ford") for $173.4
million in cash (after giving effect to an adjustment in the purchase price for
changes in NAB working capital) and approximately $10.5 million in notes payable
to Ford or its affiliates (the "NAB Acquisition"). A significant portion of the
funds needed to finance the 1988 Acquisition and the NAB Acquisition were raised
through borrowings. As a result, the Company has debt that is substantial in
relation to its stockholders' equity, and a significant portion of the Company's
cash flow from operations is and will be required for debt service. As of
December 31, 1993, after giving pro forma effect to the initial public offering
of the Notes which was consummated on February 3, 1994 (the "1994 Note
Offering"), the initial public offering of Lear's Common Stock which was
consummated on April 13, 1994 (the "IPO") and the application of the proceeds
therefrom, the Company would have had total long-term debt of $422.2 million and
stockholders' equity of $145.6 million, resulting in a total capitalization of
$567.8 million.
The Company anticipates that it will be required to use substantial amounts
of its cash flow from operations to meet its debt service obligations. If the
Company is unable to generate sufficient cash flow to meet its debt service
obligations, it will have to adopt one or more alternatives, such as reducing or
delaying planned expansion and capital expenditures, selling assets, obtaining
additional equity capital or restructuring debt. There is no assurance that any
of these strategies could be effected on satisfactory terms.
In addition, because certain of the Company's obligations under its Credit
Agreement dated October 25, 1993 (the "Credit Agreement"), with Chemical Bank,
as Agent on behalf of the lenders party thereto, and Bankers Trust Company, The
Bank of Nova Scotia, Citicorp USA, Inc. and Lehman Commercial Paper Inc., as
Managing Agents, bear interest at floating rates, an increase in interest rates
could adversely affect the Company's ability to meet its debt service
obligations. As of April 2, 1994, the Company was not a party to any interest
rate swaps or similar arrangements; however, in the future the Company may
determine to enter into such arrangements on all or a portion of its floating
rate debt. Although any interest rate swaps or similar arrangements entered into
by the Company would effectively cap or fix associated interest rates, such
arrangements could have the effect of increasing total interest expense.
NET LOSSES
The Company has experienced net losses during two of its last three
completed fiscal years ended June 30, principally as a result of the significant
interest charges on the debt incurred in connection with the 1988 Acquisition.
The Company experienced net losses of $33.2 million and $22.2 million for the
fiscal years ended June 30, 1991 and 1992, respectively, net income of $10.1
million for the fiscal year ended June 30, 1993 and a net loss of $34.7 million
for the six months ended December 31, 1993. The Company had significant non-cash
charges to income during these periods, including (i) charges for depreciation
and amortization of goodwill of $36.8 million, $35.0 million, $40.7 million and
$21.9 million, (ii) write-offs and amortization of deferred financing fees of
$4.1 million, $5.7 million, $3.0 million and $6.0 million, in each case for the
fiscal years ended June 30, 1991, 1992, 1993 and for the six months ended
December 31, 1993, respectively and (iii) a one-time charge for incentive stock
and other compensation of $14.5 million for the six months ended December 31,
1993.
4
<PAGE> 9
SUBORDINATION
Payments under the Senior Subordinated Notes and the Notes are subordinated
to all of Lear's existing and future Senior Indebtedness (as defined in
"Description of the Senior Subordinated Notes -- Certain Definitions" and
"Description of the Notes -- Certain Definitions," respectively). As of April 2,
1994, the aggregate amount of Senior Indebtedness of Lear with respect to the
Senior Subordinated Notes was approximately $271.7 million, comprised of $264.9
million outstanding under the Company's Credit Agreement (of which $39.2 million
was outstanding under letters of credit), $2.4 million in notes payable related
to the NAB Acquisition and $4.4 million in guarantees of indebtedness of less
than majority-owned affiliates. As of April 2, 1994, the aggregate amount of
Senior Indebtedness of Lear with respect to the Notes was approximately $396.7
million, comprised of the Senior Indebtedness for purposes of the Senior
Subordinated Notes plus the $125 million of Senior Subordinated Notes.
In addition, certain of the Company's subsidiaries have outstanding
indebtedness and may incur indebtedness in the future. Holders of such
indebtedness will have a claim against the assets of such subsidiaries that will
rank prior to the claims of the holders of the Senior Subordinated Notes and the
Notes. As of April 2, 1994, the Company's subsidiaries had outstanding
approximately $32.0 million of indebtedness.
Because of the subordination provisions of the Senior Subordinated Notes
and the Notes, and after the occurrence of certain events, creditors whose
claims are senior to the Senior Subordinated Notes and the Notes may recover
more, ratably, than the holders of the Senior Subordinated Notes and the Notes,
respectively. Substantially all of the assets of the Company are pledged under
the Credit Agreement. Consequently, in the event of a default under the Credit
Agreement, such assets could be subject to foreclosure by the lenders under the
Credit Agreement.
CYCLICAL NATURE OF AUTOMOTIVE INDUSTRY
The Company's principal operations are directly related to domestic and
foreign automotive vehicle production. Automobile sales and production in North
America and Europe are cyclical and can be affected by the strength of a
country's general economy and by other factors which may have an effect on the
level of the Company's sales to automobile and light truck manufacturers.
RELIANCE ON MAJOR CUSTOMERS AND SELECTED CAR MODELS
Two of Lear's customers, General Motors and Ford, accounted for
approximately 45% and 28%, respectively, of the Company's net sales in the
twelve months ended December 31, 1993. The Company's net sales to General Motors
and Ford in the twelve months ended December 31, 1993 as a percentage of its
total net sales, after giving pro forma effect to the NAB Acquisition as if it
had occurred at the beginning of such period, were approximately equal. Although
the Company has long-term purchase orders from many of its customers, such
purchase orders generally provide for supplying the customer's annual
requirements for a particular model or assembly plant, renewable on a
year-to-year basis, rather than for manufacturing a specific quantity of
products. In addition, certain of the Company's manufacturing and assembly
plants are dedicated to a single customer vehicle assembly plant. A customer's
decision to close any such plant would require the Company to obtain alternate
supply agreements, relocate existing business to such facility or close such
facility. To date, neither model discontinuances nor plant closings have had a
material adverse effect on the Company because of the breadth of the vehicle
lines incorporating the Company's products and the ability of the Company to
relocate its manufacturing operations with minimal capital expenditures. There
can be no assurances that the Company's loss of business with respect to either
a particular vehicle model or a particular assembly plant would not have a
material adverse effect on the Company's financial condition in the future.
There is substantial and continuing pressure from the major original
equipment manufacturers (OEMs) to reduce costs, including costs associated with
outside suppliers such as the Company. Management believes that the Company's
ability to develop new products and to control its own costs, many of which are
variable, will allow the Company to remain competitive. However, there can be no
assurance that the Company will be able to improve or maintain its gross
margins.
5
<PAGE> 10
CONTROL BY LEHMAN BROTHERS HOLDINGS INC.
Certain merchant banking partnerships affiliated with Lehman Brothers
Holdings Inc. (the "Lehman Funds") own a majority of Lear's outstanding Common
Stock. As a result of the stock ownership by the Lehman Funds and related
arrangements, the Lehman Funds can effectively control the affairs and policies
of the Company.
LIMITATION ON THE COMPANY'S CHANGE OF CONTROL REPURCHASE OBLIGATION
Transactions which would otherwise constitute a Change of Control under the
Indentures for the Senior Subordinated Notes and the Notes will not constitute a
Change of Control if consummated by the Lehman Funds, FIMA Finance Management
Inc., certain members of the Company's management and/or their respective
affiliates ("Permitted Investors"). Such a transaction could result in the
Company becoming more leveraged. As a result of this exclusion from the
definition of a Change of Control, holders of the Senior Subordinated Notes and
the Notes will not be able to require the Company to repurchase their securities
upon the consummation of a transaction by Permitted Investors that would
otherwise constitute a Change of Control.
TRADING MARKET FOR THE SENIOR SUBORDINATED NOTES AND THE NOTES
Although they are not obligated to do so, Lehman Brothers Inc. (the
"Market-maker") currently makes a market in the Senior Subordinated Notes and
the Notes. Any such market-making activity may be discontinued at any time, for
any reason, without notice at the sole discretion of the Market-maker. No
assurance can be given as to the liquidity of or the trading market for the
Senior Subordinated Notes and the Notes.
RATIO OF EARNINGS TO FIXED CHARGES
Presented below, for the periods indicated, is a calculation of the ratio
of the Company's earnings to fixed charges and, where applicable, fixed charges
in excess of earnings. For purposes of these calculations: (i) "earnings"
consist of income (loss) before taxes on income, fixed charges and undistributed
earnings plus minority interest; and (ii) "fixed charges" consists of interest
on debt, amortization of deferred financing fees plus that portion of rental
expenses representative of interest (deemed to be one-third of rental expenses).
<TABLE>
<CAPTION>
NINE MONTHS YEAR YEAR YEAR YEAR SIX MONTHS THREE MONTHS THREE MONTHS
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, DECEMBER 31, APRIL 3, APRIL 2,
1989 1990 1991 1992 1993 1993 1993 1994
----------- -------- -------- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges................. -- -- -- -- 1.55x -- 2.14x 1.91x
Fixed charges in excess of
earnings................ $(1,249) $(4,344 ) $(20,743) $(6,484 ) -- $ (9,296) -- --
</TABLE>
6
<PAGE> 11
DESCRIPTION OF THE SENIOR SUBORDINATED NOTES
The Senior Subordinated Notes have been issued under an Indenture dated as
of July 15, 1992 (the "11 1/4% Indenture"), among the Company, as issuer,
Holdings, as guarantor, and The Bank of New York, as trustee (the "Trustee").
Since the date of the 11 1/4% Indenture, Holdings has merged with and into the
Company and its separate corporate existence has ceased. As a result, the
"Guarantee" referred to in this section, which was the guarantee by Holdings of
Lear's obligations under the Senior Subordinated Notes, is no longer in effect.
The terms of the Senior Subordinated Notes include those stated in the
11 1/4% Indenture and those made part of the 11 1/4% Indenture by reference to
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), as in
effect on the date of the 11 1/4% Indenture. The Senior Subordinated Notes are
subject to all such terms, and holders of the Senior Subordinated Notes are
referred to the 11 1/4% Indenture and the Trust Indenture Act for a statement
thereof.
The following summary of certain provisions of the 11 1/4% Indenture does
not purport to be complete and is qualified in its entirety by reference to the
11 1/4% Indenture, including the definitions therein of certain terms used
below. A copy of the 11 1/4% Indenture and a specimen of the Senior Subordinated
Note have been filed as exhibits to the Registration Statement of which this
Prospectus is a part. Capitalized terms used in this section and not otherwise
defined below have the meaning assigned to them in the 11 1/4% Indenture, unless
the context requires otherwise.
GENERAL
The Senior Subordinated Notes are direct obligations of the Company, and
are issued in denominations of $1,000 and integral multiples thereof. The
11 1/4% Indenture authorizes the issuance of $125,000,000 aggregate principal
amount of Senior Subordinated Notes. As described below under "Subordination",
the Senior Subordinated Notes are subordinated in right of payment to Senior
Indebtedness of the Company.
As of April 2, 1994, the aggregate amount of Senior Indebtedness of the
Company (including its obligations under the Credit Agreement) was approximately
$271.7 million. In addition, certain of the Company's subsidiaries have incurred
and will in the future incur Indebtedness. Holders of such indebtedness will
have a claim against the assets of such subsidiaries that will rank prior to the
claims of the holders of the Senior Subordinated Notes. As of April 2, 1994, the
aggregate indebtedness of such subsidiaries for money borrowed was approximately
$32.0 million.
The Senior Subordinated Notes bear interest at the rate per annum shown on
the cover page of this Prospectus, payable semiannually on January 15 and July
15 in each year to holders of record of the Senior Subordinated Notes at the
close of business on January 1 and July 1, respectively, of such year. The first
interest payment date was January 15, 1993. Interest is computed on the basis of
a 360-day year of twelve 30-day months. The Senior Subordinated Notes mature on
July 15, 2000.
Principal and interest on the Senior Subordinated Notes are payable, and
the Senior Subordinated Notes are transferable, initially at the offices of the
Trustee in New York, New York. Holders must surrender the Senior Subordinated
Notes to the Paying Agent in order to collect principal payments. Interest on
the Senior Subordinated Notes may be paid by check mailed to the registered
holders of the Senior Subordinated Notes. The Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection with certain transfers or exchanges. Initially, the Trustee will act
as Paying Agent and Registrar under the 11 1/4% Indenture. The Company or any of
its Affiliates may act as Paying Agent and Registrar, and the Company may change
the Paying Agent or Registrar without prior notice to holders.
OPTIONAL REDEMPTION
The Senior Subordinated Notes may not be redeemed prior to July 15, 1997.
On or after July 15, 1997, the Company may, at its option, redeem the Senior
Subordinated Notes in whole or in part, on at least 30 days' but not more than
60 days' notice to each holder of Senior Subordinated Notes to be redeemed, at
100% of their principal amount together with accrued and unpaid interest (if
any) to the redemption date.
7
<PAGE> 12
The Credit Agreement contains provisions that limit the Company's ability
to optionally redeem the Senior Subordinated Notes.
MANDATORY REDEMPTION
The Senior Subordinated Notes are not subject to mandatory redemption prior
to maturity.
SUBORDINATION
The Indebtedness evidenced by the Senior Subordinated Notes is subordinated
to the prior payment, when due, of all Senior Indebtedness (as defined below) of
the Company but will rank senior to the Notes and other Indebtedness of the
Company expressly subordinated to the Senior Subordinated Notes.
Upon any payment or distribution of assets or securities of the Company due
to any dissolution, winding up, total or partial liquidation or reorganization
of the Company or in bankruptcy, insolvency, receivership or other proceedings,
the payment of the principal of and interest on the Senior Subordinated Notes
will be subordinated in right of payment, as set forth in the 11 1/4% Indenture,
to the prior payment in full of all Senior Indebtedness. Upon a default in the
payment of any Obligations with respect to Senior Indebtedness or upon the
acceleration of the maturity of Senior Indebtedness or while any judicial
proceeding is pending with respect to a default on Senior Indebtedness (of which
the Trustee has received written notice), no payment may be made upon or in
respect of the Senior Subordinated Notes until such default shall have been
cured or waived. In addition, during the continuance of any other event of
default with respect to (i) the Credit Agreement pursuant to which the maturity
thereof may be accelerated, upon (a) receipt by the Trustee of written notice
from the Agent Bank (or any Representative of any Senior Indebtedness which
refinances or refunds the Credit Agreement so long as amounts outstanding under
such agreement are in excess of $50,000,000) or (b) if such event of default
results from the acceleration of the Senior Subordinated Notes, on the date of
such acceleration, no such payment may be made by the Company upon or in respect
of the Senior Subordinated Notes for a period ("Payment Blockage Period")
commencing on the earlier of the date of receipt of such notice or the date of
such acceleration and ending 119 days thereafter (unless such Payment Blockage
Period shall be terminated by written notice to the Trustee from the Agent Bank
or any Representative of any Senior Indebtedness under any agreement which
refinances or refunds the Credit Agreement so long as amounts outstanding under
such agreement are in excess of $50,000,000) or (ii) any other Specified Senior
Indebtedness, upon receipt by the Company of written notice from the
Representative for the holders of such Specified Senior Indebtedness, no such
payment may be made by the Company upon or with respect to the Senior
Subordinated Notes for a Payment Blockage Period commencing on the date of the
receipt of such notice and ending 119 days thereafter (unless such Payment
Blockage Period shall be terminated by written notice to the Company from such
Representative commencing such Payment Blockage Period). In no event will any
one Payment Blockage Period extend beyond 179 days from the date the payment on
the Senior Subordinated Notes was due. Not more than one Payment Blockage Period
may be commenced with respect to the Senior Subordinated Notes during any period
of 360 consecutive days; provided that as long as amounts outstanding under the
Credit Agreement or any agreement which refinances or refunds the Credit
Agreement are in excess of $50,000,000, the commencement of a Payment Blockage
Period by the holders of the Specified Senior Indebtedness other than the Credit
Agreement shall not bar the commencement of a Payment Blockage Period by the
Agent Bank within such period of 360 days. No event of default which existed or
was continuing on the date of the commencement of any Payment Blockage Period
with respect to the Specified Senior Indebtedness initiating such Payment
Blockage Period shall be, or be made, the basis for the commencement of a second
Payment Blockage Period by the Representative of such Specified Senior
Indebtedness whether or not within a period of 360 consecutive days unless such
event of default shall have been cured or waived for a period of not less than
90 consecutive days.
If payments with respect to both the Senior Subordinated Notes and Senior
Indebtedness become due on the same day, then all obligations with respect to
such Senior Indebtedness due on that date shall first be paid in full before any
payment is made with respect to the Senior Subordinated Notes.
8
<PAGE> 13
"Senior Indebtedness" is defined, for the purpose of the 11 1/4% Indenture,
as the Obligations of the Company with respect to (i) all Obligations (including
reimbursement obligations in respect of letters of credit) incurred and
outstanding from time to time under the Credit Agreement or any refinancing or
refunding thereof (including interest accruing on or after filing of any
petition in bankruptcy or reorganization relating to the Company, at the rate
specified in such Senior Indebtedness whether or not a claim for post-filing
interest is allowed in such proceeding), (ii) Interest Swap Obligations related
to its payment Obligations on Indebtedness under the Credit Agreement and (iii)
any other Indebtedness of the Company, whether outstanding on the date of the
11 1/4% Indenture or thereafter created, incurred or assumed, unless, in the
case of any particular Indebtedness, the instrument creating or evidencing the
same or pursuant to which the same is outstanding expressly provides that such
Indebtedness is not senior in right of payment to the Senior Subordinated Notes;
provided, that, notwithstanding the foregoing, Senior Indebtedness shall not
include (A) Indebtedness evidenced by the Senior Subordinated Notes, (B)
Indebtedness represented by the Notes, (C) Indebtedness incurred in violation of
the 11 1/4% Indenture, (D) Indebtedness which is represented by Disqualified
Stock, (E) amounts payable or any other Indebtedness to trade creditors created,
incurred, assumed or guaranteed by the Company or any subsidiary of the Company
in the ordinary course of business in connection with obtaining goods or
services, (F) amounts payable or any other Indebtedness to employees of the
Company or any subsidiary of the Company as compensation for services, (G)
Indebtedness of the Company to an Affiliate of the Company or a subsidiary of
the Company and (H) any liability for Federal, state, local or other taxes owed
or owing by the Company.
By reason of the subordination provisions described above, in the event of
the Company's insolvency, liquidation, reorganization, dissolution or other
winding-up, funds which would otherwise be payable to holders of the Senior
Subordinated Notes will be paid to the holders of Senior Indebtedness to the
extent necessary to pay the Senior Indebtedness in full. The 11 1/4% Indenture
limits the amount of additional Senior Indebtedness which the Company can
create, incur, assume or guarantee. See "Certain Covenants -- Limitation on
Indebtedness."
CERTAIN DEFINITIONS
"Acquired Indebtedness" means, with respect to the Company, Indebtedness of
a person existing at the time such person becomes a subsidiary of the Company or
assumed in connection with the acquisition by the Company or a subsidiary of the
Company of assets from such person, which assets constitute all of an operating
unit of such person, and not incurred in connection with, or in contemplation
of, such person becoming a subsidiary of the Company or such acquisition.
"Affiliate" means, when used with reference to the Company or another
person, any person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, the Company or such other person, as the
case may be. For the purposes of this definition, "control" when used with
respect to any specified person means the power to direct or cause the direction
of management or policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the foregoing.
Notwithstanding the foregoing, the term "Affiliate" shall not include any wholly
owned subsidiary of the Company.
"Agent Bank" means Manufacturers Hanover Trust Company ("MHT") and/or its
Affiliates together with any bank which is or becomes a party to the Credit
Agreement or any successor to MHT and/or its Affiliates, and any other Agent
Bank under the Credit Agreement.
"Asset Sale" means any sale exceeding $1,000,000, or any series of sales in
related transactions exceeding $1,000,000 in the aggregate, by the Company or
any subsidiary of the Company, directly or indirectly, of properties or assets
other than in the ordinary course of business, including capital stock of a
subsidiary of the Company, except for (i) the sale of receivables by the Company
or any subsidiary of the Company in the ordinary course of business consistent
with past practice of the Company or any of its subsidiaries and (ii) any
sale-and-lease-back transaction involving a Capitalized Lease Obligation
permitted under the provisions described under "Certain Covenants -- Limitation
on Indebtedness."
9
<PAGE> 14
"Automotive Seating Business" means the production, design, development,
manufacture, marketing or sale of automotive seat frames, seat components, seat
systems or automotive interiors or any related businesses.
"average weighted life" means, as of the date of determination, with
reference to any debt security, the quotient obtained by dividing (i) the sum of
the products of the number of years from the date of determination to the dates
of each successive scheduled principal payment of such debt security multiplied
by the amount of such principal payment by (ii) the sum of all such principal
payments.
"Cash Proceeds" means, with respect to any Asset Sale, cash payments
(including any cash received by way of deferred payment pursuant to a note
receivable or otherwise, but only as and when so received) received from such
Asset Sale.
"Change of Control" means an event or series of events by which (i) (a)
prior to an Initial Public Offering a party other than a Permitted Investor or
any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) directly or indirectly controlling, controlled by, or under common control
with the Permitted Investors (1) 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 any such
person has the right to acquire without condition, other than the passage of
time, whether such right is exercisable immediately or only after the passage of
time) of 50% or more of the Voting Stock of the Company, (2) is or becomes a
shareholder of the Company with the right to appoint or remove directors of the
Company holding 50% or more of the voting rights at meetings of the Board of
Directors on all, or substantially all, matters or (3) is or becomes able to
exercise the right to give directions with respect to the operating and
financial policies of the Company with which the relevant directors are obliged
to comply by reason of: (A) provisions contained in the organizational documents
of the Company or (B) the existence of any contract permitting such person to
exercise control over the Company, or (b) after an Initial Public Offering, any
"person" is or becomes the "beneficial owner", directly or indirectly, of more
than 30% of the total Voting Stock of the Company; provided, that the Permitted
Investors, and any person directly or indirectly controlling, controlled by, or
under common control with the Permitted Investors, together, are the "beneficial
owners" of a lesser percentage of the Voting Stock of the Company than such
other person 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) the Company consolidates with, or merges or
amalgamates with or into another person or conveys, transfers, or leases all or
substantially all of its assets to any person, or any person consolidates with,
or merges or amalgamates with or into 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 (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 in an amount
which could be paid by the Company as a Restricted Payment pursuant to the
provisions described under "Limitation on Restricted Payments" (and such amount
shall be treated as a Restricted Payment subject to the provisions described
under "Limitation on Restricted Payments") and (B) the holders of the Voting
Stock of the Company immediately prior to such transaction own, directly or
indirectly, not less than a majority of the Voting Stock of the surviving
corporation immediately after such transaction; or (iii) 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 by such Board of Directors or whose nomination for
election by the shareholders 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 the Board of
Directors of the Company then in office.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Consolidated Adjusted Net Income (Loss)" means, when used with reference
to any person for any period, the Consolidated Net Income (Loss) of such person
for such period, adjusted by excluding therefrom
10
<PAGE> 15
(to the extent otherwise included therein) all gains, to the extent they exceed
all losses, realized upon the sale or other disposition (including, without
limitation, pursuant to sale-and-lease-back transactions) of property or assets
which are not sold or otherwise disposed of in the ordinary course of business
or upon the sale or other disposition of any capital stock of such person or any
of its subsidiaries.
"Consolidated Adjusted Net Worth" means, with respect to any person, as of
any date of determination, the total amount of stockholders' equity of such
person and its subsidiaries which would appear on the consolidated balance sheet
of such person as of the date of determination, less (to the extent otherwise
included therein) the following (the amount of such stockholders' equity and
deductions therefrom to be computed, except as noted below, in accordance with
GAAP): (i) an amount attributable to interests in subsidiaries of such person
held by persons other than such person or its subsidiaries, (ii) any
reevaluation or other write-up in book value of assets subsequent to March 28,
1992, other than upon the acquisition of assets acquired in a transaction to be
accounted for by purchase accounting under GAAP made within twelve months after
the acquisition of such assets; (iii) treasury stock; (iv) an amount equal to
the excess, if any, of the amount reflected for the securities of any person
which is not a subsidiary over the lesser of cost or market value (as determined
in good faith by the Board of Directors) of such securities; and (v)
Disqualified Stock of the Company or any subsidiary of the Company.
"Consolidated Amortization Expense" means for any person, for any period,
the amortization of goodwill and other intangible items of such person and its
subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Cash Flow Available for Interest Expense" means, for any
person and the Company, the sum of the aggregate amount, for the four fiscal
quarters for which financial information in respect thereof is available
immediately prior to the date of the transaction giving rise to the need to
calculate the Consolidated Cash Flow Available for Interest Expense (the
"Transaction Date"), of (i) Consolidated Adjusted Net Income of such person,
(ii) Consolidated Income Tax Expense, (iii) Consolidated Depreciation Expense,
(iv) Consolidated Amortization Expense, (v) Consolidated Interest Expense and
(vi) other noncash items reducing Consolidated Net Income, minus non-cash items
increasing Consolidated Net Income. Consolidated Cash Flow Available for
Interest Expense for any period shall be adjusted to give pro forma effect (to
the extent applicable) to (i) the Investment by the Company or a subsidiary of
the Company during such period up to and including the Transaction Date (the
"Reference Period") in any person which, as a result of such Investment, becomes
a subsidiary of the Company, or in the acquisition of assets from any person
which constitutes substantially all of an operating unit or business of such
person and (ii) the sale or other disposition of any assets (including capital
stock) of the Company or a subsidiary of the Company, other than in the ordinary
course of business, during the Reference Period, as if such Investment or sale
or disposition of assets by the Company or a subsidiary of the Company occurred
on the first day of the Reference Period.
"Consolidated Depreciation Expense" means for any person, for any period,
the depreciation expense of such person and its subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Income Tax Expense" means, for any person, for any period,
the aggregate of the income tax expense of such person and its subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any person, for any period, the
sum of (a) the Interest Expense of such person and its subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP and (b)
dividends in respect of preferred or preference stock of a subsidiary of the
Company held by persons other than the Company or a wholly owned subsidiary of
the Company. For purposes of clause (b) of the preceding sentence, dividends
shall be deemed to be an amount equal to the actual dividends paid divided by
one minus the applicable actual combined Federal, state, local and foreign
income tax rate of the Company (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.
11
<PAGE> 16
"Consolidated Interest Expense Coverage Ratio" means, with respect to any
person, the ratio of (i) the aggregate amount of the applicable Consolidated
Cash Flow Available for Interest Expense of such person to (ii) the aggregate
Consolidated Interest Expense which such person shall accrue during the first
full fiscal quarter following the Transaction Date and the three fiscal quarters
immediately subsequent to such fiscal quarter, such Consolidated Interest
Expense to be calculated on the basis of the amount of such person's
Indebtedness (on a consolidated basis) outstanding on the Transaction Date and
reasonably anticipated by such person in good faith to be outstanding from time
to time during such period.
"Consolidated Net Income (Loss)" means, with respect to any person, for any
period, the aggregate of the net income (loss) of such person and its
subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP; provided that there shall be excluded from such net income (to the
extent otherwise included therein) (i) the net income (loss) of any person which
is not a subsidiary of such person and which is accounted for by the equity
method of accounting, except to the extent of the amount of cash dividends or
distributions paid by such other person to such person or to a subsidiary of
such person, (ii) the net income (loss) of any person accrued prior to the date
on which it is acquired by such person or a subsidiary of such person in a
pooling of interests transaction, (iii) the net income (loss) of any subsidiary
of such person to the extent that the declaration or payment of dividends or
similar distributions or transfers or loans by that subsidiary 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 such subsidiary, in each case determined in accordance with GAAP
and (iv) any gain (but not loss), together with any related provision for taxes
on such gain, realized upon the sale or other disposition (including, without
limitation, dispositions pursuant to sale-and-lease-back transactions) of any
asset or property outside of the ordinary course of business and any gain (but
not loss) realized upon the sale or other disposition by such person of any
capital stock or marketable securities.
"Disinterested Director" means, with respect to an Affiliate Transaction or
series of related Affiliate Transactions, a member of a Board of Directors who
has no financial interest, and whose employer has no financial interest, in such
Affiliate Transaction or series of related Affiliate Transactions.
"Disqualified Stock" means any capital stock of the Company or any
subsidiary of the Company which, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the maturity date of the
Senior Subordinated Notes or which is exchangeable or convertible into debt
securities of the Company or any subsidiary of the Company, except to the extent
that such exchange or conversion rights cannot be exercised prior to the
maturity of the Senior Subordinated Notes.
"GAAP" means generally accepted accounting principles on a basis
consistently applied.
"Indebtedness" means (without duplication), with respect to any person, any
indebtedness, contingent or otherwise, in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such person or
only to a portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (except any such balance that constitutes a trade payable
in the ordinary course of business that is not overdue by more than 120 days or
is being contested in good faith), if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such person
prepared on a consolidated basis in accordance with GAAP, and shall also include
letters of credit, Obligations with respect to Interest Swap Obligations, any
Capitalized Lease Obligation, the maximum fixed repurchase price of any
Disqualified Stock, Obligations secured by a Lien to which any property or
asset, including leasehold interests under Capitalized Lease Obligations and any
other tangible or intangible property rights, owned by such person is subject,
whether or not the Obligations secured thereby shall have been assumed (provided
that, if the Obligations have not been assumed, such Obligations shall be deemed
to be in an amount not to exceed the fair market value of the property or
properties to which the Lien relates, as determined in good faith by the Board
of Directors of such person and as evidenced by a Board Resolution), and
guarantees of items which would be included within this definition (regardless
of whether such items would appear upon such balance sheet; provided that for
the
12
<PAGE> 17
purpose of computing the amount of Indebtedness outstanding at any time, such
items shall be excluded to the extent that they would be eliminated as
intercompany items in consolidation). For purposes of the preceding sentence,
the maximum fixed repurchase price of any Disqualified Stock which does not have
a fixed repurchase price shall be calculated in accordance with the terms of
such Disqualified Stock as if such Disqualified Stock were repurchased on any
date on which Indebtedness shall be required to be determined pursuant to the
11 1/4% Indenture, and if such price is based upon, or measured by, the fair
market value of such Disqualified Stock (or any equity security for which it may
be exchanged or converted), such fair market value shall be determined in good
faith by the Board of Directors of such person.
"Independent Financial Advisor" means a reputable accounting, appraisal or
investment banking firm that is, in the reasonable judgment of the Board of
Directors of the Company or a subsidiary of the Company, qualified to perform
the task for which such firm has been engaged hereunder and disinterested and
independent with respect to the Company and its Affiliates.
"Initial Public Offering" means the sale of capital stock of the Company
pursuant to (a) a registration statement under the Securities Act that has been
declared effective by the Commission or (b) a public offering outside the United
States and which results, in either case, in an active trading market for such
shares. An active trading market shall be deemed to exist if such shares are
listed on the New York Stock Exchange, the American Stock Exchange or the NASDAQ
National Market System or any major international trading market exchange.
"Investment Grade" is defined as BBB-or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such ratings by S&P or Moody's. In the event that
the Company shall select any other rating agency, the equivalent of such ratings
by such rating agency shall be used.
"Moody's" means Moody's Investor Services, Inc. or if Moody's shall not
then make a rating of the Senior Subordinated Notes publicly available, a
nationally recognized securities rating agency selected by the Company.
"Net Cash Proceeds" means, with respect to any Asset Sale, the Cash
Proceeds of such Asset Sale net of fees, commissions, expenses and other costs
of sale (including payment of the outstanding principal amount of, premium or
penalty, if any, and interest on any Indebtedness which is either secured by a
Lien on the stock or other assets sold or can be or is accelerated by such
sale), taxes paid or payable as a result thereof, and any amount required to be
paid to any person (other than the Company or any of its subsidiaries) owning a
beneficial interest in the stock or other assets sold.
"Obligation" means any principal, interest, premium, penalties, fees and
any other liabilities payable under the documentation governing any
Indebtedness.
"Permitted Indebtedness" means: (i) Indebtedness of the Company pursuant to
its guarantee of Obligations under, or Indebtedness of any subsidiary of the
Company under, the Credit Agreement; provided that in no event shall the
aggregate amount of Indebtedness permitted to be outstanding at any one time
pursuant to this clause (i) exceed $221,300,000 (less any amounts permanently
repaid thereunder but without deducting payments under the revolving credit
facility and the swingline facility of the Credit Agreement unless the
commitments thereunder have been permanently reduced); (ii) Indebtedness
represented by guarantees of Indebtedness which is permitted by the provisions
described under "Certain Covenants -- Limitation on Indebtedness"; (iii)
Indebtedness evidenced by the Senior Subordinated Notes and the Guarantee; (iv)
Indebtedness (A) incurred in connection with the purchase or improvement of
property (real or personal) or equipment or other capital expenditures in the
ordinary course of business or (B) secured by a mortgage or arising out of
sale-and-lease-back transactions with respect to capital assets; provided that
in no event shall the aggregate amount of Indebtedness permitted to be
outstanding at any one time pursuant to this clause (iv) exceed $20,000,000; (v)
Indebtedness up to $5,000,000 incurred in connection with or arising out of a
sale-and-lease-back transaction with respect to the Company's recently
constructed facility in Eisenach, Germany; (vi) Indebtedness of the Company to
any subsidiary of the Company and Indebtedness of any subsidiary of the Company
to the Company or another subsidiary of the Company; provided that the Company
or such subsidiary shall not become liable to any person other than the Company
or a subsidiary of the
13
<PAGE> 18
Company with respect thereto; (vii) Indebtedness of the Company or any
subsidiary of the Company represented by Interest Swap Obligations; provided
that such Interest Swap Obligations are related to payment Obligations on
Indebtedness otherwise permitted by the provisions described under "Certain
Covenants -- Limitation on Indebtedness" and shall not result in an increase in
the principal amount of any outstanding Indebtedness; (viii) Indebtedness of the
Company and its subsidiaries, and any undrawn amounts under legally binding
revolving credit facilities or other standby credit facilities, existing on the
date of the 11 1/4% Indenture; (ix) Indebtedness of CISA in the amount
outstanding on the date of the 11 1/4% Indenture; (x) Indebtedness of the
Company or any of its subsidiaries in respect of guarantees of receivables
originated by the Company or any of its subsidiaries and sold to other persons
to the extent that (A) the sale of such receivables does not constitute an Asset
Sale and (B) such guarantees are similar in nature to the guarantees currently
provided by a foreign subsidiary of the Company under the Discretionary Draft
Purchase Facility dated as of December 15, 1991, between a foreign subsidiary of
the Company and The Bank of New York; (xi) other Indebtedness of the Company and
of any subsidiary of the Company; provided that in no event shall the aggregate
amount of Indebtedness of the Company and of subsidiaries of the Company
permitted to be outstanding pursuant to this clause (xi) at any one time exceed
$30,000,000; (xii) Indebtedness of the Company and its subsidiaries in respect
of guarantees of the Indebtedness of less than majority owned persons; provided
that in no event shall Indebtedness permitted pursuant to this clause (xii)
exceed $5,000,000; (xiii) Indebtedness secured by Permitted Liens; (xiv)
Indebtedness of the Company and its subsidiaries, all of the net proceeds of
which (after customary fees, expenses and costs related to the incurrence of
such Indebtedness) are applied to repay or to refund outstanding Indebtedness
permitted under clauses (i) through (xiii) of this definition ("Refinancing
Indebtedness"); provided that (A) the original issue amount of the Refinancing
Indebtedness shall not exceed the maximum principal amount and accrued interest
of the Indebtedness to be repaid or, if greater in the case of clause (i) of
this definition, permitted to be outstanding under the agreements governing the
Indebtedness being refinanced (or if such Indebtedness was issued at an original
issue discount, the original issue price plus amortization of the original issue
discount at the time of the incurrence of the Refinancing Indebtedness) plus the
amount of customary fees, expenses and costs related to the incurrence of such
Refinancing Indebtedness, (B) Refinancing Indebtedness incurred by any
subsidiary shall not be used to repay or refund outstanding Indebtedness of the
Company and (C) with respect to any Refinancing Indebtedness which refinances
Indebtedness which ranks pari passu or junior in right of payment to the Senior
Subordinated Notes or the Guarantee, (1) the Refinancing Indebtedness does not
require any principal payments prior to the dates of principal payments under
the Senior Subordinated Notes and has an average weighted life which is equal to
or greater than the average weighted life of the Senior Subordinated Notes, (2)
if such Indebtedness being refinanced is pari passu in right of payment to the
Senior Subordinated Notes or to the Guarantee, as the case may be, such
Refinancing Indebtedness does not rank senior in right of payment to the payment
of principal of and interest on the Senior Subordinated Notes or to the
Guarantee, as the case may be, and (3) if such Indebtedness being refinanced is
subordinated to the Senior Subordinated Notes or the Guarantee, as the case may
be, such Refinancing Indebtedness is subordinated to the Senior Subordinated
Notes or the Guarantee, as the case may be, to the same extent and on
substantially the same terms.
"Permitted Investors" means the parties to the Stockholders Agreement
(other than the Company) and their respective Affiliates.
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims which are being contested in good faith by appropriate
proceedings, promptly instituted and diligently conducted and, if a reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor; (ii) statutory Liens of landlords and
carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's,
or other like Liens arising in the ordinary course of business and with respect
to amounts not yet delinquent or being contested in good faith by appropriate
process of law, if a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor; (iii) Liens incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (iv)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds, government contracts,
performance and return-of-money bonds and other Obligations of like nature
incurred in the ordinary course of business
14
<PAGE> 19
(exclusive of Obligations for the payment of borrowed money); (v) easements,
rights-of-way, restrictions, zoning provisions and other governmental
restrictions and other similar charges or encumbrances not interfering in any
material respect with the business of the Company or any of its subsidiaries;
(vi) Liens upon tangible personal property acquired after the date of original
issuance of the Senior Subordinated Notes; provided that, (A) any such Lien is
created solely for the purpose of securing Indebtedness representing or incurred
to finance, refinance or refund the cost of the item of property subject
thereto, (B) the principal amount of the Indebtedness secured by such Lien does
not exceed 100% of such cost, (C) such Lien does not extend to or cover any
property other than such item of property and additions, replacements and
improvements thereon and (D) the incurrence of such Indebtedness is permitted by
the provisions described below under "Certain Covenants -- Limitation on
Indebtedness" (other than clause (xiii) of the definition of Permitted
Indebtedness); (vii) judgment Liens not giving rise to a Default or Event of
Default; (viii) leases or subleases granted to others not interfering in any
material respect with the business of the Company or any of its subsidiaries;
(ix) Liens encumbering customary initial deposits and margin deposits, and other
Liens incurred in the ordinary course of business and which are within the
general parameters customary in the industry, in each case securing Indebtedness
under Interest Swap Obligations; (x) any interest or title of a lessor in the
property subject to any Capitalized Lease Obligation or operating lease or any
Lien granted by a lessor on such property which does not interfere in any
material respect with the business of the Company and its subsidiaries; (xi)
Liens arising from filing UCC financing statements regarding leases; (xii) Liens
securing reimbursement Obligations with respect to Commercial Letters of Credit
which encumber documents and other property relating to such Commercial Letters
of Credit and the products and proceeds thereof; (xiii) other Liens existing on
the date of the 11 1/4% Indenture; and (xiv) other Liens to secure Obligations
not in excess of $1,000,000 in the aggregate at any time outstanding, except to
secure Indebtedness.
"Rating Decline" means the occurrence of the following on, or within 90
days after, the date of public notice of the occurrence of a Change of Control
or of the intention of the Company to effect a Change of Control (which period
shall be extended so long as the rating of the Senior Subordinated Notes is
under publicly announced consideration for possible downgrading by either
Moody's or S&P): (i) in the event that the Senior Subordinated Notes are rated
by either Moody's or S&P prior to the date of such public notice as Investment
Grade, the rating of the Senior Subordinated Notes by both such rating agencies
shall be decreased to below Investment Grade or (ii) in the event the Senior
Subordinated Notes are rated below Investment Grade by both such rating agencies
prior to the date of such public notice, the rating of the Senior Subordinated
Notes by either rating agency shall be decreased by one or more gradations
(including gradations within rating categories as well as between rating
categories).
"Restricted Debt Prepayment" means any purchase, redemption, defeasance
(including, but not limited to, in substance or legal defeasance) or other
acquisition or retirement for value (collectively a "prepayment"), directly or
indirectly, by the Company or a subsidiary of the Company (other than to the
Company or a subsidiary of the Company), prior to the scheduled maturity or
prior to any scheduled repayment of principal or sinking fund payment in respect
of Indebtedness of the Company or such subsidiary which would rank pari passu
with the Senior Subordinated Notes (other than the Senior Subordinated Notes) or
the Guarantee (other than the Guarantee) or would be subordinate in right of
payment to the Senior Subordinated Notes or the Guarantee, as the case may be,
("Refinanced Debt"); provided, however, that (i) any such prepayment of any
Refinanced Debt (including without limitation the 14% Subordinated Debentures)
shall not be deemed to be a Restricted Debt Prepayment to the extent such
prepayment is made (x) with the proceeds of the substantially concurrent sale
(other than to a subsidiary of the Company) of shares of the capital stock
(other than Disqualified Stock) of the Company or rights, warrants or options to
purchase such capital stock of the Company or (y) in exchange for or with the
proceeds from the substantially concurrent issuance of Indebtedness (A) in a
principal amount (or, if such Indebtedness was issued at an original issue
discount, the original issue price thereof plus amortization of the original
issue discount at the time of the issuance) not to exceed the sum of (1) the
principal amount of the Refinanced Debt and (2) the amount of customary fees,
expenses and costs related to the incurrence of such Indebtedness, (B) that does
not require any principal payments prior to the dates of principal payments
under the Senior Subordinated Notes and has an average weighted life which is
equal to or greater than the average weighted life of the Senior Subordinated
Notes, (C) if such Refinanced Debt is pari passu in right of payment to the
Senior
15
<PAGE> 20
Subordinated Notes or the Guarantee, as the case may be, such Indebtedness does
not rank senior in right of payment to the payment of principal of and interest
on the Senior Subordinated Notes or to the Guarantee, as the case may be, and
(D) if such Refinanced Debt was subordinated to the Senior Subordinated Notes or
the Guarantee, as the case may be, such Indebtedness is subordinated to the
Senior Subordinated Notes or the Guarantee, as the case may be, to the same
extent and on substantially the same terms and (ii) no Default or Event of
Default shall have occurred and be continuing at the time or shall occur as a
result of such sale of capital stock or issuance of such Indebtedness.
"Restricted Payment" means (i) any Restricted Stock Payment or (ii) any
Restricted Debt Prepayment.
"Restricted Stock Payment" means (i) with respect to the Company, any
dividend, either in cash or in property (except dividends payable in Common
Stock), on, or the making by the Company of any other distribution in respect
of, its capital stock, now or hereafter outstanding, or the redemption,
repurchase, retirement or other acquisition for value by the Company or any
subsidiary of the Company, directly or indirectly, of capital stock of the
Company or any warrants, rights (other than exchangeable or convertible
Indebtedness of the Company) or options to purchase or acquire shares of any
class of the Company's capital stock, now or hereafter outstanding, and (ii)
with respect to any subsidiary of the Company, any redemption, repurchase,
retirement or other acquisition for value by the Company or a subsidiary of the
Company of capital stock of such subsidiary or any warrants, rights (other than
exchangeable or convertible Indebtedness of any subsidiary of the Company), or
options to purchase or acquire shares of any class of capital stock of such
subsidiary, now or hereafter outstanding, except with respect to capital stock
of such subsidiary or such warrants, rights or options owned by (x) the Company
or a subsidiary of the Company or (y) any person which is not an Affiliate of
the Company.
"S&P" means Standard & Poor's Corporation, or if it shall not make a rating
of the Senior Subordinated Notes publicly available, a nationally recognized
securities rating agency selected by the Company.
"Voting Stock" means all classes of capital stock then outstanding of a
person normally entitled to vote in elections of directors.
CERTAIN COVENANTS
Repurchase of Notes Upon a Change of Control Triggering Event. If a "Change
of Control Triggering Event" shall occur at any time, then each holder shall
have the right to require that the Company repurchase such holder's Senior
Subordinated Notes 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,
which date shall be no earlier than 30 days nor more than 60 days from the date
the Company notifies the holders of the occurrence of a Change of Control
Triggering Event. The source of funds for any such repurchase will be the
Company's available cash or cash generated from operations or other sources,
including borrowing, sales of assets or sales of equity. However, there can be
no assurance that sufficient funds will be available at the time of any Change
of Control Triggering Event to make any required repurchases. Under the 11 1/4%
Indenture, the Company can only effect such repurchases either with the consent
of the lenders under the Credit Agreement or by repaying amounts owed to such
lenders under the Credit Agreement. The failure to satisfy either such condition
would constitute a default under the 11 1/4% Indenture. The Credit Agreement
also contains prohibitions of certain events that would constitute a Change of
Control Triggering Event. In addition, the Company's ability to repurchase
Senior Subordinated Notes following a Change of Control Triggering Event may be
limited by the terms of its then-existing Senior Indebtedness, including,
without limitation, the subordination provisions described above under
"Subordination". Therefore, the exercise by the holders of their right to
require the Company to repurchase the Senior Subordinated Notes could cause a
default under the Senior Indebtedness even if the Change of Control Triggering
Event itself does not, due to the financial effect of such repurchase on the
Company. Failure of the Company to repurchase the Senior Subordinated Notes in
the event of a Change of Control Triggering Event will create an Event of
Default with respect to the Senior Subordinated Notes, whether or not such
repurchase is permitted by the subordination provisions. the Company agrees that
it will comply with all applicable tender
16
<PAGE> 21
offer rules, including Rule 14e-1 under the Exchange Act, if the repurchase
option is triggered upon a Change of Control Triggering Event.
Under the 11 1/4% Indenture, the Company is obligated to give notice to
holders of the Senior Subordinated Notes and the Trustee within 30 days
following a Change of Control Triggering Event specifying, among other things,
the purchase price, the purchase date, the place at which Senior Subordinated
Notes shall be presented and surrendered for purchase, that interest accrued to
the purchase date will be paid upon such presentation and surrender and that
interest will cease to accrue on Senior Subordinated Notes surrendered for
purchase as of such purchase date. In order for a holder of Senior Subordinated
Notes properly to put its Senior Subordinated Notes to the Company for purchase,
the holder must give notice and present and surrender its Senior Subordinated
Notes to the Company at the place specified in the Company's aforementioned
notice at least 15 days prior to the purchase date. Any such tender by a holder
of Senior Subordinated Notes shall be irrevocable. The Company is not obligated
to notify holders of or to purchase Senior Subordinated Notes with respect to
more than one Change of Control Triggering Event.
The Change of Control purchase feature of the Senior Subordinated Notes may
in certain circumstances make more difficult or discourage a takeover of the
Company, and, thus, the removal of incumbent management. The Change of Control
purchase feature, however, is not the result of management's knowledge of any
specific effort to accumulate the Company's stock or to obtain control of the
Company by means of a merger, tender offer, solicitation or otherwise, or part
of a plan by management to adopt a series of antitakeover provisions. Instead,
the Change of Control purchase feature is a result of negotiations between the
Company and the underwriters for the original offering of the Senior
Subordinated Notes. Management has no present intention to engage in a
transaction involving a Change of Control Triggering Event, although it is
possible that the Company would decide to do so in the future. Subject to the
limitations discussed below, including the limitation on incurrence of
additional indebtedness and the issuance of certain securities, the Company
could, in the future, enter into certain transactions, including acquisitions,
refinancings or other recapitalizations, that would not constitute a Change of
Control Triggering Event under the 11 1/4% Indenture, but that could increase
the amount of Company Senior Indebtedness (or any other indebtedness)
outstanding at such time or otherwise affect the Company's capital structure or
credit ratings.
Limitation on Restricted Payments. The 11 1/4% Indenture provides that the
Company will not, and will not permit any subsidiary of the Company to, directly
or indirectly, make any Restricted Payment unless (a) no Default or Event of
Default has occurred and is continuing at the time or will occur as a
consequence of such Restricted Payment and (b) after giving effect to such
Restricted Payment, the aggregate amount expended for all Restricted Payments
since March 28, 1992 (the amount so expended, if other than in cash, to be
determined by the Board of Directors, whose reasonable determination shall be
conclusive and evidenced by a Board Resolution), does not exceed the sum of (x)
25% of Consolidated Net Income of the Company (or in the case such Consolidated
Net Income shall be a deficit, minus 100% of such deficit) during the period
(treated as one accounting period) subsequent to March 28, 1992 and ending on
the last day of the fiscal quarter immediately preceding such Restricted Payment
and (y) the aggregate net proceeds, including cash and the fair market value of
property other than cash (as determined in good faith by the Board of Directors
of the Company and evidenced by a Board Resolution), received by the Company
during such period from any person other than a subsidiary of the Company, as a
result of the issuance of capital stock of the Company (other than any
Disqualified Stock) or warrants, rights or options to purchase or acquire such
capital stock including such capital stock issued upon conversion or exchange of
Indebtedness or upon exercise of warrants or options and any contributions to
the capital of the Company received by the Company from any such person less the
amount of such net proceeds actually applied as permitted by clause (ii) of the
next paragraph or by the proviso to the definition of Restricted Debt
Prepayment; provided that, at the time of such Restricted Payment and after
giving effect thereto, the Company or any subsidiary of the Company shall be
able to incur an additional $1.00 of Indebtedness pursuant to the provisions
described under "Limitation on Indebtedness" (as if such additional $1.00 of
Indebtedness were not deemed to be Permitted Indebtedness). For purposes of any
calculation pursuant to the preceding sentence which is required to be made
within 60 days after the declaration of a dividend by the Company, such dividend
shall be deemed to be paid at the date of declaration.
17
<PAGE> 22
This provision is not violated by reason of (i) the payment of any dividend
within 60 days after the date of declaration thereof if, at such date of
declaration such payment complied with the provisions hereof; provided that no
Default or Event of Default has occurred and is continuing at the time, or will
occur as a result, of such Restricted Payment; (ii) the purchase, redemption,
acquisition or retirement of any shares of the Company's capital stock in
exchange for, or out of the proceeds of the substantially concurrent sale (other
than to a subsidiary of the Company) of, other shares of capital stock (other
than Disqualified Stock) of the Company or rights, warrants or options to
purchase or acquire such capital stock of the Company; provided that no Default
or Event of Default has occurred and is continuing at the time, or shall occur
as a result, of such Restricted Payment. For purposes of determining the
aggregate amount of Restricted Payments in accordance with clause (b) of the
preceding paragraph, all amounts expended pursuant to clause (i) (except to the
extent deemed to have been paid pursuant to the last sentence of the immediately
preceding paragraph) of this paragraph shall be included; or (iii) payments by
the Company (A) for the mandatory repurchase of shares of Common Stock of the
Company (or scheduled payments of principal of or interest on notes issued to
finance the repurchase of such shares) from Management Investors under the
Stockholders Agreement or (B) to satisfy any other Obligations under the terms
of the Stockholders Agreement.
Limitation on Indebtedness. The 11 1/4% Indenture provides that except for
Permitted Indebtedness, the Company will not, and will not permit any subsidiary
of the Company to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become liable for, contingently or otherwise, extend the
maturity of or become responsible for the payment of (collectively, an
"incurrence"), any Obligations in respect of any Indebtedness including Acquired
Indebtedness unless (a) no Default or Event of Default shall have occurred and
be continuing at the time or as a consequence of the incurrence of such
Indebtedness and (b) after giving effect to the incurrence of such Indebtedness
and the receipt and application of the proceeds thereof, the Consolidated
Interest Expense Coverage Ratio of the Company is greater than 1.75 to 1 through
the period ending June 30, 1993, and 2.00 to 1 thereafter.
Limitation on Payment Restrictions Affecting Subsidiaries. The 11 1/4%
Indenture provides that the Company will not, and will not permit any subsidiary
of the Company to, create or otherwise cause or suffer to exist or become
effective any consensual restriction which by its terms expressly restricts any
such subsidiary from (i) paying dividends or making any other distributions on
such subsidiary's capital stock or paying any Indebtedness owed to the Company
or any subsidiary of the Company, (ii) making any loans or advances to the
Company or any subsidiary of the Company or (iii) transferring any of its
property or assets to the Company or any subsidiary of the Company, except (a)
any restrictions existing under agreements in effect at the issuance of the
Senior Subordinated Notes, (b) any restrictions under any agreement evidencing
any Acquired Indebtedness of a subsidiary of the Company incurred pursuant to
the provisions described under "Limitation on Indebtedness"; provided that such
restrictions shall not restrict or encumber any assets of the Company or its
subsidiaries other than such subsidiary or (c) any restrictions existing under
any agreement which refinances any Indebtedness in accordance with paragraph
(xiv) of the definition of Permitted Indebtedness; provided that the terms and
conditions of any such agreement are not materially less favorable to such
subsidiary than those under the agreement creating or evidencing the
Indebtedness being refinanced.
Limitation on Creation of Liens. The 11 1/4% Indenture provides that the
Company will not, and will not permit any subsidiary of the Company to, create,
incur, assume or suffer to exist any Liens upon any of their respective assets
unless the Guarantee and the Senior Subordinated Notes are equally and ratably
secured by such assets except for (i) Liens securing Senior Indebtedness
permitted to be incurred under the provisions described under "Limitation on
Indebtedness"; (ii) Liens with respect to Acquired Indebtedness; provided that
such Liens do not extend to or cover any property or assets of the Company or
any subsidiary of the Company other than the property or assets acquired; (iii)
Liens securing Indebtedness which is incurred to refinance secured Indebtedness
and which is permitted to be incurred under the provisions described under
"Limitation on Indebtedness"; provided that such Liens do not extend to or cover
any property or assets of the Company or any subsidiary of the Company other
than the property or assets securing the Indebtedness being refinanced; and (iv)
Permitted Liens.
No Senior Subordinated Indebtedness. The 11 1/4% Indenture provides that
the Company will not issue, incur, create, assume, guarantee or otherwise become
liable for any Indebtedness which is subordinate or
18
<PAGE> 23
junior in right of payment to any Indebtedness of the Company unless such
Indebtedness is pari passu with or subordinate in right of payment to the Senior
Subordinated Notes.
Transactions with Shareholders and Affiliates. The 11 1/4% Indenture
provides that the Company will not, and will not permit any subsidiary of the
Company to, directly or indirectly, enter into or suffer to exist any
transaction (an "Affiliate Transaction") (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of more than 10% of any class of equity securities of
the Company or with any Affiliate of the Company or of any such holder (other
than a wholly owned subsidiary of the Company), on terms that are less favorable
to the Company or such subsidiary, as the case may be, than would be available
in a comparable transaction with an unrelated person. In addition, neither the
Company nor any subsidiary of the Company shall enter into any Affiliate
Transaction or series of related Affiliate Transactions involving or having a
value of (a) more than $2,500,000, unless a majority of Disinterested Directors
(or, if there are no Disinterested Directors, a majority of the Board of
Directors) of the Company or such subsidiary, as the case may be, determines in
good faith pursuant to a Board Resolution that such Affiliate Transaction or
series of related Affiliate Transactions is fair to the Company or such
subsidiary, as the case may be, or (b) more than $10,000,000, unless (i) a
majority of Disinterested Directors (or, if there are no Disinterested
Directors, a majority of the Board of Directors) of the Company or such
subsidiary, as the case may be, make the determination referred to in clause (a)
above and (ii) the Company or such subsidiary, as the case may be, has received
an opinion from an Independent Financial Advisor to the effect that such
Affiliate Transaction or series of related Affiliate Transactions are fair to
the Company or such subsidiary, as the case may be, from a financial point of
view.
The foregoing provisions shall not apply to payments of investment banking
and financial advisory or consulting fees and other fees to Shearson Lehman
Brothers Inc. or any of its subsidiaries or Affiliates in connection with the
sale of the Senior Subordinated Notes (or any refunding, refinancing or
conversion thereof) and other customary investment banking and financial
advisory or consulting fees, including fees relating to the Equity Investment.
Sales of Assets. The 11 1/4% Indenture provides that subject to the
provisions described under "Mergers or Consolidations", the Company will not,
and will not permit any subsidiary to, make any Asset Sale unless (i) the
Company (or such subsidiary, as the case may be) receives consideration at the
time of such sale at least equal to the fair market value of the shares or
assets included in such Asset Sale (as determined in good faith by the Board of
Directors, including valuation of all noncash consideration) and (ii)(x) either
(A) the Net Cash Proceeds are reinvested within 12 months (or, pursuant to a
determination of the Board of Directors, held pending reinvestment) in
replacement assets or assets used in the Automotive Seating Business or used to
purchase all of the issued and outstanding capital stock of a person engaged in
such business or (B) if the Net Cash Proceeds are not applied or are not
required to be applied as set forth in clause (ii)(x)(A) or if after applying
such Net Cash Proceeds as set forth in clause (ii)(x)(A) there remain Net Cash
Proceeds, such Net Cash Proceeds are applied within 12 months of the original
receipt thereof to the prepayment, repayment or purchase of Senior Indebtedness
or Indebtedness of a subsidiary, (y) if and to the extent that the gross
proceeds from such Asset Sale (after giving effect to the application of clause
(ii)(x)(A) and (B), when added to the gross proceeds from all prior Asset Sales
(not applied as set forth in clause (ii)(x)(A) or (B)) exceeds $7,500,000, such
proceeds are applied pursuant to a Repurchase Offer (as defined in the 11 1/4%
Indenture) to repurchase the Senior Subordinated Notes (on a pro rata basis if
the amount available for such purchase is less than the outstanding principal
amount of the Senior Subordinated Notes) at a purchase price equal to 100% of
the principal amount thereof plus accrued interest to the date of prepayment and
(z) if the aggregate principal amount of all Senior Subordinated Notes tendered
pursuant to a Repurchase Offer is less than the Repurchase Offer Amount (as
defined in the 11 1/4% Indenture), such excess amount is applied for general
corporate purposes.
Limitation on Issuance of Preferred Stock. The 11 1/4% Indenture provides
that the Company will not permit any of its subsidiaries to issue any preferred
or preference stock (except to the Company or a wholly owned subsidiary of the
Company) or permit any person (other than the Company or any wholly owned
subsidiary of the Company) to hold any such preferred or preference stock unless
the Company would be entitled to create, incur or assume Indebtedness pursuant
to the provisions described under "Limitation on
19
<PAGE> 24
Indebtedness" in the aggregate principal amount equal to the aggregate
liquidation value of the preferred or preference stock to be issued.
MERGERS OR CONSOLIDATIONS
Under the 11 1/4% Indenture, the Company will not consolidate or merge with
or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to any person unless: (i) the person formed by
or surviving any such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or disposition has been
made, is a corporation organized and existing under the laws of the United
States of America, any state thereof or the District of Columbia; (ii) the
corporation formed by or surviving any such consolidation or merger (if other
than the Company), or to which such sale, assignment, transfer, lease,
conveyance or disposition has been made, assumes by supplemental indenture
satisfactory in form to the Trustee all the obligations of the Company under the
Guarantee and the 11 1/4% Indenture; (iii) immediately before and immediately
after such transaction, and giving effect thereto, no Default or Event of
Default has occurred and is continuing; (iv) the Company or any corporation
formed by or surviving any such consolidation or merger, or to which such sale,
assignment, transfer, lease, conveyance or disposition has been made, has
Consolidated Adjusted Net Worth (immediately after the transaction and giving
effect thereto, excluding any write-ups of assets resulting from such
consolidation or merger) at least equal to the Consolidated Adjusted Net Worth
of the Company immediately preceding the transaction; (v) immediately after such
transaction and giving effect thereto, the Company or any corporation formed by
or surviving any such consolidation or merger, or to which such sale,
assignment, transfer, lease, conveyance or disposition shall have been made,
shall be able to incur an additional $1.00 of Indebtedness pursuant to the
provisions described under "Limitation on Indebtedness" (as if such additional
$1.00 of Indebtedness were not deemed to be Permitted Indebtedness); and (vi)
the Company has delivered to the Trustee (A) an Officers' Certificate (attaching
the calculation to demonstrate compliance with clause (iv) and (v) above) and an
Opinion of Counsel, each stating that such consolidation, merger or transfer and
such supplemental indenture comply with the above provisions and that all
conditions precedent relating to such transaction have been complied with, and
(B) a certificate from the Company's independent certified public accountants,
stating that the Company has made the calculations required by clauses (iv) and
(v) above.
EVENTS OF DEFAULT
The 11 1/4% Indenture defines an Event of Default as: (i) default by the
Company for 30 days in the payment of interest on the Senior Subordinated Notes;
(ii) default by the Company in the payment when due of principal of the Senior
Subordinated Notes; (iii) failure by the Company for 30 days after notice to
comply with any of its other agreements in the 11 1/4% Indenture or the Senior
Subordinated Notes; (iv) any Indebtedness of the Company or a Significant
Subsidiary of the Company for borrowed money (or the payment of which is
guaranteed by the Company or one of its subsidiaries) having an outstanding
principal amount of $3,000,000 or more under a single payment agreement or
$5,000,000 or more in the aggregate, is declared to be due and payable prior to
its stated maturity or failure by the Company or any Significant Subsidiary to
pay the final scheduled principal installment in an amount of at least
$3,000,000 in respect of any such Indebtedness on its stated maturity date
unless such Indebtedness which has been declared due and payable prior to its
stated maturity is Indebtedness of a Foreign Subsidiary the payment of which is
guaranteed by the Syndicated Letters of Credit; (v) failure by the Company, or
any subsidiary of the Company to pay certain final judgments aggregating in
excess of $3,000,000; and (vi) certain events of bankruptcy or insolvency.
Subject to the provisions under "Subordination", if an Event of Default
occurs and is continuing, the Trustee or the holders of at least 25% of the
principal amount of the Senior Subordinated Notes then outstanding, by written
notice to the Company (and the Agent Bank, so long as the Indebtedness under the
Credit Agreement is outstanding), may declare to be due and payable all unpaid
principal of and accrued interest on the Senior Subordinated Notes.
Upon a declaration of acceleration, such principal and accrued interest to
the date of such acceleration shall be due and payable upon the first to occur
of (i) an acceleration under the Credit Agreement (or any refunding or
refinancing thereof), or (ii) five Business Days after notice of such
declaration is given to the Company (and the Agent Bank, so long as the
Indebtedness under the Credit Agreement is outstanding);
20
<PAGE> 25
provided, however, that, if the Event of Default giving rise to such
acceleration is cured before the earlier to occur of (i) or (ii), such notice of
acceleration and its consequences shall be deemed rescinded and annulled. In the
event of a declaration of acceleration under the 11 1/4% Indenture because an
Event of Default described in clause (iv) of the second preceding paragraph has
occurred and is continuing, such declaration of acceleration shall be
automatically annulled if the holders of the Indebtedness which is the subject
of such Event of Default have rescinded their declaration of acceleration in
respect of such Indebtedness within 90 days thereof or all amounts payable in
respect of such Indebtedness have been paid and such Indebtedness has been
discharged during such 90-day period and if (i) the annulment of such
acceleration would not conflict with any judgment or decree of a court of
competent jurisdiction, (ii) all existing Events of Default, except nonpayment
of principal or interest that has been due solely because of the acceleration,
have been cured or waived, and (iii) the Company has delivered an Officers'
Certificate to the Trustee to the effect of clauses (i) and (ii) of this
sentence. If an Event of Default described in clause (vi) of the second
preceding paragraph with respect to the Company occurs, all unpaid principal and
accrued interest on the Senior Subordinated Notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
The Holders of a majority of the outstanding principal amount of the Senior
Subordinated Notes by written notice to the Trustee may rescind an acceleration
and its consequences if (i) all existing Events of Default, other than the
nonpayment of principal of or interest on the Senior Subordinated Notes which
have become due solely because of the acceleration, have been cured or waived
and (ii) the rescission would not conflict with any judgment or decree of a
court of competent jurisdiction.
Holders of the Senior Subordinated Notes may not enforce the 11 1/4%
Indenture or the Senior Subordinated Notes except as provided in the 11 1/4%
Indenture. Subject to certain limitations, holders of a majority in principal
amount of the then outstanding Senior Subordinated Notes may direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from holders of
the Senior Subordinated Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest. The
Company is required to deliver to the Trustee annually a statement regarding
compliance with the 11 1/4% Indenture, and upon becoming aware of any Default or
Event of Default, a statement specifying such Default or Event of Default.
DISCHARGE OF INDENTURE AND DEFEASANCE
Except as otherwise limited by the provisions of the Credit Agreement, the
Company may terminate its obligations under the Senior Subordinated Notes and
the 11 1/4% Indenture when (i) all outstanding Senior Subordinated Notes have
been delivered (other than destroyed, lost or stolen Senior Subordinated Notes
which have not been replaced or paid) to the Trustee for cancellation or (ii)
all outstanding Senior Subordinated Notes have become due and payable, and the
Company irrevocably deposits with the Trustee funds or U.S. Government
Obligations sufficient (without reinvestment thereof) to pay at maturity all
outstanding Senior Subordinated Notes, including all interest thereon (other
than destroyed, lost or stolen Senior Subordinated Notes which have not been
replaced or paid), and in either case the Company has paid all other sums
payable under the 11 1/4% Indenture. In addition, the Company may terminate
substantially all its obligations under the Senior Subordinated Notes and the
11 1/4% Indenture if the Company (a) irrevocably deposits in trust for the
benefit of the holders money or U.S. Government Obligations maturing as to
principal and interest in such amounts and at such times as are sufficient to
pay principal of and interest on the then outstanding Senior Subordinated Notes
to maturity or redemption, as the case may be, (b) delivers to the Trustee an
Opinion of Counsel to the effect that, based on Federal income tax laws then in
effect, the holders of the Senior Subordinated Notes will not recognize income,
gain or loss for Federal income tax purposes as a result of the Company's
exercise of such option and shall be subject to Federal income tax on the same
amounts and in the same manner and at the same times as would have been the case
if such option had not been exercised or a ruling to that effect has been
received from or published by the Internal Revenue Service and (c) certain other
conditions are met.
The Company shall be released from its obligations with respect to the
covenants described under "Certain Covenants" and any Event of Default occurring
because of a default with respect to such covenants if (a) the Company deposits
or causes to be deposited with the Trustee in trust an amount of cash or U.S.
21
<PAGE> 26
Government Obligations sufficient to pay and discharge when due the entire
unpaid principal of and interest on all outstanding Senior Subordinated Notes
and (b) certain other conditions are met. The obligations of the Company under
the 11 1/4% Indenture with respect to the Senior Subordinated Notes, other than
with respect to the covenants and Events of Default referred to above, shall
remain in full force and effect.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Senior Subordinated Notes in accordance
with the 11 1/4% Indenture. The Registrar may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and to pay
any taxes and fees required by law or permitted by the 11 1/4% Indenture. The
Registrar is not required to transfer or exchange any Senior Subordinated Note
selected for redemption or any Senior Subordinated Note for a period of 15 days
before a selection of Senior Subordinated Notes to be redeemed.
The registered holder of a Senior Subordinated Note may be treated as the
owner of it for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the 11 1/4% Indenture or the Notes may be
amended or supplemented by the Company, and the Trustee with the consent of the
holders of at least a majority in principal amount of such then outstanding
Senior Subordinated Notes and any existing default may be waived with the
consent of the holders of at least a majority in principal amount of the then
outstanding Senior Subordinated Notes. Without the consent of any holder of the
Senior Subordinated Notes, the Company and the Trustee may amend the 11 1/4%
Indenture or the Notes to cure any ambiguity, defect or inconsistency, to
provide for the assumption of the Company's obligations to holders of the Senior
Subordinated Notes by a successor corporation, to provide for uncertificated
Senior Subordinated Notes in addition to certificated Senior Subordinated Notes
or to make any change that does not adversely affect the rights of any holder of
the Senior Subordinated Notes. Without the consent of each holder of Senior
Subordinated Notes affected, the Company may not reduce the principal amount of
Senior Subordinated Notes the holders of which must consent to an amendment of
the 11 1/4% Indenture; reduce the rate or change the interest payment time of
any Senior Subordinated Note; reduce the principal of or change the fixed
maturity of any Senior Subordinated Notes or alter the redemption provisions
with respect thereto; make any Senior Subordinated Note payable in money other
than that stated in the Senior Subordinated Note; make any change in the
provisions concerning waiver of Defaults or Events of Default by holders of the
Senior Subordinated Notes or rights of holders to receive payment of principal
or interest, make any change in the subordination provisions in the 11 1/4%
Indenture that affects the right of any holder or release the Company from any
of its obligations under the 11 1/4% Indenture.
THE TRUSTEE
The Bank of New York is the Trustee under the 11 1/4% Indenture. The Bank
of New York is a lender under the Credit Agreement.
DESCRIPTION OF THE NOTES
The Notes have been issued under an Indenture dated as of February 1, 1994
(the "8 1/4% Indenture"), among the Company, as issuer, and The First National
Bank of Boston, as trustee (the "Trustee").
The terms of the Notes include those stated in the 8 1/4% Indenture and
those made part of the 8 1/4% Indenture by reference to the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), as in effect on the date of the
8 1/4% Indenture. The Notes are subject to all such terms, and holders of the
Notes are referred to the 8 1/4% Indenture and the Trust Indenture Act for a
statement thereof.
The following summary of certain provisions of the 8 1/4% Indenture does
not purport to be complete and is qualified in its entirety by reference to the
8 1/4% Indenture, including the definitions therein of certain terms used below.
A copy of the 8 1/4% Indenture and a specimen of the Note have been filed as
exhibits to the Registration Statement of which this Prospectus is a part.
Capitalized terms used herein and not otherwise defined below, have the meaning
assigned in the 8 1/4% Indenture.
22
<PAGE> 27
GENERAL
The Notes are direct obligations of the Company, and are issued in
denominations of $1,000 and integral multiples thereof. The 8 1/4% Indenture
authorizes the issuance of $145,000,000 aggregate principal amount of Notes. As
described below under "Subordination", the Notes are subordinated in right of
payment to Senior Indebtedness of the Company.
As of April 2, 1994, the aggregate amount of Senior Indebtedness of the
Company (including its obligations under the Senior Subordinated Notes and
amounts outstanding under the Credit Agreement) was approximately $396.7
million. In addition, certain of the Company's subsidiaries have outstanding and
may incur Indebtedness in the future. Holders of such indebtedness will have a
claim against the assets of such subsidiaries that will rank prior to the claims
of the holders of the Notes. As of April 2, 1994, the aggregate indebtedness of
such subsidiaries for money borrowed was approximately $32.0 million.
The Notes bear interest at the rate per annum shown on the cover page of
this Prospectus, payable semiannually on February 1 and August 1 in each year to
holders of record of the Notes at the close of business on January 15 and July
15, respectively, of such year. The first interest payment date is August 1,
1994. Interest is computed on the basis of a 360-day year of twelve 30-day
months. The Notes mature on February 1, 2002.
Principal and interest on the Notes are payable, and the Notes are
transferable, initially at the offices of the Trustee in New York, New York.
Holders must surrender the Notes to the Paying Agent in order to collect
principal payments. Interest on the Notes may be paid by check mailed to the
registered holders of the Notes. The Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
with certain transfers or exchanges. Initially, the Trustee will act as Paying
Agent and Registrar under the 8 1/4% Indenture. The Company or any of its
Affiliates may act as Paying Agent and Registrar, and the Company may change the
Paying Agent or Registrar without prior notice to holders.
OPTIONAL REDEMPTION
The Notes may not be redeemed prior to February 1, 1998. On or after such
date, the Company may, at its option, redeem the Notes in whole or in part, from
time to time, at the following redemption prices (expressed in percentages of
the principal amount thereof), in each case together with accrued interest, if
any, to the date of redemption.
If redeemed during the 12-month period commencing February 1:
<TABLE>
<CAPTION>
PERCENTAGE
----------
<S> <C>
1998................................................................ 101.65%
1999 and thereafter................................................. 100.00%
</TABLE>
The Credit Agreement and the Senior Subordinated Notes contain provisions
that limit the Company's ability to optionally redeem the Notes.
MANDATORY REDEMPTION
The Notes are not subject to mandatory redemption prior to maturity.
SUBORDINATION
The Indebtedness evidenced by the Notes is subordinated to the prior
payment, when due, of all Senior Indebtedness (including the Senior Subordinated
Notes) of the Company but will rank senior to the Indebtedness of the Company
expressly subordinated to the Notes.
Upon any payment or distribution of assets or securities of the Company due
to any dissolution, winding up, total or partial liquidation or reorganization
of the Company or in bankruptcy, insolvency, receivership or other proceedings,
the payment of the principal of and interest on the Notes will be subordinated
in right of
23
<PAGE> 28
payment, as set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness. Upon a default in the payment of any Obligations with
respect to Senior Indebtedness or upon the acceleration of the maturity of
Senior Indebtedness or while any judicial proceeding is pending with respect to
a default on Senior Indebtedness (of which the Trustee has received written
notice), no payment may be made upon or in respect of the Notes until such
default shall have been cured or waived. In addition, during the continuance of
any other event of default with respect to (i) the Credit Agreement pursuant to
which the maturity thereof may be accelerated, upon (a) receipt by the Trustee
of written notice from the Agent Bank (or any Representative of any Senior
Indebtedness which refinances or refunds the Credit Agreement so long as amounts
outstanding under such agreement are in excess of $50,000,000) or (b) if such
event of default results from the acceleration of the Notes, on the date of such
acceleration, no such payment may be made by the Company upon or in respect of
the Notes for a period ("Payment Blockage Period") commencing on the earlier of
the date of receipt of such notice or the date of such acceleration and ending
119 days thereafter (unless such Payment Blockage Period shall be terminated by
written notice to the Trustee from the Agent Bank or any Representative of any
Senior Indebtedness under any agreement which refinances or refunds the Credit
Agreement so long as amounts outstanding under such agreement are in excess of
$50,000,000) or (ii) any other Specified Senior Indebtedness, upon receipt by
the Company of written notice from the Representative for the holders of such
Specified Senior Indebtedness, no such payment may be made by the Company upon
or with respect to the Notes for a Payment Blockage Period commencing on the
date of the receipt of such notice and ending 119 days thereafter (unless such
Payment Blockage Period shall be terminated by written notice to the Company
from such Representative commencing such Payment Blockage Period). In no event
will any one Payment Blockage Period extend beyond 179 days from the date the
payment on the Notes was due. Not more than one Payment Blockage Period may be
commenced with respect to the Notes during any period of 360 consecutive days;
provided that as long as amounts outstanding under the Credit Agreement or any
agreement which refinances or refunds the Credit Agreement are in excess of
$50,000,000, the commencement of a Payment Blockage Period by the holders of the
Specified Senior Indebtedness other than the Credit Agreement shall not bar the
commencement of a Payment Blockage Period by the Agent Bank within such period
of 360 days. No event of default which existed or was continuing on the date of
the commencement of any Payment Blockage Period with respect to the Specified
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis for the commencement of a second Payment Blockage Period by the
Representative of such Specified Senior Indebtedness whether or not within a
period of 360 consecutive days unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days.
If payments with respect to both the Notes and Senior Indebtedness become
due on the same day, then all obligations with respect to such Senior
Indebtedness due on that date shall first be paid in full before any payment is
made with respect to the Notes.
By reason of the subordination provisions described above, in the event of
the Company's insolvency, liquidation, reorganization, dissolution or other
winding-up, funds which would otherwise be payable to holders of Notes will be
paid to the holders of Senior Indebtedness to the extent necessary to pay the
Senior Indebtedness in full. The 8 1/4% Indenture limits the amount of
additional Senior Indebtedness which the Company can create, incur, assume or
guarantee. See "Certain Covenants -- Limitation on Indebtedness."
CERTAIN DEFINITIONS
"Acquired Indebtedness" means, with respect to the Company, Indebtedness of
a person existing at the time such person becomes a subsidiary of the Company or
assumed in connection with the acquisition by the Company or a subsidiary of the
Company of assets from such person, which assets constitute all of an operating
unit of such person, and not incurred in connection with, or in contemplation
of, such person becoming a subsidiary of the Company or such acquisition.
"Affiliate" means, when used with reference to the Company or another
person, any person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, the Company or such other person, as the
case may be. For the purposes of this definition, "control" when used with
respect to any specified person means the power to direct or cause the direction
of management or policies of such person,
24
<PAGE> 29
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative of the foregoing. Notwithstanding the foregoing, the term
"Affiliate" shall not include any wholly owned subsidiary of the Company.
"Agent Bank" means Chemical Bank and/or its Affiliates together with any
bank which is or becomes a party to the Credit Agreement or any successor to
Chemical Bank and/or its Affiliates, and any other Agent Bank under the Credit
Agreement.
"Asset Sale" means any sale exceeding $2,000,000, or any series of sales in
related transactions exceeding $2,000,000 in the aggregate, by the Company or
any subsidiary of the Company, directly or indirectly, of properties or assets
other than in the ordinary course of business, including capital stock of a
subsidiary of the Company, except for (i) the sale of receivables by the Company
or any subsidiary of the Company in the ordinary course of business consistent
with past practice of the Company or any of its subsidiaries, or the transfer of
receivables to a special-purpose subsidiary of the Company and the issuance by
such special-purpose subsidiary, on a basis which is non-recourse (except for
representations as to the status or eligibility of such receivables or to the
limited extent described in clause (vii)(B) of the definition of "Permitted
Indebtedness") to the Company or any other subsidiary of the Company, of
securities secured by such receivables, and (ii) any sale-and-lease-back
transaction involving a Capitalized Lease Obligation permitted under the
provisions described under "Limitation on Indebtedness."
"average weighted life" means, as of the date of determination, with
reference to any debt security, the quotient obtained by dividing (i) the sum of
the products of the number of years from the date of determination to the dates
of each successive scheduled principal payment of such debt security multiplied
by the amount of such principal payment by (ii) the sum of all such principal
payments.
"Capitalized Lease Obligation" means any lease obligation of a person
incurred with respect to any property (whether real, personal or mixed) acquired
or leased by such person and used in its business that is accounted for as a
capital lease on the balance sheet of such person in accordance with GAAP.
"Cash Equivalents" means (A) any evidence of Indebtedness maturing, or
otherwise payable without penalty, not more than 365 days 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, (B) any certificate of deposit
maturing, or otherwise payable without penalty, not more than 365 days after the
date of acquisition issued by, or time deposit of, a commercial banking
institution that has combined capital and surplus of not less than $300,000,000,
whose debt is rated, at the time as of which any Investment therein is made,
"A2" (or higher) according to Moody's or "A" (or higher) according to S & P, (C)
commercial paper, maturing not more than 90 days 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 or any
jurisdiction thereof, with a rating, at the time as of which any Investment
therein is made, of "P-1" (or higher) according to Moody's or "A-1" (or higher)
according to S&P and (D) any money market deposit accounts issued or offered by
any domestic institution in the business of accepting money market accounts or
any commercial bank having capital and surplus in excess of $300,000,000.
"Cash Proceeds" means, with respect to any Asset Sale, cash payments
(including any cash received by way of deferred payment pursuant to a note
receivable or otherwise, but only as and when so received) received from such
Asset Sale.
"Change of Control" means an event or series of events by which (i) a party
other than a Permitted Investor or any "person" (as such term is used in
Sections 13 (d) and 14 (d) of the Exchange Act) directly or indirectly
controlling, controlled by, or under common control with the Permitted Investors
(1) 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 any such person has the right to acquire without
condition, other than the passage of time, whether such right is exercisable
immediately or only after the passage of time) of 50% or more of the Voting
Stock of the Company, (2) is or becomes a shareholder of the Company with the
right to appoint or remove directors of the Company holding 50% or more of the
voting rights at meetings of the Board of Directors on all, or substantially
all, matters or (3) is or becomes able to
25
<PAGE> 30
exercise the right to give directions with respect to the operating and
financial policies of the Company with which the relevant directors are obliged
to comply by reason of: (A) provisions contained in the organizational documents
of the Company or (B) the existence of any contract permitting such person to
exercise control over the Company; (ii) the Company consolidates with, or merges
or amalgamates with or into another person or conveys, transfers, or leases all
or substantially all of its assets to any person, or any person consolidates
with, or merges or amalgamates with or into 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 (A) the outstanding Voting Stock of the Company is
changed into or exchanged for Voting Stock of the surviving corporation which is
not redeemable capital stock or (x) such Voting Stock and (y) cash, securities
and other property in an amount which could be paid by the Company as a
Restricted Payment pursuant to the provisions described under "Limitation on
Restricted Payments" (and such amount shall be treated as a Restricted Payment
subject to the provisions described under "Limitation on Restricted Payments")
and (B) the holders of the Voting Stock of the Company immediately prior to such
transaction own, directly or indirectly, not less than a majority of the Voting
Stock of the surviving corporation immediately after such transaction; (iii)
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 by such Board of Directors or whose nomination for
election by the shareholders 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 the Board of
Directors of the Company then in office; or (iv) the shareholders of the Company
approve any plan or proposal for the liquidation or dissolution of the Company
(whether or not otherwise in compliance with the provisions of the Indenture).
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Common Stock" means the common stock, par value $.01 per share, of the
Company.
"Consolidated Adjusted Net Worth" means, with respect to any person, as of
any date of determination, the total amount of stockholders' equity of such
person and its subsidiaries which would appear on the consolidated balance sheet
of such person as of the date of determination, less (to the extent otherwise
included therein) the following (the amount of such stockholders' equity and
deductions therefrom to be computed, except as noted below, in accordance with
GAAP): (i) an amount attributable to interests in subsidiaries of such person
held by persons other than such person or its subsidiaries; (ii) any
reevaluation or other write-up in book value of assets subsequent to December
31, 1993, other than upon the acquisition of assets acquired in a transaction to
be accounted for by purchase accounting under GAAP made within twelve months
after the acquisition of such assets; (iii) treasury stock; (iv) an amount equal
to the excess, if any, of the amount reflected for the securities of any person
which is not a subsidiary over the lesser of cost or market value (as determined
in good faith by the Board of Directors) of such securities; and (v)
Disqualified Stock of the Company or any subsidiary of the Company.
"Consolidated Amortization Expense" means for any person, for any period,
the amortization of goodwill and other intangible items of such person and its
subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Cash Flow Available for Interest Expense" means, for any
person and the Company, the sum of the aggregate amount, for the four fiscal
quarters for which financial information in respect thereof is available
immediately prior to the date of the transaction giving rise to the need to
calculate the Consolidated Cash Flow Available for Interest Expense (the
"Transaction Date"), of (i) Consolidated Net Income (Loss) of such person, (ii)
Consolidated Income Tax Expense, (iii) Consolidated Depreciation Expense, (iv)
Consolidated Amortization Expense, (v) Consolidated Interest Expense and (vi)
other noncash items reducing Consolidated Net Income (Loss), minus non-cash
items increasing Consolidated Net Income (Loss). Consolidated Cash Flow
Available for Interest Expense for any period shall be adjusted to give pro
forma effect (to the extent applicable) to (i) each acquisition by the Company
or a subsidiary of the Company during such period up to and including the
Transaction Date (the "Reference Period") in any
26
<PAGE> 31
person which, as a result of such acquisition, becomes a subsidiary of the
Company, or the acquisition of assets from any person which constitutes
substantially all of an operating unit or business of such person and (ii) the
sale or other disposition of any assets (including capital stock) of the Company
or a subsidiary of the Company, other than in the ordinary course of business,
during the Reference Period, as if such acquisition or sale or disposition of
assets by the Company or a subsidiary of the Company occurred on the first day
of the Reference Period.
"Consolidated Depreciation Expense" means for any person, for any period,
the depreciation expense of such person and its subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Income Tax Expense" means, for any person, for any period,
the aggregate of the income tax expense of such person and its subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any person, for any period, the
sum of (a) the Interest Expense of such person and its subsidiaries for such
period, determined on a consolidated basis, (b) dividends in respect of
preferred or preference stock of a subsidiary of the Company held by persons
other than the Company or a wholly owned subsidiary of the Company and (c)
interest incurred during the period and capitalized by the Company and its
subsidiaries on a consolidated basis in accordance with GAAP. For purposes of
clause (b) of the preceding sentence, dividends will be deemed to be an amount
equal to the actual dividends paid divided by one minus the applicable actual
combined Federal, state, local and foreign income tax rate of the Company
(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.
"Consolidated Interest Expense Coverage Ratio" means, with respect to any
person, the ratio of (i) the aggregate amount of the applicable Consolidated
Cash Flow Available for Interest Expense of such person to (ii) the aggregate
Consolidated Interest Expense which such person shall accrue during the first
full fiscal quarter following the Transaction Date and the three fiscal quarters
immediately subsequent to such fiscal quarter, such Consolidated Interest
Expense to be calculated on the basis of the amount of such person's
Indebtedness (on a consolidated basis) outstanding on the Transaction Date and
reasonably anticipated by such person in good faith to be outstanding from time
to time during such period.
"Consolidated Net Income (Loss)" means, with respect to any person, for any
period, the aggregate of the net income (loss) of such person and its
subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP; provided that there shall be excluded from such net income (to the
extent otherwise included therein) (i) the net income (loss) of any person which
is not a subsidiary of such person and which is accounted for by the equity
method of accounting, except to the extent of the amount of cash dividends or
distributions paid by such other person to such person or to a subsidiary of
such person, (ii) the net income (loss) of any person accrued prior to the date
on which it is acquired by such person or a subsidiary of such person in a
pooling of interests transaction, (iii) except for NS Beteiligungs GmbH (a
German Foreign Subsidiary) or any successor entity, the net income (loss) of any
subsidiary of such person to the extent that the declaration or payment of
dividends or similar distributions or transfers or loans by that subsidiary 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 such subsidiary, in each case determined in accordance
with GAAP, (iv) any gain or loss, together with any related provision for taxes
in respect of such gain or loss, realized upon the sale or other disposition
(including, without limitation, dispositions pursuant to sale-and-lease-back
transactions) of any asset or property outside of the ordinary course of
business and any gain or loss realized upon the sale or other disposition by
such person of any capital stock or marketable securities and (v) any noncash
charges incurred by the Company at any time in connection with SFAS 106.
"Credit Agreement" means the Amended and Restated Credit Agreement dated as
of October 25, 1993 among Lear Holdings Corporation, the Company, the several
financial institutions parties thereto from time to time (the "Banks"), the
Agent Bank and Bankers Trust Company, The Bank of Nova Scotia, Citicorp USA,
Inc. and Lehman Commercial Paper Inc., as managing agents, as the same has been
heretofore amended and
27
<PAGE> 32
may be amended hereafter from time to time, and any subsequent credit agreement
constituting a refinancing, extension or modification thereof.
"Default" means any event which is, or after notice or lapse of time or
both would be, an Event of Default.
"Disinterested Director" means, with respect to an Affiliate Transaction or
series of related Affiliate Transactions, a member of a Board of Directors who
has no financial interest, and whose employer has no financial interest, in such
Affiliate Transaction or series of related Affiliate Transactions.
"Disqualified Stock" means any capital stock of the Company or any
subsidiary of the Company which, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the maturity date of the
Notes or which is exchangeable or convertible into debt securities of the
Company or any subsidiary of the Company, except to the extent that such
exchange or conversion rights cannot be exercised prior to the maturity of the
Notes.
"Foreign Subsidiary" means any subsidiary of the Company organized and
conducting its principal operations outside the United States.
"GAAP" means generally accepted accounting principles on a basis
consistently applied, provided that all ratios and calculations contained in the
8 1/4% Indenture will be calculated in accordance with generally accepted
accounting principles in effect on the date of the 8 1/4% Indenture.
"Indebtedness" means (without duplication), with respect to any person, any
indebtedness, contingent or otherwise, in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such person or
only to a portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (except any such balance that constitutes a trade payable
in the ordinary course of business that is not overdue by more than 120 days or
is being contested in good faith), if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such person
prepared on a consolidated basis in accordance with GAAP, and shall also include
letters of credit, Obligations with respect to Interest Swap Obligations, any
Capitalized Lease Obligation, the maximum fixed repurchase price of any
Disqualified Stock, Obligations secured by a Lien to which any property or
asset, including leasehold interests under Capitalized Lease Obligations and any
other tangible or intangible property rights, owned by such person is subject,
whether or not the Obligations secured thereby shall have been assumed (provided
that, if the Obligations have not been assumed, such Obligations shall be deemed
to be in an amount not to exceed the fair market value of the property or
properties to which the Lien relates, as determined in good faith by the Board
of Directors of such person and as evidenced by a Board Resolution), and
guarantees of items which would be included within this definition (regardless
of whether such items would appear upon such balance sheet; provided that for
the purpose of computing the amount of Indebtedness outstanding at any time,
such items shall be excluded to the extent that they would be eliminated as
intercompany items in consolidation). For purposes of the preceding sentence,
the maximum fixed repurchase price of any Disqualified Stock which does not have
a fixed repurchase price shall be calculated in accordance with the terms of
such Disqualified Stock as if such Disqualified Stock were repurchased 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 Disqualified Stock (or any equity security for which it may be
exchanged or converted), such fair market value shall be determined in good
faith by the Board of Directors of such person.
"Independent Financial Advisor" means a reputable accounting, appraisal or
investment banking firm that is, in the reasonable judgment of the Board of
Directors of the Company or a subsidiary of the Company, qualified to perform
the task for which such firm has been engaged hereunder and disinterested and
independent with respect to the Company and its Affiliates.
"Initial Public Offering" means the sale of capital stock of the Company
pursuant to (a) a registration statement under the Securities Act that has been
declared effective by the Commission or (b) a public
28
<PAGE> 33
offering outside the United States and which results, in either case, in an
active trading market for such shares. An active trading market shall be deemed
to exist if such shares are listed on the New York Stock Exchange or the
American Stock Exchange or the quoted on the NASDAQ National Market System or
any major international trading market or exchange.
"Interest Expense" means for any person, for any period, the aggregate
amount of interest in respect of Indebtedness (including all fees and charges
owed with respect to letters of credit and bankers' acceptance financing and the
net costs associated with Interest Swap Obligations and all but the principal
component of rentals in respect of Capitalized Lease Obligations) incurred or
scheduled to be incurred by such person during such period, all as determined in
accordance with GAAP, except that non-cash amortization or write-off of deferred
financing fees and expenses will not be included in the calculation of Interest
Expense. For purposes of this definition, (a) interest on Indebtedness
determined on a fluctuating basis for periods succeeding the date of
determination will be deemed to accrue at a rate equal to the rate of interest
on such indebtedness in effect on the last day of the fiscal quarter immediately
preceding the date of determination and (b) interest on a Capitalized Lease
Obligation will be deemed to accrue at an interest rate reasonably determined in
good faith by the chief financial officer and the chief accounting officer of
such person to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with GAAP (including Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board).
"Investment" of any person means (i) all investments by such person in any
other person in the form of loans, advances or capital contributions, (ii) all
guarantees of indebtedness or other obligations of any other person by such
person, (iii) all purchases (or other acquisitions for consideration) by such
person of indebtedness, capital stock or other securities of any other person
and (iv) all other items that would be classified as investments (including,
without limitation, purchases of assets outside the ordinary course of business)
on a balance sheet of such person prepared in accordance with GAAP.
"Investment Grade" is defined as BBB-or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such ratings by S&P or Moody's.
"Letters of Credit" means the Letters of Credit as defined in the Credit
Agreement as in effect on October 25, 1993.
"Lien" means any lien, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention agreement or any lease
creating a Capitalized Lease Obligation).
"Management Investors" means the persons who are designated as Management
Investors in the Stockholders Agreement.
"Moody's" means Moody's Investor Services, Inc. or if Moody's ceases to
make a rating of the Notes publicly available, a nationally recognized
securities rating agency selected by the Company.
"Net Cash Proceeds" means, with respect to any Asset Sale, the Cash
Proceeds of such Asset Sale net of fees, commissions, expenses and other costs
of sale (including payment of the outstanding principal amount of, premium or
penalty, if any, and interest on any Indebtedness which is either secured by a
Lien on the stock or other assets sold or can be or is accelerated by such
sale), taxes paid or payable as a result thereof, and any amount required to be
paid to any person (other than the Company or any of its subsidiaries) owning a
beneficial interest in the stock or other assets sold, provided that when any
noncash consideration for an Asset Sale is converted into cash, such cash shall
then constitute Net Cash Proceeds.
"Obligation" means any principal, interest, premium, penalties, fees and
any other liabilities payable under the documentation governing any
Indebtedness.
"Permitted Indebtedness" means: (i) Indebtedness of the Company pursuant to
its Obligations under, or Indebtedness of any subsidiary of the Company under,
the Credit Agreement; provided that in no event shall the aggregate amount of
Indebtedness permitted to be outstanding at any one time pursuant to this clause
(i) exceed $425,000,000 (less any (x) any amounts outstanding in respect of the
United States, Canada and Mexico under the program described in clause (xi)
below (the "North American clause (xi) amounts") and (y) any amounts permanently
repaid under the Credit Agreement but without deducting payments under the
29
<PAGE> 34
revolving credit facility and the swing line facility of the Credit Agreement
unless the commitments thereunder have been permanently reduced and without
deducting under this subclause (y) any such permanent repayments or permanent
reductions made in respect of the North American clause (xi) amounts); (ii)
Indebtedness represented by guarantees of Indebtedness which is permitted by the
provisions described under "Certain Covenants -- Limitation on Indebtedness";
(iii) Indebtedness evidenced by the Notes; (iv) Indebtedness of the Company to
any subsidiary of the Company and Indebtedness of any subsidiary of the Company
to the Company or another subsidiary of the Company, provided that the Company
or such subsidiary shall not become liable to any person other than the Company
or a subsidiary of the Company with respect thereto; (v) Indebtedness of the
Company or any subsidiary of the Company represented by Interest Swap
Obligations; provided that such Interest Swap Obligations are related to payment
Obligations on Indebtedness otherwise permitted by the provisions described
under "Certain Covenants -- Limitation on Indebtedness" and will not result in
an increase in the principal amount of the underlying outstanding Indebtedness;
(vi) Indebtedness of the Company and its subsidiaries, and any undrawn amounts
under the Specified Lines of Credit or legally binding revolving credit or
standby credit facilities existing on the date of the 8 1/4% Indenture and
Refinancing Indebtedness in respect of such Indebtedness or amounts; (vii)
Indebtedness of the Company or any of its subsidiaries in respect of guarantees
of receivables originated by the Company or any of its subsidiaries and sold to
other persons to the extent that (A) the sale of such receivables does not
constitute an Asset Sale and (B) such guarantees are in respect of warranties
granted by the Company on the products giving rise to such receivables and such
guarantees are not in respect of any other aspect of such receivables, including
the capacity of any customer to meet its obligations under such receivables;
(viii) Indebtedness incurred for working capital purposes by Foreign
Subsidiaries in aggregate principal amount at any one time outstanding not to
exceed (in each case calculated based on currency exchange rates in effect at
the time of any proposed incurrence of Indebtedness) (A) for Foreign
Subsidiaries organized under the laws of countries located in Europe,
$45,000,000 in the aggregate, (B) for Foreign Subsidiaries organized under the
laws of Mexico, $30,000,000 in the aggregate, and (C) for Foreign Subsidiaries
organized under the laws of Canada, $25,000,000 in the aggregate; (ix)
Indebtedness of the Company and its subsidiaries in respect of guarantees of
Indebtedness of less than majority owned persons; provided that in no event will
Indebtedness permitted pursuant to this clause (ix) exceed $5,000,000; (x) other
Indebtedness of the Company and of any subsidiary of the Company, provided that
in no event shall the aggregate amount of Indebtedness of the Company and of
subsidiaries of the Company permitted to be outstanding pursuant to this clause
(x) at any one time exceed $50,000,000; and (xi) Indebtedness of special-purpose
subsidiaries of the Company in respect of securities secured by receivables
transferred to such special-purpose subsidiaries by the Company or a subsidiary
of the Company, provided that (A) the transfer of such receivables does not
constitute an Asset Sale, (B) such special-purpose subsidiaries engage in no
activities other than the purchase of such receivables and the issuance of such
securities, and (C) such securities are non-recourse to the Company or any
subsidiary of the Company (except for representations as to the status or
eligibility of such receivables or to the limited extent described in clause
(vii)(B) above in this definition).
"Permitted Investors" means the parties to the Stockholders Agreement
(other than the Company) and their respective Affiliates.
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims which are being contested in good faith by appropriate
proceedings, promptly instituted and diligently conducted and, if a reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor; (ii) statutory Liens of landlords and
carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's,
or other like Liens arising in the ordinary course of business and with respect
to amounts not yet delinquent or being contested in good faith by appropriate
process of law, if a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor, (iii) Liens incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (iv)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds, government contracts,
performance and return-of-money bonds and other Obligations of like nature
incurred in the ordinary course of business (exclusive of Obligations for the
payment of borrowed money); (v) easements, rights-of-way, restrictions, zoning
provisions and other governmental restrictions and other similar charges or
encumbrances not
30
<PAGE> 35
interfering in any material respect with the business of the Company or any of
its subsidiaries; (vi) judgment Liens not giving rise to a Default or Event of
Default; (vii) leases or subleases granted to others not interfering in any
material respect with the business of the Company or any of its subsidiaries;
(viii) Liens encumbering customary initial deposits and margin deposits, and
other Liens incurred in the ordinary course of business and which are within the
general parameters customary in the industry, in each case securing Indebtedness
under Interest Swap Obligations; (ix) any interest or title of a lessor in the
property subject to any Capitalized Lease Obligation or operating lease or any
Lien granted by a lessor on such property which does not interfere in any
material respect with the business of the Company and its subsidiaries; (x)
Liens arising from filing UCC financing statements regarding leases; (xi) Liens
securing reimbursement Obligations with respect to Commercial Letters of Credit
which encumber documents and other property relating to such Commercial Letters
of Credit and the products and proceeds thereof; (xii) other Liens existing on
the date of the Indenture; (xiii) other Liens to secure Obligations not in
excess of $1,000,000 in the aggregate at any time outstanding, except to secure
Indebtedness; and (xiv) Liens securing Indebtedness permitted pursuant to
clauses (i), (v), (vi), (viii), (x) and (xi) of the definition of Permitted
Indebtedness.
"principal" of a debt security means the principal of the security plus, if
such security has been called for redemption, the premium, if any, payable on
such security upon redemption of such security.
"Rating Decline" means the occurrence of the following on, or within 90
days after, the date of public notice of the occurrence of a Change of Control
or of the intention of the Company to effect a Change of Control (which period
shall be extended so long as the rating of the Notes is under publicly announced
consideration for possible downgrading by either Moody's or S&P): (i) in the
event that the Notes are rated by either Moody's or S&P prior to the date of
such public notice as Investment Grade, the rating of the Notes by both such
rating agencies shall be decreased to below Investment Grade or (ii) in the
event the Notes are rated below Investment Grade by both such rating agencies
prior to the date of such public notice, the rating of the Notes by either
rating agency shall be decreased by one or more gradations (including gradations
within rating categories as well as between rating categories).
"Refinancing Indebtedness" means Indebtedness of the Company and its
subsidiaries, all of the net proceeds of which (after customary fees, expenses
and costs related to the incurrence of such Indebtedness) are applied to repay,
refund, prepay, repurchase, redeem, defease, retire or refinance (collectively,
"refinance") outstanding Indebtedness permitted to be incurred under the terms
of this Indenture; provided that Refinancing Indebtedness that refinances any
Permitted Indebtedness will be deemed to be incurred and to be outstanding under
the relevant clause in the definition of "Permitted Indebtedness"; and provided
further that (A) the original issue amount of the Refinancing Indebtedness shall
not exceed the maximum principal amount and accrued interest of the Indebtedness
to be repaid or, if greater in the case of clause (i) of the definition of
Permitted Indebtedness, permitted to be outstanding under the agreements
governing the Indebtedness being refinanced (or if such Indebtedness was issued
at an original issue discount, the original issue price plus amortization of the
original issue discount at the time of the incurrence of the Refinancing
Indebtedness) plus the amount of customary fees, expenses and costs related to
the incurrence of such Refinancing Indebtedness, (B) Refinancing Indebtedness
incurred by any subsidiary of the Company shall not be used to refinance
outstanding Indebtedness of the Company and (C) with respect to any Refinancing
Indebtedness which refinances Indebtedness which ranks pari passu or junior in
right of payment to the Securities, (1) the Refinancing Indebtedness has an
average weighted life which is equal to or greater than the average weighted
life of the Indebtedness being refinanced, (2) if such Indebtedness being
refinanced is pari passu in right of payment to the Securities, such Refinancing
Indebtedness does not rank senior in right of payment to the payment of
principal of and interest on the Securities, and (3) if such Indebtedness being
refinanced is subordinated to the Securities, such Refinancing Indebtedness is
subordinated to the Securities to the same extent and on substantially the same
terms.
"Restricted Debt Prepayment" means any purchase, redemption, defeasance
(including, but not limited to, in substance or legal defeasance) or other
acquisition or retirement for value (collectively a "prepayment"), directly or
indirectly, by the Company or a subsidiary of the Company (other than to the
Company or a subsidiary of the Company), prior to the scheduled maturity or
prior to any scheduled repayment of principal or sinking fund payment in respect
of Indebtedness of the Company or such subsidiary which would
31
<PAGE> 36
rank pari passu with the Notes (other than the Notes) or would be subordinate in
right of payment to the Notes ("Prepaid Debt"); provided, that (i) any such
prepayment of any Prepaid Debt shall not be deemed to be a Restricted Debt
Prepayment to the extent such prepayment is made (x) with the proceeds of the
substantially concurrent sale (other than to a subsidiary of the Company) of
shares of the capital stock (other than Disqualified Stock) of the Company or
rights, warrants or options to purchase such capital stock of the Company or (y)
in exchange for or with the proceeds from the substantially concurrent issuance
of Refinancing Indebtedness and (ii) no Default or Event of Default shall have
occurred and be continuing at the time or shall occur as a result of such sale
of capital stock or issuance of such Indebtedness.
"Restricted Investment" means, with respect to any person, any Investments
by such person in (i) any of its Affiliates (other than its subsidiaries) or in
any person that becomes an Affiliate (unless it becomes a subsidiary) as a
result of such Investment to the extent that the aggregate amount of all such
Investments made after the date of the Indenture, whether or not outstanding,
less the amount of cash received by such person upon the disposition of any such
Investment, exceeds $25,000,000; (ii) any executive officer or director of such
person; or (iii) any executive officer or director of any Affiliate or any
wholly owned subsidiary of such person; provided, in the case of clauses (ii)
and (iii), that (x) loans to any individual executive officer or director of
such person in an amount less than $100,000 in the aggregate outstanding at any
time which have been approved by the chief executive officer of such person and
(y) such loans in excess of that amount which have been approved by a majority
of the Disinterested Directors of such person shall not be considered Restricted
Investments.
"Restricted Payment" means (i) any Restricted Stock Payment, (ii) any
Restricted Debt Prepayment or (iii) any Restricted Investment.
"Restricted Stock Payment" means (i) with respect to the Company, any
dividend, either in cash or in property (except dividends payable in Common
Stock), on, or the making by the Company of any other distribution in respect
of, its capital stock, now or hereafter outstanding, or the redemption,
repurchase, retirement or other acquisition for value by the Company or any
subsidiary of the Company, directly or indirectly, of capital stock of the
Company or any warrants, rights (other than exchangeable or convertible
Indebtedness of the Company) or options to purchase or acquire shares of any
class of the Company's capital stock, now or hereafter outstanding, and (ii)
with respect to any subsidiary of the Company, any redemption, repurchase,
retirement or other acquisition for value by the Company or a subsidiary of the
Company of capital stock of such subsidiary or any warrants, rights (other than
exchangeable or convertible Indebtedness of any subsidiary of the Company), or
options to purchase or acquire shares of any class of capital stock of such
subsidiary, now or hereafter outstanding, except with respect to capital stock
of such subsidiary or such warrants, rights or options owned by (x) the Company
or a subsidiary of the Company or (y) any person which is not an Affiliate of
the Company.
"S&P" means Standard & Poor's Corporation, or if it ceases to make a rating
of the Notes publicly available, a nationally recognized securities rating
agency selected by the Company.
"Seating Business" means the production, design, development, manufacture,
marketing or sale of seat systems, seat frames, seat components, or vehicle
interiors or any related businesses.
"Senior Indebtedness" means the Obligations of the Company with respect to
(i) any and all amounts payable by the Company under or in respect of its
obligations (including reimbursement obligations in respect of letters of
credit) incurred and outstanding from time to time under the Credit Agreement,
or any refinancings thereof (including interest accruing on or after filing of
any petition in bankruptcy or reorganization relating to the Company, at the
rate specified in such Senior Indebtedness whether or not a claim for post-
filing interest is allowed in such proceeding), (ii) Interest Swap Obligations
related to its payment Obligations on Senior Indebtedness, (iii) any and all
amounts payable by the Company under or in respect of its Obligations incurred
and outstanding from time to time under the Senior Subordinated Notes but not
including any refinancings thereof and (iv) any other Indebtedness of the
Company, whether outstanding on the date of the 8 1/4% Indenture or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness is not
senior in right of payment to the Notes; provided that
32
<PAGE> 37
notwithstanding the foregoing, Senior Indebtedness shall not include (A)
Indebtedness represented by the Notes, (B) Indebtedness incurred in violation of
the 8 1/4% Indenture, (C) Indebtedness which is represented by Disqualified
Stock, (D) amounts payable or any other Indebtedness to trade creditors created,
incurred, assumed or guaranteed by the Company or any subsidiary of the Company
in the ordinary course of business in connection with obtaining goods or
services, (E) amounts payable or any other Indebtedness to employees of the
Company or any subsidiary of the Company as compensation for services, (F)
Indebtedness of the Company to a subsidiary of the Company, (G) any liability
for Federal, state, local or other taxes owed or owing by the Company and (H)
Indebtedness represented by the 14% Subordinated Debentures.
"Senior Subordinated Indebtedness" means, with respect to any person, any
Indebtedness of a person that specifically provides that such Indebtedness is to
rank pari passu with other Senior Subordinated Indebtedness of such person and
is not subordinated by its terms to any Indebtedness of such person which is not
Senior Indebtedness.
"Senior Subordinated Notes" means the 11 1/4% Senior Subordinated Notes of
the Company due 2000, issued pursuant to an Indenture dated as of July 15, 1992
among the Company and The Bank of New York, as trustee.
"Significant Subsidiary" means one or more subsidiaries of the Company
which, in the aggregate, have (i) assets, or in which the Company and its other
subsidiaries have Investments, equal to or greater than 5% or more of the total
assets of the Company and its subsidiaries consolidated at the end of the most
recently completed fiscal year of the Company or (ii) consolidated gross revenue
equal to or exceeding 5% of the consolidated gross revenue of the Company for
its most recently completed fiscal year.
"Specified Lines of Credit" means the following informal lines of credit
existing on the date of the 8 1/4% Indenture: (a) Indebtedness incurred by an
Austrian Foreign Subsidiary to Sparkasse Bank under a working capital credit
line in a principal amount not to exceed 20,000,000 Austrian schillings; (b)
Indebtedness incurred by a Mexican Foreign Subsidiary to Banco Internacional
under a note payable facility for working capital in a principal amount not to
exceed $15,000,000; (c) Indebtedness incurred by a Mexican Foreign Subsidiary to
Bancomer, Banco Mexicano and Banamex under a note payable facility for working
capital in a principal amount not to exceed 45,000,000 Mexican pesos; (d)
Indebtedness incurred by a Swedish Foreign Subsidiary to SE Banken under a
working capital credit facility in a principal amount not to exceed 6,500,000
Swedish krona; and (e) Indebtedness consisting only of trade acceptances of NS
Beteiligungs GmbH and Lear Seating Sweden, AB in an aggregate principal amount
not to exceed $1,000,000.
"Specified Senior Indebtedness" means (i) Indebtedness under the Credit
Agreement (or any refunding or refinancing thereof), (ii) any other single issue
of Senior Indebtedness (other than the Senior Subordinated Notes) having an
initial principal amount of $30,000,000 or more. For purposes of this
definition, a refinancing of any Specified Senior Indebtedness shall be treated
as such only if it ranks or would rank on a pari passu basis with the
Indebtedness refinanced.
"14% Subordinated Debentures" means the Company's 14% Subordinated
Debentures due December 1, 2000, issued on December 22, 1988, pursuant to the
Subordinated Debenture Indenture.
"subsidiary" of any person means (i) a corporation a majority of whose
capital stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such person or by
such person and a subsidiary or subsidiaries of such person or by a subsidiary
or subsidiaries of such person or (ii) any other person (other than a
corporation) in which such person or such person and a subsidiary or
subsidiaries of such person or a subsidiary or subsidiaries of such persons, at
the time, directly or indirectly, owned at least a majority ownership interest.
"Voting Stock" means all classes of capital stock then outstanding of a
person normally entitled to vote in elections of directors.
CERTAIN COVENANTS
Repurchase of Notes Upon a Change of Control Triggering Event. If a "Change
of Control Triggering Event" shall occur at any time, then each holder shall
have the right to require that the Company repurchase such holder's Notes in
whole or in part in integral multiples of $1,000, at a purchase price in cash in
an amount
33
<PAGE> 38
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of purchase, which date shall be no earlier than 30 days nor
more than 60 days from the date the Company notifies the holders of the
occurrence of a Change of Control Triggering Event. The source of funds for any
such repurchase will be the Company's available cash or cash generated from
operations or other sources, including borrowing, sales of assets or sales of
equity. However, there can be no assurance that sufficient funds will be
available at the time of any Change of Control Triggering Event to make any
required repurchases. Under the 8 1/4% Indenture, the Company can only effect
such repurchases either with the consent of the lenders under the Credit
Agreement or by repaying amounts owed to such lenders under the Credit
Agreement. The failure to satisfy either such condition would constitute a
default under the 8 1/4% Indenture. The Credit Agreement also contains
prohibitions of certain events that would constitute a Change of Control
Triggering Event. In addition, the Company's ability to repurchase Notes
following a Change of Control Triggering Event may be limited by the terms of
its then-existing Senior Indebtedness, including, without limitation, the
subordination provisions described above under "Subordination". Therefore, the
exercise by the holders of their right to require the Company to repurchase the
Notes could cause a default under the Senior Indebtedness (including Specified
Senior Indebtedness) even if the Change of Control Triggering Event itself does
not, due to the financial effect of such repurchase on the Company. Failure of
the Company to repurchase the Notes in the event of a Change of Control
Triggering Event will create an Event of Default with respect to the Notes,
whether or not such repurchase is permitted by the subordination provisions. The
Company agrees that it will comply with all applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, if the repurchase option is
triggered upon a Change of Control Triggering Event.
Under the 8 1/4% Indenture, the Company is obligated to give notice to
holders of Notes and the Trustee within 30 days following a Change of Control
Triggering Event specifying, among other things, the purchase price, the
purchase date, the place at which Notes shall be presented and surrendered for
purchase, that interest accrued to the purchase date will be paid upon such
presentation and surrender and that interest will cease to accrue on Notes
surrendered for purchase as of such purchase date. In order for a holder of
Notes properly to put its Notes to the Company for purchase, the holder must
give notice and present and surrender its Notes to the Company at the place
specified in the Company's aforementioned notice at least 15 days prior to the
purchase date. Any such tender by a holder of Notes shall be irrevocable. The
Company is not obligated to notify holders of or to purchase Notes with respect
to more than one Change of Control Triggering Event.
The Change of Control purchase feature of the Notes may in certain
circumstances make more difficult or discourage a takeover of the Company, and,
thus, the removal of incumbent management. The Change of Control purchase
feature, however, is not the result of management's knowledge of any specific
effort to accumulate the Company's stock or to obtain control of the Company by
means of a merger, tender offer, solicitation or otherwise, or part of a plan by
management to adopt a series of antitakeover provisions. Instead, the Change of
Control purchase feature is a result of negotiations between the Company and the
Underwriters. Management has no present intention to engage in a transaction
involving a Change of Control Triggering Event, although it is possible that the
Company would decide to do so in the future. Subject to the limitations
discussed below, including the limitation on incurrence of additional
indebtedness and the issuance of certain securities, the Company could, in the
future, enter into certain transactions, including acquisitions, refinancings or
other recapitalizations, that would not constitute a Change of Control
Triggering Event under the 8 1/4% Indenture, but that could increase the amount
of Senior Indebtedness of the Company (or any other indebtedness) outstanding at
such time or otherwise affect the Company's capital structure or credit ratings.
Limitation on Restricted Payments. The 8 1/4% Indenture provides that the
Company will not, and will not permit any subsidiary of the Company to, directly
or indirectly, make any Restricted Payment unless (a) no Default or Event of
Default has occurred and is continuing at the time or will occur as a
consequence of such Restricted Payment and (b) after giving effect to such
Restricted Payment, the aggregate amount expended for all Restricted Payments
subsequent to December 31, 1993 (the amount so expended, if other than in cash,
to be determined by the Board of Directors, whose reasonable determination shall
be conclusive and evidenced by a Board Resolution), does not exceed the sum of
(x) 50% of Consolidated Net Income of the Company (or in the case such
Consolidated Net Income shall be a deficit, minus 100% of such deficit) during
the period (treated as one accounting period) subsequent to December 31, 1993
and ending on the last day of the fiscal
34
<PAGE> 39
quarter immediately preceding such Restricted Payment and (y) the aggregate net
proceeds, including cash and the fair market value of property other than cash
(as determined in good faith by the Board of Directors of the Company and
evidenced by a Board Resolution), received by the Company during such period
from any person other than a subsidiary of the Company, as a result of the
issuance of capital stock of the Company (other than any Disqualified Stock) or
warrants, rights or options to purchase or acquire such capital stock including
such capital stock issued upon conversion or exchange of Indebtedness or upon
exercise of warrants or options and any contributions to the capital of the
Company received by the Company from any such person less the amount of such net
proceeds actually applied as permitted by clause (ii) of the next paragraph or
by the proviso to the definition of Restricted Debt Prepayment; provided that,
at the time of such Restricted Payment and after giving effect thereto, the
Company or any subsidiary of the Company shall be able to incur an additional
$1.00 of Indebtedness pursuant to clauses (a) and (b) of the provisions
described under "Limitation on Indebtedness". For purposes of any calculation
pursuant to the preceding sentence which is required to be made within 60 days
after the declaration of a dividend by the Company, such dividend shall be
deemed to be paid at the date of declaration.
This provision is not violated by reason of (i) the payment of any dividend
within 60 days after the date of declaration thereof if, at such date of
declaration such payment complied with the provisions hereof; (ii) the purchase,
redemption, acquisition or retirement of any shares of the Company's capital
stock in exchange for, or out of the proceeds of the substantially concurrent
sale (other than to a subsidiary of the Company) of, other shares of capital
stock (other than Disqualified Stock) of the Company or rights, warrants or
options to purchase or acquire such capital stock of the Company or (iii)
payments by the Company (A) for the mandatory repurchase of shares of Common
Stock of the Company (or scheduled payments of principal of or interest on notes
issued to finance the repurchase of such shares) from Management Investors under
the Stockholders Agreement or (B) to satisfy any other Obligations under the
terms of the Stockholders Agreement provided that no Default or Event of Default
has occurred and is continuing at the time, or shall occur as a result, of such
Restricted Payment. For purposes of determining the aggregate amount of
Restricted Payments in accordance with clause (b) of the preceding paragraph,
all amounts expended pursuant to clause (i) or (ii) (except to the extent deemed
to have been paid pursuant to the last sentence of the immediately preceding
paragraph) of this paragraph shall be included.
Limitation on Indebtedness. The 8 1/4% Indenture provides that, except for
Permitted Indebtedness and Refinancing Indebtedness, the Company will not, and
will not permit any subsidiary of the Company to, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become liable for,
contingently or otherwise, extend the maturity of or become responsible for the
payment of (collectively, an "incurrence"), any Obligations in respect of any
Indebtedness including Acquired Indebtedness unless (a) no Default or Event of
Default shall have occurred and be continuing at the time or as a consequence of
the incurrence of such Indebtedness and (b) after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof on a pro forma basis, the Consolidated Interest Expense Coverage Ratio
of the Company is greater than 2 to 1.
Limitation on Payment Restrictions Affecting Subsidiaries. The 8 1/4%
Indenture provides that the Company will not, and will not permit any subsidiary
of the Company to, create or otherwise cause or suffer to exist or become
effective any consensual restriction which by its terms expressly restricts any
such subsidiary from (i) paying dividends or making any other distributions on
such subsidiary's capital stock or paying any Indebtedness owed to the Company
or any subsidiary of the Company, (ii) making any loans or advances to the
Company or any subsidiary of the Company or (iii) transferring any of its
property or assets to the Company or any subsidiary of the Company, except (a)
any restrictions existing under agreements in effect at the issuance of the
Notes, (b) any restrictions under any agreement evidencing any Acquired
Indebtedness of a subsidiary of the Company incurred pursuant to the provisions
described under "Limitation on Indebtedness"; provided that such restrictions
shall not restrict or encumber any assets of the Company or its subsidiaries
other than such subsidiary or (c) any restrictions existing under any agreement
which refinances any Indebtedness in accordance with paragraph (xiv) of the
definition of Permitted Indebtedness; provided that the terms and conditions of
any such agreement are not materially less favorable to such subsidiary than
those under the agreement creating or evidencing the Indebtedness being
refinanced.
35
<PAGE> 40
Limitation on Creation of Liens. The 8 1/4% Indenture provides that the
Company will not, and will not permit any subsidiary of the Company to, create,
incur, assume or suffer to exist any Liens upon any of their respective assets
unless the Notes are secured by such assets on an equal and ratable basis with
the obligation so secured until such time as such obligation is no longer
secured by a Lien, provided that if the obligation secured by such Lien is
subordinated to the Notes, the Lien securing such obligation will be subordinate
and junior to the Lien securing the Notes with the same relative priority as
such subordinated obligations have with respect to the Notes, except for (i)
Liens securing Senior Indebtedness that would be permitted to be incurred under
clauses (a) and (b) of the provisions described under "Limitation on
Indebtedness" if such Indebtedness were incurred on the date such Lien is
granted; (ii) Liens with respect to Acquired Indebtedness, provided that such
Liens do not extend to or cover any property or assets of the Company or any
subsidiary of the Company other than the property or assets acquired, and
provided further that such Liens were not incurred in connection with, or in
contemplation of, the transactions giving rise to such Acquired Indebtedness;
(iii) Liens securing Indebtedness which is incurred to refinance secured
Indebtedness and which is permitted to be incurred under the provisions
described under "Limitation on Indebtedness"; provided that such Liens do not
extend to or cover any property or assets of the Company or any subsidiary of
the Company other than the property or assets securing the Indebtedness being
refinanced; and (iv) Permitted Liens.
No Senior Subordinated Indebtedness. The 8 1/4% Indenture provides that the
Company will not issue, incur, create, assume, guarantee or otherwise become
liable for any Indebtedness which is subordinate or junior in right of payment
to any Indebtedness of the Company, including, without limitation, Indebtedness
that refinances the Senior Subordinated Notes, unless such Indebtedness is pari
passu with or subordinate in right of payment to the Notes.
Transactions with Shareholders and Affiliates. The 8 1/4% Indenture
provides that the Company will not, and will not permit any subsidiary of the
Company to, directly or indirectly, enter into or suffer to exist any
transaction (an "Affiliate Transaction") (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of more than 10% of any class of equity securities of
the Company or with any Affiliate of the Company or of any such holder (other
than a wholly owned subsidiary of the Company), on terms that are less favorable
to the Company or such subsidiary, as the case may be, than would be available
in a comparable transaction with an unrelated person. In addition, neither the
Company nor any subsidiary of the Company shall enter into any Affiliate
Transaction or series of related Affiliate Transactions involving or having a
value of (a) more than $2,500,000, unless a majority of Disinterested Directors
(or, if there are no Disinterested Directors, a majority of the Board of
Directors) of the Company or such subsidiary, as the case may be, determines in
good faith pursuant to a Board Resolution that such Affiliate Transaction or
series of related Affiliate Transactions is fair to the Company or such
subsidiary, as the case may be, or (b) more than $10,000,000 unless (i) a
majority of Disinterested Directors (or, if there are no Disinterested
Directors, a majority of the Board of Directors) of the Company or such
subsidiary, as the case may be, make the determination referred to in clause (a)
above and (ii) the Company or such subsidiary, as the case may be, has received
an opinion from an Independent Financial Advisor to the effect that such
Affiliate Transaction or series of related Affiliate Transactions are fair to
the Company or such subsidiary, as the case may be, from a financial point of
view.
The foregoing provisions will not apply to payments of investment banking
and financial advisory or consulting fees and other fees to Lehman Brothers Inc.
or any of its subsidiaries or Affiliates in connection with the sale of the
Notes (or any refunding, refinancing or conversion thereof) and other customary
investment banking and financial advisory or consulting fees.
Sales of Assets. The 8 1/4% Indenture provides that subject to the
provisions described under "Mergers or Consolidations", the Company will not,
and will not permit any subsidiary to, make any Asset Sale unless (i) the
Company (or such subsidiary, as the case may be) receives consideration at the
time of such sale at least equal to the fair market value of the shares or
assets included in such Asset Sale (as determined in good faith by the Board of
Directors, including valuation of all noncash consideration) and (ii) (x) either
(A) the Net Cash Proceeds are reinvested within 12 months (or, pursuant to a
determination of the Board of Directors, held pending reinvestment) in
replacement assets or assets used in the Seating Business or used to
36
<PAGE> 41
purchase all of the issued and outstanding capital stock of a person engaged in
such business or used to fund research and development costs or (B) if the Net
Cash Proceeds are not applied or are not required to be applied as set forth in
clause (ii) (x) (A) or if after applying such Net Cash Proceeds as set forth in
clause (ii) (x) (A) there remain Net Cash Proceeds, such Net Cash Proceeds are
applied within 12 months of the original receipt thereof to the permanent
prepayment, repayment, retirement or purchase of Senior Indebtedness or
Indebtedness of a subsidiary, (y) if and to the extent that the gross proceeds
from such Asset Sale (after giving effect to the application of clause
(ii)(x)(A) and (B), when added to the gross proceeds from all prior Asset Sales
(not applied as set forth in clause (ii)(x)(A) or (B)) exceeds $15,000,000, such
proceeds are applied pursuant to a Repurchase Offer (as defined in the 8 1/4%
Indenture) to repurchase the Notes (on a pro rata basis if the amount available
for such purchase is less than the outstanding principal amount of the Notes) at
a purchase price equal to 100% of the principal amount thereof plus accrued
interest to the date of prepayment and (z) if the aggregate principal amount of
all Notes tendered pursuant to a Repurchase Offer is less than the Repurchase
Offer Amount (as defined in the Indenture), such excess amount is applied for
general corporate purposes; provided that when any noncash consideration is
converted into cash, such cash will then constitute Net Cash Proceeds and will
be subject to clause (ii) of this sentence.
Limitation on Issuance of Preferred Stock. The Indenture provides that the
Company will not permit any of its subsidiaries to issue any preferred or
preference stock (except to the Company or a wholly owned subsidiary of the
Company) or permit any person (other than the Company or any wholly owned
subsidiary of the Company) to hold any such preferred or preference stock unless
the Company would be entitled to create, incur or assume Indebtedness pursuant
to the provisions described under "Limitation on Indebtedness" in the aggregate
principal amount equal to the aggregate liquidation value of the preferred or
preference stock to be issued.
MERGERS OR CONSOLIDATIONS
Under the 8 1/4% Indenture, the Company will not consolidate or merge with
or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to any person unless: (1) the person formed by
or surviving any such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or disposition has been
made, is a corporation organized and existing under the laws of the United
States of America, any state thereof or the District of Columbia; (ii) the
corporation formed by or surviving any such consolidation or merger (if other
than the Company), or to which such sale, assignment, transfer, lease,
conveyance or disposition has been made, assumes by supplemental indenture
satisfactory in form to the Trustee all the obligations of the Company under the
8 1/4% Indenture; (iii) immediately after such transaction, and giving effect
thereto, no Default or Event of Default has occurred and is continuing; (iv) the
Company or any corporation formed by or surviving any such consolidation or
merger, or to which such sale, assignment, transfer, lease, conveyance or
disposition has been made, has Consolidated Adjusted Net Worth (immediately
after the transaction and giving effect thereto, excluding any write-ups of
assets resulting from such consolidation or merger) at least equal to the
Consolidated Adjusted Net Worth of the Company immediately preceding the
transaction; (v) immediately after such transaction and giving effect thereto,
the Company or any corporation formed by or surviving any such consolidation or
merger, or to which such sale, assignment, transfer, lease, conveyance or
disposition shall have been made, shall be able to incur an additional $1.00 of
Indebtedness pursuant to clause (b) of the provisions described under
"Limitation on Indebtedness"; and (vi) the Company has delivered to the Trustee
(A) an Officers' Certificate (attaching the calculation to demonstrate
compliance with clause (iv) and (v) above) and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and such supplemental
indenture comply with the above provisions and that all conditions precedent
relating to such transaction have been complied with, and (B) a certificate from
the Company's independent certified public accountants, stating that the Company
has made the calculations required by clauses (iv) and (v) above.
EVENTS OF DEFAULT
The 8 1/4% Indenture defines an Event of Default as: (i) default by the
Company for 30 days in the payment of interest on the Notes; (ii) default by the
Company in the payment when due of principal of the
37
<PAGE> 42
Notes; (iii) failure by the Company for 30 days after notice to comply with any
of its other agreements in the Indenture or the Notes; (iv) any Indebtedness of
the Company or a Significant Subsidiary of the Company for borrowed money (or
the payment of which is guaranteed by the Company or one of its subsidiaries)
having an outstanding principal amount of $10,000,000 or more in the aggregate,
is declared to be due and payable prior to its stated maturity or failure by the
Company or any Significant Subsidiary to pay the final scheduled principal
installment in an amount of at least $10,000,000 in respect of any such
Indebtedness on its stated maturity date unless such Indebtedness which has been
declared due and payable prior to its stated maturity is Indebtedness of a
Foreign Subsidiary the payment of which is guaranteed by the Letters of Credit;
(v) failure by the Company or any subsidiary of the Company to pay certain final
judgments aggregating in excess of $10,000,000; and (vi) certain events of
bankruptcy or insolvency.
A Default under the provisions of the Indenture described hereunder is not
an Event of Default until the Trustee notifies the Company in writing, or the
Holders of at least 25% in principal amount of the Notes then outstanding notify
the Company and the Trustee, in writing of the Default, and the Company does not
cure the Default within 30 days after receipt of the notice; provided that a
Default by the Company with respect to the provisions of the Indenture described
under "Mergers or Consolidations" and "Certain Covenants -- Repurchase of Notes
upon a Change of Control Triggering Event" will constitute an Event of Default
immediately upon such notification and without passage of time.
Subject to the provisions under "Subordination", if an Event of Default
(other than as a result of certain events of bankruptcy or insolvency) occurs
and is continuing, the Trustee or the holders of at least 25% of the principal
amount of the Notes then outstanding, by written notice to the Company (and the
Agent Bank, so long as the Indebtedness under the Credit Agreement is
outstanding) (and the Senior Subordinated Notes Trustee, so long as the
Indebtedness under the Senior Subordinated Notes is outstanding) may declare to
be due and payable all unpaid principal of and only accrued interest on the
Notes.
Upon a declaration of acceleration, such principal and accrued interest to
the date of such acceleration shall be due and payable upon the first to occur
of (i) an acceleration under the Credit Agreement (or any refunding or
refinancing thereof), or (ii) five Business Days after notice of such
declaration is given to the Company (and the Agent Bank, so long as the
Indebtedness under the Credit Agreement is outstanding) (and the Senior
Subordinated Notes Trustee, so long as the Indebtedness under the Senior
Subordinated Notes is outstanding); provided that, if the Event of Default
giving rise to such acceleration is cured before the earlier to occur of (i) or
(ii), such notice of acceleration and its consequences shall be deemed rescinded
and annulled. In the event of a declaration of acceleration under the Indenture
because an Event of Default described in clause (iv) of the third preceding
paragraph has occurred and is continuing, such declaration of acceleration shall
be automatically annulled if the holders of the Indebtedness which is the
subject of such Event of Default have rescinded their declaration of
acceleration in respect of such Indebtedness within 90 days thereof or all
amounts payable in respect of such Indebtedness have been paid and such
Indebtedness has been discharged during such 90-day period and if (i) the
annulment of such acceleration would not conflict with any judgment or decree of
a court of competent jurisdiction, (ii) all existing Events of Default, except
nonpayment of principal or interest that has been due solely because of the
acceleration, have been cured or waived, and (iii) the Company has delivered an
Officers' Certificate to the Trustee to the effect of clauses (i) and (ii) of
this sentence. If an Event of Default described in clause (vi) of the third
preceding paragraph with respect to the Company occurs, all unpaid principal and
accrued interest on the Notes shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
The Holders of a majority of the outstanding principal amount of the Notes
by written notice to the Trustee may rescind an acceleration and its
consequences if (i) all existing Events of Default, other than the nonpayment of
principal of or interest on the Notes which have become due solely because of
the acceleration, have been cured or waived and (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction.
Holders of the Notes may not enforce the 8 1/4% Indenture or the Notes
except as provided in the 8 1/4% Indenture. Subject to certain limitations,
holders of a majority in principal amount of the then outstanding
38
<PAGE> 43
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest. The
Company is required to deliver to the Trustee annually a statement regarding
compliance with the 8 1/4% Indenture, and upon becoming aware of any Default or
Event of Default, a statement specifying such Default or Event of Default.
DISCHARGE OF INDENTURE AND DEFEASANCE
Except as otherwise limited by the provisions of the Credit Agreement, the
Company may terminate its obligations under the Notes and the 8 1/4% Indenture
when (i) all outstanding Notes have been delivered (other than destroyed, lost
or stolen Notes which have not been replaced or paid) to the Trustee for
cancellation or (ii) all outstanding Notes have become due and payable, and the
Company irrevocably deposits with the Trustee funds or U.S. Government
Obligations sufficient (without reinvestment thereof) to pay at maturity all
outstanding Notes, including all interest thereon (other than destroyed, lost or
stolen Notes which have not been replaced or paid), and in either case the
Company has paid all other sums payable under the 8 1/4% Indenture. In addition,
the Company may terminate substantially all its obligations under the Notes and
the 8 1/4% Indenture if the Company (a) irrevocably deposits in trust for the
benefit of the holders money or U.S. Government Obligations maturing as to
principal and interest in such amounts and at such times as are sufficient to
pay principal of and interest on the then outstanding Notes to maturity or
redemption, as the case may be, (b) delivers to the Trustee an Opinion of
Counsel to the effect that, based on Federal income tax laws then in effect, the
holders of the Notes will not recognize income, gain or loss for Federal income
tax purposes as a result of the Company's exercise of such option and shall be
subject to Federal income tax on the same amounts and in the same manner and at
the same times as would have been the case if such option had not been exercised
or a ruling to that effect has been received from or published by the Internal
Revenue Service and (c) certain other conditions are met.
The Company shall be released from its obligations with respect to the
covenants described under "Certain Covenants" and any Event of Default occurring
because of a default with respect to such covenants if (a) the Company deposits
or causes to be deposited with the Trustee in trust an amount of cash or U.S.
Government Obligations sufficient to pay and discharge when due the entire
unpaid principal of and interest on all outstanding Notes and (b) certain other
conditions are met. The obligations of the Company under the 8 1/4% Indenture
with respect to the Notes, other than with respect to the covenants and Events
of Default referred to above, shall remain in full force and effect.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the 8 1/4%
Indenture. The Registrar may require a holder, among other things, to furnish
appropriate endorsements and transfer documents, and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar is not required to
transfer or exchange any Note selected for redemption or any Note for a period
of 15 days before a selection of Notes to be redeemed.
The registered holder of a Note may be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the 8 1/4% Indenture or the Notes may be
amended or supplemented by the Company and the Trustee with the consent of the
holders of at least a majority in principal amount of such then outstanding
Notes and any existing default may be waived with the consent of the holders of
at least a majority in principal amount of the then outstanding Notes. Without
the consent of any holder of the Notes, the Company and the Trustee may amend
the 8 1/4% Indenture or the Notes to cure any ambiguity, defect or
inconsistency, to provide for the assumption of the Company's obligations to
holders of the Notes by a successor corporation, to provide for uncertificated
Notes in addition to certificated Notes or to make any change that does not
adversely affect the rights of any holder of the Notes. Without the consent of
each holder
39
<PAGE> 44
of Notes affected, the Company may not reduce the principal amount of Notes the
holders of which must consent to an amendment of the 8 1/4% Indenture; reduce
the rate or change the interest payment time of any Note; reduce the principal
of or change the fixed maturity of any Notes or alter the redemption provisions
with respect thereto; make any Note payable in money other than that stated in
the Note; make any change in the provisions concerning waiver of Defaults or
Events of Default by holders of the Notes or rights of holders to receive
payment of principal or interest, make any change in the subordination
provisions in the 8 1/4% Indenture that affects the right of any holder or
release the Company from any of its obligations under the 8 1/4% Indenture or
the Notes.
THE TRUSTEE
The First National Bank of Boston is the Trustee under the 8 1/4%
Indenture. The First National Bank of Boston is a lender under the Credit
Agreement.
PLAN OF DISTRIBUTION
This Prospectus is to be used by the Market-maker in connection with offers
and sales of the Senior Subordinated Notes and the Notes in market-making
transactions. The Market-maker may act as a principal or agent in such
transactions. The Senior Subordinated Notes and the Notes may be offered in
negotiated transactions or otherwise. Sales will be made at prices related to
prevailing market prices at the time of sale. The Market-maker has no obligation
to make a market in the Senior Subordinated Notes or in the Notes and may
discontinue market-making activities at any time without notice, in its sole
discretion.
The Lehman Funds, each an affiliate of Lehman Brothers Inc., beneficially
own, in the aggregate, a majority of the outstanding Common Stock of the
Company. In accordance with Schedule E to the Bylaws of the National Association
of Securities Dealers, Inc., the Market-maker will not make sales of the Senior
Subordinated Notes or the Notes to customers' discretionary accounts without the
prior specific written approval of such customers.
Lehman Brothers Inc., acted as underwriter in connection with the offerings
of the Senior Subordinated Notes and the Notes and received gross underwriting
discounts of approximately $2,000,000 and $2,392,500, respectively, in
connection therewith. Lehman Brothers Inc. acted as an underwriter in the
Company's initial public offering of Common Stock, which was consummated on
April 13, 1994, for which it received fees and gross underwriting discounts of
approximately $3,300,000. In addition, Lehman Brothers Inc. has from time to
time provided investment banking, financial advisory and other services to the
Company, for which it has received fees.
Lehman Brothers Inc. is an affiliate of Lehman Commercial Paper Inc., which
is a managing agent and a lender to Lear under the Credit Agreement. In
addition, Lehman Brothers Inc. or its affiliates may participate on a regular
basis in various general financing and banking transactions for Lear.
LEGAL MATTERS
The validity of the Notes has been passed upon for the Company by Winston &
Strawn, Chicago, Illinois. The validity of the Senior Subordinated Notes has
been passed upon for the Company by Skadden, Arps, Slate, Meagher & Flom, New
York, New York. Certain legal matters with respect to the Notes and the Senior
Subordinated Notes have been passed upon for the underwriters of the original
offerings of the Notes and the Senior Subordinated Notes by Cravath, Swaine &
Moore, New York, New York. Cravath, Swaine & Moore has performed, and continues
to perform, services for the Lehman Funds from time to time.
40
<PAGE> 45
EXPERTS
The consolidated balance sheets as of June 30, 1992, June 30, 1993 and
December 31, 1993 and the related consolidated statements of operations,
stockholders' equity, cash flows and schedules for the years ended June 30,
1991, 1992 and 1993 and for the twelve months and the six months ended December
31, 1993 of the Company included in the periodic reports filed by the Company
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and incorporated herein by reference have been audited by Arthur Andersen
& Co., independent public accountants, as indicated in their reports with
respect thereto, and are incorporated herein in reliance upon the authority of
said firm as experts in giving said reports. In addition, the financial
statements of the NAB included in certain periodic reports filed by the Company
pursuant to the Exchange Act and incorporated herein by reference have been
audited by Coopers & Lybrand, independent public accountants, as indicated in
their report with respect thereto, and are incorporated herein in reliance upon
the authority of said firm as experts in giving said report.
41
<PAGE> 46
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all fees and expenses payable by the
Registrant in connection with this Amendment. All of such expenses, are
estimated.
<TABLE>
<S> <C>
Legal fees and expenses............................................ $ 6,000
Printing and engraving............................................. 5,000
Accounting fees and expenses....................................... 3,000
Miscellaneous...................................................... 2,000
--------
Total......................................................... $ 16,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As authorized by Section 145 of the General Corporation Law of Delaware
(the "Delaware Corporation Law"), each director and officer of the Registrant
may be indemnified by the Registrant against expenses (including attorney's
fees, judgments, fines and amounts paid in settlement) actually and reasonably
incurred in connection with the defense or settlement of any threatened, pending
or completed legal proceedings in which he is involved by reason of the fact
that he is or was a director or officer of the Registrant if he acted in good
faith and in a manner that he reasonably believed to be in or not opposed to the
best interests of the Registrant, and, with respect to any criminal action or
proceeding, if he had no reasonable cause to believe that his conduct was
unlawful. If the legal proceeding, however, is by or in the right of the
Registrant, the director or officer may not be indemnified in respect to any
claim, issue or matters as to which he shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Registrant unless
a court determines otherwise.
Article Fifth of the Restated Certificate of Incorporation of the
Registrant, a copy of which is filed as Exhibit 3.1 to this Registration
Statement, provides that no director of the Registrant shall be personally
liable to that Registrant or its stockholders for monetary damages for any
breach of his fiduciary duty as a director; provided, however, that such clause
shall not apply to any liability of a director (1) for any breach of his duty of
loyalty to the Registrant or its stockholders, (2) for acts or omissions that
are not in good faith or involve intentional misconduct or a knowing violation
of the law, (3) under Section 174 of the Delaware Corporation Law, or (4) for
any transaction from which the director derived an improper personal benefit. In
addition, Article Sixth of the Restated Certificate of Incorporation Article
VIII of the Amended and Restated By-Laws of the Registrant, a copy of which is
filed as Exhibit 3.2 hereto, provide for the indemnification of the Registrant's
directors and officers.
The Registrant has directors and officers liability insurance that insures
the directors and officers of the Registrant against certain liabilities. In
addition, Lehman Brothers Inc. has agreed to indemnify Jeffrey P. Hughes, David
P. Spalding, James A. Stern, Eliot Fried and Alan Washkowitz, each being a
director of the Registrant and an officer or former officer of Lehman Brothers
Inc., in connection with their service as directors of the Registrant.
The Market-Maker Agreement dated July 30, 1992 and the Market-Maker
Agreement dated February 3, 1994, in each case between Lear and Lehman Brothers
Inc., provides for indemnification by Lehman Brothers Inc. of directors and
officers of Lear against certain liabilities, including liabilities under the
Securities Act of 1933, under certain circumstances.
II-1
<PAGE> 47
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibits:
- ---------
<S> <C>
* 1.1 -- Form of Underwriting Agreement relating to the 8 1/4% Subordinated Notes of
Lear.
* 1.2 -- Form of Underwriting Agreement relating to the 11 1/4% Senior Subordinated Notes
of Lear.
* 3.1 -- Restated Certificate of Incorporation of Lear (incorporated by reference to
Exhibit 3.3 to the Company's Transition Report on Form 10-K filed on March 31,
1994).
* 3.4 -- Amended and Restated By-laws of Lear.
* 3.5 -- Merger Agreement dated December 31, 1993, by and between Lear and Holdings
(incorporated by reference to Exhibit 3.4 to Lear's Registration Statement on
Form S-1 (No. 33-51317)).
* 4.1 -- Indenture by and between Lear and The First National Bank of Boston, as Trustee,
relating to the 8 1/4% Subordinated Notes (the "Subordinated Note Indenture")
(incorporated by reference to Exhibit 4.1 to the Company's Transition Report on
Form 10-K filed on March 31, 1994).
* 4.2 -- Form of 11 1/4% Senior Subordinated Note Indenture dated as of July 15, 1992
between Lear and The Bank of New York, as Trustee (the "Senior Subordinated Note
Indenture") (incorporated by reference to Exhibit 4.1 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-47867)).
* 5.1 -- Opinion of Winston & Strawn, special counsel to the Company.
* 5.2 -- Opinion of Skadden, Arps, Slate, Meagher & Flom, special counsel to the Company.
* 10.1 -- Amended and Restated Credit Agreement dated as of October 25, 1993 (the "Credit
Agreement") among Holdings, Lear, Chemical Bank, as agent for the bank parties
thereto, and Bankers Trust Company, The Bank of Nova Scotia, Citicorp USA, Inc.
and Lehman Commercial Paper Inc., as managing agents (incorporated by reference
to Exhibit 4 to the Company's Quarterly Report on Form 10-Q for the quarter
ended October 2, 1993).
* 10.2 -- Amendment No. 1 to the Credit Agreement dated as of January 27, 1994
(incorporated by reference to Exhibit 10 to Lear's Current Report on Form 8-K
dated February 11, 1994).
* 10.3 -- Credit Agreement dated as of March 8, 1989, as amended June 21, 1989 (the
"Canadian Credit Agreement"), between Lear Seating Canada, Ltd. and The Bank of
Nova Scotia with respect to the establishment of credit facilities (incorporated
by reference to Exhibit 10.28 to Lear's Annual Report on Form 10-K for the year
ended June 30, 1989).
* 10.4 -- Amendment dated September 13, 1989 to the Canadian Credit Agreement
(incorporated by reference to Exhibit 10.30 to Lear's Quarterly Report on Form
10-Q for the quarter ended September 30, 1989).
* 10.5 -- Amendment dated March 28, 1990 to the Canadian Credit Agreement (incorporated by
reference to Exhibit 10.11 to Holdings' and Lear's Registration Statement on
Form S-1 (No. 33-47867)).
* 10.6 -- Amendment dated October 11, 1990 to the Canadian Credit Agreement (incorporated
by reference to Exhibit 10.12 to Holdings' and Lear's Registration Statement on
Form S-1 (No. 33-47867)).
* 10.7 -- Amendment dated January 23, 1992 to the Canadian Credit Agreement (incorporated
by reference to Exhibit 10.13 to Holdings' and Lear's Registration Statement on
Form S-1 (No. 33-47867)).
* 10.8 -- Senior Executive Incentive Compensation Plan of Lear (incorporated by reference
to Exhibit 10.14 to Holdings' and Lear's Registration Statement on Form S-1
(No. 33-47867)).
* 10.9 -- Management Incentive Compensation Plan of Lear (incorporated by reference to
Exhibit 10.15 to Holdings' and Lear's Registration Statement on Form S-1
(No. 33-47867)).
*10.10 -- Form of Warrant Agreement dated as of December 15, 1988 between Holdings and
Norwest Bank, N.A., as Warrant Agent (incorporated by reference to Exhibit 4.3
to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)).
*10.11 -- Stock Option Agreement dated as of September 29, 1988 between Holdings and
certain management investors (the "Management Investors") (incorporated by
reference to Exhibit 10.6 to Holdings' and Lear's Registration Statement on Form
S-1 (No. 33-25256)).
</TABLE>
II-2
<PAGE> 48
<TABLE>
<CAPTION>
Exhibits:
- ---------
<S> <C>
*10.12 -- Employment Agreement dated September 29, 1988 between Lear and Kenneth L. Way
(incorporated by reference to Exhibit 10.7 to Holdings' and Lear's Registration
Statement on Form S-1 (No. 33-25256)).
*10.13 -- Employment Agreement dated September 29, 1988 between Lear and Robert E.
Rossiter (incorporated by reference to Exhibit 10.8 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-25256)).
*10.14 -- Employment Agreement dated September 29, 1988 between Lear and James H.
Vandenberghe (incorporated by reference to Exhibit 10.9 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-25256)).
*10.15 -- Employment Agreement dated September 29, 1988 between Lear and James A. Hollars
(incorporated by reference to Exhibit 10.10 to Holdings' and Lear's Registration
Statement on Form S-1 (No. 33-25256)).
*10.16 -- Employment Agreement dated September 29, 1988 between Lear and Randal T. Murphy
(incorporated by reference to Exhibit 10.12 to Holdings' and Lear's Registration
Statement on Form S-1 (No. 33-25256)).
*10.17 -- Employment Agreement dated as of September 29, 1988 between Lear and Ted E.
Melson (incorporated by reference to Exhibit 10.13 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-25256)).
*10.18 -- Employment Agreement dated June 1, 1992 between Lear and Donald J. Stebbins
(incorporated by reference to Exhibit 10.17 to Lear's Registration Statement on
Form S-1 (No. 33-51317)).
*10.19 -- Amendments to Employment Agreements dated as of September 21, 1991 by and
between Lear and each of Messrs. Way, Vandenberghe, Rossiter, Hollars, Melson
and Murphy (incorporated by reference to Exhibit 28.7 to Holdings' Current
Report on Form 8-K dated September 24, 1991).
*10.20 -- Stock Purchase Agreement dated July 25, 1990 by and between Fair Haven
Industries, Inc., Bradley D. Osgood, Robert Michelin and LS Acquisition
Corporation No. 24. (incorporated by reference to Exhibit 10.34 to Holdings'
Annual Report on Form 10-K for the year ended June 30, 1991).
*10.21 -- Purchase Agreement dated July, 1990 by and between Fairfax Industries, Inc. and
LS Acquisition Corporation No. 24 (incorporated by reference to Exhibit 10.37 to
the Company's Annual Report on Form 10-K for the year ended June 30, 1991).
*10.22 -- Amended and Restated Stockholders and Registration Rights Agreement dated as of
September 27, 1991 by and among Holdings, the Lehman Funds, Lehman Merchant
Banking Partners Inc., as representative of the Lehman Partnerships, FIMA
Finance Management Inc., a British Virgin Islands corporation, and the
Management Investors (incorporated by reference to Exhibit 2.2 to Holdings'
Current Report on Form 8-K dated September 24, 1991).
*10.23 -- Waiver and Agreement dated September 27, 1991, by and among Holdings, Kidder
Peabody Group Inc., KP/Hanover Partners 1988, L.P., General Electric Capital
Corporation, FIMA Finance Management Inc., a Panamanian corporation, FIMA
Finance Management Inc., a British Virgin Islands corporation, MH Capital
Partners Inc., successor by merger and name change to MH Equity Corp., SO.PA.F.
Societa Partecipazioni Finanziarie S.p.A., INVEST Societa Italiana Investimenti
S.p.A., the Lehman Partnerships and the Management Investors (incorporated by
reference to Exhibit 2.3 to Holdings' Current Report on Form 8-K dated September
24, 1991).
*10.24 -- Amendment to Amended and Restated Stockholders and Registration Rights Agreement
dated as of March 31, 1994 (incorporated by reference to Exhibit 10.24 to the
Company's Transition Report on Form 10-K filed on March 31, 1994).
*10.25 -- 1992 Stock Option Plan (incorporated by reference to Exhibit 10.7 to Lear's
Annual Report on Form 10-K for the year ended June 30, 1993).
*10.26 -- Amendment to 1992 Stock Option Plan of Lear (incorporated by reference to
Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended
April 2, 1994).
*10.27 -- 1994 Stock Option Plan of Lear (incorporated by reference to Exhibit 10.27 to
the Company's Transition Report on Form 10-K filed on March 31, 1994).
*10.28 -- Stock Purchase Agreement dated as of July 21, 1992 among the Company, the Lehman
Funds and FIMA Finance Management Inc., a British Virgin Islands corporation
</TABLE>
II-3
<PAGE> 49
<TABLE>
<CAPTION>
Exhibits:
- ---------
<S> <C>
(incorporated by reference to Exhibit 10.33 to Holdings' and Lear's Registration
Statement on Form S-1 (No. 33-47867)).
*10.29 -- Asset Purchase & Supply Agreement dated as of November 18, 1991 between Lear
Seating Sweden, AB and Volvo Car Corporation (incorporated by reference to
Exhibit 10.34 to Holdings' and Lear's Registration Statement on Form S-1 (No.
33-47867)).
*10.30 -- Purchase Agreement dated as of November 1, 1993 between the Company and Ford
Motor Company (incorporated by reference to Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the quarter ended October 2, 1993).
* 11.1 -- Computation of income (loss) per share.
* 21.1 -- List of subsidiaries of the Company.
23.1 -- Consents of Experts
* 23.2 -- Consent of Winston & Strawn (included in Exhibit 5.1).
* 23.3 -- Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit 5.2)
* 24.1 -- Powers of Attorney.
* 25.1 -- Form T-1 with respect to the eligibility of The First National Bank of Boston as
Trustee under the Subordinated Note Indenture.
* 25.2 -- Form T-1 with respect to the eligibility of The Bank of New York as Trustee
under the Senior Subordinated Note Indenture.
</TABLE>
- -------------------------
* Previously filed.
ITEM 17. UNDERTAKINGS
1. 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 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 of 1933 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 them is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
2. The undersigned Registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this Registration Statement as of the time it was declared effective.
(b) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in
this Registration Statement shall be deemed to be a new Registration
Statement relating to the Securities offered therein, and the offering of
such Securities shall be deemed to be the initial bona fide offering
thereof.
II-4
<PAGE> 50
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
Post-Effective Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Southfield,
State of Michigan on June 13, 1994.
LEAR SEATING CORPORATION
By: /s/ KENNETH L. WAY
---------------------------------
Kenneth L. Way
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 2 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- --------------------------------- ------------------
<S> <C> <C>
/s/ KENNETH L. WAY Chairman of the Board and June 13, 1994
Chief Executive Officer
- ------------------------------------- (Principal Executive Officer)
Kenneth L. Way
* President and Director June 13, 1994
- -------------------------------------
Robert E. Rossiter
/s/ JAMES H. VANDENBERGHE Executive Vice President June 13, 1994
- ------------------------------------- and Chief Financial Officer
James H. Vandenberghe (Principal Financial and
Principal Accounting Officer)
* Director June 13, 1994
- -------------------------------------
Larry W. McCurdy
Director
- -------------------------------------
Gian Andrea Botta
* Director June 13, 1994
- -------------------------------------
Eliot Fried
* Director June 13, 1994
- -------------------------------------
Robert W. Shower
* Director June 13, 1994
- -------------------------------------
Jeffrey P. Hughes
* Director June 13, 1994
- -------------------------------------
David P. Spalding
* Director June 13, 1994
- -------------------------------------
James A. Stern
Director
- -------------------------------------
Alan Washkowitz
*By: /s/ JAMES H. VANDENBERGHE
- -------------------------------------
James H. Vandenberghe
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 51
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ---------- --------------------------------------------------------------------- -------------
<S> <C> <C>
*1.1 -- Form of Underwriting Agreement relating to the 8 1/4% Subordinated
Notes of Lear.
*1.2 -- Form of Underwriting Agreement relating to the 11 1/4% Senior
Subordinated Notes of Lear.
*3.1 -- Restated Certificate of Incorporation of Lear (incorporated by
reference to Exhibit 3.3 to the Company's Transition Report on Form
10-K filed on March 31, 1994).
*3.4 -- Amended and Restated By-laws of Lear.
*3.5 -- Merger Agreement dated December 31, 1993, by and between Lear and
Holdings (incorporated by reference to Exhibit 3.4 to Lear's
Registration Statement on Form S-1 (No. 33-51317)).
*4.1 -- Indenture by and between Lear and The First National Bank of
Boston, as Trustee, relating to the 8 1/4% Subordinated Notes (the
"Subordinated Note Indenture") (incorporated by reference to
Exhibit 4.1 to the Company's Transition Report on Form 10-K filed
on March 31, 1994).
*4.2 -- Form of 11 1/4% Senior Subordinated Note Indenture dated as of
July 15, 1992 between Lear and The Bank of New York, as Trustee (the
"Senior Subordinated Note Indenture") (incorporated by reference
to Exhibit 4.1 to Holdings' and Lear's Registration Statement on
Form S-1 (No. 33-47867)).
*5.1 -- Opinion of Winston & Strawn, special counsel to the Company.
*5.2 -- Opinion of Skadden, Arps, Slate, Meagher & Flom, special counsel
to the Company.
*10.1 -- Amended and Restated Credit Agreement dated as of October 25, 1993
(the "Credit Agreement") among Holdings, Lear, Chemical Bank, as
agent for the bank parties thereto, and Bankers Trust Company, The
Bank of Nova Scotia, Citicorp USA, Inc. and Lehman Commercial
Paper Inc., as managing agents (incorporated by reference to
Exhibit 4 to the Company's Quarterly Report on Form 10-Q for the
quarter ended October 2, 1993).
*10.2 -- Amendment No. 1 to the Credit Agreement dated as of January 27,
1994 (incorporated by reference to Exhibit 10 to Lear's Current
Report on Form 8-K dated February 11, 1994).
*10.3 -- Credit Agreement dated as of March 8, 1989, as amended June 21,
1989 (the "Canadian Credit Agreement"), between Lear Seating Canada,
Ltd. and The Bank of Nova Scotia with respect to the establishment
of credit facilities (incorporated by reference to Exhibit 10.28
to Lear's Annual Report on Form 10-K for the year ended June 30,
1989).
*10.4 -- Amendment dated September 13, 1989 to the Canadian Credit
Agreement (incorporated by reference to Exhibit 10.30 to Lear's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1989).
*10.5 -- Amendment dated March 28, 1990 to the Canadian Credit Agreement
(incorporated by reference to Exhibit 10.11 to Holdings' and
Lear's Registration Statement on Form S-1 (No. 33-47867)).
*10.6 -- Amendment dated October 11, 1990 to the Canadian Credit Agreement
(incorporated by reference to Exhibit 10.12 to Holdings' and
Lear's Registration Statement on Form S-1 (No. 33-47867)).
*10.7 -- Amendment dated January 23, 1992 to the Canadian Credit Agreement
(incorporated by reference to Exhibit 10.13 to Holdings' and
Lear's Registration Statement on Form S-1 (No. 33-47867)).
</TABLE>
<PAGE> 52
<TABLE>
<S> <C>
*10.8 -- Senior Executive Incentive Compensation Plan of Lear (incorporated
by reference to Exhibit 10.14 to Holdings' and Lear's Registration
Statement on Form S-1 (No. 33-47867)).
*10.9 -- Management Incentive Compensation Plan of Lear (incorporated by
reference to Exhibit 10.15 to Holdings' and Lear's Registration
Statement on Form S-1
(No. 33-47867)).
*10.10 -- Form of Warrant Agreement dated as of December 15, 1988 between
Holdings and Norwest Bank, N.A., as Warrant Agent (incorporated by
reference to Exhibit 4.3 to Holdings' and Lear's Registration
Statement on Form S-1 (No. 33-25256)).
*10.11 -- Stock Option Agreement dated as of September 29, 1988 between
Holdings and certain management investors (the "Management
Investors") (incorporated by reference to Exhibit 10.6 to
Holdings' and Lear's Registration Statement on Form S-1 (No.
33-25256)).
*10.12 -- Employment Agreement dated September 29, 1988 between Lear and
Kenneth L. Way (incorporated by reference to Exhibit 10.7 to
Holdings' and Lear's Registration Statement on Form S-1 (No.
33-25256)).
*10.13 -- Employment Agreement dated September 29, 1988 between Lear and
Robert E. Rossiter (incorporated by reference to Exhibit 10.8 to
Holdings' and Lear's Registration Statement on Form S-1 (No.
33-25256)).
*10.14 -- Employment Agreement dated September 29, 1988 between Lear and
James H. Vandenberghe (incorporated by reference to Exhibit 10.9
to Holdings' and Lear's Registration Statement on Form S-1 (No.
33-25256)).
*10.15 -- Employment Agreement dated September 29, 1988 between Lear and
James A. Hollars (incorporated by reference to Exhibit 10.10 to
Holdings' and Lear's Registration Statement on Form S-1 (No.
33-25256)).
*10.16 -- Employment Agreement dated September 29, 1988 between Lear and
Randal T. Murphy (incorporated by reference to Exhibit 10.12 to
Holdings' and Lear's Registration Statement on Form S-1 (No.
33-25256)).
*10.17 -- Employment Agreement dated as of September 29, 1988 between Lear
and Ted E. Melson (incorporated by reference to Exhibit 10.13 to
Holdings' and Lear's Registration Statement on Form S-1 (No.
33-25256)).
*10.18 -- Employment Agreement dated June 1, 1992 between Lear and Donald J.
Stebbins (incorporated by reference to Exhibit 10.17 to Lear's
Registration Statement on Form S-1 (No. 33-51317)).
*10.19 -- Amendments to Employment Agreements dated as of September 21, 1991
by and between Lear and each of Messrs. Way, Vandenberghe, Rossiter,
Hollars, Melson and Murphy (incorporated by reference to Exhibit
28.7 to Holdings' Current Report on Form 8-K dated September 24,
1991).
*10.20 -- Stock Purchase Agreement dated July 25, 1990 by and between Fair
Haven Industries, Inc., Bradley D. Osgood, Robert Michelin and LS
Acquisition Corporation No. 24. (incorporated by reference to
Exhibit 10.34 to Holdings' Annual Report on Form 10-K for the year
ended June 30, 1991).
*10.21 -- Purchase Agreement dated July, 1990 by and between Fairfax
Industries, Inc. and LS Acquisition Corporation No. 24 (incorporated
by reference to Exhibit 10.37 to the Company's Annual Report on
Form 10-K for the year ended June 30, 1991).
*10.22 -- Amended and Restated Stockholders and Registration Rights
Agreement dated as of September 27, 1991 by and among Holdings, the
Lehman Funds, Lehman Merchant Banking Partners Inc., as
representative of the Lehman Partnerships, FIMA Finance Management
Inc., a British Virgin Islands corporation, and the Management
Investors (incorporated by reference to Exhibit 2.2 to Holdings'
Current Report on Form 8-K dated September 24, 1991).
</TABLE>
<PAGE> 53
<TABLE>
<S> <C> <C>
*10.23 -- Waiver and Agreement dated September 27, 1991, by and among
Holdings, Kidder Peabody Group Inc., KP/Hanover Partners 1988, L.P.,
General Electric Capital Corporation, FIMA Finance Management
Inc., a Panamanian corporation, FIMA Finance Management Inc., a
British Virgin Islands corporation, MH Capital Partners Inc.,
successor by merger and name change to MH Equity Corp., SO.PA.F.
Societa Partecipazioni Finanziarie S.p.A., INVEST Societa Italiana
Investimenti S.p.A., the Lehman Partnerships and the Management
Investors (incorporated by reference to Exhibit 2.3 to Holdings'
Current Report on Form 8-K dated September 24, 1991).
*10.24 -- Amendment to Amended and Restated Stockholders and Registration
Rights Agreement dated as of March 31, 1994 (incorporated by
reference to Exhibit 10.24 to the Company's Transition Report on
Form 10-K filed on March 31, 1994).
*10.25 -- 1992 Stock Option Plan (incorporated by reference to Exhibit 10.7
to Lear's Annual Report on Form 10-K for the year ended June 30,
1993).
*10.26 -- Amendment to 1992 Stock Option Plan of Lear (incorporated by
reference to Exhibit 4.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended April 2, 1994).
*10.27 -- 1994 Stock Option Plan of Lear (incorporated by reference to
Exhibit 10.27 to the Company's Transition Report on Form 10-K filed
on March 31, 1994).
*10.28 -- Stock Purchase Agreement dated as of July 21, 1992 among the
Company, the Lehman Funds and FIMA Finance Management Inc., a British
Virgin Islands corporation (incorporated by reference to Exhibit
10.33 to Holdings' and Lear's Registration Statement on Form S-1
(No. 33-47867)).
*10.29 -- Asset Purchase & Supply Agreement dated as of November 18, 1991
between Lear Seating Sweden, AB and Volvo Car Corporation
(incorporated by reference to Exhibit 10.34 to Holdings' and
Lear's Registration Statement on Form S-1 (No. 33-47867)).
*10.30 -- Purchase Agreement dated as of November 1, 1993 between the
Company and Ford Motor Company (incorporated by reference to Exhibit
10 to the Company's Quarterly Report on Form 10-Q for the quarter
ended October 2, 1993).
*11.1 -- Computation of income (loss) per share.
*21.1 -- List of subsidiaries of the Company.
23.1 -- Consent of Experts
*23.2 -- Consent of Winston & Strawn (included in Exhibit 5.1).
*23.3 -- Consent of Skadden, Arps, Slate, Meagher & Flom (included in
Exhibit 5.2)
*24.1 -- Powers of Attorney.
*25.1 -- Form T-1 with respect to the eligibility of The First National
Bank of Boston as Trustee under the Subordinated Note Indenture.
*25.2 -- Form T-1 with respect to the eligibility of The Bank of New York
as Trustee under the Senior Subordinated Note Indenture.
</TABLE>
- -------------------------
* Previously filed.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated August 20, 1993
and February 10, 1994 included in Lear Seating Corporation's Forms 10-K for the
year ended June 30, 1993 and the six months ended December 31, 1993,
respectively, and our report dated August 20, 1993 included in Lear Holdings
Corporation's Form 10-K for the year ended June 30, 1993 and to all references
to our firm included in this registration statement.
/s/ ARTHUR ANDERSEN & CO.
ARTHUR ANDERSEN & CO.
Detroit, Michigan,
June 10, 1994.
<PAGE> 2
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement,
Post-Effective Amendment No. 2, on Form S-3 to Registration Statement on Form
S-1 (File No. 33-51317), and Post-Effective Amendment No. 2 on Form S-3 to
Registration Statement on Form S-1 (File No. 33-47867), of our report, dated
November 18, 1993, which includes an explanatory paragraph concerning a change
in accounting principle and a subsequent event, on our audits of the financial
statements of The North American Business (an operating component of Ford Motor
Company) as of September 30, 1993 and December 31, 1992, and for the nine
months ended September 30, 1993 and the years ended December 31, 1992 and 1991.
We also consent to the reference to our firm under the caption "Experts."
/s/ COOPERS & LYBRAND
COOPERS & LYBRAND
Detroit, Michigan
June 13, 1994
