<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 26, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INSILCO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 274, 371, 346, 361, 367, 349 06-0635844
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) CLASSIFICATION NO.)
CODE NUMBER)
</TABLE>
INSILCO CORPORATION
425 METRO PLACE N.
FIFTH FLOOR
DUBLIN, OHIO 43017
(614) 792-0468
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
KENNETH H. KOCH
VICE PRESIDENT AND GENERAL COUNSEL
INSILCO CORPORATION
425 METRO PLACE N.
FIFTH FLOOR
DUBLIN, OHIO 43017
(614) 791-3137
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
Copy to:
AVIVA DIAMANT
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004-1980
(212) 859-8000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED EXCHANGE OFFER: As soon as
practicable after the effective date of this Registration Statement.
------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF CLASS OF AMOUNT TO AGGREGATE PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 1/4% Senior Subordinated
Notes Due 2007.............. $150,000,000 100% $150,000,000 $45,455
============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(f)(2) under the Securities Act of 1933.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
EXPLANATORY NOTE
THIS REGISTRATION STATEMENT COVERS THE REGISTRATION OF AN AGGREGATE
PRINCIPAL AMOUNT OF $150,000,000 OF 10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
(THE "NEW NOTES") OF INSILCO CORPORATION (THE "COMPANY") THAT MAY BE EXCHANGED
FOR AN EQUAL PRINCIPAL AMOUNT OF THE COMPANY'S OUTSTANDING 10 1/4% SENIOR
SUBORDINATED NOTES DUE 2007 (THE "OLD NOTES") (THE "EXCHANGE OFFER"). THIS
REGISTRATION STATEMENT ALSO COVERS THE REGISTRATION OF THE NEW NOTES FOR RESALE
BY GOLDMAN, SACHS & CO. ("GOLDMAN SACHS") IN MARKET-MAKING TRANSACTIONS. THE
COMPLETE PROSPECTUS RELATING TO THE EXCHANGE OFFER (THE "EXCHANGE OFFER
PROSPECTUS") FOLLOWS IMMEDIATELY AFTER THIS EXPLANATORY NOTE. FOLLOWING THE
EXCHANGE OFFER PROSPECTUS ARE CERTAIN PAGES OF THE PROSPECTUS RELATING SOLELY TO
SUCH MARKET-MAKING TRANSACTIONS (THE "MARKET-MAKING PROSPECTUS"), INCLUDING
ALTERNATIVE FRONT AND BACK COVER PAGES, A SECTION ENTITLED "RISK FACTORS --
TRADING MARKET FOR THE NEW NOTES" TO BE USED IN LIEU OF THE SECTION ENTITLED
"RISK FACTORS -- ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES; VOLATILITY," A NEW
SECTION ENTITLED "USE OF PROCEEDS" AND AN ALTERNATE SECTION ENTITLED "PLAN OF
DISTRIBUTION." IN ADDITION, THE MARKET-MAKING PROSPECTUS WILL NOT INCLUDE THE
FOLLOWING CAPTIONS (OR THE INFORMATION SET FORTH UNDER SUCH CAPTIONS) IN THE
EXCHANGE OFFER PROSPECTUS: "PROSPECTUS SUMMARY -- THE OFFERING" AND "-- THE
EXCHANGE OFFER", "RISK FACTORS -- CONSEQUENCES OF THE EXCHANGE OFFER ON
NON-TENDERING HOLDERS OF THE OLD NOTES" AND "-- THE EXCHANGE OFFER" AND "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES". ALL OTHER SECTIONS OF THE EXCHANGE OFFER
PROSPECTUS WILL BE INCLUDED IN THE MARKET-MAKING PROSPECTUS.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 26, 1997
PROSPECTUS
INSILCO CORPORATION
OFFERS TO EXCHANGE ITS
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING
OLD NOTES (AS DEFINED HEREIN)
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
[ ], 1997, UNLESS EXTENDED. AS DESCRIBED HEREIN, WITHDRAWAL RIGHTS
WITH RESPECT TO THE EXCHANGE OFFER ARE EXPECTED TO EXPIRE AT THE EXPIRATION OF
THE EXCHANGE OFFER
Insilco Corporation, a Delaware corporation ("Insilco" or the "Company"),
hereby offers (the "Exchange Offer"), upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal (the "Letter of Transmittal"), to exchange up to $150,000,000
aggregate principal amount of its 10 1/4% Senior Subordinated Notes Due 2007
which will be registered (the "New Notes"), under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement of which
this Prospectus is a part, for a like principal amount of its issued and
outstanding 10 1/4% Senior Subordinated Notes Due 2007 (the "Old Notes" and,
together with the New Notes, the "Notes"). The Exchange Offer is being made
pursuant to the terms of the Exchange and Registration Rights Agreement, dated
August 12, 1997 (the "Registration Rights Agreement"), entered into between the
Company and Goldman Sachs & Co., McDonald & Company Securities, Inc. and
Citicorp Securities, Inc. (the "Initial Purchasers") pursuant to the terms of
the Purchase Agreement (the "Purchase Agreement"), dated August 7, 1997, between
the Company and the Initial Purchasers. See "The Exchange Offer -- Purpose and
Effect of the Exchange Offer."
Interest on the Notes will be payable semi-annually on February 15 and
August 15 of each year (each, an "Interest Payment Date"), commencing on
February 15, 1998. The Notes will mature on August 15, 2007 and will not be
subject to redemption at the option of the Company except as follows. The
Company may redeem the Notes, in whole or in part, at any time on or after
August 15, 2002 and prior to maturity, upon not less than 30 nor more than 60
days notice mailed to each holder of the Notes, at the redemption prices set
forth herein, plus accrued interest, if any, to but excluding the date of
redemption. Holders of record on the relevant Regular Record Date will be
entitled to receive interest due on an Interest Payment Date that is on or prior
to the relevant date of redemption.
(cover continued on next page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 17 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH INVESTORS SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND AN
INVESTMENT IN THE NEW NOTES OFFERED HEREBY
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 4
(cover continued from previous page)
Upon a Change of Control, holders of the New Notes may require the Company
to purchase all or a portion of the New Notes at a purchase price equal to 101%
of their aggregate principal amount, plus accrued interest, if any, to but
excluding the purchase date. Additionally, the Company will be obligated in
certain circumstances to make an offer to purchase the New Notes at a purchase
price equal to 100% of the principal amount thereof, plus accrued interest, if
any, to but excluding the purchase date with the Net Available Proceeds of Asset
Dispositions. See "Description of the Notes."
The New Notes will be senior subordinated unsecured obligations of the
Company. The New Notes will be subordinated in right of payment to all existing
and future Senior Debt (as defined herein), of the Company, including the New
Credit Facility (as defined herein), will be structurally subordinate to all
existing and future indebtedness of the Company's subsidiaries, will rank pari
passu in right of payment with any future senior subordinated indebtedness of
the Company and will rank senior in right of payment to any future indebtedness
of the Company that may be subordinated thereto. On a pro forma basis as of June
30, 1997, the Company had Senior Debt of approximately $141.8 million. The
Company's domestic subsidiaries have joint and several liability for (and have
pledged substantially all of their assets as collateral for, and in certain
cases guaranteed) indebtedness under the New Credit Facility. See "Description
of the Notes" and "Description of the New Credit Facility."
The New Notes will be obligations of the Company entitled to the benefits
of the Indenture (as defined herein). The form and terms of the New Notes will
be identical in all material respects to the form and terms of the Old Notes
except that (i) the New Notes will have been registered under the Securities
Act, (ii) holders of the New Notes will not be entitled to certain rights of
holders of Old Notes under the Registration Rights Agreement and (iii) the New
Notes will not be entitled to the contingent increase in interest rate provided
pursuant to the Indenture and the Old Notes. Any Old Notes not tendered and
accepted in the Exchange Offer will remain outstanding and will be entitled to
all the rights and preferences and will be subject to the limitations applicable
thereto under the Indenture. Following consummation of the Exchange Offer, the
holders of Old Notes will continue to be subject to the existing restrictions
upon transfer thereof, and the Company will have no further obligation to such
holders to provide for the registration under the Securities Act of the Old
Notes held by them. Following completion of the Exchange Offer, none of the
Notes will be entitled to the contingent increase in interest rate provided
pursuant to the Indenture and the Old Notes. See "The Exchange Offer."
The Company will accept for exchange any and all validly tendered Old Notes
on or prior to 5:00 p.m., New York City time, on [ ], 1997, unless
extended by the Company (the "Expiration Date"). Tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date, unless previously accepted for payment by the Company. The Exchange Offer
is not conditioned upon any minimum principal amount of Old Notes being tendered
for exchange. However, the Exchange Offer is subject to certain conditions which
may be waived by the Company. Old Notes may be tendered only in denominations of
$1,000 principal amount and integral multiplies thereof. New Notes to be issued
in exchange for validly tendered Old Notes will be delivered through the
facilities of The Depository Trust Company ("DTC") by the Exchange Agent (as
defined herein). The Company has agreed to pay the expenses of the Exchange
Offer. See "The Exchange Offer."
Any waiver, extension or termination of the Exchange Offer will be publicly
announced by the Company through a release to PR Newswire and as otherwise
required by applicable law or regulations.
The Company is making the Exchange Offer in reliance on the position of the
staff of the Division of Corporation Finance of the Securities and Exchange
Commission (the "Commission") as set forth in no-action letters issued to third
parties in other transactions. However, the Company has not sought its own no-
action letter and there can be no assurance that the staff of the Division of
Corporation Finance of the Commission would make a similar determination with
respect to the Exchange Offer as in such other circumstances. Based on those
interpretations by the staff of the Division of Corporation Finance of the
Commission, the Company believes the New Notes issued pursuant to the Exchange
Offer in exchange for
<PAGE> 5
Old Notes may be offered for resale, resold and otherwise transferred by any
holder thereof (other than broker-dealers, as set forth below, and any such
holder that is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holder's business and that
such holder is not participating, does not intend to participate and has no
arrangement or understanding with any person to participate, in the distribution
(within the meaning of the Securities Act) of such New Notes. Any holder who
tenders in the Exchange Offer with the intention to participate, or for the
purpose of participating, in a distribution of the New Notes may not rely upon
such interpretations by the staff of the Division of Corporation Finance of the
Commission as set forth in these no-action letters and, in the absence of an
exemption therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction, and any such secondary resale transaction must be covered by an
effective registration statement containing the selling securityholder
information required by Item 507 of Regulation S-K under the Securities Act.
Each broker-dealer (other than an affiliate of the Company) that receives
New Notes for its own account pursuant to the Exchange Offer must acknowledge
that it acquired the Old Notes as the result of market-making activities or
other trading activities and will deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale of such New Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. The Company has agreed
that, for a period of 90 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution," "The Exchange Offer."
The New Notes constitute a new issue of securities with no established
trading market. The New Notes will be represented by a Global Certificate (as
defined herein) registered in the name of a nominee of DTC, as Depositary.
Beneficial interests in the Global Certificates will be shown on, and transfers
will be effected only through, records maintained by the Depositary and its
participants. See "Description of the New Notes -- Book Entry, Delivery and
Form."
The Company has been advised by the Initial Purchasers that, following
completion of the Exchange Offer, they currently intend to make a market in the
New Notes; however, they are not obligated to do so and any market-making
activities with respect to the New Notes may be discontinued at any time. There
can be no assurance that an active trading market for any issue of the New Notes
will develop. See "Risk Factors -- Absence of Public Market for the New Notes;
Volatility." To the extent that Old Notes are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Notes could be
adversely affected. It is not expected that an active trading market for the Old
Notes will develop while they are subject to restrictions on transfer. See "Risk
Factors -- Consequences of the Exchange Offer on Non-Tendering Holders of the
Old Notes."
This Prospectus, together with the accompanying Letter of Transmittal, is
being sent to all registered holders of Old Notes as of [ ], 1997.
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to pay the expenses it incurs in the Exchange Offer. No
dealer-manager is being used in connection with the Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT SURRENDERS
OF OLD NOTES FOR EXCHANGE FROM, HOLDERS THEREOF IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR "BLUE SKY" LAWS OF SUCH JURISDICTION.
<PAGE> 6
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement
(together with any amendments thereto, the "Registration Statement") on Form S-4
under the Securities Act, with respect to the New Notes offered hereby. As
permitted by the rules and regulations of the Commission, this Prospectus does
not contain all of the information included in the Registration Statement and
the exhibits and schedules thereto. Statements contained in this Prospectus as
to the contents of any contract or other document referred to herein or therein
and filed as an exhibit to the Registration Statement are not necessarily
complete and, in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. For further
information with respect to the Company and the New Notes, reference is hereby
made to the Registration Statement and the exhibits and schedules thereto.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company with the Commission pursuant to the informational requirements of the
Exchange Act may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, and at the following Regional Offices of the
Commission: Midwest Regional Office, Citicorp Center, Suite 1400, 14th Floor,
500 West Madison Street, Chicago, Illinois 60661-2511; and Northeast Regional
Office, Suite 1300, 13th Floor, 7 World Trade Center, New York, New York 10048.
Copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Commission also maintains a Web site
(http://www.sec.gov) that makes available reports, proxy statements and other
information regarding the Company. Shares of the Company's Common Stock, $.001
par value per share (the "Shares"), are quoted on the NASDAQ National Market,
and copies of the aforementioned materials may also be inspected at the office
of the National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20006.
Under the Indenture relating to the New Notes, and without regard to
whether the Company is subject to the informational requirements of the Exchange
Act, the Company has agreed to file with the Commission and to distribute to the
Trustee (as defined herein) and the holders of the New Notes annual reports of
the Company containing audited consolidated financial statements, as well as
quarterly reports containing unaudited consolidated financial statements for
each of the first three quarters of each fiscal year.
Potential investors may obtain a copy of the agreements summarized herein
without charge by request directed to the Secretary of the Company at 425 Metro
Place N., Fifth Floor, Dublin, Ohio 43017, telephone (614) 792-0468.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 and Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31 and June 30, 1997, previously filed by the Company with the Commission, are
incorporated by reference in this Prospectus and shall be deemed to be a part
hereof.
Each document filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of any offering of securities made by
this Prospectus shall be deemed to be incorporated herein by reference and to be
a part hereof from the date of filing such document. Any statement contained
herein, or in a document all or a portion of which is incorporated or deemed to
be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such 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 any person to whom a copy of
this Prospectus is delivered, upon written or oral request, a copy of any and
all of the documents that have been or may be incorporated by reference herein
(other than exhibits to such documents which are not specifically incorporated
by reference into such documents). Request for such documents should be
submitted in writing to the Company at 425 Metro Place N., Fifth Floor, Dublin,
Ohio 43017.
2
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and historical and pro forma
financial statements and notes thereto appearing elsewhere in this Prospectus.
Unless the context otherwise requires, all references in this Prospectus to
"Insilco" or the "Company" are to Insilco Corporation and its direct and
indirect subsidiaries on a consolidated basis.
THE COMPANY
OVERVIEW
Insilco, directly and through its subsidiaries, is a diversified
manufacturer of automotive components and telecommunications and electronics
components and a publisher of specialty publishing products, chiefly student
yearbooks. Insilco, with three reporting segments (the Automotive Components
Group, the Technologies Group, and Specialty Publishing), conducts its business
in eight separate operating units, including both divisions and subsidiaries.
Specialty Publishing was Insilco's Office Products/Specialty Publishing segment
prior to the divestiture of the Rolodex Business (as defined below) in March,
1997.
The following chart depicts the organizational structure of the Company:
[INSILCO CORPORATION GRAPH]
The Automotive Components Group is comprised of businesses that produce
radiators and other heat exchanger components, equipment and systems used in the
production of heat exchangers, heavy gauge stamped automotive parts (principally
transmission clutch plates) and welded stainless steel tubing, and a 50% owned
joint venture, Thermalex Inc. ("Thermalex"), which produces precision extruded
aluminum tubing. The Automotive Components Group serves both original equipment
manufacturers ("OEMs") and aftermarket customers in the automotive, specialty
vehicle, truck and off-road vehicle and industrial equipment markets and also
serves the marine and architectural markets with decorative stainless steel
tubing. On July 10, 1996, Insilco acquired the automotive aluminum tube business
of Helmut Lingemann GmbH & Co. (the "Lingemann Business").
The Technologies Group manufactures high-performance data transmission
connectors, small electric power transformers, precision stampings, and wire and
cable assemblies. The Technologies Group serves the computer networking,
microwave relay, telephone digital switching, data processing, automotive,
medical equipment and other markets.
Specialty Publishing consists of Taylor Publishing Company ("Taylor"), a
publisher of specialty publishing products, chiefly student yearbooks.
During 1996 and the first quarter of 1997, the Company divested its Office
Products Business, consisting of (i) Curtis Manufacturing Co., Inc. ("Curtis"),
a manufacturer of computer accessories, (ii) the Rolodex electronics product
line ("Rolodex Electronics") and (iii) the traditional Rolodex office products
business (the "Rolodex Business"). For the year ended December 31, 1996, on a
pro forma basis assuming that the
3
<PAGE> 8
Office Products Business had been sold and the Lingemann Business had been
acquired at the beginning of the year, the Company had revenues of $507.1
million and net income before net interest expense, income taxes, depreciation
and amortization, and other income (expense), net ("EBITDA") of $63.8 million.
For the six months ended June 30, 1996 and 1997, on a pro forma basis assuming
that the Office Products Business had been sold at the beginning of each such
period and, in the case of the six months ended June 30, 1996, that the
Lingemann Business was acquired at the beginning of such period, the Company had
revenues of $269.5 million and $276.2 million and EBITDA of $35.6 million and
$38.4 million, respectively.
Water Street Corporate Recovery Fund I, L.P. ("Water Street"), an
investment partnership of which Goldman, Sachs & Co. ("Goldman Sachs") is the
general partner, is the Company's largest shareholder. Two of the Company's
directors, Terence M. O'Toole and Barry S. Volpert, are Managing Directors of
Goldman Sachs. See "Principal Stockholders."
On April 1, 1993, the Company emerged from Chapter 11 bankruptcy
proceedings (which had commenced on January 13, 1991 (the "Petition Date"))
pursuant to an Amended and Restated Plan of Reorganization dated November 23,
1992 (the "Plan of Reorganization"). The Plan of Reorganization provided for the
discharge or settlement of all of the Company's pre-Petition Date liabilities
and resulted in a reduction in the Company's liabilities of $532.3 million. As a
consequence of the bankruptcy discharge, the Company's liabilities (including
environmental liabilities) for pre-Petition Date conduct are limited and
reasonably certain.
The Company's executive offices are located at 425 Metro Place N., Fifth
Floor, Dublin, Ohio 43017. The Company's telephone number at such address is
(614) 792-0468.
THE TRANSACTIONS
On October 7, 1996, the Company announced that it had retained Goldman
Sachs as its financial advisor to assist in the review of the Company's
strategic alternatives to maximize shareholder value, including selling the
Rolodex Business. On March 5, 1997, the Company completed the sale of the
Rolodex Business and deposited $110 million (the "Rolodex Proceeds") of the $117
million sale price in a segregated account. Following the sale, the Company
decided to (i) refinance its existing indebtedness, (ii) seek to obtain up to
$150 million of new debt and (iii) effect a repurchase of a portion of its
outstanding Shares in an amount of approximately $220 million funded, as
described below, in part by the Rolodex Proceeds (collectively, the
"Transactions").
The Company subsequently entered into an Amended and Restated Credit
Agreement as of July 3, 1997 (the "New Credit Facility") which, among other
things, provides for (i) a $200,000,000 revolving credit facility, (ii) a
$50,000,000 sublimit for commercial and standby letters of credit and (iii) a
$50,000,000 sublimit for advances in selected foreign currencies. The closing of
the New Credit Facility permitted the Company on July 10, 1997 to refinance the
entire amount of indebtedness outstanding under the Old Credit Facility. The New
Credit Facility permits the Company to issue the Notes, subject to certain
conditions. See "Description of the New Credit Facility."
On July 10, 1997, the Company, using the Rolodex Proceeds, purchased (i)
2,805,194 Shares from Water Street at $38.50 per Share in cash for an aggregate
purchase price of $107,999,969 and (ii) 51,948 Shares from Robert L. Smialek,
the President and Chairman of the Board of the Company, at $38.50 per Share in
cash, for an aggregate purchase price of $1,999,998.
On July 11, 1997, the Company commenced a tender offer (the "Tender
Offer"), pursuant to which it offered to purchase up to 2,857,142 Shares at a
price of $38.50 per Share in cash. The Tender Offer expired on August 12, 1997.
Upon the expiration of the Tender Offer 2,857,142 Shares had been tendered in
the Tender Offer and the Company purchased all of the Shares tendered in the
Tender Offer. The purchase of Shares tendered in the Tender Offer was paid for
from the proceeds of the issuance and sale of the Old Notes.
The net proceeds from the offer and sale of the Old Notes (the "Offering")
were approximately $145.9 million. The Company used the net proceeds from the
Offering to fund the purchase of Shares tendered in the
4
<PAGE> 9
Tender Offer, repay loans under the New Credit Facility, pay fees and expenses
of the Transactions and for general corporate purposes.
SOURCES AND USES OF FUNDS IN THE TRANSACTIONS
<TABLE>
<CAPTION>
SOURCES OF FUNDS ($ IN MILLIONS) USES OF FUNDS ($ IN MILLIONS)
--------------------------------- ---------------------------------
<S> <C> <C> <C>
Refinancing of Old Credit
New Credit Facility.............. $140 Facility......................... $168
Repurchase of Shares from Water
Rolodex Proceeds................. 110(1) Street and Mr. Smialek......... 110(1)
Subordinated Notes............... 150 Tender Offer..................... 110
----
Transaction Fees and Expenses.... 12
----
TOTAL SOURCES.................... $400 TOTAL USES....................... $400
==== ====
</TABLE>
- ---------------
(1) The Rolodex Proceeds were used to fund the July 10, 1997 purchase of Shares
from Water Street and Mr. Smialek.
Upon giving effect to the Transactions on a pro forma basis, the Company's
interest coverage ratio (defined to be the ratio of EBITDA to net interest) was
2.2x for the 12-month period ended June 30, 1997. The Board of Directors of the
Company believes that the Company's financial condition and outlook for cash
generation will enable it to raise sufficient funds to maintain existing assets
and undertake reasonable investments in new growth, while permitting the Company
to meet its obligations as they become due.
BUSINESS STRATEGY
Since 1993 Insilco's new management team has implemented the following
strategies to enhance sales growth, improve the operations of its continuing
businesses, and increase operating cash flow:
REFINE MANAGEMENT FOCUS -- CORE BUSINESSES. Prior to 1993 Insilco operated
a number of diverse businesses including paint products, office products,
computer accessories, automotive components, electrical and electronics
components, and specialty publishing. The new management team decided to
streamline the Company's operations and focus on developing those core
industrial businesses where it perceived the greatest opportunity for sales
growth, operating performance improvements, and return on invested capital.
In executing this strategy, the Company has divested its paint products,
computer accessories and office products businesses, and made significant
investments in the remaining businesses. The Company has increased its capital
spending in those businesses, added management expertise and made selective
acquisitions to take advantage of identified growth trends in automotive heat
exchangers.
The Company intends to continue to refine the focus of its business
segments and pursue market leadership positions in targeted automotive and
industrial components markets.
PRODUCT DIFFERENTIATION. The Company's businesses typically manufacture
specialized or custom-designed products. Management believes that the Company's
strength lies in the manufacture and sale of value-added products. Although that
value-added component may vary among its businesses (and may be obtained in a
variety of ways, through a product's design, engineering, tooling, assembly,
service or distribution), Insilco believes that this strategy allows it to avoid
commodity markets, differentiate its products from those of its competitors and
earn attractive margins.
INVEST IN CORE BUSINESSES. To capitalize on emerging trends and growth
opportunities in targeted markets, Insilco has substantially increased capital
spending and investment in recent years. One example (in addition to the
acquisition of the Lingemann Business), was the Company's purchase of automated
brazing equipment to produce aluminum aftermarket heat exchangers. These
investments were made to capitalize on the worldwide shift from copper/brass
heat exchangers to lighter-weight more fuel-efficient aluminum heat exchangers.
5
<PAGE> 10
The Company has increased capital spending in its businesses, with such
investments targeted at enhancing productivity, increasing necessary capacity,
accelerating research and development of new products and building engineering
capabilities. After giving effect to the divestiture of the Office Products
Business, capital spending has increased from $12 million in 1992 to $20 million
in 1996. Taylor recently completed a major multi-year investment to automate the
prepress operation using digital technology. Capital was appropriated for
Stewart Connector to develop and tool new high-speed data-grade connector
products, expand capacity and automate production. Steel Parts has made
significant investments in production equipment to improve productivity and
product quality to meet the requirements of its primary customer, Ford Motor
Company ("Ford"). As a result of these investments, Steel Parts has been able to
solidify its position as Ford's primary source of conventionally stamped
transmission clutch plates.
Insilco has invested in new computer and business systems, made significant
investments in automation equipment to reduce costs and improve productivity,
and implemented "kaizen" training programs to instill a continuous productivity
philosophy in its operations. Many of Insilco's businesses have achieved or are
pursuing ISO 9000 certification to ensure consistent quality of products and
reduce defects.
As a result in part of these investments and productivity initiatives, the
Company's EBITDA as a percent of sales (after giving effect to the divested
Office Products Business), has improved from 10.7% in 1992 to 12.9% in 1996.
SEEK REVENUE GROWTH. Sales have increased from $370 million in 1992 to
$492 million in 1996 (after giving effect to the divestiture of the Office
Products Business) representing a 7.4% compound annual rate of growth. The
Company has sought to obtain revenue growth through acquisitions, market
penetration and expansion, geographic expansion, and the development and
introduction of new products.
Selective Acquisitions. The Company completed two automotive
acquisitions in 1996, which, in the aggregate, added approximately $35
million in annualized sales on a pro forma basis. Subject to limitations
under the New Credit Facility, the Company intends to pursue acquisitions
that complement existing businesses and provide attractive returns on
investment.
Market Penetration and Expansion. Insilco intends to increase market
share and expand into new markets by implementing new sales strategies and
entering new sales and distribution channels. Most notably, the
Technologies Group has developed a unified marketing program to cross-sell
the products of its four businesses, Signal Transformer has established a
new sales representative network, and Taylor has adopted various incentive
programs to attract larger accounts and increase penetration in existing
accounts.
Geographic Expansion. Insilco's sales have historically been
concentrated in the United States. After giving effect to the divestiture
of the Office Products Business, domestic sales accounted for approximately
86% of 1996 sales. The Company seeks to expand its sales, marketing and
manufacturing efforts into new geographic markets. To further this strategy
the Company in 1996 acquired the Lingemann Business, which is primarily a
European manufacturer; and recently entered into a joint venture with a
Chinese locomotive research institute to develop and market new heat
exchanger products for the growing Chinese rail industry. In 1996, the
Company expanded a small connector operation in Mexico to provide cable
assemblies to a large telecommunications customer. The Company also opened
a new precision stampings facility in El Paso, Texas to capitalize on the
growing base of low-cost OEM production facilities in the southwestern
United States and Mexico.
New Product Introductions. The Company has invested in upgrading its
research and development and product engineering capabilities so as both to
increase the number of new products and to speed their time to market. As a
supplier to the computer networking, telecommunications and automotive
industries, which are undergoing rapid change, the Company believes the
investment will provide additional revenue growth opportunities. The
Company's connector business has made significant investments in new
technology and equipment to develop new connectors that meet the
ever-increasing demand for faster data transmission without compromising
the integrity of the transmission. The Company also recently funded an
automotive technical research and development facility and staffed it
6
<PAGE> 11
with engineering and design personnel to develop new products and
applications in the growing heat exchanger market.
ENHANCE CASH FLOW FROM OPERATIONS. A major objective for the new
management team has been to improve cash flow from operations. Through a
concentrated effort to improve productivity and better manage working capital,
cash flow from operations (after giving effect to the divestiture of the Office
Products Business) increased from $25 million in 1993 to $46 million in 1996.
The strong cash flow from the Company's business units, coupled with the
divestitures and sales of other idle assets, allowed the Company to reduce
outstanding debt, net of cash, from $254 million at December 31, 1993 to $59
million, at June 30, 1997, despite the significantly higher level of capital
spending, stock repurchases totaling $11 million, and two acquisitions totaling
$38 million. The Company intends to continue to focus on enhancing cash flow
from operations, and expects that recently implemented manufacturing and
financial information systems will enable more efficient working capital
management.
7
<PAGE> 12
THE OFFERING
On August 12, 1997, the Company consummated the Offering. The net proceeds
of the Offering were used to fund the purchase of Shares tendered in the Tender
Offer, repay loans under the Company's New Credit Facility, pay fees and
expenses related to the Transactions and for general corporate purposes. See
"Prospectus Summary -- The Transactions" and "Use of Proceeds."
The Old Notes.............. The Old Notes were sold by the Company on August
12, 1997 to the Initial Purchasers pursuant to the
Purchase Agreement. The Initial Purchasers
subsequently resold the Old Notes to qualified
institutional buyers pursuant to Rule 144A under
the Securities Act ("Rule 144A") and to non-U.S.
persons outside the United States in reliance on
Regulation S under the Securities Act.
Registration Rights
Agreement.................. Pursuant to the Purchase Agreement, the Company and
the Initial Purchasers entered into the
Registration Rights Agreement, which granted the
holders of the Old Notes certain exchange and
registration rights. The Exchange Offer is being
made pursuant to the Registration Rights Agreement
and is intended to satisfy such rights.
THE EXCHANGE OFFER
Securities Offered......... $150,000,000 aggregate principal amount of the
Company's 10 1/4% Senior Subordinated Notes due
2007.
The Exchange Offer......... Pursuant to the Exchange Offer, U.S. $1,000
principal amount of New Notes will be issued in
exchange for each U.S. $1,000 principal amount of
Old Notes that are validly tendered and not
withdrawn. On the date hereof, U.S. $150,000,000
aggregate principal amount of Old Notes were
outstanding. See "The Exchange Offer."
The Exchange Offer is not being made to, nor will
the Company accept surrenders of Old Notes for
exchange from, holders thereof in any jurisdiction
in which the Exchange Offer or the acceptance
thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
Holders of Old Notes whose Old Notes are not
tendered and accepted in the Exchange Offer will
continue to hold such Old Notes and will be
entitled to all the rights and preferences thereof
and will be subject to the limitations applicable
thereto under the Indenture, dated as of August 12,
1997 (the "Indenture") between the Company and The
Bank of New York, as Trustee, governing the Old
Notes and the New Notes. Following consummation of
the Exchange Offer, the holders of Old Notes will
continue to be subject to the existing restrictions
upon transfer thereof, and the Company will have no
further obligation to such holders to provide for
the registration under the Securities Act of the
Old Notes held by them. Following the completion of
the Exchange Offer, none of the Old Notes will be
entitled to the contingent increase in interest
rate provided pursuant to the Indenture and the Old
Notes.
Resales.................... Based on interpretations by the staff of the
Division of Corporation Finance of the Commission
set forth in no-action letters issued to third
parties, the Company believes the New Notes issued
pursuant to the Exchange Offer in exchange for Old
Notes may be offered for resale, resold and
otherwise transferred by any holder thereof (other
than
8
<PAGE> 13
broker-dealers, as set forth below, and any such
holder that is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act)
without compliance with the registration and
prospectus delivery provisions of the Securities
Act, provided that such New Notes are acquired in
the ordinary course of such holder's business and
that such holder is not participating, does not
intend to participate, and has no arrangement or
understanding with any person to participate, in
the distribution (within the meaning of the
Securities Act) of such New Notes. Any holder who
tenders in the Exchange Offer with the intention to
participate, or for the purpose of participating,
in a distribution of the New Notes may not rely
upon such interpretations by the staff of the
Division of Corporation Finance of the Commission
as set forth in these no-action letters and, in the
absence of an exemption therefrom, must comply with
the registration and prospectus delivery
requirements of the Securities Act in connection
with any secondary resale transaction, and any such
secondary resale transaction must be covered by an
effective registration statement containing the
selling securityholder information required by Item
507 of Regulation S-K under the Securities Act.
Holders of Old Notes wishing to accept the Exchange
Offer must represent to the Company in the Letter
of Transmittal that such conditions have been met.
Failure to comply with such requirements in such
instance may result in such holder incurring
liabilities under the Securities Act for which the
holder is not indemnified by the Company. Each
broker-dealer (other than an affiliate of the
Company) that receives New Notes for its own
account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The
Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales
of New Notes received in exchange for Old Notes
where such Old Notes were acquired by such
broker-dealer as a result of market-making
activities or other trading activities. The Company
has agreed that, for a period of 90 days after the
Expiration Date, it will make this Prospectus
available to any broker-dealer for use in
connection with any such resale. Any broker-dealer
who is an affiliate of the Company may not
participate in the Exchange Offer and may not rely
on the no-action letters referred to above and must
comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with a secondary resale transaction. See
"The Exchange Offer -- Purpose and Effect of the
Exchange Offer" and "Plan of Distribution."
Expiration Date............ The Exchange Offer will expire at 5:00 p.m., New
York City time, on [ ], 1997, unless
extended, in which case the term "Expiration Date"
shall mean the latest date and time to which the
Exchange Offer is extended. Any extension, if made,
will be publicly announced through a release to PR
Newswire and as otherwise required by applicable
law or regulations.
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain
conditions, which may be waived by the Company. See
"The Exchange Offer -- Conditions of the
9
<PAGE> 14
Exchange Offer." The Exchange Offer is not
conditioned upon any minimum principal amount of
Old Notes being tendered for exchange.
The Company reserves the right, in its discretion,
(i) to delay accepting any Old Notes, to extend the
Exchange Offer or to terminate the Exchange Offer
if any of the conditions set forth below under "The
Exchange Offer -- Terms of the Exchange
Offer -- Conditions of the Exchange Offer" shall
not have been satisfied in the good faith
determination of the Company, by giving oral or
written notice of such delay, extension or
termination to the Exchange Agent and (ii) to amend
the terms of the Exchange Offer in any manner. See
"-- The Exchange Offer -- Terms of the Exchange
Offer Expiration Date; Extensions; Amendments."
Procedures for Tendering
Old Notes.................. Each holder of Old Notes wishing to tender their
Old Notes pursuant to the Exchange Offer must (i)
complete, sign and date the Letter of Transmittal,
or a facsimile thereof, in accordance with the
instructions contained herein and therein, and mail
or otherwise deliver such Letter of Transmittal, or
a facsimile thereof, together with such Old Notes
and any other required documentation to The Bank of
New York, as exchange agent (the "Exchange Agent"),
at the address set forth herein and therein on or
prior to the Expiration Date (or complying with the
procedure for book-entry transfer) or (ii) comply
with the guaranteed delivery procedures. By
executing a Letter of Transmittal, a holder will
represent to the Company that, among other things,
the New Notes acquired pursuant to the Exchange
Offer are being obtained in the ordinary course of
business of the person receiving such New Notes,
whether or not such person is the holder, that
neither the holder nor any such other person has an
arrangement or understanding with any person to
participate in the distribution of such Notes, if
the holder is not a broker-dealer, or if such
holder is a broker-dealer but such holder will not
receive New Notes for its own account in exchange
for Old Notes, neither the holder nor any such
other person is engaged in or intends to
participate in the distribution of such New Notes
and that neither the holder nor any such other
person is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act. See
"The Exchange Offer -- Terms of the Exchange
Offer -- Procedures for Tendering Old Notes" and
"The Exchange Offer -- Terms of the Exchange
Offer -- Guaranteed Delivery Procedures."
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Old Notes are registered
in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender such Old Notes in the Exchange Offer should
contact such registered holder promptly and
instruct such registered holder to tender on such
beneficial owner's behalf. If such beneficial owner
wishes to tender on his or her own behalf, such
owner must, prior to completing and executing the
Letter of Transmittal and delivering his or her Old
Notes, either make appropriate arrangements to
register ownership of the Old Notes in such owner's
name or obtain a properly completed bond power from
the registered holder. The transfer of registered
ownership may take considerable time and may not be
able to
10
<PAGE> 15
be completed prior to the Expiration Date. See "The
Exchange Offer -- Terms of the Exchange
Offer -- Procedures for Tendering Old Notes."
Guaranteed Delivery
Procedures................. Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes,
the Letter of Transmittal or any other documents
required by such Letter of Transmittal to the
Exchange Agent prior to the Expiration Date, must
tender their Old Notes according to the guaranteed
delivery procedures set forth in "The Exchange
Offer -- Terms of the Exchange Offer -- Guaranteed
Delivery Procedures."
Acceptance of Old Notes and
Delivery of New Notes.... Subject to certain conditions (as described more
fully in "The Exchange Offer -- Terms of the
Exchange Offer -- Conditions of the Exchange
Offer"), the Company will accept for exchange any
and all Old Notes which are properly tendered in
the Exchange Offer and not withdrawn, prior to 5:00
p.m., New York City time, on the Expiration Date.
The New Notes issued pursuant to the Exchange Offer
will be delivered as promptly as practicable
following the Expiration Date.
Withdrawal Rights.......... Except as otherwise provided herein, tenders of Old
Notes may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
See "The Exchange Offer -- Terms of the Exchange
Offer -- Withdrawal of Tenders of Old Notes."
Taxation................... An exchange of Old Notes for New Notes should not
be taxable to holders. See "Certain Federal Income
Tax Consequences."
Use of Proceeds............ The Company will not receive any proceeds from the
New Notes offered hereby. See "Use of Proceeds."
Exchange Agent............. The Bank of New York is the Exchange Agent. The
address, telephone number and facsimile number of
the Exchange Agent are set forth in "The Exchange
Offer -- Exchange Agent."
SUMMARY OF TERMS OF THE NEW NOTES
General.................... The form and terms of the New Notes are the same as
the form and terms of the Old Notes (which they
replace) except that (i) the New Notes have been
registered under the Securities Act and, therefore,
will not contain terms or bear legends with respect
to transfer restrictions, (ii) the New Notes do not
include provisions providing for an increase in the
interest rate in certain circumstances relating to
the timing of the Exchange Offer and (iii) holders
of New Notes will not be entitled to certain rights
under the Registration Rights Agreement. The New
Notes will evidence the same debt as the Old Notes
and will be entitled to the benefits of the
Indenture. See "Description of New Notes."
Securities Offered......... $150,000,000 aggregate principal amount of the
Company's 10 1/4% Senior Subordinated Notes due
2007.
Maturity Date.............. August 15, 2007.
Interest Payment Dates..... February 15 and August 15 of each year, commencing
February 15, 1998.
Ranking.................... The New Notes will be unsecured and will rank
junior in right of payment to all existing and
future Senior Debt of the Company,
11
<PAGE> 16
including the New Credit Facility. The New Notes
will rank pari passu in right of payment with all
existing and future senior subordinated
indebtedness of the Company and senior to any other
subordinated indebtedness of the Company issued
after the Offering. See "Description of the New
Notes -- Subordination."
On the pro forma basis described herein, as of June
30, 1997, there was approximately $141.8 million of
Senior Debt of the Company outstanding. See
"Unaudited Pro Forma Condensed Consolidated
Financial Information." While the Indenture will
limit, subject to certain financial tests, the
amount of additional Debt (as defined in the
Indenture) that the Company and its Restricted
Subsidiaries (as defined in the Indenture) can
incur, the Indenture will not restrict the amount
of otherwise permissible indebtedness that may be
incurred as Senior Debt. See "Description of New
Notes -- Certain Covenants -- Limitation on
Consolidated Debt."
The New Notes will be effectively subordinated to
all existing and future Debt of the Company's
subsidiaries. The Company's domestic subsidiaries
have joint and several liability for (and have
pledged substantially all of their assets as
collateral for, and in certain cases guaranteed)
indebtedness under the New Credit Facility. See
"Risk Factors -- Subordination of the New Notes;
Other Indebtedness," "-- Structural Subordination"
and "-- Fraudulent Conveyance."
Optional Redemption........ The New Notes will not be redeemable prior to
August 15, 2002. On or after such date, the New
Notes will be subject to redemption, at the option
of the Company, in whole or in part, at any time
prior to maturity, at the redemption prices set
forth herein, plus accrued interest, if any, to the
date of redemption.
Change of Control.......... Subject to the provisions of the New Credit
Facility, upon the occurrence of a Change of
Control, each holder of the New Notes may require
the Company to repurchase the New Notes held by
such holder at 101% of the principal amount thereof
plus accrued interest, if any, to, but excluding,
the date of repurchase. See "Description of the
Notes -- Repurchase at the Option of
Holders -- Change of Control."
Restrictive Covenants...... The Indenture will restrict, among other things,
the ability of the Company and its Restricted
Subsidiaries (i) to incur additional Debt, (ii) to
pay dividends and make other distributions, (iii)
to have restrictions on the ability of any
Restricted Subsidiary to make dividend or other
payments to the Company or any other Restricted
Subsidiary, (iv) to sell assets and to use the
proceeds of asset sales, (v) to pledge assets, (vi)
to merge or consolidate with or transfer all or
substantially all of its assets to, or to acquire
the stock or assets of, another entity or (vii) to
engage in certain transactions with affiliates. All
of these restrictions, however, are subject to a
number of important qualifications. See
"Description of the New Notes -- Certain
Covenants."
Market..................... The New Notes constitute a new issue of securities
with no established trading market. The Company has
been advised by the Initial Purchasers that they
intend to make a market in the New Notes; however,
they are not obligated to do so and such
market-making activities could be terminated at any
time. There can be no assurance that an active
trading market for the New Notes will develop. It
is not expected that an active
12
<PAGE> 17
trading market for the Old Notes will develop while
they are subject to restrictions on transfer. See
"Risk Factors -- Absence of Public Market for the
New Notes; Volatility" and "-- Consequences of the
Exchange Offer on Non-Tendering Holders of the Old
Notes."
RISK FACTORS
Prospective investors should consider all of the information contained in
this Prospectus before making an investment in the New Notes. In particular,
prospective investors should carefully consider the factors set forth under
"Risk Factors."
13
<PAGE> 18
SUMMARY HISTORICAL AND PRO FORMA
CONSOLIDATED FINANCIAL AND OPERATING DATA
The summary historical consolidated financial data presented below as of
and for each of the years in the three year period ended December 31, 1996 are
derived from, and should be read in conjunction with, the Company's related
audited consolidated financial statements and accompanying notes included
elsewhere herein, which have been audited by KPMG Peat Marwick LLP, independent
certified public accountants (the "Consolidated Financial Statements"). The
Consolidated Financial Statements, and the report thereon, which is based
partially upon the report of other auditors, are included elsewhere in this
Prospectus.
The summary historical consolidated financial data presented below as of
and for the six months ended June 30, 1996 and 1997 are derived from unaudited
consolidated financial statements of the Company, which have been prepared by
management on the same basis as the audited consolidated financial statements of
the Company and, in the opinion of management of the Company, reflect all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement for such periods. Operating results for the six-month periods
ended June 30, 1996 and 1997 are not necessarily indicative of results that may
be expected for any other interim period or for the full year.
The unaudited pro forma consolidated financial data of the Company and its
subsidiaries for the year ended December 31, 1996 and for the six months ended
June 30, 1996 and 1997 are based on historical information that has been
adjusted to reflect significant acquisitions and divestitures that have occurred
during the respective periods and the Transactions. The income statement data
give effect to the following transactions as if all had occurred at the
beginning of each period presented: (i) the sale of the Rolodex Business; (ii)
the Company's purchase of 2,805,194 Shares from Water Street and 51,948 Shares
from Robert L. Smialek, the President and Chairman of the Board of the Company,
at a price of $38.50 per Share; (iii) the Company's purchase of 2,857,142 Shares
at a price of $38.50 per Share pursuant to the Tender Offer; (iv) the closing of
the New Credit Facility (including advances to refinance in full the Old Credit
Facility) and (v) the issuance and sale of $150 million aggregate principal
amount of the Old Notes. In addition, the income statement data for the year
ended December 31, 1996 and the six months ended June 30, 1996 have been
adjusted to reflect (i) the divestiture of Rolodex Electronics; (ii) the
divestiture of Curtis and (iii) the acquisition of the Lingemann Business, as if
all had occurred at the beginning of the periods presented. These divestitures
and the acquisition actually occurred in the third and fourth quarters of 1996.
The balance sheet data give effect to the aforementioned transactions as if all
had occurred as of the date of the respective balance sheets (except any
acquisitions or divestitures that occurred prior to the respective balance sheet
dates are included in the respective balance sheet data as of the date of the
actual sale or purchase). The nonrecurring transactions directly related to the
aforementioned transactions are excluded from the pro forma summary statements
of income. The summary pro forma consolidated financial data should be read in
conjunction with the accompanying notes thereto and the financial statements and
related notes set forth herein. The summary pro forma consolidated financial
data are based on certain assumptions and estimates, and therefore do not
purport to be indicative of the results that would actually have been obtained
had the transactions been completed as of such dates or indicative of future
results of operations and financial position.
14
<PAGE> 19
The following table sets forth summary historical and pro forma
consolidated financial and operating data (dollars in thousands, except per
Share and ratio data) derived from the Company's Consolidated Financial
Statements.
<TABLE>
<CAPTION>
PRO FORMA
------------------------------
SIX MONTHS ENDED YEAR SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30, ENDED JUNE 30,
---------------------------- ----------------- DEC. 31, -------------------
1994 1995 1996 1996 1997 1996 1996 1997
-------- ------- ------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS DATA
Sales (net)(1).............. $543,630 561,203 572,474 300,497 287,012 507,140 269,454 276,215
Operating income
(loss)(2)................. (9,699) 24,617 59,101 32,885 30,967 46,694 26,781 28,801
Other income (expense):
Interest expense.......... (29,113) (19,546) (18,386) (9,400) (7,762) (32,216) (16,722) (14,880)
Interest income........... 1,842 1,577 1,010 460 2,078 724 372 228
Other income, net(3)...... 2,663 12,126 10,138 3,104 96,617 7,706 3,120 1,615
Income (loss) from
continuing operations
before income taxes and
extraordinary items....... (34,307) 18,774 51,863 27,049 121,900 22,908 13,551 15,764
Income tax expense.......... (8,585) (16,199) (12,810) (9,098) (47,374) (6,896) (4,607) (5,874)
-------- ------- ------- ------- ------- -------- -------- --------
Income (loss) from
continuing operations
before extraordinary
items..................... (42,892) 2,575 39,053 17,951 74,526 16,012 8,944 9,890
Income from discontinued
operations, net of tax.... 12,914 -- -- -- -- -- -- --
-------- ------- ------- ------- ------- -------- -------- --------
Income (loss) before
extraordinary items....... (29,978) 2,575 39,053 17,951 74,526 16,012 8,944 9,890
Extraordinary items, net of
tax....................... (2,156) -- -- -- -- -- -- --
-------- ------- ------- ------- ------- -------- -------- --------
Net income (loss)........... $(32,134) 2,575 39,053 17,951 74,526 16,012 8,944 9,890
======== ======= ======= ======= ======= ======== ======== ========
BALANCE SHEET DATA AT PERIOD END
Working capital............. $ 33,915 44,920 47,956 71,156 144,970 30,583 60,131 60,183
Total assets................ 368,669 340,129 352,000 345,644 423,211 306,656 320,054 321,560
Long-term debt.............. 198,109 186,489 161,042 193,381 169,820 283,042 327,231 291,820
Other long-term
liabilities............... 59,117 53,612 47,337 50,660 44,348 47,337 51,914 44,348
Stockholders' equity
(deficit)................. (13,451) (15,779) 33,402 2,291 108,462 (130,162) (156,140) (113,976)
PER SHARE DATA
Income (loss) per share from
continuing operations..... $ (4.42) 0.25 3.95 1.81 7.55 3.83 2.13 2.38
OTHER DATA
Depreciation and
amortization.............. $ 13,570 14,758 16,831 8,087 9,798 17,139 8,799 9,604
Amortization of
Reorganization Goodwill... 69,217 32,172 -- -- -- -- -- --
Capital expenditures........ 19,163 22,159 22,579 9,266 10,315 20,009 8,113 10,322
EBITDA(4)................... 73,088 71,547 75,932 40,972 40,765 63,833 35,580 38,405
EBITDA to net interest...... NA NA NA NA NA 2.0x 2.2x 2.6x
</TABLE>
See accompanying notes to the summary historical and pro forma consolidated
financial and operating data.
15
<PAGE> 20
THE NOTES TO THE SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL AND
OPERATING DATA FOLLOW:
- ---------------
(1) Sales of the divested Office Products Business are included in the
consolidated results as follows: 1994, $105.2 million; 1995, $111.7 million;
1996, $80.1 million; the six months ended June 30, 1996, $45.8 million; and
the six months ended June 30, 1997, $10.8 million. Pro forma sales for the
respective periods exclude sales of the Office Products Business as if the
business was divested at the beginning of the periods presented.
Sales in 1996 and for the six months ended June 30, 1997 include sales of
$13.2 million and $15.3 million, respectively, of the Lingemann Business
which was acquired on July 10, 1996. Pro forma sales for the six months
ended June 30, 1996 and the year ended December 31, 1996 include $14.7
million and $27.9 million, respectively, of sales of the Lingemann Business
as if the business was acquired at the beginning of the periods presented.
See "Unaudited Pro Forma Condensed Consolidated Financial Information" for
further information regarding acquisitions and divestitures.
(2) Operating income for the Office Products Business, before the allocation of
corporate overhead, is included in the consolidated results as follows:
1994, $15.2 million; 1995, $1.7 million; 1996, $10.7 million; the six months
ended June 30, 1996, $4.4 million; and the six months ended June 30, 1997,
$2.2 million. Pro forma operating income for the respective periods excludes
operating income, before allocation of corporate overhead, of the Office
Products Business as if the business was divested at the beginning of the
periods presented.
Operating income in 1996 and for the six months ended June 30, 1997 includes
operating income, before allocation of corporate overhead, of $0.1 million
and $0.3 million, respectively, of the Lingemann Business. Pro forma
operating income for the six months ended June 30, 1996 and the year ended
December 31, 1996 includes $1.7 million and $1.6 million, respectively, of
operating loss of the Lingemann Business as if the business was acquired at
the beginning of the year.
Operating income in 1994 and 1995 includes the deduction for the
amortization of the Company's reorganization value over the aggregate fair
value of its tangible and identified intangible assets at March 31, 1993
("Reorganization Goodwill").
Operating income in 1995 includes a nonrecurring charge of $6.2 million
relating to the Office Products Business (see Note 15 to the Consolidated
Financial Statements) and a gain of $4.3 million related to a change in the
Company's pension plan (see Note 10 to the Consolidated Financial
Statements).
(3) Other income in 1994 included a $1.2 million gain related to the collection
of notes receivable in excess of their financial statement carrying amount.
Other income in 1995 included favorable adjustments of $3.6 million related
to the Company's environmental liabilities, $1.5 million related to the
resolution of several legal disputes and a $4.0 million gain on the sale of
idle corporate assets. Other income in 1996 included a fourth quarter $3.1
million gain on the sale of Rolodex Electronics and a third quarter $2.2
million adjustment related to the satisfaction of certain of the Company's
environmental liabilities, following completion of a site clean-up for an
amount less than previously estimated. Other income in the six months ended
June 30, 1997 includes a $95.0 million gain on the sale of the Rolodex
Business.
(4) "EBITDA" represents net income before net interest expense, income taxes,
depreciation and amortization, and other income (expense), net. EBITDA is
not intended to represent and should not be considered more meaningful than,
or an alternative to, net income, cash flow or other measures of performance
in accordance with generally accepted accounting principles. EBITDA data is
included because the Company understands that such information is used by
certain investors as one measure of an issuer's historical ability to
service debt.
This summary historical and pro forma consolidated financial and operating
data should also be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
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<PAGE> 21
RISK FACTORS
Before investing in the New Notes, prospective investors should consider
carefully all the information set forth elsewhere in this Prospectus and should
particularly consider the following matters.
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE DEBT
Since the consummation of the Transactions, the Company has had substantial
indebtedness with significant debt service requirements and is highly leveraged.
As of June 30, 1997, on a pro forma basis after giving effect to the
Transactions, the Company's consolidated debt was approximately $291.8 million
and stockholders' deficit was $114.0 million.
The degree to which the Company is leveraged will have important
consequences to holders of the Notes, including the following: (i) the ability
of the Company to obtain additional financing in the future, whether for working
capital, capital expenditures, acquisitions or other purposes, may be impaired,
(ii) a substantial portion of the Company's cash flow from operations is
required to be dedicated to the payment of interest and, under certain
circumstances, principal on amounts due under the New Credit Facility, thereby
reducing funds available to the Company for other purposes, (iii) the Company's
flexibility in planning for or reacting to changes in market conditions may be
limited, (iv) the Company may be more vulnerable in the event of a downturn in
its business, and (v) to the extent the Company's outstanding debt under the New
Credit Facility is at variable rates of interest that have not been hedged, the
Company will be vulnerable to increases in interest rates. See "Capitalization"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
The Company's ability to make scheduled principal payments on, or to pay
interest on, or to refinance its indebtedness (including the Notes) depends on
its future performance which, to a certain extent, is subject to general
economic, financial, competitive, legislative, regulatory and other factors
beyond its control. Based upon the Company's current level of operations and
anticipated growth, the management of the Company believes that available cash
flow, together with available borrowing under the New Credit Facility, and other
sources of liquidity, will be adequate to meet the Company's anticipated future
requirements for working capital, letters of credit, capital expenditures and
scheduled payments of interest and, under certain circumstances, principal on
amounts due under the New Credit Facility, other Senior Debt and interest on the
Notes. However, there can be no assurance that Company's businesses will
generate sufficient cash flow from operations or that future financing will be
available in an amount sufficient to enable the Company to service its
indebtedness, including the Notes, or to make necessary capital expenditures, or
that any refinancing would be available, or available on commercially reasonable
terms. Further, depending on the timing, amount and structure of any future
acquisitions and the availability of funds for acquisitions under the New Credit
Facility, the Company may need to raise additional capital to fund the
acquisitions of additional businesses. There can be no assurance that the
Company will be able to secure such additional funding on favorable terms, if at
all.
RESTRICTIONS IMPOSED BY THE NEW CREDIT FACILITY
The New Credit Facility, among other things, restricts the ability of the
Company and its subsidiaries, subject to a number of qualifications, to dispose
of assets, incur additional indebtedness, incur liens on property or assets,
repay other indebtedness, enter into accommodation obligations, pay dividends,
enter into certain investments or transactions, repurchase or redeem capital
stock, engage in mergers or consolidations or engage in certain transactions
with subsidiaries and affiliates, and will otherwise restrict corporate
activities. There can be no assurance that such restrictions will not adversely
affect the Company's ability to finance its future operations or capital needs
or engage in other business activities that may be in the Company's interest. In
addition, the New Credit Facility also requires the Company to maintain
compliance with certain financial ratios. The Company's ability to comply with
such ratios may be affected by events beyond the Company's control. A breach of
any of these covenants or the inability of the Company to comply with the
required financial ratios could result in a default under the New Credit
Facility which could adversely affect payment of the New Notes. See "Description
of the New Credit Facility."
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<PAGE> 22
RISK OF ABILITY TO FINANCE CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be required to
make an offer to purchase all of the outstanding Notes at a price equal to 101%
of the principal amount thereof at the date of purchase plus accrued interest,
if any, to the date of purchase. The occurrence of a Change of Control would
constitute an event of default under the New Credit Facility and might
constitute a default under other indebtedness of the Company (if any). In
addition, the New Credit Facility will prohibit the purchase of the Notes by the
Company in the event of a Change of Control until the indebtedness under the New
Credit Facility is repaid in full. The Company's failure to purchase the Notes
upon a Change of Control would result in a default under the Indenture and thus
the New Credit Facility. The inability to repay the indebtedness under the New
Credit Facility, if accelerated, could have materially adverse consequences to
the Company and to the holders of the Notes. In the event of a Change of
Control, there can be no assurance that the Company would have sufficient assets
to satisfy all of its obligations under the New Credit Facility and the Notes.
Future Senior Debt of the Company may also contain prohibitions of certain
events or transactions that would constitute a Change of Control or require such
Senior Debt to be repurchased upon a Change of Control. See "Description of the
New Credit Facility" and "Description of the New Notes -- Change of Control."
CUSTOMER CONCENTRATION; ABSENCE OF LONG-TERM CONTRACTS
A significant portion of the Automotive Components Group's sales are made
to a relatively small group of major customers. In 1996, the Automotive
Components Group made approximately 24% of its sales to Ford and 18% of its
sales to a group of nine other customers. The current size of the Company's
automotive customer base exposes the Company to the risk of changes in the
business condition of its major customers and to the risk that the loss of a
major customer could adversely affect the Company's results of operations.
The Company's wholly owned subsidiary, Steel Parts Corporation ("Steel
Parts"), manufactures stamped transmission and suspension parts for the
automotive market. Steel Parts accounted for 30% of the Automotive Components
Group's sales in 1996. Over 70% of Steel Parts' sales were made to Ford. While
Steel Parts has supplied Ford for over 20 years, Ford is not contractually bound
to purchase supplies from Steel Parts in the future. Thus, Steel Parts'
relationship with Ford is subject to termination at any time. If Steel Parts
were to lose Ford as a customer, the Company's results of operations would be
adversely affected.
CYCLICAL MARKETS
A substantial portion of the Company's revenues derive from sales to
markets that have been historically, and are likely to continue to be, cyclical.
For example, the Company's Automotive Components Group, which accounted for
approximately 37% of the Company's total sales and 40% of its operating income
for the year ended December 31, 1996, primarily serves the automobile OEM market
and the automobile parts aftermarket through the manufacture of automotive heat
exchangers and related tubing, and automatic transmission and suspension
components. The automobile industry has experienced recessionary or slow growth
conditions for substantial periods in the past and may experience recessionary
conditions in the future. Any substantial weakening of the automobile industry
could have an adverse effect on the Company's results of operations.
SEASONALITY; PRODUCTION DISRUPTION
In certain of the Company's businesses in which there is high customer
concentration or high production seasonality, the Company would be exposed to
potentially significant revenue losses if it (or its customers) were to
experience substantial disruption in production. With the continued emphasis on
reductions in component inventories and "just-in-time" deliveries, especially in
the automotive industry, any disruption in production by the Company or its
major customers, through work stoppages or otherwise, could have an immediate
and adverse effect on the Company's results of operations.
Additionally, a portion of the Company's revenues are exposed to the
seasonality of the yearbook production cycle. Most of the annual revenues of
Taylor are recognized in the Company's second quarter. Any disruption during the
peak production period (April to June), through work stoppages or otherwise,
could
18
<PAGE> 23
cause lost revenues or delay revenue recognition in the year in which it
occurred and would likely have an adverse effect on future years' contract
renewals. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
COMPETITION
The businesses in which the Company is engaged are highly competitive and
in some cases highly fragmented, with many small manufacturers. In some of its
businesses, especially the data grade connector business and the heat exchanger
business, the Company competes with entities having significantly more
resources. In other businesses, especially Taylor, the Company competes with
entities that have a greater share of the relevant market. As competition
increases, profit margins on some of the Company's significant business lines
could decrease, and in the more fragmented markets consolidation could occur
resulting in the creation of larger and financially stronger competitors. The
Company believes that, to remain competitive and maintain or increase its
profitability, it must pursue a strategy focusing on growth and product
innovation. However, the Company's competitors can be expected to continue to
seek their own growth, to improve the design and performance of their products,
to reduce costs of existing competitive products and to introduce new products
with competitive price and performance characteristics. Although the Company
believes that, with respect to most of its businesses, it has certain
technological, manufacturing or other advantages over its competitors,
maintaining these advantages will require continued investment by the Company in
research and development, sales and marketing, productivity improvements and
information systems. There can be no assurance that the Company will have
sufficient resources to continue to make such investments or that the Company
will be able to maintain its existing competitive advantages.
TECHNOLOGY AND THE DEVELOPMENT OF NEW PRODUCTS
The markets for many of the Company's products, particularly the products
produced by Stewart Connector, are characterized by technological change,
evolving industry standards, frequent new product introductions and product
enhancements. Many of the Company's products require significant planning,
design, development and testing at the technological, product and manufacturing
process levels. In addition, the introduction of new products and technologies
may render existing or proposed products noncompetitive. There can be no
assurance that any of the products currently being developed by the Company, or
those to be developed in the future, will be technologically feasible or
accepted by the marketplace, that any such development will be completed in any
particular time frame or that the Company's products or proprietary technologies
will not become uncompetitive or obsolete.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant extent upon the services of
its senior management and other management in its various businesses. The
Company could be adversely affected if any of these persons were unwilling or
unable to continue in the Company's employ.
CONTROL BY SIGNIFICANT SHAREHOLDER
At September 22, 1997 Water Street owned approximately 45% of the
outstanding Shares. Consequently, Water Street, through its general partner,
Goldman Sachs, will retain effective control of the Company.
FRAUDULENT CONVEYANCE
The incurrence by the Company of indebtedness under the Notes to fund the
Tender Offer could be subject to review under relevant federal and state
fraudulent transfer or conveyance laws in a bankruptcy case involving, or a
lawsuit commenced by or on behalf of unpaid creditors of, the Company. If a
court were to find under such laws that (i) at the time the Notes were issued
the Company had incurred the indebtedness under the Notes with the intent of
delaying or defrauding creditors, or (ii) the Company received less than
reasonably equivalent value or fair consideration for the Notes and (x) was
insolvent or rendered insolvent by reason of such transaction, (y) was engaged
in a business or transaction for which the assets remaining with
19
<PAGE> 24
the Company constituted unreasonably small capital or (z) intended to incur, or
believed that it would incur, debts that it would be unable to pay when due,
such court could subordinate the Notes to present or future indebtedness of the
Company, void the issuance of some or all of the indebtedness under the Notes,
direct any amounts paid under the Notes to be repaid to the Company or applied
to a fund for the benefit of the Company's creditors or take other action that
would be detrimental to the holders of the Notes.
The Company believes that the indebtedness represented by the Notes is
being incurred for proper purposes and in good faith, that the Company is
receiving reasonably equivalent value or fair consideration for incurring such
indebtedness, that the Company was, is and will be solvent under the foregoing
standards and that it had, has and will have sufficient capital for carrying on
its business and was, is, and will be able to pay its debts as they mature.
There can be no assurance, however, that a court would reach the same
conclusions.
SUBORDINATION OF THE NOTES; OTHER INDEBTEDNESS
The Notes will be subordinated to all existing and future Senior Debt of
the Company, including the New Credit Facility. As of June 30, 1997, after
giving pro forma effect to the Transactions, approximately $141.8 million would
have been outstanding under the New Credit Facility and available borrowings
thereunder (exclusive of approximately $10 million in outstanding standby
letters of credit) would have been approximately $50 million. Indebtedness under
the New Credit Facility must be repaid in whole or in part under certain
circumstances, and in some cases the available commitments thereunder would be
reduced. Commencing on the third anniversary of the New Credit Facility and each
succeeding anniversary thereafter, through its term, the revolving credit
commitments are scheduled to be reduced by $20 million per year with the result
that any aggregate outstanding indebtedness under the New Credit Facility at
such time in excess of the amount of the then current revolving credit
commitments must be repaid. The New Credit Facility is guaranteed on a joint and
several basis by the Company's wholly owned domestic subsidiaries, with certain
exceptions (the "Guarantors"), and has been secured by substantially all of the
assets of the Company and the Guarantors, including the intellectual property,
accounts receivable, inventories, equipment and real property of the Company and
its domestic subsidiaries and the stock of substantially all of its domestic
subsidiaries. In the event of any default, the lenders under the New Credit
Facility could elect to declare all borrowings outstanding under the New Credit
Facility, together with accrued interest and fees, to be due and payable and to
require the Company to apply all of its available cash to repay such
indebtedness and to prevent the Company from making payments on the Notes. If
the Company were unable to repay any such indebtedness when due, such lenders
could proceed against their collateral. In that event, it is unlikely that the
value of any remaining assets of the Company would be sufficient to repay the
Notes. See "Description of the New Notes" and "Description of the New Credit
Facility."
After giving effect to the Transactions, the Company expects to have
approximately $291.8 million of debt outstanding consisting primarily of the
Notes and the New Credit Facility. Furthermore, the Company and its subsidiaries
may in the future incur additional Senior Debt, secured debt and pari passu debt
and may pledge collateral to secure existing or future debt, subject to the
terms of the New Credit Facility. The provisions of the Indenture would not
necessarily afford the holders of the Notes protection in the event of a highly
leveraged transaction involving the Company that may adversely affect the
holders of the Notes.
STRUCTURAL SUBORDINATION
The Notes are obligations exclusively of the Company. Since many of the
Company's operations are currently conducted through subsidiaries, the Company's
cash flow and its ability to service its debt, including the Notes, is dependent
upon the earnings of its subsidiaries and the distribution of those earnings to
the Company or upon loans or other payments of funds by those subsidiaries to
the Company.
The Notes are effectively subordinated in right of payment to all existing
and future debt and liabilities of the Company's subsidiaries. A substantial
portion of the Company's assets consists of investments in its subsidiaries
(including intercompany secured notes, which have been pledged as security under
the New Credit Facility). The Company's rights, and the rights of its creditors
(including holders of the Notes), to participate in the distribution of any
subsidiary's assets upon such subsidiary's liquidation or reorganization
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<PAGE> 25
will be subject to the prior claims of such subsidiary's creditors, except to
the extent that the Company is itself recognized as a creditor or a secured
creditor of such subsidiary, in which case the claims of the Company would still
be subject to the claims of any secured creditor or prior secured creditor of
such subsidiary and of any holder of such subsidiary's indebtedness senior to
that held by the Company. As of June 30, 1997, on a pro forma basis, the Company
had Senior Debt of approximately $141.8 million. The Company's domestic
subsidiaries have joint and several liability for (and have pledged
substantially all of their assets as collateral for, and in certain cases
guaranteed) indebtedness under the New Credit Facility.
ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES; VOLATILITY
The New Notes will constitute a new issue of securities with no established
trading market. The Company has been advised by the Initial Purchasers that
following completion of the Exchange Offer, the Initial Purchasers intend to
make a market in the New Notes. However, the Initial Purchasers are not
obligated to do so and any market-making activities with respect to the New
Notes may be discontinued at any time without notice. Accordingly, no assurance
can be given that an active public or other market will develop for the New
Notes or as to the liquidity of or the trading market for the New Notes. If a
trading market does not develop or is not maintained, holders of the New Notes
may experience difficulty in reselling the New Notes or may be unable to sell
them at all. If a market for the New Notes develops, any such market may cease
to continue at any time. In addition, if a market for the New Notes develops,
the market prices of the New Notes may be volatile. Factors such as fluctuations
in the Company's earnings and cash flow, the difference between the Company's
actual results and results expected by investors and analysts and economic
developments could cause the market prices of the New Notes to fluctuate
substantially.
CONSEQUENCES OF THE EXCHANGE OFFER ON NON-TENDERING HOLDERS OF THE OLD NOTES
In the event the Exchange Offer is consummated, the Company will not be
required to register any Old Notes not tendered and accepted in the Exchange
Offer. In such event, holders of Old Notes seeking liquidity in their investment
would have to rely on exemptions to the registration requirements under the
securities laws, including the Securities Act, since the Old Notes will continue
to be subject to certain restrictions on transfer. Following the Exchange Offer,
none of the Notes will be entitled to the contingent increase in interest rate
provided for (in the event of a failure to consummate the Exchange Offer in
accordance with the terms of the Registration Rights Agreement) pursuant to the
Indenture and the Old Notes.
USE OF PROCEEDS
The Company will not receive any proceeds from the issuance of the New
Notes offered hereby. The proceeds of the Offering were used to fund the
purchase of shares tendered in the Tender Offer, repay loans under the Company's
New Credit Facility, pay fees and expenses related to the Transactions and for
general corporate purposes.
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<PAGE> 26
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company on a historical basis as of June 30, 1997 and on a pro forma basis as of
such date to give effect to the Transactions as if the Transactions were
consummated on June 30, 1997. The following information (dollars in thousands)
should be read in conjunction with the Consolidated Financial Statements and the
Unaudited Pro Forma Condensed Consolidated Financial Information included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, JUNE 30, 1997
1997 PRO FORMA
--------- -------------
<S> <C> <C>
Current portion of long-term debt............................ $ 24,708 708
-------- ---------
Long-term debt:
Senior Bank Debt........................................... 143,692 139,692
The Notes.................................................. -- 150,000
Other...................................................... 1,420 1,420
-------- ---------
Total long-term debt.................................... 145,112 291,112
-------- ---------
Stockholders' equity (deficit)............................... 108,462 (113,976)
-------- ---------
Total capitalization......................................... $ 278,282 177,844
======== =========
</TABLE>
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<PAGE> 27
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Company on August 12, 1997 to the Initial
Purchasers in reliance on Section 4(2) of the Securities Act. The Initial
Purchasers offered and sold the Old Notes within the United States only to
"qualified institutional buyers" (as defined in Rule 144A) in compliance with
Rule 144A and outside the United States in compliance with Regulation S under
the Securities Act.
In connection with the sale of the Old Notes, the Company and the Initial
Purchasers entered into the Registration Rights Agreement, which requires the
Company (i) to cause the Old Notes to be registered under the Securities Act or
(ii) to file with the Commission a registration statement under the Securities
Act with respect to an issue of New Notes of the Company identical in all
material respects to the Old Notes and use its best efforts to cause such
registration statement to become effective under the Securities Act and, upon
the effectiveness of that registration statement, to offer to the holders of the
Old Notes the opportunity to exchange their Old Notes for a like principal
amount of New Notes, which will be issued without restrictive legends and which
may be reoffered and resold by the holder without restrictions or limitations
under the Securities Act. A copy of the Registration Rights Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. The Exchange Offer is being made pursuant to the Registration Rights
Agreement to satisfy the Company's obligations thereunder with regard to the Old
Notes. The term "holder" with respect to the Exchange Offer means any person in
whose name Old Notes are registered on the Trustee's books or any other person
who has obtained a properly completed bond power from the registered holder, or
any person whose Old Notes are held of record by DTC who desires to deliver such
Old Notes by book-entry transfer at DTC.
The Company is making the Exchange Offer in reliance on the position of the
staff of the Division of Corporation Finance of the Commission set forth in
"no-action" letters issued to third parties in other transactions. However, the
Company has not sought its own "no-action" letter and there can be no assurance
that the staff of the Division of Corporation Finance of the Commission would
make a similar determination with respect to the Exchange Offer as in such other
circumstances. Based on those interpretations by the staff of the Division of
Corporation Finance of the Commission, the Company believes that the New Notes
issued pursuant to the Exchange Offer in exchange for the Old Notes may be
offered for resale, resold and otherwise transferred by any holder thereof
(other than broker-dealers, as set forth below, and any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such New Notes are acquired in the ordinary
course of such holder's business and that such holder is not participating, does
not intend to participate and has no arrangement or understanding with any
person to participate, in the distribution (within the meaning of the Securities
Act) of such New Notes. Any holder who participates in the Exchange Offer with
the intention to participate, or for the purpose of participating, in a
distribution of the New Notes may not rely upon the position of the staff of the
Division of Corporation Finance of the Commission as set forth in those
no-action letters and, in the absence of an exemption therefrom, must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any secondary resale transaction, and any such secondary
resale transaction must be covered by an effective registration statement
containing the selling securityholder information required by Item 507 of
Regulation S-K under the Securities Act. Failure to comply with such
requirements in such instance may result in such holder incurring liabilities
under the Securities Act for which the holder is not indemnified by the Company.
Each broker-dealer (other than an affiliate of the Company) that receives
New Notes for its own account pursuant to the Exchange Offer must acknowledge
that it acquired the Old Notes as a result of market-making activities or other
trading activities and will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of
23
<PAGE> 28
market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution." Any broker-dealer who is an affiliate of the
Company may not participate in the Exchange Offer and may not rely on the
no-action letters referred to above and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction.
The Exchange Offer is not being made to, nor will the Company accept
surrender of Old Notes for exchange from, holders thereof in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or "blue sky" laws of such jurisdiction.
By tendering in the Exchange Offer, each holder of Old Notes will represent
to the Company that, among other things, (i) the New Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of business of the
person receiving such New Notes, whether or not such person is the holder, (ii)
neither the holder of Old Notes nor any such other person is participating,
intends to participate or has an arrangement or understanding with any person to
participate, in the distribution of such New Notes, (iii) if the holder is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its own
account in exchange for Old Notes, neither the holder nor any such other person
is engaged in or intends to participate in the distribution of such New Notes
and (iv) neither the holder nor any such other person is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act or, if such
holder is an "affiliate," that such holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
If the tendering holder is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes, it will acknowledge that it acquired such
Old Notes as the result of market making activities or other trading activities
and it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such New Notes. See "Plan of Distribution."
Following the completion of the Exchange Offer, none of the Notes will be
entitled to the contingent increase in interest rate provided pursuant to the
Indenture and the Old Notes. Following the consummation of the Exchange Offer,
holders of Notes will not have any further registration rights, and the Old
Notes will continue to be subject to certain restrictions on transfer. See
"-- Consequences of Failure to Exchange." Accordingly, the liquidity of the
market for the Old Notes could be adversely affected. See "Risk Factors --
Consequences of the Exchange Offer on Non-Tendering Holders of the Old Notes."
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Old Notes are urged to
consult their financial and tax advisors in making their own decisions on
whether to participate in the Exchange Offer.
TERMS OF THE EXCHANGE OFFER
General. Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal, the Company will accept any and all
Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. New Notes will be issued in exchange for an equal
principal amount of outstanding Old Notes accepted in the Exchange Offer. Old
Notes may be tendered only in multiples of $1,000.
The form and terms of the New Notes will be identical in all material
respects to the form and terms of the Old Notes except that (i) the New Notes
will be registered under the Securities Act and, therefore, will not bear
legends restricting the transfer thereof, (ii) holders of the New Notes will not
be entitled to certain rights of holders of Old Notes under the Registration
Rights Agreement, and (iii) the New Notes will not be entitled to the contingent
increase in interest rate provided pursuant to the Indenture and the Old Notes.
The New Notes will evidence the same debt as the Old Notes and will be entitled
to the benefits of the Indenture. The New Notes will be treated as a single
class under the Indenture with any Old Notes that remain outstanding. The
Exchange Offer is not conditioned upon any minimum aggregate principal amount of
Old Notes being tendered for exchange.
24
<PAGE> 29
As of the date hereof, U.S. $150,000,000 aggregate principal amount of Old
Notes was outstanding. This Prospectus, together with the Letter of Transmittal,
is being sent to registered holders of the Old Notes.
The Company intends to conduct the Exchange Offer in accordance with the
provisions of the Registration Rights Agreement and the applicable requirements
of the Exchange Act, and the rules and regulations of the Commission thereunder.
Old Notes that are not tendered for exchange in the Exchange Offer will remain
outstanding and interest thereon will continue to accrue, but such Old Notes
will not be entitled to any rights or benefits under the Registration Rights
Agreement.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purposes of receiving the New Notes from the Company. If any tendered
Old Notes are not accepted for exchange because of an invalid tender, the
occurrence of certain other events set forth herein or otherwise, certificates
for any such unaccepted Old Notes will be returned, without expense, to the
tendering holder thereof as promptly as practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes described below, in connection with the
Exchange Offer. See "-- Fees and Expenses."
Expiration Date; Extensions; Amendments. The term "Expiration Date" shall
mean 5:00 p.m., New York City time, on [ ], 1997, unless the
Company, in its sole discretion, extends the Exchange Offer, in which case the
term "Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended. Although the Company has no current intention to extend the
Exchange Offer, the Company reserves the right to extend the Exchange Offer at
any time and from time to time by giving oral or written notice to the Exchange
Agent and by timely public announcement communicated, unless otherwise required
by applicable law or regulation, by making a release to PR Newswire. During any
extension of the Exchange Offer, all Old Notes previously tendered pursuant to
the Exchange Offer and not withdrawn will remain subject to the Exchange Offer.
The date of the exchange of the New Notes for Old Notes will be the first
business day following the Expiration Date.
The Company reserves the right, in its discretion, (i) to delay accepting
any Old Notes, to extend the Exchange Offer or to terminate the Exchange Offer
if any of the conditions set forth below under "-- Conditions of the Exchange
Offer" shall not have been satisfied in the good faith determination of the
Company, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent and (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the registered holders. If the Exchange Offer is amended in any
manner determined by the Company to constitute a material change, the Company
will promptly disclose such amendment by means of a prospectus supplement that
will be distributed to the registered holders, and the Company will extend the
Exchange Offer for a period of time, depending upon the significance of the
amendment and the manner of disclosure to the registered holders, if the
Exchange Offer would otherwise expire during such period.
In all cases, issuance of the New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent, of properly completed and duly executed Letters of
Transmittal and all other required documents; provided, however, that the
Company reserves the absolute right to waive any conditions of the Exchange
Offer or defects or irregularities in the tender of Old Notes. If any tendered
Old Notes are not accepted for any reason set forth in the terms and conditions
of the Exchange Offer such unaccepted or non-exchanged Old Notes or substitute
Old Notes evidencing the unaccepted portion, as appropriate, will be returned
without expense to the tendering holder, unless otherwise provided in the Letter
of Transmittal, as promptly as practicable after the expiration or termination
of the Exchange Offer.
25
<PAGE> 30
Interest on the New Notes. Holders of Old Notes that are accepted for
exchange will not receive accrued interest thereon at the time of exchange.
However, each New Note will bear interest from the most recent date to which
interest has been paid on the Old Notes or New Notes, or, if no interest has
been paid on the Old Notes or New Notes, from August 12, 1997.
Procedures for Tendering Old Notes. The tender to the Company of Old Notes
by a holder thereof pursuant to one of the procedures set forth below will
constitute an agreement between such holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal. A holder of Old Notes may tender such Old Notes by (i) properly
completing and signing a Letter of Transmittal or a facsimile thereof (all
references in this Prospectus to a Letter of Transmittal shall be deemed to
include a facsimile thereof) and delivering the same together with any
corresponding certificate or certificates representing the Old Notes being
tendered (if in certificated form) and any required signature guarantees, to the
Exchange Agent at its address set forth in such Letter of Transmittal on or
prior to the Expiration Date (or complying with the procedure for book-entry
transfer described below) or (ii) complying with the guaranteed delivery
procedures described below.
If tendered Old Notes are registered in the name of the signer of the
Letter of Transmittal and the New Notes to be issued in exchange therefor are to
be issued (and any untendered Old Notes are to be reissued) in the name of the
registered holder (which term, for the purposes described herein, shall include
any participant in DTC (also referred to as a book-entry facility) whose name
appears on a security listing as the owner of Old Notes), the signature of such
signer need not be guaranteed. In any other case, the tendered Old Notes must be
endorsed or accompanied by written instruments of transfer in form satisfactory
to the Company and duly executed by the registered holder and the signature on
the endorsement or instrument of transfer must be guaranteed by a member firm of
a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" as
defined by Rule 17Ad-15 under the Exchange Act (any of the foregoing hereinafter
referred to as an "Eligible Institution"). If the New Notes or Old Notes not
exchanged are to be delivered to an address other than that of the registered
holder appearing on the Notes register for the Old Notes, the signature in the
Letter of Transmittal must be guaranteed by an Eligible Institution.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER AND WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF SUCH DELIVERY IS BY MAIL IT IS RECOMMENDED THAT REGISTERED MAIL
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT
TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish an account with respect
to the Old Notes at DTC for the purpose of facilitating the Exchange Offer, and
subject to the establishment thereof, any financial institution that is a
participant in DTC's system may make book-entry delivery of Old Notes by causing
DTC to transfer such Old Notes into the Exchange Agent's account with respect to
the Old Notes in accordance with DTC's procedure for such transfer. Although
delivery of the Old Notes may be effected through book-entry transfer into the
Exchange Agent's account at DTC, an appropriate Letter of Transmittal with any
required signature guarantee and all other required documents must in each case
be transmitted to and received or confirmed by the Exchange Agent at the address
set forth in the Letter of Transmittal on or prior to the Expiration Date, or,
if the guaranteed delivery procedures described below are complied with, within
the time period provided under such procedures.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Old Notes (or a confirmation of book-
26
<PAGE> 31
entry transfer of such Old Notes into the Exchange Agent's account at DTC) is
received by the Exchange Agent or (ii) a Notice of Guaranteed Delivery or
letter, telegram or facsimile transmission to similar effect (as provided below)
from an Eligible Institution is received by the Exchange Agent. Issuances of New
Notes in exchange for Old Notes tendered pursuant to a Notice of Guaranteed
Delivery or letter, telegram or facsimile transmission to similar effect (as
provided below) by an Eligible Institution will be made only against submission
of a duly signed Letter of Transmittal (and any other required documents) and
deposit of the tendered Old Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Old Notes will be
determined by the Company, whose determination will be final and binding. The
Company reserves the absolute right to reject any or all tenders not in proper
form or the acceptance for exchange of which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Exchange Offer or any defect or irregularity
in the tender of any Old Notes. None of the Company, the Exchange Agent or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Any Old Notes received by the Exchange Agent that are not validly
tendered and as to which the defects or irregularities have not been cured or
waived, or if Old Notes are submitted in principal amount greater than the
principal amount of Old Notes being tendered by such tendering holder, such
unaccepted or non-exchanged Old Notes will be returned by the Exchange Agent to
the tendering holder, unless otherwise provided in the Letter of Transmittal as
soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its own discretion (a) to
purchase or make offers for any Old Notes that remain outstanding subsequent to
the Expiration Date and (b) to the extent permitted by applicable law, to
purchase Old Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers will differ from the terms
of the Exchange Offer.
Guaranteed Delivery Procedures. If the holder desires to accept an
Exchange Offer and time will not permit a Letter of Transmittal or Old Notes to
reach the Exchange Agent before the Expiration Date or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if the Exchange Agent has received at its office, on or prior to the
Expiration Date, a letter, telegram or facsimile transmission from an Eligible
Institution setting forth the name and address of the tendering holder, the
name(s) in which the Old Notes are registered and the certificate number(s) of
the Old Notes to be tendered, and stating that the tender is being made thereby
and guaranteeing that, within three business days after the date of execution of
such letter, telegram or facsimile transmission by the Eligible Institution,
such Old Notes, in proper form for transfer (or a confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at DTC), will be
delivered by such Eligible Institution together with a properly completed and
duly executed Letter of Transmittal (and any other required documents). Unless
Old Notes being tendered by the above-described method are deposited with the
Exchange Agent within the time period set forth (accompanied or preceded by a
properly completed Letter of Transmittal and any other required documents), the
Company may, at its option, reject the tender. Copies of a Notice of Guaranteed
Delivery which may be used by Eligible Institutions for the purposes described
in this paragraph are available from the Exchange Agent.
Terms and Conditions of the Letter of Transmittal. The Letter of
Transmittal contains, among other things, the following terms and conditions,
which are part of the Exchange Offer.
The party tendering Old Notes for exchange (the "Transferor") exchanges,
assigns and transfers the Old Notes to the Company and irrevocably constitutes
and appoints the Exchange Agent as the Transferor's agent and attorney-in-fact
to cause the Old Notes to be assigned, transferred and exchanged. The Transferor
represents and warrants that it has full power and authority to tender,
exchange, assign and transfer the Old Notes and to acquire New Notes issuable
upon the exchange of such tendered Old Notes, and that, when the same are
accepted for exchange, the Company will acquire good and unencumbered title to
the tendered Old Notes, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim. The Transferor also warrants
that it will, upon request, execute and deliver any additional documents deemed
by the Exchange Agent or the Company to be necessary or desirable to complete
the exchange, assignment
27
<PAGE> 32
and transfer of tendered Old Notes or to transfer ownership of such Old Notes on
the account books maintained by DTC. All authority conferred by the Transferor
will survive the death, bankruptcy or incapacity of the Transferor and every
obligation of the Transferor shall be binding upon the heirs, personal
representatives, executors, administrators, successors, assigns, trustees in
bankruptcy and other legal representatives of such Transferor.
By executing a Letter of Transmittal, each holder will make to the Company
the representations set forth above under the heading "-- Purpose and Effect of
the Exchange Offer."
Withdrawal of Tenders of Old Notes. Except as otherwise provided herein,
tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) contain a statement that
such holder is withdrawing its election to have such Old Notes exchanged, (iv)
be signed by the holder in the same manner as the original signature on the
Letter of Transmittal by which such Old Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Old Notes register the
transfer of such Old Notes in the name of the person withdrawing the tender and
(v) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. If Old Notes have been tendered pursuant
to the procedure for book-entry transfer facility, any notice of withdrawal must
specify the name and number of the account at the book-entry transfer facility.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Company, whose determination
shall be final and binding on all parties. Any Old Notes so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer and
no New Notes will be issued with respect thereto unless the Old Notes so
withdrawn are validly retendered. Any Old Notes which have been tendered but
which are not accepted for exchange will be returned to the holder thereof
without cost to such holder as soon as practicable after withdrawal, rejection
of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may
be retendered by following one of the procedures described above under
"-- Procedures for Tendering Old Notes" at any time prior to the Expiration
Date.
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other terms of the Exchange Offer, or any extension of
the Exchange Offer, the Company shall not be required to accept for exchange, or
exchange New Notes for, any Old Notes, and may terminate the Exchange Offer as
provided herein before the acceptance of such Old Notes, if:
(a) any statute, rule or regulation shall have been enacted, or any
action shall have been taken by any court or governmental authority which,
in the reasonable judgment of the Company would prohibit, restrict or
otherwise render illegal consummation of the Exchange Offer; or
(b) any change, or any development involving a prospective change, in
the business or financial affairs of the Company or any of its subsidiaries
has occurred which, in the reasonable judgment of the Company, might
materially impair the ability of the Company to proceed with the Exchange
Offer or materially impair the contemplated benefits of the Exchange Offer
to the Company; or
(c) any stop order shall be threatened or in effect with respect to
the Registration Statement of which this Prospectus constitutes a part or
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended. The Company will use its reasonable best efforts to prevent the
issuance of any such order and, if any such order is issued, to obtain the
withdrawal of any such order at the earliest possible moment; or
28
<PAGE> 33
(d) there shall occur a change in the current interpretations by the
staff of the Commission which, in the Company's reasonable judgment, might
materially impair the Company's ability to proceed with the Exchange Offer;
or
(e) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the Company's sole judgment, might materially impair the ability
of the Company to proceed with the Exchange Offer; or
(f) any governmental approval or approval by the holders of the Old
Notes has not been obtained, which approval the Company shall, in its sole
discretion, deem necessary for the consummation of the Exchange Offer as
contemplated hereby.
If the Company makes a good faith determination that any of the above
conditions are not satisfied, the Company may (i) refuse to accept any Old Notes
and return all tendered Old Notes to the tendering holders, (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the Expiration Date,
subject, however, to the right of holders to withdraw such Old Notes (see
"-- Terms of the Exchange Offer -- Withdrawal of Tenders of Old Notes") or (iii)
waive such unsatisfied conditions with respect to Exchange Offer and accept all
validly tendered Old Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders, and the Company will extend the Exchange
Offer for a period of time, depending upon the significance of the waiver and
the manner of disclosure to the registered holders, if the Exchange Offer would
otherwise expire during such period.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for the Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
<TABLE>
<S> <C>
By Hand or Overnight Courier: By Registered or Certified Mail:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
New York, NY 10286 New York, NY 10286
Attn: Reorganization Department Attn: Reorganization Department
</TABLE>
Facsimile Transmission:
( ) -
Confirm by Telephone:
( ) -
For information with respect to the Exchange Offer, call:
[ ] of the Exchange Agent
at ( ) -
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telecopy, telephone or in person by officers and regular
employees of the Company and its affiliates. No additional compensation will be
paid to any such officers and employees who engage in soliciting tenders.
The Company has not retained any dealer-manager or other soliciting agent
in connection with the Exchange Offer and will not make any payments to brokers,
dealers or others soliciting acceptance of the Exchange Offer. The Company,
however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith. The Company may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus, the Letter of
Transmittal and related documents to the beneficial owners of the Old Notes and
in handling or forwarding tenders for exchange.
29
<PAGE> 34
The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and transfer agent and registrar, accounting and legal fees and printing
costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of the Old Notes pursuant to the Exchange Offer. If however, New Notes, or Old
Notes for principal amounts not tendered or accepted for exchange, are to be
delivered to, or are to be issued in the name of, any person other than the
registered holder of the Old Notes tendered or if a transfer tax is imposed for
any reason other than the exchange of the Old Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will remain restricted securities within the meaning of Rule 144 under the
Securities Act. Accordingly, such Old Notes may be resold only (i) to the
Company or any subsidiary thereof, (ii) inside the United States to a qualified
institutional buyer in compliance with Rule 144A, (iii) inside the United States
to an institutional accredited investor as set forth in the Indenture, (iv)
outside the United States in compliance with Rule 904 under the Securities Act,
(v) pursuant to the exemption from registration provided by Rule 144 under the
Securities Act (if available) or (vi) pursuant to an effective registration
statement under the Securities Act. The liquidity of the Old Notes could be
adversely affected by the Exchange Offer. Following the consummation of the
Exchange Offer, holders of the Old Notes will have no further registration
rights under the Registration Rights Agreement and will not be entitled to the
contingent increase in the interest rate provided for in the Indenture and the
Old Notes.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
as reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Company. The costs of the Exchange Offer and the unamortized expenses related to
the issuance of the Old Notes will be amortized over the term of the Notes.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The exchange of Old Notes for New Notes in the Exchange Offer should not be
a taxable exchange for federal income tax purposes and, accordingly, a holder
should not recognize any taxable gain or loss as a result of such exchange.
30
<PAGE> 35
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
Set forth below is certain unaudited pro forma condensed consolidated
financial information of the Company and its subsidiaries based on historical
information that has been adjusted to reflect significant acquisitions and
divestitures that have occurred during the respective periods and the
Transactions. The income statement data give effect to the following
transactions at the beginning of each period presented: (i) the sale of the
Rolodex Business; (ii) the Company's purchase of 2,805,194 Shares from Water
Street and 51,948 Shares from Mr. Smialek at a price of $38.50 per Share; (iii)
the Company's purchase of 2,857,142 Shares at a price of $38.50 per Share
pursuant to the Tender Offer; (iv) the closing of New Credit Facility (including
advances to refinance in full the Old Credit Facility); and (v) the issuance and
sale of $150 million aggregate principal amount of Notes. In addition, the
income statement data for the year ended December 31, 1996 and the six months
ended June 30, 1996 have been adjusted to reflect (i) the divestiture of Rolodex
Electronics, (ii) the divestiture of Curtis and (iii) the acquisition of the
Lingemann Business, as if all had occurred at the beginning of the periods
presented. These divestitures and the acquisition actually occurred in the third
and fourth quarters of 1996. The balance sheet data give effect to the
aforementioned transactions as if all had occurred as of the respective balance
sheet dates (except that any acquisitions or divestitures which occurred prior
to the date of the respective balance sheet are included in the respective
balance sheet data as of the date of the actual sale or purchase). The
nonrecurring transactions directly related to the aforementioned transactions
are excluded from the pro forma consolidated statements of income. The summary
pro forma consolidated financial data should be read in conjunction with the
accompanying notes thereto and the Consolidated Financial Statements set forth
herein. The unaudited summary pro forma consolidated financial data are based on
certain assumptions and estimates, and therefore do not purport to be indicative
of the results that would actually have been obtained had the transactions been
completed as of such dates or indicative of future results of operations and
financial position.
31
<PAGE> 36
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)
<TABLE>
<CAPTION>
ACQUISITION AND
HISTORICAL DIVESTITURES(1) SUBTOTAL TRANSACTIONS(2) PRO FORMA
---------- --------------- -------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Net sales............................. $ 287,012 (10,797) 276,215 276,215
Cost of goods sold.................... 195,436 (5,483) 189,953 189,953
Depreciation and amortization......... 9,798 (194) 9,604 9,604
Selling, general and administrative
expenses............................ 50,811 (2,954) 47,857 47,857
-------- ------- ------- ------ -------
Operating income................. 30,967 (2,166) 28,801 28,801
Interest expense, net................. (5,684) 955 (4,729) (9,923) (14,652)
Equity in net income of Thermalex..... 1,547 1,547 1,547
Other income, net..................... 69 (1) 68 68
Gain on sale of Rolodex............... 95,001 (95,001)
-------- ------- ------- ------ -------
Income before income taxes....... 121,900 (96,213) 25,687 (9,923) 15,764
Income tax expense.................... (47,374) 37,680 (9,694) 3,820 (5,874)
Effective income tax rate(3)..... 38.9% 37.3%
-------- ------- ------- ------ -------
Net income....................... $ 74,526 (58,533) 15,993 (6,103) 9,890
======== ======= ======= ====== =======
Net income per common share and common
share equivalent.................... $ 7.55 1.62 2.38
======== ======= =======
Weighted average number of common
shares and common share
equivalents......................... 9,875 9,875 (5,714) 4,161
Ratio of earnings to fixed
charges(4).......................... 15.32x 2.00x
</TABLE>
32
<PAGE> 37
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)
<TABLE>
<CAPTION>
ACQUISITION AND
HISTORICAL DIVESTITURES(1) SUBTOTAL TRANSACTIONS(2) PRO FORMA
---------- --------------- -------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Net sales............................. $ 300,497 (31,043) 269,454 269,454
Cost of goods sold.................... 202,752 (15,371) 187,381 187,381
Depreciation and amortization......... 8,087 712 8,799 8,799
Selling, general and administrative
expenses............................ 56,773 (10,280) 46,493 46,493
-------- ------- ------- ------ -------
Operating income................. 32,885 (6,104) 26,781 26,781
Interest expense, net................. (8,940) 2,498 (6,442) (9,908) (16,350)
Equity in net income of Thermalex..... 1,363 1,363 1,363
Other income, net..................... 1,741 16 1,757 1,757
-------- ------- ------- ------ -------
Income before income taxes....... 27,049 (3,590) 23,459 (9,908) 13,551
Income tax expense.................... (9,098) 676 (8,422) 3,815 (4,607)
Effective income tax rate(3)..... 33.6% 34.0%
-------- ------- ------- ------ -------
Net income....................... $ 17,951 (2,914) 15,037 (6,093) 8,944
======== ======= ======= ====== =======
Net income per common share and common
share equivalents................... $ 1.81 1.52 2.13
======== ======= =======
Weighted average number of common
shares and common share
equivalents......................... 9,909 9,909 (5,714) 4,195
Ratio of earnings to fixed
charges(4).......................... 3.63x 1.76x
</TABLE>
33
<PAGE> 38
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)
<TABLE>
<CAPTION>
ACQUISITION AND
HISTORICAL DIVESTITURES(1) SUBTOTAL TRANSACTIONS(2) PRO FORMA
---------- --------------- -------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Net sales............................. $ 572,474 (65,334) 507,140 507,140
Cost of goods sold.................... 389,893 (32,187) 357,706 357,706
Depreciation and amortization......... 16,831 308 17,139 17,139
Selling, general and administrative
expenses............................ 106,649 (21,048) 85,601 85,601
-------- ------- ------- ------ -------
Operating income................. 59,101 (12,407) 46,694 46,694
Interest expense, net................. (17,376) 5,632 (11,744) (19,748) (31,492)
Equity in net income of Thermalex..... 2,922 2,922 2,922
Other income, net..................... 7,216 (2,432) 4,784 4,784
-------- ------- ------- ------ -------
Income before income taxes....... 51,863 (9,207) 42,656 (19,748) 22,908
Income tax expense.................... (12,810) (1,689) (14,499) 7,603 (6,896)
Effective income tax rate(3)..... 24.7% 30.1%
-------- ------- ------- ------ -------
Net income....................... $ 39,053 (10,896) 28,157 (12,145) 16,012
======== ======= ======= ====== =======
Net income per common share and common
share equivalents................... $ 3.95 2.85 3.83
======== ======= =======
Weighted average number of common
shares and common share
equivalents......................... 9,892 9,892 (5,714) 4,178
Ratio of earnings to fixed
charges(4).......................... 3.55x 1.67x
</TABLE>
34
<PAGE> 39
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ASSETS HISTORICAL TRANSACTIONS(5) PRO FORMA
---------- --------------- ---------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents............................. $ 111,200 (110,000) 1,200
Trade receivables, net................................ 90,920 90,920
Other receivables..................................... 7,276 7,276
Inventories........................................... 57,681 57,681
Deferred tax asset.................................... 2,174 2,174
Prepaid expenses...................................... 6,616 6,616
-------- -------- --------
Total current assets.......................... 275,867 (110,000) 165,867
Property, plant and equipment, net...................... 110,397 110,397
Deferred tax asset...................................... 4,950 4,950
Goodwill................................................ 13,678 13,678
Other assets............................................ 18,319 8,349(6) 26,668
-------- -------- --------
Total assets.................................. $ 423,211 (101,651) 321,560
======== ======== ========
LIABILITY AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt..................... $ 24,708 (24,000) 708
Current portion of long-term liabilities.............. 5,608 5,608
Accounts payable...................................... 34,831 34,831
Accrued income taxes.................................. 11,823 (1,213) 10,610
Accrued expenses and other............................ 53,927 53,927
-------- -------- --------
Total current liabilities..................... 130,897 (25,213) 105,684
Long-term debt.......................................... 145,112 146,000 291,112
Other long-term liabilities............................. 38,740 38,740
Stockholders' equity (deficit).......................... 108,462 (222,438) (113,976)
-------- -------- --------
Total liabilities and stockholders' equity
(deficit)................................... $ 423,211 (101,651) 321,560
======== ======== ========
Book value per share.................................... $ 11.21 (28.79)
======== ========
</TABLE>
35
<PAGE> 40
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SALE OF THE
ROLODEX
HISTORICAL BUSINESS(7) SUBTOTAL TRANSACTIONS(5) PRO FORMA
---------- ----------- -------- -------------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 3,481 112,610 116,091 (110,000) 6,091
Trade receivables, net................ 73,874 (8,481) 65,393 65,393
Other receivables..................... 8,499 (325) 8,174 8,174
Inventories........................... 66,385 (8,460) 57,925 57,925
Deferred tax asset.................... 29,859 (28,652) 1,207 1,207
Prepaid expenses...................... 7,010 (1,095) 5,915 5,915
-------- ------- ------- -------- -------
Total current assets.......... 189,108 65,597 254,705 (110,000) 144,705
Property, plant and equipment, net...... 114,379 (3,944) 110,435 110,435
Deferred tax asset...................... 7,542 7,542 7,542
Goodwill................................ 13,659 13,659 13,659
Other assets............................ 27,312 (4,990) 22,322 7,993(6) 30,315
-------- ------- ------- -------- -------
Total assets.................. $ 352,000 56,663 408,663 (102,007) 306,656
======== ======= ======= ======== =======
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt..... $ 24,272 24,272 (23,250) 1,022
Current portion of long-term
liabilities........................ 6,661 6,661 6,661
Accounts payable...................... 37,984 (4,797) 33,187 33,187
Accrued income taxes.................. 3,596 9,400 12,996 (1,350) 11,646
Accrued expenses and other............ 68,639 (7,033) 61,606 61,606
-------- ------- ------- -------- -------
Total current liabilities..... 141,152 (2,430) 138,722 (24,600) 114,122
Long-term debt.......................... 136,770 136,770 145,250 282,020
Other long-term liabilities............. 40,676 40,676 40,676
Stockholders' equity (deficit).......... 33,402 59,093 92,495 (222,657) (130,162)
-------- ------- ------- -------- -------
Total liabilities and
stockholders' equity
(deficit)................... $ 352,000 56,663 408,663 (102,007) 306,656
======== ======= ======= ======== =======
Book value per share.................... $ 3.52 34.49
======== =======
</TABLE>
36
<PAGE> 41
THE NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION FOLLOW:
- ---------------
(1) To record the effect on sales, costs and expenses assuming that the
divestiture of the Office Products Business and the acquisition of the
Lingemann Business had occurred as of the beginning of the period presented.
Proceeds from the sale of the Rolodex Business were assumed to have been
held in short term investments from the beginning of the period. Proceeds
from the sales of Rolodex Electronics and Curtis were assumed to have been
applied to reduce the Company's outstanding debt at the beginning of the
period, reducing interest expense and the related income tax expense
(benefit). The acquisition of the Lingemann Business was assumed to have
occurred and to have been funded through borrowings under the Old Credit
Facility as of the beginning of the period presented.
(2) To record the effect on interest expense and the related income tax effect
of (i) the purchase of 2,805,194 Shares from Water Street and 51,948 Shares
from Mr. Smialek at $38.50 per Share in cash for an aggregate purchase price
of $109,999,967, (ii) the entering into of the New Credit Facility and the
issuance and sale of $150,000,000 aggregate principal amount of the Old
Notes, and (iii) the purchase of 2,857,142 Shares at $38.50 per Share in
cash for an aggregate purchase price of $109,999,967 pursuant to the Tender
Offer, as if the aforementioned transactions had occurred at the beginning
of the periods presented. Interest income which was assumed to have been
earned on the proceeds from the sale of the Office Products Business was
reversed as part of this adjustment.
(3) The 1996 full year pro forma effective income tax rate is lower than the
1997 pro forma effective income tax rate primarily due to the establishment
of previously unrecognized tax assets in the fourth quarter of 1996.
(4) The ratio of earnings to fixed charges was computed by dividing pre-tax
income before fixed charges by fixed charges. Fixed charges consist of
interest expense and the interest component of operating leases. The
Company's historical earnings before fixed charges for the six months ended
June 30, 1997 includes a $95,001,000 pre-tax gain on the sale of the Rolodex
Business.
(5) To record as of the date of the balance sheet presented (i) the purchase of
2,805,194 Shares from Water Street and 51,948 Shares from Mr. Smialek at
$38.50 per Share in cash for an aggregate purchase price of $109,999,967,
(ii) the entering into of the New Credit Facility and the issuance and sale
of $150,000,000 aggregate principal amount of Old Notes, and (iii) the
purchase of 2,857,142 Shares at $38.50 per Share in cash for an aggregate
purchase price of $109,999,967 pursuant to the Tender Offer.
(6) To write off debt issue costs ($1,507,000 at December 31, 1996 and
$1,151,000 at June 30, 1997) related to the Old Credit Facility and to
record $9,500,000 in debt issue costs related to the New Credit Facility and
the Old Notes.
(7) To record the sale of the Rolodex Business as if the sale had occurred as of
the date of the balance sheet presented.
37
<PAGE> 42
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of the end of
each of the years in the five-year period ended December 31, 1996 are derived
from, and should be read in conjunction with, the Company's related Consolidated
Financial Statements and accompanying notes included elsewhere herein, which
Consolidated Financial Statements have been audited by KPMG Peat Marwick LLP,
independent certified public accountants. The Consolidated Financial Statements
as of December 31, 1996 and 1995, and for each of the years in the three-year
period ended December 31, 1996, and the report thereon, which is based partially
upon the report of other auditors, are included elsewhere in this Prospectus.
The selected data presented below for the six-month periods ended June 30, 1997
and 1996, and as of June 30, 1997 and 1996 are derived from the unaudited
consolidated financial statements of the Company included elsewhere in the
Prospectus. This selected consolidated financial data should also be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
38
<PAGE> 43
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------
PREDECESSOR
--------------------
1993 SIX MONTHS ENDED
---------------------- JUNE 30,
TO FROM ---------------------
1992 3/31 4/1 1994 1995 1996 1996 1997
--------- -------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS DATA(1)
Sales (net)(2)................. $ 481,637 105,862 411,040 543,630 561,203 572,474 300,497 287,012
Depreciation and
amortization................. 18,400 4,453 10,144 13,570 14,758 16,831 8,087 9,798
Amortization of Reorganization
Goodwill..................... -- -- 54,507 69,217 32,172 -- -- --
Operating income (loss)(3)..... 37,814 7,256 (21,488) (9,699) 24,617 59,101 32,885 30,967
Other income (expense):
Interest expense(4).......... (31,495) (9,609) (26,905) (29,113) (19,546) (18,386) (9,400) (7,762)
Interest income.............. 1,233 351 1,710 1,842 1,577 1,010 460 2,078
Other income (expense),
net(5)..................... 399 (40) 167 2,663 12,126 10,138 3,104 96,617
Income (loss) from continuing
operations before
reorganization items,
extraordinary items and
income taxes................. 7,951 (2,042) (46,516) (34,307) 18,774 51,863 27,049 121,900
Reorganization items (net)..... (22,407) 21,767 -- -- -- -- -- --
Income tax expense............. (3,117) (873) (1,134) (8,585) (16,199) (12,810) (9,098) (47,374)
--------- -------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before
extraordinary items.......... (17,573) 18,852 (47,650) (42,892) 2,575 39,053 17,951 74,526
Income (loss) from discontinued
operations, net of tax....... (13,712) (18,241) 1,041 12,914 -- -- -- --
--------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before
extraordinary items.......... (31,285) 611 (46,609) (29,978) 2,575 39,053 17,951 74,526
Extraordinary items, net of
tax.......................... -- 448,334 -- (2,156) -- -- -- --
--------- -------- -------- -------- -------- -------- -------- --------
Net income (loss).............. $ (31,285) 448,945 (46,609) (32,134) 2,575 39,053 17,951 74,526
========= ======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA AT PERIOD END
Working capital................ $ 136,077 94,589 97,718 33,915 44,920 47,956 71,156 144,970
Total assets................... 547,748 562,011 517,738 368,669 340,129 352,000 345,644 423,211
Long-term debt................. 311,946 306,682 307,406 198,109 186,489 161,042 193,381 169,820
Other long-term liabilities.... 631 64,896 65,016 59,117 53,612 47,337 50,660 44,348
Liabilities subject to
compromise................... 608,987 -- -- -- -- -- -- --
Stockholders' equity
(deficit).................... (462,227) 64,214 18,505 (13,451) (15,779) 33,402 2,291 108,462
CASH FLOW DATA
Net cash provided by (used in)
operating activities......... $ (1,684) (16,361) 52,524 34,305 37,744 55,423 10,333 (5,159)
Net cash provided by (used in)
investing activities......... (18,480) 2,668 (14,146) 36,295 (14,678) (29,783) (12,337) 105,334
Net cash provided by (used in)
financing activities......... 2,903 (9,109) (6,774) (115,648) (21,862) (32,053) 3,018 7,772
PER SHARE DATA
Income (loss) per share from
continuing operations(6)..... NA NA (4.93) (4.42) 0.25 3.95 1.81 7.55
Book value per share........... NA NA 1.89 (1.37) (1.64) 3.52 0.24 11.21
RATIO DATA
Ratio of earnings to fixed
charges...................... 0.55x 2.97x (0.68)x (0.13)x (1.85)x 3.55x 3.63x 15.32x
</TABLE>
See accompanying notes to the Selected Consolidated Financial Data.
39
<PAGE> 44
THE NOTES TO THE SELECTED CONSOLIDATED FINANCIAL DATA FOLLOW:
- ---------------
(1) For financial reporting purposes, March 31, 1993 is the effective date of
the Plan of Reorganization. As of that date, in accordance with Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" (the "Reorganization SOP"), issued by the American
Institute of Certified Public Accountants, the Company adopted "fresh start"
accounting as described in Note 1 to the Consolidated Financial Statements.
As a result, financial information for all periods prior to March 31, 1993
(referred to as "Predecessor") is not comparable to information for
subsequent periods.
(2) Sales include the sales of the Office Products Business (which was divested
in two separate transactions in 1996 and one final transaction in the first
quarter of 1997) as follows: 1992, $111.0 million; 1993, $104.8 million;
1994, $105.2 million; 1995, $111.7 million; 1996, $80.1 million; the six
months ended June 30, 1996, $45.8 million; and the six months ended June 30,
1997, $10.8 million.
Sales in 1996 and for the six months ended June 30, 1997 include sales of
$13.2 million and $15.3 million, respectively, of the Lingemann Business.
See description of Unaudited Pro Forma Condensed Consolidated Financial
Information on page 31 for further information regarding acquisitions and
divestitures.
(3) Operating income for the Office Products Business, before the allocation of
corporate overhead, is included in the consolidated results as follows:
1992, $14.9 million; 1993, $12.4 million; 1994, $15.2 million; 1995, $1.7
million; 1996, $10.7 million; the six months ended June 30, 1996, $4.4
million; and the six months ended June 30, 1997, $2.2 million.
Operating income in 1996 and for the six months ended June 30, 1997 includes
operating income, before allocation of corporate overhead, of $0.1 million
and $0.3 million, respectively, of the Lingemann Business.
Operating income includes the deduction for the amortization of
Reorganization Goodwill in the period from April 1, 1993 and years ended
December 31, 1994 and 1995.
Operating income in 1995 includes a nonrecurring charge of $6.2 million
relating to the Office Products Business (see Note 15 to the Consolidated
Financial Statements) and a gain of $4.3 million related to a change in the
Company's pension plan (see Note 10 to the Consolidated Financial
Statements).
(4) Excluding $19.8 million and $79.3 million of contractual interest not
accrued on unsecured debt during the Chapter 11 proceedings in the three
months ended March 31, 1993 and the year ended December 31, 1992,
respectively.
(5) Other income for 1994 included a $1.2 million gain related to the collection
of notes receivable in excess of their financial statement carrying amount.
Other income in 1995 included favorable adjustments of $3.6 million related
to the Company's environmental liabilities, $1.5 million related to the
resolution of several legal disputes and $4.0 million gain on the sale of
idle corporate assets. Other income in 1996 included a fourth quarter $3.1
million gain on the sale of Rolodex Electronics and a third quarter $2.2
million adjustment related to the satisfaction of certain of the Company's
environmental liabilities, following completion of a site clean-up, for an
amount less than previously estimated. Other income in the six months ended
June 30, 1997 includes a $95.0 million gain on the sale of the Rolodex
Business.
(6) Earnings per Share information for the Predecessor is not presented because
the Predecessor was closely held and the revision of the Company's capital
structure pursuant to the Plan of Reorganization makes such information not
meaningful.
40
<PAGE> 45
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with "Selected
Consolidated Financial Data" and the Company's Consolidated Financial Statements
included elsewhere in this Prospectus. See "Risk Factors" for a discussion of
important factors which could cause actual results to differ materially from the
forward-looking statements contained herein. See also "Disclosure Regarding
Forward Looking Statements."
OVERVIEW
Insilco, directly and through its subsidiaries, is a diversified
manufacturer of automotive components and telecommunications and electronics
components and a publisher of specialty publishing products, chiefly student
yearbooks. The Company, with three reporting segments (the Automotive Components
Group, the Technologies Group, and Specialty Publishing), conducts its business
in eight separate operating units, including both divisions and subsidiaries.
Specialty Publishing was the Company's Office Products/Specialty Publishing
segment prior to the divestiture of the Rolodex Business in March, 1997.
The Automotive Components Group is comprised of businesses that produce
radiators and other heat exchanger components, equipment and systems used in the
production of heat exchanges, heavy gauged stamped automotive parts
(principally, transmission clutch plates) and welded stainless steel tubing, and
a 50% owned joint venture, Thermalex, which produces precision extruded aluminum
tubing. The Automotive Components Group serves both original equipment
manufacturers and aftermarket customers in the automotive, specialty vehicle,
truck and off-road vehicle and industrial equipment markets and also serves the
marine and architectural markets with decorative stainless steel tubing. On July
10, 1996, the Company acquired the Lingemann Business.
The Technologies Group manufactures high-performance data transmission
connectors, small electric power transformers, precision stampings, and wire and
cable assemblies. The Technologies Group serves the computer networking,
microwave relay, telephone digital switching, data processing, automotive,
medical equipment and other markets.
Specialty Publishing consists of Taylor, a publisher of specialty
publishing products, chiefly elementary, middle school, high school and college
yearbooks.
"FRESH START" ACCOUNTING
On March 31, 1993, the Company adopted the "fresh start" accounting
principles prescribed by Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code" (the "Reorganization
SOP"), issued by the American Institute of Certified Public Accountants. The
"fresh start" accounting principles required the Company to value its assets and
liabilities at fair values and eliminate its accumulated deficit.
"Fresh start" accounting was required because on April 1, 1993 the Company
and certain of its subsidiaries emerged under Chapter 11 of the United States
Bankruptcy Code (the "Chapter 11 cases") pursuant to the Plan of Reorganization.
For financial reporting purposes, the effective date of the Plan of
Reorganization was March 31, 1993 (the "Plan Effective Date"). For periods prior
to the Plan Effective Date, the Company sometimes is referred to herein as the
"Predecessor." The Chapter 11 cases were commenced on January 13, 1991 (i.e.,
the "Petition Date"). See "Business and Properties -- Reorganization History."
One effect of "fresh start" accounting on the Company's financial
statements was the negative impact on the reported operating income of each
business segment and the consolidated net income resulting from the noncash
amortization of the Reorganization Goodwill. Such amortization expense totaled
$32.2 million in 1995 and $69.2 million in 1994. At December 31, 1995,
Reorganization Goodwill was fully amortized.
41
<PAGE> 46
DIVESTED BUSINESS
During the last half of 1996 and the first quarter of 1997 the Office
Products Business was divested in three separate transactions. The disposal of
this business is not accounted for as a discontinued operation. See "-- Results
of Operations."
DISCONTINUED OPERATIONS
On August 1, 1994, the Company completed the sale of its paint products
segment for $50.8 million, and the segment is being accounted for as a
discontinued operation.
RESULTS OF OPERATIONS
Summarized sales and operating income (loss) by business segment for the
six months ended June 30, 1996 and 1997 and the years ended December 31, 1994,
1995 and 1996 are set forth in the following table and discussed below:
SELECTED SEGMENT FINANCIAL DATA
Operating information of each business segment follows (dollars in
thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- -------------------
1994 1995 1996 1996 1997
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
SALES
Automotive Components Group........... $173,079 180,251 209,722 101,480 116,266
Technologies Group.................... 164,909 170,615 183,663 92,181 97,961
Specialty Publishing/Office Products
Group:
Specialty Publishing............... 100,446 98,640 99,020 61,058 61,988
Office Products.................... 105,196 111,697 80,069 45,778 10,797
-------- ------- ------- ------- -------
Total Specialty
Publishing/Office
Products.................... 205,642 210,337 179,089 106,836 72,785
-------- ------- ------- ------- -------
Consolidated sales.................... $543,630 561,203 572,474 300,497 287,012
======== ======= ======= ======= =======
OPERATING INCOME(LOSS)(1)(2)
Automotive Components Group........... $ 14,941 20,407 23,915 12,278 12,600
Technologies Group.................... 7,386 20,310 24,453 13,403 11,371
Specialty Publishing/Office Products
Group:
Specialty Publishing............... (9,892) (753) 1,650 3,657 5,114
Office Products.................... (20,921) (15,287) 9,167 3,589 1,926
-------- ------- ------- ------- -------
Total Specialty
Publishing/Office
Products.................... (30,813) (16,040) 10,817 7,246 7,040
Unallocated corporate overhead........ (1,213) (60) (84) (42) (44)
-------- ------- ------- ------- -------
Consolidated operating income
(loss)............................. $ (9,699) 24,617 59,101 32,885 30,967
======== ======= ======= ======= =======
</TABLE>
- ---------------
(1) Segment operating income (loss) reflects the allocation of corporate
overhead. Unallocated corporate overhead consists of overhead associated
with discontinued operations. In 1995 corporate overhead was
42
<PAGE> 47
reduced by a $4,300,000 gain relating to a change in the Company's pension plan
(see Note 10 to the Consolidated Financial Statements). The allocation of
corporate overhead follows (dollars in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------- -----------------
1994 1995 1996 1996 1997
------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
ALLOCATED CORPORATE OVERHEAD
Automotive Components Group........... $2,194 1,282 2,981 1,543 1,870
Technologies Group.................... 2,870 1,412 3,152 1,631 1,971
Specialty Publishing/Office Products
Group:
Specialty Publishing............... 1,867 881 1,986 1,028 922
Office Products.................... 1,732 1,023 1,501 776 240
------ ----- ----- ----- -----
Total Specialty
Publishing/Office
Products.................... 3,599 1,904 3,487 1,804 1,162
Unallocated corporate overhead........ 1,213 60 84 -- --
------ ----- ----- ----- -----
Corporate overhead.................... $9,876 4,658 9,704 4,978 5,003
====== ===== ===== ===== =====
</TABLE>
(2) Segment operating income (loss) includes a deduction for the amortization of
Reorganization Goodwill by segment as follows (dollars in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------- -------------------
1994 1995 1996 1996 1997
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
ALLOCATED AMORTIZATION OF
REORGANIZATION GOODWILL
Automotive Components Group...... $ 7,313 3,404 -- -- --
Technologies Group............... 15,419 7,176 -- -- --
Specialty Publishing/Office
Products Group:
Specialty Publishing.......... 12,081 5,625 -- -- --
Office Products............... 34,404 15,967 -- -- --
------- ------- ------- ------- -------
Total Specialty
Publishing/Office
Products................. 46,485 21,592 -- -- --
------- ------- ------- ------- -------
Consolidated..................... $69,217 32,172 -- -- --
======= ======= ======= ======= =======
</TABLE>
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Sales and Operating Income. Total net sales decreased by approximately 4%
($13.5 million) in the first six months of 1997 compared to the corresponding
period of 1996 due to the divestiture of the Office Products Business in three
separate transactions completed in late 1996 and the first quarter of 1997.
Sales of the Office Products Business totaled $10.8 million in the first six
months of 1997 compared to $45.8 million in the first six months of 1996.
Excluding the Office Products Business, the Company's sales increased 8% ($21.5
million) in the first half of 1997 compared to the first half of 1996 due to 15%
($14.8 million) and 6% ($5.8 million) increases in sales by the Automotive
Components Group and Technologies Group, respectively. In addition, Specialty
Publishing's sales increased 2% ($0.9 million) in the first six months of 1997
over the corresponding period in 1996.
The 15% increase in the Automotive Components Group's sales was due to an
increase in the sales of automotive heat exchangers and related components and
equipment, including sales of $15.3 million from the Lingemann Business which
was acquired in July 1996. Partially offsetting this growth was continued
weakness in the domestic automotive radiator aftermarket caused by the mild
spring weather. Steel Parts reported a 9% gain in sales of transmissions and
other stamped steel parts due to higher content per car of Steel Parts
transmission components and diversification of its product line.
43
<PAGE> 48
The Technologies Group's sales increased 6% over the first six months of
1996 due to growth in all business units of the Group. Escod had 11% growth in
sales of wire and cable assemblies over the prior year period primarily due to
strong demand from one of its major customers, as well as continued expansion of
its customer base. Signal Transformer's sales for the first six months of 1997
increased 5% over the corresponding period of 1996 due to increased demand from
electronic OEMs. Stewart Stamping's sales of precision stampings increased 7%
over the first half of 1996. Stewart Connector's modular data interconnect
product sales were up slightly over the first six months of 1996.
Taylor's sales increased 2% ($0.9 million) in the first six months of 1997
over the corresponding period of the prior year following the spring yearbook
season. (See "-- Seasonality.")
The Company's operating income decreased to $31.0 million in the first half
of 1997 from $32.9 million in the first half of 1996 primarily due to operating
income included in 1996 results from the divested Office Products Business.
Operating income in the first six months of 1997 included $1.9 million from the
divested Office Products Business compared to $3.6 million in the first six
months of 1996. Excluding the divested Office Products Business, the Company's
operating income decreased 1% ($0.3 million) in the first six months of 1997
compared to the corresponding period of 1996 due to a decline in the
Technologies Group which was partially offset by increased operating income at
Taylor and the Automotive Components Group.
The Automotive Components Group's operating income in the first six months
of 1997 compared to the corresponding period of 1996 increased from $12.3
million to $12.6 million. Increased operating income at the Company's stamped
steel parts and stainless steel tubing business units was largely offset by
decreased operating income from the weak domestic automotive radiator
aftermarket.
The Technologies Group's operating income in the first six months of 1997
compared to the corresponding period of 1996 decreased from $13.4 million to
$11.4 million. Operating income was impacted by lower margins on power
transformers and competitive pricing pressures in the connector market,
partially offset by increased operating income at Escod.
In Specialty Publishing, Taylor's operating income in the first six months
of 1997 improved to $5.1 million from $3.7 million in the corresponding period
of the prior year due to improved operating margins reflecting increased
productivity.
Other Income (Expense). Interest expense decreased 17% ($1.6 million) in
the first six months of 1997 compared to the first six months of 1996 due to
lower debt balances. Interest income increased $1.6 million in the first half of
1997 over the corresponding period of 1996 due to interest income earned on the
proceeds from the sale of the Rolodex Business. Other income for the first six
months of 1997 and 1996 included $1.5 million and $1.4 million, respectively, of
equity income from the Company's unconsolidated joint venture, Thermalex, which
manufactures extruded aluminum tubing primarily for automotive air conditioning
condensers. The Company recorded a pre-tax gain on the sale of the Rolodex
Business totaling $95.0 million in the first half of 1997. Other income for the
first half of 1997 decreased $1.7 million from the first half of 1996 due to the
resolution of several legal disputes dating to prior years and the favorable
resolution of stock reserved for bankruptcy claims.
Income Tax Expense. The Company's effective income tax rate increased from
33.6% at June 30, 1996 to 38.9% at June 30, 1997 primarily because of the
greater proportion of domestic source income resulting from the sale of the
Rolodex Business. The Company expects to substantially offset the cash taxes
resulting from the sale of the Rolodex Business by utilizing its usable tax loss
carryforwards.
1996 COMPARED TO 1995
Sales. Net sales in 1996 were $572.5 million, an increase of 2% over 1995
net sales of $561.2 million. The aggregate growth rate was adversely affected by
the divestitures of Rolodex Electronics and Curtis in the second half of 1996.
Sales in the Automotive Components Group segment were $209.7 million, an
increase of 16% over 1995 sales of $180.3 million. The increased sales were
attributable to $20.5 million of sales from the 1996
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<PAGE> 49
acquisitions of the Lingemann Business and Great Lake, Inc. ("Great Lake") as
well as higher content per automobile of transmission clutch plates and higher
sales of aluminum heat exchangers and related products and equipment
manufactured by the segment's Thermal Components Group ("Thermal").
Approximately 29% of Thermal's sales are to the automotive OEM market. Steel
Parts achieved sales growth over 1995 due to higher parts content per
automobile, as automobile manufacturers have moved from three-speed to four-and
five-speed automatic transmissions. Steel Parts is primarily an OEM supplier of
transmission and other automotive components. The increased sales at Thermal and
Steel Parts were partially offset by a decline from the prior year at Romac
Metals ("Romac"), the Company's manufacturer of stainless steel tubing sold
principally in marine and distribution markets.
Sales in the Technologies Group were $183.7 million, an increase of 8% over
1995 sales of $170.6 million. Sales of the wire and cable assembly business,
Escod, were up 23% over 1995, reflecting continued expansion of its customer
base and a rebound in orders from its largest telecommunications customer.
Stewart Connector, the Company's manufacturer of high-speed data transmission
connectors which serves the computer networking market, had an 8% increase in
sales over the prior year with 15% growth in the fourth quarter of the year,
primarily as a result of a new contract with a major telecommunications customer
for connector/cable assemblies. Foreign sales accounted for approximately 40%
and 43% of Stewart Connector's sales in 1996 and 1995, respectively. Sales at
the segment's Signal Transformer unit were flat compared to the prior year.
Sales of precision stampings at the segment's Stewart Stamping unit increased 5%
due to the underlying strength of the markets that it serves, including the
housing construction and automotive markets.
Sales in the Office Products/Specialty Publishing Group were $179.1
million, a decrease of 15% from 1995 sales of $210.3 million, primarily due to
the divestitures of Rolodex Electronics in October 1996 and Curtis in September
1996. Excluding the effect of the divestitures, sales for the Group declined 2%
from the prior year as a result of lower sales of traditional office products.
Sales at Taylor were $99.0 million, relatively flat compared to prior year sales
of $98.6 million.
Operating Income. Operating income (loss) comparisons between 1996 and
1995 are more difficult to present than the sales comparisons because of the
effects of "fresh start" accounting on the results of operations. Due to the
effects of "fresh start" accounting, the Company's 1995 operating results were
depressed by a $32.2 million charge for the amortization of Reorganization
Goodwill. The consolidated reported operating income in 1996 improved to $59.1
million from $24.6 million in 1995. (See footnote 2 to the table on page 43 for
the effect of "fresh start" accounting on the reported operating income as well
as the comparability between the periods.)
Excluding the effects of "fresh start" accounting, as described above, the
Company's operating performance increased $2.3 million or 4%. The increase is
primarily due to higher operating income in the Office Products Business. This
gain was partially offset by higher corporate overhead, decreased operating
margins in the Technologies Group and a $1.5 million restructuring charge
recorded by Taylor. The higher corporate overhead in 1996 is primarily due to a
$4.3 million gain recorded in 1995 related to a change in the Company's pension
plan which temporarily reduced corporate overhead. These items and other
operational year-to-year changes are discussed below in the analysis of each
segment's operating income.
The Automotive Components Group operating income in 1996 compared to 1995
increased to $23.9 million from $20.4 million. The results in 1995 were
negatively affected by the amortization of Reorganization Goodwill totaling $3.4
million. Excluding amortization of Reorganization Goodwill, the segment's
operating performance was relatively flat compared to 1995, as the effect of
higher sales was offset by a $1.7 million increase in allocated corporate
overhead due to the 1995 pension gain noted above.
The Technologies Group operating income in 1996 compared to 1995 increased
to $24.5 million from $20.3 million. The results in 1995 were negatively
affected by a $7.2 million amortization charge for Reorganization Goodwill.
Excluding the amortization of Reorganization Goodwill, the segment's operating
performance decreased $3.0 million in 1996 compared to 1995, an 11% decrease,
due to decreased operating margins and a $1.7 million increase in allocated
corporate overhead due to the 1995 pension gain noted above. The decreased
operating margins were caused principally by competitive price pressure in the
connector market and delayed introductions of new connector products.
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<PAGE> 50
The operating income of the Office Products/Specialty Publishing Group was
$10.8 million in 1996 compared to an operating loss of $16.0 million in 1995.
The results in 1995 were negatively affected by a $21.6 million charge for
amortization of Reorganization Goodwill. Excluding the amortization of
Reorganization Goodwill, the segment's operating performance increased $5.3
million in 1996 compared to 1995. The results in 1995, as compared to 1996, were
negatively affected by $10.1 million of charges recorded for potentially
uncollectible accounts receivable, inventory valuation, anticipated customer
returns and other charges. The improvement in operating earnings for 1996 was
partially offset by decreased operating income at the Rolodex division and
Taylor and an increase in allocated corporate overhead of $1.6 million due to
the pension gain recorded in 1995.
In 1996, the operating income of the Specialty Publishing business, Taylor
improved to $1.7 million from an operating loss of $0.8 million in 1995 due
principally to the reduction in amortization of Reorganization Goodwill, which
totaled $5.6 million in 1995. Excluding the amortization of Reorganization
Goodwill, the unit's operating performance decreased $3.2 million in 1996
compared to 1995 due to a $1.5 million restructuring charge incurred in 1996
following Taylor's adoption of a restructuring plan to improve profitability, a
$1.1 million increase in allocated corporate overhead, which was primarily
attributable to the 1995 pension gain noted above, and increased administrative
costs.
Other Income (Expense). Interest expense decreased approximately 6% or
$1.2 million in 1996 compared to 1995 due to a lower effective interest rate and
lower debt balances. Other income for 1996 included a $3.1 million pre-tax gain
on the sale of Rolodex Electronics. Other income also included a favorable
adjustment of $2.2 million related to the Company's environmental liabilities
following completion of a site clean-up for an amount less than previously
estimated. Other income for 1995 included favorable adjustments of $3.6 million
related to the Company's environmental liabilities following a review of its
liabilities from previously divested operations and $1.5 million related to the
resolutions of several legal disputes. In addition, other income included a $4.0
million gain on the sale of idle corporate assets.
Income Tax Expense. The Company's actual income tax obligations during
1996 ($2.4 million) and 1995 ($2.6 million) were substantially less than the
total amount of income taxes recognized ($12.4 million and $16.1 million,
respectively) because previously generated net operating losses and other net
deferred tax assets were utilized to reduce the tax obligations. During 1996 and
1995, additional deferred tax assets of $10.7 million and $9.2 million,
respectively, were recognized and recorded on the Company's balance sheet
because it was concluded as more likely than not that such amounts would be
realized within future years. In accordance with the Reorganization SOP, the tax
benefits associated with the recognition of pre-effective date deferred tax
assets ($10.2 million and $1.6 million in 1996 and 1995, respectively) were
recorded as an increase to additional paid-in capital and $7.2 million in 1995
was recorded as a reduction to Reorganization Goodwill. The 1995 reduction
eliminated the remaining unamortized Reorganization Goodwill. The effective tax
rate on adjusted income from continuing operations (adjusted to exclude
Reorganization Goodwill amortization) was 24.7% in 1996 compared to 31.8% for
1995. The percentage decrease is primarily due to the recognition of the tax
benefit of net capital loss carryforwards. See Note 11 to the Consolidated
Financial Statements for further information.
1995 COMPARED TO 1994
Sales. Net sales from continuing operations in 1995 were $561.2 million,
an increase of 3% over 1994 net sales of $543.6 million. The aggregate growth
rate was adversely affected by the continuation in early 1995 of declining sales
at the Company's wire and cable assembly business and to a lesser degree by a
small decrease in school yearbook sales at Taylor.
Sales in the Automotive Components Group were $180.3 million, an increase
of 4% over 1994 sales of $173.1 million. The higher sales were attributable to
higher content per automobile of transmission clutch plates and higher unit
sales of heat exchanger products manufactured by the segment's Thermal unit. The
increase in units sold is due to increased penetration in non- automotive
aluminum heat exchanger markets and the accelerating demand for aluminum
radiator replacements. Approximately 23% of Thermal's sales are to the
automotive OEM market. Steel Parts, the segment's smaller unit, achieved sales
growth over 1994
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despite a slowdown in North American automobile production. The growth at Steel
Parts was due to higher parts content per automobile, as automobile
manufacturers have moved from three-speed to four- and five-speed automatic
transmissions. Steel Parts is primarily an OEM supplier of transmission and
other automotive components.
Sales in the Technologies Group were $170.6 million, an increase of 3% over
1994 sales of $164.9 million. This increase was offset by sharply reduced demand
in the first half of 1995 from two major customers of the segment's relatively
low margin wire and cable assembly business, Escod, which resulted in a 17%
($8.9 million) sales decline. Excluding this drop-off, the segment recorded a
13% increase in sales over 1994. This increase was partly a result of the
continued growth at the segment's Stewart Connector unit, the Company's
manufacturer of high-speed data transmission connectors which serves the
computer networking market. Despite the year-over-year improvement, Stewart
Connector experienced a slowdown in the rate of sales growth in the second half
of 1995 due to competitive pricing pressures and pending new product
introductions scheduled for introduction in 1996. Foreign sales accounted for
approximately 43% and 35% of Stewart Connector's sales in 1995 and 1994,
respectively. Sales at the segment's Signal Transformer unit increased primarily
due to the continued success of its customer-focused program to deliver
transformers within 24 hours of the receipt of the customer order. Sales at the
segment's Stewart Stamping unit increased due to the underlying strength of the
markets that it serves, including the telecommunications and electrical
industries, and as a result of more targeted selling efforts through the
engagement of additional independent sales representatives.
Sales in the Office Products/Specialty Publishing Group were $210.3
million, an increase of 2% over 1994 sales of $205.6 million. Sales of the
segment's office products (Rolodex division and Curtis) of $111.7 million
increased 6% over 1994 sales of $105.2 million due primarily to increases in
sales of consumer electronics and traditional card file products at the Rolodex
division. The sales at Taylor were $98.6 million, a decrease of 2% from 1994
sales of $100.4 million.
Operating Income. Operating income (loss) comparisons between 1995 and
1994 are less transparent than the sales comparisons because of the effects of
"fresh start" accounting on results of operations. Due to the effects of "fresh
start" accounting, the Company's 1995 and 1994 operating results were depressed
by $32.2 million and $69.2 million charges, respectively, for the amortization
of Reorganization Goodwill. The consolidated reported operating income in 1995
improved to $24.6 million from an operating loss of $9.7 million in 1994. See
footnote 2 on page 43 for the impact of "fresh start" accounting on the reported
operating income as well as the comparability between the periods. Excluding the
effects of "fresh start" accounting, as described above, the operating
performance from 1994 to 1995 decreased $2.7 million, a 5% decrease. The
decrease was primarily due to $10.1 million of charges related to uncollectible
accounts receivable, sales returns and obsolete inventory recorded at
Rolodex/Curtis of which $6.2 million were classified as nonrecurring charges.
These charges were partially offset by a gain of $4.3 million related to a
change in the Company's pension plan whereby a lump sum settlement feature was
adopted for retirees and certain vested participants resulting in the settlement
of more than $42.0 million in pension obligations. As a result, corporate
overhead was reduced by $4.3 million in 1995 compared to 1994. These items and
other operational year-to-year changes are discussed below in the analysis for
each segment's operating income.
The Automotive Components Group operating income in 1995 compared to 1994
increased from $14.9 million to $20.4 million. The results in each year were
negatively affected by the amortization of Reorganization Goodwill ($3.4 million
and $7.3 million in 1995 and 1994, respectively). Excluding amortization of
Reorganization Goodwill, the segment's operating performance improved $1.6
million in 1995 compared to 1994, a 7% increase, due to the higher sales and a
reduction of $0.9 million in allocated corporate overhead attributable to the
pension gain noted above.
The Technologies Group operating income in 1995 compared to 1994 increased
from $7.4 million to $20.3 million. The results in each year are negatively
affected by the amortization of Reorganization Goodwill ($7.2 million and $15.4
million in 1995 and 1994, respectively). Excluding the amortization of
Reorganization Goodwill, the segment's operating performance improved $4.7
million in 1995 compared to 1994, a 21%
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<PAGE> 52
increase, due to higher sales and improved productivity, as well as a reduction
of $1.5 million in allocated corporate overhead attributable to the pension plan
noted above.
The operating loss of the Office Products/Specialty Publishing Group, the
segment to which most of the Reorganization Goodwill was allocated, improved to
$16.0 million in 1995 from $30.8 million in 1994. In 1995 and 1994, the
amortization of Reorganization Goodwill included in the segment's operating
results was $21.6 million and $46.5 million, respectively. Excluding the
amortization of Reorganization Goodwill, the segment's operating performance
decreased $10.1 million in 1995 compared to 1994. The decrease was due to $6.2
million of nonrecurring charges recorded in the second quarter of 1995 at the
Rolodex division, related primarily to a number of open and unresolved customer
chargebacks that had originated in prior years. The nonrecurring charges also
included a charge at the Rolodex division and Curtis (the Company's computer
accessory unit) of $1.6 million to adjust the net realizable value of inventory
and related capital assets. In addition, the Company recorded provisions
totaling $3.9 million in the fourth quarter of 1995 for potentially
uncollectible accounts receivable, inventory valuation, anticipated customer
returns and other charges at the Rolodex division and Curtis. These charges were
partially offset by a reduction in allocated corporate overhead, attributable to
the pension gain noted above, of $1.7 million.
In 1995, the operating losses of the Specialty Publishing business, Taylor,
improved to $0.8 million from $9.9 million in 1994 due to a $6.5 million
decrease in the amortization of Reorganization Goodwill and improved
productivity relating to the introduction in 1994 of new photo processing
technology. Throughout 1995 the Company continued efforts to upgrade production
processes at Taylor resulting in improved quality of its school yearbooks and
reduced turnaround time to schools as well as improved financial performance.
Other Income (Expense). Interest expense decreased approximately 33% ($9.5
million) in 1995 compared to 1994 because of the early retirement of long-term
debt in 1994 and the refinancing of long-term debt in November 1994. See
" -- Financial Condition -- Cash Flows From (Used In) Financing Activities."
Other income for 1995 included favorable adjustments of $3.6 million related to
the Company's environmental liabilities following a review of its liabilities
from previously divested operations and $1.5 million related to the resolutions
of several legal disputes. In addition, other income included a $4.0 million
gain on the sale of idle corporate assets. Other income for 1994 included a $1.2
million gain related to the collection of notes receivable in excess of their
financial statement carrying amount.
Income Tax Expense. The Company's actual income tax obligations during
1995 ($2.6 million) and 1994 ($2.3 million) were substantially less than the
total amount of income taxes recognized ($16.1 million and $15.5 million,
respectively) because previously generated net operating losses and other net
deferred tax assets were utilized to reduce the tax obligations. During 1995 and
1994, additional deferred tax assets of $9.2 million and $40.7 million,
respectively, were recognized and recorded on the balance sheet because it was
concluded that it was more likely than not that such amounts would be realized
in future years. In accordance with the Reorganization SOP, the tax benefits
associated with the recognition of pre-effective date deferred tax assets ($7.2
million and $39.0 million in 1995 and 1994, respectively) were recorded as a
reduction to Reorganization Goodwill. The 1995 reduction eliminated the
remaining unamortized Reorganization Goodwill.
Discontinued Operations. On August 1, 1994, the Company sold substantially
the entire paint products segment for net proceeds of $50.8 million, resulting
in a gain of $10.7 million, net of taxes of $8.2 million. The tax on the gain
was offset by utilization of federal and state net operating loss carryforwards
and as a result did not result in significant cash payments. In accordance with
the Reorganization SOP the tax benefit associated with utilization of
pre-effective date loss carryforwards was recorded as a reduction in the
Company's Reorganization Goodwill. The net proceeds were utilized to reduce the
Company's long-term debt.
Extraordinary Item. An extraordinary charge of $2.2 million, net of $1.3
million tax, was recorded in the fourth quarter of 1994 as a result of prepaying
post-reorganization debt prior to its maturity. See "-- Financial Condition."
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FINANCIAL CONDITION
Factors that are expected in the future to affect the Company's financial
position are discussed below.
Cash Flows From (Used In) Operating Activities. Operations used $5.2
million of cash in the first six months of 1997 as compared to providing $10.3
million of cash in the first six months of 1996. Cash flows from operations
decreased from the corresponding period of the prior year due to cash flows from
the divested businesses included in 1996 results, the timing of cash receipts
and higher tax payments. The Company's cash for periods prior to the six months
ended June 30, 1997 was more favorably impacted by tax loss carryforwards, which
reduced the actual cash payments for the years to well below the financial
statement income tax expense. The tax loss carryforwards were substantially
reduced in 1997 due to the gain from the sale of the Rolodex Business. As a
result, beginning in 1998 it is expected that the Company will no longer have
any tax loss carryforwards available to reduce cash payment obligations.
Operations provided $55.4 million in cash in 1996 compared to $37.7 million cash
in 1995, which represented a $17.7 million or 47% year-over-year increase. This
improvement was primarily due to improved accounts receivable collections in the
Office Products Business.
Cash Flows From (Used In) Investing Activities. In the six months ended
June 30, 1997, the Company sold the Rolodex Business for a net sales price of
$112.6 million. In the first six months of 1996, the Company acquired businesses
servicing the automotive, heavy truck and industrial manufacturing radiator
replacement market (Great Lake, Inc. and Kar Tool Co., Inc.) for a net purchase
price of $5.1 million. The Company's other current investments consist
principally of capital expenditures which totaled $10.3 million and $9.3 million
during the six months ended June 30, 1997 and June 30, 1996, respectively. In
the year ended December 31, 1996 the Company acquired the Lingemann Business in
addition to the two businesses acquired in the six months ended June 30, 1996,
resulting in acquisitions totaling $37.7 million. In 1996, the Company also
received proceeds totaling $21.8 million from the sale of Curtis and Rolodex
Electronics; $3.6 million from Thermalex for full repayment of loans
outstanding; a $3.4 million dividend distribution from Thermalex; and $1.3
million from the disposal of idle assets. In 1995, the Company received $2.5
million from Thermalex relating to the partial repayment of loans, a $0.4
million dividend distribution from Thermalex and $4.7 million from the disposal
of idle assets. In 1994, the Company received net proceeds of $50.8 million from
the sale of its paint products segment, $4.6 million for final payments on
outstanding notes from previously divested subsidiaries and $1.0 million from
Thermalex as a partial loan repayment. The Company's capital expenditures
totaled $22.6 million in 1996, and $22.2 million in 1995. The Company currently
anticipates that approximately $27.0 million will be invested in capital
expenditures in 1997. The Company expects to finance these expenditures and
investments with internally generated funds. The Company does not anticipate
that limitations on capital expenditures under the New Credit Facility will
adversely affect its ability to meet its operating goals.
Cash Flows From (Used In) Financing Activities. Due to the Company's
seasonal use of cash flow from operations in the first six months of the year,
financing activities provided $7.8 million in the first six months of 1997 and
$3.0 million in the first six months of 1996. The financing activities were
provided from the Company's revolving credit facility borrowings of $15.3
million and $15.7 million in the first six months of 1997 and 1996,
respectively. Payments on the Company's term loan totaled $5.6 million and $8.0
million in the first half of 1997 and 1996, respectively. In addition to
borrowing activity, the Company paid $1.7 million and $1.6 million of
prepetition liabilities and repurchased its Common Stock for $1.9 million and
$3.4 million in the first six months of 1997 and 1996, respectively. In the full
year 1996, the Company repaid $22.8 million of its initial $155.0 million term
loan and repurchased its Common Stock for $3.9 million. During 1995, the Company
repaid $12.6 million of its term loan and repurchased its Common Stock for $6.8
million.
In October 1994, the Company entered into the Old Credit Facility that
provided it up to $285 million in borrowing capacity. The Old Credit Facility
consisted of a $130 million revolving credit facility, with a $50 million
sublimit for issuance of letters of credit, and a $155 million term loan. The
term loan was payable in quarterly installments through March 31, 2001. Under
the terms of the Old Credit Facility, proceeds from asset sales were to be
applied to reduce the term loan under certain circumstances. The revolving
credit facility was to terminate and all amounts outstanding, if any, were to be
due on March 31, 2001. The Company
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<PAGE> 54
subsequently entered into the New Credit Facility as of July 3, 1997 which
increased the revolving credit facility and permitted the Company on July 10,
1997 to refinance the Old Credit Facility. See "Description of the New Credit
Facility."
The Company has no required debt service payments in the next five years.
However, commencing on the third anniversary of the New Credit Facility and each
succeeding anniversary thereafter through its term, the revolving loan
commitment is reduced by $20 million with the result that the aggregate
outstanding indebtedness at such time, if any, in excess of such amount must be
repaid. In addition, the revolving loan commitments are subject to reduction
under certain circumstances and in certain amounts following asset dispositions.
The interest and commitment fee payable under the New Credit Facility during the
next five years will fluctuate based on margins tied to a certain financial
ratio, as well as to changes in interest rates. Borrowings under the New Credit
Facility will bear interest at various fluctuating rates, at the Company's
option, which approximate the one-to-six month LIBOR rates plus 1.25% (such
LIBOR rates approximated 5.6875% to 5.90625% at June 30, 1997), subject to
step-downs upon the achievement of certain financial ratios. See "Description of
the New Credit Facility." The Company reduces its exposure to potential
increases in interest rates by entering into forward rate, interest rate cap and
interest rate swap agreements with major financial institutions. A summary of
the terms of those agreements is contained in Note 7 to the Consolidated
Financial Statements.
Net Income (Loss) and Accumulated Equity (Deficit). At June 30, 1997 and
at December 31, 1996, the Company had stockholders' equity totaling $108.5
million and $33.4 million, respectively, compared to stockholders' deficit
totaling $15.8 million at December 31, 1995. The increase in the equity in the
six months ended June 30, 1997 is a result of the net income during the period
which is largely attributable to the $95.0 million pre-tax gain from the sale of
the Rolodex Business. The deficit in 1995 was attributable to the effect of the
amortization of Reorganization Goodwill which amounted to $32.2 million, $69.2
million and $54.5 million in 1995, 1994 and 1993, respectively. At December 31,
1995, the Reorganization Goodwill was fully amortized.
Liquidity. At June 30, 1997, the Company's cash and cash equivalents and
net working capital amounted to $111.2 million and $145.0 million, respectively,
compared to $3.5 million and $48.0 million, respectively, at December 31, 1996.
The significant increase over December 31, 1996 levels are due to the receipt of
the net proceeds from the sale of the Rolodex Business totaling $112.6 million.
The Company had placed into a restricted account $110 million of these proceeds
which had been pledged as security for the Company's bank loans. The entire $110
million was invested in a money market fund with Goldman Sachs immediately upon
receipt on March 5, 1997. On July 10, 1997 the Company used the $110 million to
repurchase Shares as described below (see " -- Subsequent Events"). The
borrowing ability under the Company's revolving credit facility as of the end of
the first six months of 1997 was $63.2 million, including $39.8 million
available for letters of credit.
Seasonality. The Company's yearbook publishing business, Taylor, is highly
seasonal, with a majority of sales occurring in the second and third quarters of
the year. Taylor receives significant customer advance deposits commencing each
November and continuing through March. The Company's other businesses are not
highly seasonal.
Impact of Inflation and Changing Prices. Inflation and changing prices
have not significantly affected the Company's operating results or markets. The
Company is generally able to pass through to its customers price changes in its
major steel, copper and aluminum based product lines.
Subsequent Events. On July 10, 1997, approximately $110 million of the
proceeds from the sale of the Rolodex Business were used to fund the purchase of
2,805,194 Shares from Water Street and 51,948 Shares from Robert L. Smialek, the
President and Chairman of the Board of the Company, for a purchase price of
$38.50 per Share. On July 10, 1997 the Company refinanced the Old Credit
Facility under a new six year $200 million credit agreement. On July 11, 1997
the Company commenced a $110 million self tender offer for up to 2,857,142
Shares at $38.50 per Share. On August 12 the Tender Offer expired. Upon the
expiration of the Tender Offer, 2,857,142 Shares had been tendered in the Tender
Offer and the Company purchased all
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2,857,142 Shares at $38.50 per Share. The purchase of Shares tendered in the
Tender Offer was paid for from the proceeds from the issuance and sale of the
Old Notes.
Foreign Sales. For the six months ended June 30, 1997 the Company had
export sales of $35.6 million which constituted 12% of total sales. Export sales
through June 30, 1997 to Europe, Asia, Canada and Mexico were $16.4 million,
$7.2 million, $5.3 million and $2.7 million, respectively. In 1996, the Company
had export sales of $71.6 million which constituted 12% of total sales. Export
sales in 1996 to Europe, Asia, Canada and Mexico were $29.9 million, $17.1
million, $8.4 million and $6.8 million, respectively. All other export sales in
1996 totaled $9.4 million. In 1995, export sales were $59.7 million or 11% of
total sales. In 1994, export sales were less than 10%. The Company's
transactions are primarily in U.S. dollars.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This Prospectus contains certain statements that are "Forward Looking
Statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Those statements include, among other things,
discussions of the Company's business strategy and expectations concerning
market position, future operations, margins, growth, profitability, liquidity
and capital resources. Forward Looking Statements are included in
"Summary -- Business Strategy," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business" and elsewhere in this
Prospectus. Although the Company believes that the expectations reflected in
Forward Looking Statements are reasonable, they can give no assurance that such
expectations will prove to have been correct. The words "believe," "expect,"
"anticipate," "intend," "estimate" and other expressions which indicate future
events and trends identify forward-looking statements. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only as
of their dates. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. Generally, these statements relate to business plans
or strategies, projected or anticipated benefits or other consequences of such
plans or strategies or projections involving anticipated revenues, expenses,
earnings, levels of capital expenditures, liquidity or indebtedness or other
aspects of operating results or financial position. All phases of the operations
of the Company are subject to a number of uncertainties, risks and other
influences, many of which are outside the control of the Company and any one of
which, or a combination of which, could materially affect the results of the
Company's operations and whether the forward looking statements made by the
Company ultimately prove to be accurate. Important factors that could cause
actual results to differ materially from the Company's expectations are
disclosed in this section and in "Risk Factors." See "Risk
Factors -- Substantial Leverage; Ability to Service Debt," "-- Restrictions
Imposed by the New Credit Facility," "-- Risk of Ability to Finance Change of
Control," "-- Customer Concentration; Absence of Long-Term Contracts,"
"-- Cyclical Markets," "-- Seasonality; Product Disruption," "-- Competition",
"Technology and the Development of New Products," and "-- Dependence on Key
Personnel."
BUSINESSES AND PROPERTIES
The Company, a Delaware corporation, directly and through its subsidiaries,
is a diversified manufacturer of automotive component products,
telecommunications and electronics components and is a supplier of specialty
publications. The Company's Automotive Components Group serves primarily the
automotive markets through its Thermal and Steel Parts operating units and
manufactures stainless steel tubing used in non-automotive applications through
its Romac operating unit. The Technologies Group serves primarily the
telecommunications and electronics components markets through its Stewart
Connector Systems, Stewart Stamping, Signal Transformer and Escod operating
units. Specialty Publishing consists of Taylor (a publisher of specialty
publishing products, chiefly student yearbooks). The Company completed the
divestiture of its Office Products Business with the sale of the Rolodex
Business on March 5, 1997 for a price of $117,000,000, less transactions costs.
The Company recognized a pre-tax gain on the sale totaling $95,001,000 in the
first quarter of 1997. The Company had previously divested its computer
accessories business and Rolodex Electronics in the fourth quarter of 1996.
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<PAGE> 56
REORGANIZATION HISTORY
On January 13, 1991 (i.e., the Petition Date), the Company and a number of
its subsidiaries sought protection under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the Western District
of Texas as the Company found itself unable to service the outstanding debt
incurred in its 1988 leveraged buyout. On April 1, 1993 (the "Reorganization
Date"), the Company emerged from the Chapter 11 cases pursuant to the Plan of
Reorganization. The Plan of Reorganization resulted in a reduction in the
Company's liabilities of $532.3 million, an extraordinary gain realized in 1993
of $448.3 million attributable to the discharge of such liabilities and a change
in control of the Company.
The Plan of Reorganization, among other matters, provided for: (i) the
issuance of 9,230,839 Shares in exchange for allowed unsecured claims; (ii)
deferred payment of certain prepetition claims, including various state and
federal taxes and trade debt; and (iii) the issuance of additional Shares to
other unsecured creditors over time at the pre-determined rate of 18 Shares per
$1,000 of allowed claim as those claims are determined. As of March 15, 1997,
120,571 Shares were still reserved for issuance to holders of general unsecured
claims whose allowed amounts were not finally determined by the Reorganization
Date.
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<PAGE> 57
BUSINESSES
For additional business segment information, see Note 18 to the
Consolidated Financial Statements.
AUTOMOTIVE COMPONENTS GROUP
The Automotive Components Group is made up of three operating units:
Thermal, Steel Parts and Romac. The businesses in this segment manufacture
automotive heat exchangers and related tubing, automatic transmission and
suspension components and stainless steel tubing, respectively.
AUTOMOTIVE SALES BY MARKET SEGMENT
The following table shows the sales by market segment for the Automotive
Components Group for both 1996 and the first half of 1997:
<TABLE>
<CAPTION>
1997
1996 FIRST HALF
----- ----------
<S> <C> <C>
OEM Automotive............................................ 45.9% 46.4%
OEM Other................................................. 22.6 25.4
Automotive Aftermarket.................................... 18.8 17.7
Other..................................................... 12.7 10.5
----- -----
Total..................................................... 100.0% 100.0%
===== =====
</TABLE>
Heat Transfer. Thermal is comprised of three divisions: Thermal
Components, General ThermoDynamics and McKenica; three wholly owned
subsidiaries: Great Lake, Thermal Components Division, Inc. and ARUP Alu-Rohr
und -Profil GmbH ("ARUP"); and a 50% owned joint venture, Thermalex. Thermal is
a vertically integrated manufacturer of heat exchangers for the automotive,
specialty vehicle, truck, heavy equipment and off-road vehicle and industrial
equipment markets. Its products include thin wall aluminum and brass tubes used
principally in heat transfer applications, radiators, air conditioning
condensers, oil coolers and heaters and production machinery and equipment used
in the manufacture and assembly of automotive heat exchangers.
Thermal uses a direct sales force and independent sales representatives to
market its products. Thermal sells to both OEMs and aftermarket customers. For
the six months ended June 30, 1997 Thermal sales to the automotive OEM markets,
aftermarket and non-automotive OEM manufacturers were 29%, 30% and 41% of total
sales, respectively. In 1996, Thermal sales to the automotive OEM market,
aftermarket and non-automotive OEM manufacturers were 29%, 33% and 38% of total
sales, respectively, compared to 23%, 37% and 40% of total sales, respectively,
in 1995.
Thermalex, a joint venture owned equally by the Company (through a holding
company subsidiary) and Mitsubishi Aluminum Co., Ltd., manufactures multiport
aluminum extrusions used in smaller, lighter and more efficient air conditioning
condensers which are necessary to meet environmental restrictions on
refrigerants.
The markets for automotive heat-exchanger products are highly competitive
and have many participants, particularly automobile OEMs that produce for their
own use and several large independent manufacturers. Thermal supplies tubes and,
through Thermalex, extrusions to domestic automobile OEMs and independent
manufacturers. Thermal is an established supplier of welded radiator tubes to
manufacturers and repair shops in the heat-exchanger aftermarket.
Thermal has manufacturing facilities in Alabama, Michigan, New York, South
Carolina, Wisconsin and Germany. At June 30, 1997, Thermal (excluding Thermalex)
had 912 employees.
On February 1, 1996, the Company, through its Great Lake subsidiary,
acquired two affiliated businesses, Great Lake and Kar Tool Co., Inc., that
serve the automobile, heavy truck and industrial equipment radiator replacement
market. These acquisitions did not have a material effect on the Company's
liquidity, financial position or operating results.
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<PAGE> 58
On July 10, 1996, the Company and its subsidiary TCD, Inc. acquired the
Lingemann Business. The transactions included the purchase of stock of
Lingemann's German subsidiary, ARUP, and the automotive aluminum tube business
assets of its Duncan, South Carolina based subsidiary, Helima-Helvetion
International, Inc. The cash transaction, financed principally from borrowings
under the Company's Old Credit Facility, was valued at approximately $32.6
million including transaction fees and expenses.
Transmission Components. Steel Parts, a wholly owned subsidiary of the
Company, manufactures automotive parts consisting of close-tolerance precision
metal stampings at its facility in Indiana. Its products include clutch plates
for automatic transmissions, suspension parts for vibration-reducing assemblies
and engine mounts.
Substantially all Steel Parts sales are made to the domestic automobile
industry, either directly or indirectly through other independent automotive
parts suppliers. As a result, the demand for Steel Parts' products historically
has been heavily dependent on the level of new car production by the domestic
automobile industry. Steel Parts has also seen its production content per
automobile increase in recent years as automobile manufacturers have moved from
three-speed to four- and five-speed automatic transmissions. The strong domestic
automotive market resulted in Steel Parts operating at or near capacity for most
of 1995, 1996 and the first six months of 1997.
The market for original equipment automobile parts is highly competitive
and has many participants, principally the automobile manufacturers themselves
because of their ability to make their own parts. Approximately 70%, 67% and 66%
of Steel Parts' sales were to Ford in 1996, 1995 and 1994, respectively. For the
six months ended June 30, 1997, approximately 71% of sales were to Ford.
At June 30, 1997, Steel Parts had 379 employees.
Stainless Steel Tubing. Romac manufactures stainless steel tubing for a
variety of marine, architectural, automotive and decorative applications at its
facility in North Carolina. Substantially all of its sales are domestic.
The markets for these products are highly competitive. Competition is based
principally on price and, to a lesser extent, on the shapes and finishes that
can be achieved with the tubing.
At June 30, 1997, Romac had 125 employees.
TECHNOLOGIES GROUP
The Technologies Group consists of four operating units: Stewart Connector;
Signal Transformer; Stewart Stamping; and Escod Industries ("Escod"). These
units manufacture telecommunication and electrical component products for the
computer networking, telephone digital switching, precision wiring, main frame
computer, automotive and medical equipment markets.
Specialized Connector Systems. The Company's specialized connector systems
business is made up of Stewart Connector Systems, Inc. and Stewart Connector
Systems (Japan), Inc. and two subsidiaries of Stewart Connector: Stewart
Connector Systems GmbH and Stewart Connector Systems de Mexico, S.A. de C.V.
Stewart Connector designs and manufactures specialized high speed data
connector systems, including modular plugs, modular jacks, shielded and
nonshielded specialized connectors and cable assemblies for telecommunications,
cellular communications and data transmission, including local and wide area
networks. Its primary manufacturing facility is located in Pennsylvania, with an
assembly operation in Mexico.
Stewart Connector sells its products throughout the world, directly and
through sales subsidiaries, and through a network of manufacturers'
representatives. Foreign sales accounted for approximately 43% of Stewart
Connector's sales in the first half of 1997, 40% in 1996, 43% in 1995 and 35% in
1994. It maintains direct sales offices in England, France, Japan and Germany
and has numerous domestic and foreign competitors, some of which are
substantially larger than Stewart Connector. Competition is based principally
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<PAGE> 59
on price with respect to older product lines and on technology and product
features for newer products and, to a lesser extent, patent protection.
At June 30, 1997, Stewart Connector had 743 employees, of which 361 were
employed in the United States, 20 in Japan, five in Germany, four in the United
Kingdom, one in France and 352 in Mexico.
Power Transformers. The Company's power transformer business consists of
three entities (collectively, "Signal"): Signal Transformer Co., Inc. ("Signal
Transformer"); Signal Caribe, Inc. ("Signal Caribe"); and Signal Dominicana S.A.
("Signal Dominicana"). Signal manufactures both standard "off-the-shelf" and
custom-made power transformers serving a broad customer base in a variety of
industries. Signal's markets include telecommunications, home and retail
security systems, medical instrumentation, gaming and entertainment and process
controls. Signal markets its products directly, utilizing catalogs and print
advertising, and indirectly through selective independent sales representatives
in targeted regions of the country. It has a customer base of over nine thousand
accounts, consisting of both OEMs and aftermarket resellers.
The electronic transformer industry includes both domestic and foreign
manufacturers, and there are numerous competitors to Signal. Competition is
based on price and availability of product to meet customers' needs. Signal has
directed its marketing efforts for many years towards engineers and other
customers having specialized, low-volume demand and prompt delivery
requirements. To capitalize on an identified market niche, Signal has a service
that guarantees 24-hour delivery for small order quantities of certain
"off-the-shelf" transformers.
Currently, Signal Dominicana manufactures transformer coils at a leased
production facility in the Dominican Republic for final assembly at Signal
Caribe's leased Puerto Rico plant. The Puerto Rico plant also manufactures
transformers from basic materials and accounts for most of Signal's production.
Signal Transformer, located in New York, serves as Signal's major distribution
center and accounts for the balance of transformer production.
At June 30, 1997, Signal had 657 employees, of which 155 were employed in
the United States, 237 in the Dominican Republic and 265 in Puerto Rico.
Precision Stampings and Wireforms. The Company's wholly owned subsidiary,
Stewart Stamping Corporation ("Stewart Stamping"), is a tool designer and
subcontract manufacturer of precision stampings and wireformed parts. Stewart
Stamping manufactures components used in electrical devices such as circuit
breakers, electric fuses, lighting and process controls, and the electronic
industries, including passive components such as capacitor cans and connector
contacts. Stewart Stamping sells its products to a broad customer base primarily
in the U.S. through a network of manufacturers representatives. Stewart Stamping
manufactures its products at its plant in Yonkers, New York. Stewart Stamping
recently leased a manufacturing facility in El Paso, Texas to better serve the
Southwestern U.S. and Mexican assembly operations of telecommunication and
electronics customers.
Stewart Stamping's competitors in each of its product lines are numerous
(including, in the case of metal stampings, its own customers), but Stewart
Stamping traditionally has focused on products that, because of the engineering
and manufacturing capability required to produce them, have the potential for
repeat business.
At June 30, 1997, Stewart Stamping had 316 employees.
Cable and Wire Assemblies. Escod produces electronic cable assemblies,
specialized wire harnesses and certain telecommunication equipment subassemblies
for sale to manufacturers of telecommunications, computer and other electronics
equipment. Escod's markets generally are regional in nature, and Escod's
production facilities (three in the Carolinas and one in Florida) are operated
principally to serve local plants of OEMs. Because substantially all of Escod's
customers are OEMs having a number of production facilities, the demand for
Escod's products depends not only on the demand for its customers' products but
also on its customers' varying utilization of their production sites.
Telecommunications and computer OEMs account for the bulk of Escod's sales.
Two telecommunications OEMs together accounted for approximately 66%, 60% and
65% of Escod's total revenues in 1996, 1995 and 1994, respectively, and
approximately 70% of total revenues in the six months ended June 30, 1997.
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<PAGE> 60
Escod's dependence on these two major customers makes its revenues and operating
income sensitive to changes in demand from those customers. In 1994, Escod
experienced a substantial drop in orders from these customers. In response,
Escod permanently closed one facility and consolidated the business in its
remaining facilities. Beginning in 1995, Escod has focused its efforts on
developing a broader customer base and a broader product line.
Competition in Escod's markets is based primarily on price and, to a lesser
extent, on responsiveness to customers' needs. The profitability of Escod's
sales generally depend on the relative raw material content, labor productivity,
quality of the products sold, proximity to customers and timeliness of delivery.
As a result of the low barriers to entry into Escod's business and increased,
low-cost foreign competition in recent years, Escod's business has become
intensely competitive.
At June 30, 1997, Escod had 785 employees.
SPECIALTY PUBLISHING
Specialty Publishing consists of Taylor, a wholly owned subsidiary engaged
in yearbook and other specialty publishing.
Yearbooks and Other Publications. Taylor is engaged primarily in the
contract design and printing of student yearbooks from which it derived at least
87% of its revenues in each of the last three years. Through June 30, 1997
yearbooks accounted for approximately 95% of sales. Its principal yearbook
customers are secondary (middle and senior high) schools. Other yearbook
customers include elementary schools, colleges and academies. Taylor also
publishes a variety of specialty books on a contract basis and a limited number
of its own publishing titles and provides reunion planning and other services
for alumni of schools, colleges and academies.
Competition in the yearbook industry is based upon customer service,
quality and price. The market for yearbooks is affected more by demographic
trends than by business cycles. Taylor offers several yearbook lines with
different graphic and typographic options and capabilities. Taylor has expended
significant resources in recent years to develop a system of electronic copy
preparation designed to enhance the quality and consistency of photographs,
reduce production costs and shorten the time required for yearbook production.
Taylor has also developed proprietary software programs for use by its customers
in developing yearbooks. This software facilitates the yearbook design work
performed by schools and improves the overall production process.
Taylor markets its yearbook services through commissioned independent sales
representatives who maintain contact with yearbook faculty advisors, school
principals and other key purchasing personnel. It also trains students and their
advisors in layout, design and marketing, conducts seminars and workshops and
provides supporting materials, including software, to assist student yearbook
staffs in the production process.
Yearbook production is highly seasonal. Orders are normally obtained in the
fall and finished yearbooks are delivered at or near the end of the school year,
typically late spring to early summer and, to a lesser degree, in the fall of
the following school year. Deposits representing approximately 25% of the
yearbook contract price are due from the yearbook customer upon its submission
of the first set of yearbook pages. Given the seasonal production cycle, the
Company typically receives significant cash deposits commencing each November
and continuing through each March. These deposits are available to fund the
working capital requirements of the yearbook production cycle, to reduce the
Company's indebtedness and for general corporate purposes.
Taylor operates four production facilities in Texas (two owned and two
leased) and one leased production facility in Pennsylvania. Its work force
reflects the seasonality of its business, typically ranging from 1,000 to 1,800
full-time employees. At June 30, 1997, it had 160 salaried and 1,246 hourly
employees.
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<PAGE> 61
PATENTS AND TRADEMARKS
The Company holds patents or trademarks in most of its businesses which
have expiration dates ranging from 1997 to 2016. The Company expects to maintain
such patents and to renew the trademarks important to its business prior to
their expiration and does not believe the expiration of any one of its patents
will have a material adverse effect on any of its businesses.
RAW MATERIALS AND SUPPLIES
The principal raw materials and supplies used by the Company include: (i)
steel, aluminum, copper, zinc, brass and nickel (Automotive Components Group);
(ii) copper wire, steel, brass, aluminum, plastics, ceramics and precious metals
(Technologies Group); and (iii) paper, film and other photographic and printing
supplies (Specialty Publishing). The Company purchases these materials and
supplies on the open market to meet its current requirements and believes its
sources of supply are adequate for its needs.
EMPLOYEES AND LABOR RELATIONS
At June 30, 1997, the Company employed approximately 5,362 people on a
full-time basis, of whom approximately 25% were covered by collective bargaining
agreements with various unions. The largest collective bargaining unit (at
Taylor) covers approximately 563 employees. Among the union agreements that will
expire in 1997 are those covering certain union employees of Taylor. The Company
considers relations with its employees to be good.
The Company has defined benefit and defined contribution pension plans
covering substantially all employees. For information respecting defined benefit
pension plans, see Note 10 to the Consolidated Financial Statements. The Company
is currently participating in a Closing Agreement Program (established by the
Internal Revenue Service) to cure operational defects in one of the defined
contribution plans as a result of an omission of certain eligible employees from
participation. The Company has paid a $40,000 tax penalty and expects the
curative action will entail a one-time incremental contribution by it to the
plan in an amount that has not been finally determined, but that the Company
does not presently expect will be material to its consolidated financial
position, results of operations or liquidity.
ENVIRONMENTAL REGULATIONS AND PROCEEDINGS
Environmental Matters. The Company's manufacturing operations involve the
generation of a variety of waste materials and are subject to extensive federal,
state and local environmental laws and regulations. The waste materials
generated include metal scrap from stamping operations, cutting and cooling
oils, degreasing agents, chemicals from plating and tinning operations, etching
acids and photographic and printing chemicals. The Company uses offsite disposal
facilities owned by others to dispose of its wastes and does not store wastes it
generates to the extent such storage would require a permit. The Company does
not treat, store or dispose of waste for others. The Company is required to
obtain permits to operate various of its facilities, and these permits generally
are subject to revocation or modification.
The Company has taken significant measures to address emissions, discharges
and waste generation and disposal; improve management practices and operations
in response to legal requirements; and internally audit compliance with
applicable environmental regulations and approved practices. These measures
include: raw material and process substitution; recycling and material
management programs; periodic review of hazardous waste storage and disposal
practices; and reviewing the compliance and financial status and management
practices of its offsite third-party waste management firms.
As a result of the Company's reorganization, much uncertainty has been
removed concerning the Company's potential liability for environmental
contamination at sites owned or operated by the Company (and at third-party
disposal and waste management facilities used by the Company) prior to the
filing of its bankruptcy petition. During the reorganization, the Company
settled all claims of the United States relating to the Company's pre-Petition
Date conduct at previously owned or third party sites arising under the federal
Comprehensive Environmental Response, Compensation, and Liability Act. This
settlement: (i) discharged
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<PAGE> 62
the Company's liability to the United States at a number of hazardous waste
sites; (ii) protects the Company from contribution claims of the remaining
potentially responsible parties; (iii) limits the amount the Company may be
required to pay the United States in any one year on prepetition claims; and
(iv) provides that any such payment may be made in cash or, at the Company's
option, Common Stock at the rate of 18 Shares for each $1,000 of allowed claims.
The Company is also currently engaged in clean-up programs at sites located
in Newtown, Connecticut and Mount Vernon, New York, which were owned by the
Company on the Petition Date. The Company has established what it believes are
appropriate reserves for anticipated remedial obligations. Due to the
establishment of these reserves and the environmental settlements reached during
the Company's reorganization, management does not believe that environmental
compliance or remedial requirements are likely to have a material effect on the
Company.
LEGAL PROCEEDINGS
From time to time, the Company is involved in litigation relating to claims
arising out of its operations in the normal course of its business. The Company
maintains insurance coverage against potential general liability and certain
other claims in an amount it believes to be adequate. In the Company's opinion,
the outcome of these matters will not have a material adverse effect on the
Company's financial condition, liquidity or results of operation.
PROPERTIES
As of June 30, 1997, the Company operated 35 facilities throughout the
United States and seven facilities internationally consisting of approximately
2.2 million square feet. Eighteen of these 42 facilities (consisting of
approximately 1.5 million square feet) are owned by the Company. Management
believes that the Company's facilities generally are well maintained and
adequate for the purposes of which they are used.
Substantially all of the Company's material domestic assets, including
owned properties, are subject to liens and encumbrances to secure the Company's
obligations under the New Credit Facility.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
All of the Company's directors and executive officers are listed below:
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICES
--------------------------------------- --- -------------------------------------------
<S> <C> <C>
Robert L. Smialek...................... 53 Chairman of the Board, President and Chief
Executive Officer
James J. Gaffney....................... 56 Director
Terence M. O'Toole..................... 39 Director
Thomas E. Petry........................ 57 Director
Barry S. Volpert....................... 37 Director
Robert F. Heffron...................... 52 Executive Vice President and Chief
Operating Officer
Kenneth H. Koch........................ 42 Vice President, General Counsel and
Secretary
Leslie G. Jacobs....................... 47 Vice President, Human Resources
Phillip K. Woodlief.................... 44 Vice President and Corporate Controller
David A. Kauer......................... 41 Vice President and Treasurer
</TABLE>
Robert L. Smialek, 53, has served as Chairman of the Board, President and
Chief Executive Officer of the Company since May 1, 1993. From October 1992 to
May 1993, Mr. Smialek served as the President and Chief Operating Officer of the
Temperature and Appliance Controls Group of Siebe plc, a global controls and
engineering firm. From September 1990 to October 1992, Mr. Smialek served as
President and Chief Operating Officer of Ranco, Inc., a subsidiary of Siebe,
Inc. From May 1988 to May 1990, Mr. Smialek served as Group Vice President for
Tracor Instruments Group. For the prior 19 years, Mr. Smialek worked for General
Electric Company, most recently as the General Manager of Manufacturing and
Technology Operations for the General Electric Medical Systems Group.
James J. Gaffney, 56, specializes in the turnaround of financially troubled
companies, serving with such companies as the chief executive officer, as a
board director or as an independent consultant. He was formerly the President
and Chief Executive Officer of General Aquatics, Inc., a successor to KDI
Corporation (September 1993 -- April 1997). He previously served as Chief
Executive Officer of International Tropic-Cal, Inc. (August 1991 -- July 1992),
and as an independent consultant from September 1989 to August 1991 and from
July 1992 to the present. Mr. Gaffney provides consulting services to GS Capital
Partners II, L.P. (a private investment fund affiliated with Water Street and
Goldman Sachs) and other affiliated investment funds in relation to an
investment held by those funds. He also is a director of Koll Real Estate Group
Inc.
Terence M. O'Toole, 39, has been a Managing Director of Goldman Sachs since
November 1996. Previously, he was a general partner of Goldman Sachs from 1992
to 1996 and prior thereto was a Vice President of Goldman Sachs. Mr. O'Toole is
a director of AMF Group Inc., Western Wireless Corporation, Concentric Network
Corporation and several private companies.
Thomas E. Petry, 57, is Chairman of the Board (since March 1989) of
Eagle-Picher Industries, Inc., which is engaged in, among other businesses, the
manufacture of earthmoving equipment and other machinery, automotive parts and
industrial products. A voluntary petition under Chapter 11 of the Federal
Bankruptcy Laws was filed by Eagle-Picher Industries, Inc. on January 7, 1991.
An amended plan of reorganization was filed during August 1996, and approved by
U.S. Bankruptcy Court during November 1996, whereby Eagle-Picher emerged from
bankruptcy. Mr. Petry is a director of The Union Central Life Insurance Co., The
William Powell Co., CINergy Corp., Star Banc Corp. and Star Bank, N.A.
Barry S. Volpert, 37, has been a Managing Director of Goldman Sachs since
November 1996. He was a general partner of Goldman Sachs from 1994 to 1996. He
was a Vice President of Goldman Sachs from 1990 to 1994 and the Manager of Water
Street from 1991 to 1994. From 1989 to 1991, Mr. Volpert was the head of
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<PAGE> 64
Goldman Sachs' workout and restructuring advisory business. He is a director of
Rockefeller Center Properties, Inc. and several private companies.
Robert F. Heffron, 52, has been the Executive Vice President and Chief
Operating Officer since October 1996 and was the Executive Vice President from
July 1993 to October 1996. He was the Vice President and General Manager of the
Grayson Division of Robertshaw Controls Company (a subsidiary of Siebe, Inc.)
from January 1992 -- June 1993; Vice President and General Manager of Ranco,
Inc. (a subsidiary of Siebe, Inc.) from February 1991 -- January 1992; Vice
President, Business Operations, of the Control Systems Division of Johnson
Controls, Inc. from October 1990 -- February 1991 and Vice President and General
Manager of the Control Products Division of Johnson Controls, Inc. prior
thereto. Each of the foregoing companies or divisions manufactures or supplies
control devices and systems for refrigeration, ventilation, air conditioning,
heating, appliance or automotive applications.
Kenneth H. Koch, 42, has been the Vice President, General Counsel and
Secretary since October 1993. Prior thereto he was an associate and then a
partner with the law firm of Porter, Wright, Morris & Arthur.
Leslie G. Jacobs, 47, has been the Vice President, Human Resources since
August 1993 and was the Director of Human Resources from January 1990 to August
1993. Prior thereto, he was the Director, Compensation and Employee Programs, of
Rockwell International.
Philip K. Woodlief, 44, has been the Vice President and Corporate
Controller since April 1997 and was Controller from February 1989 to April 1997.
David A. Kauer, 41, has been the Vice President and Treasurer since April
1997 and was the Treasurer from September 1993 to April 1997. He was the
Controller and Treasurer of Johnson Yokogawa Corporation (a joint venture of
Yokogawa Electric Corporation and Johnson Controls, Inc.), from October 1989 --
September 1993.
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PRINCIPAL STOCKHOLDERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of Shares by each
beneficial owner of more than five percent of the issued and outstanding Shares.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OF CLASS
-------------------------------------------------------- ---------------- ----------
<S> <C> <C>
Water Street Corporate Recovery Fund I, L.P. ........... 1,847,878(1)(2) 45.3%
85 Broad Street
New York, NY 10004
Continental Casualty Company............................ 502,926(3) 12.5%
CNA Plaza
Chicago, Illinois 60685
</TABLE>
- ---------------
(1) Represents Shares beneficially owned by Water Street. Goldman Sachs is the
general partner of Water Street and thus may be deemed to be the beneficial
owner of Shares held by Water Street. GS Group is a general partner of
Goldman Sachs and directly owns 334 Shares not included in the amount shown.
The address of Goldman Sachs and GS Group is 85 Broad Street, New York, NY
10004. Goldman Sachs disclaims beneficial ownership of the Shares held by
Water Street except to the extent that such ownership corresponds to its
interests in Water Street and disclaims beneficial ownership of the Shares
held by GS Group. GS Group disclaims beneficial ownership of the Shares held
by Water Street to the extent partnership interests in Water Street are held
by persons other than GS Group, Goldman Sachs or their affiliates.
(2) Includes an aggregate of 40,000 Shares acquired from the Company by Water
Street through Messrs. O'Toole and Volpert pursuant to a director
compensation plan; also includes 64,000 Shares subject to stock options
exercisable by Mr. O'Toole or Mr. Volpert within 60 days of September 22,
1997.
(3) Represents Shares beneficially owned by Continental Casualty Company
("Continental"). Continental is a subsidiary of CNA Financial Corporation
("CNA") and Loews Corporation ("Loews"). As such, CNA and Loews may be
deemed to be the beneficial owner of Shares held by Continental. Each of CNA
and Loews disclaims beneficial ownership of the Shares held by Continental.
The address for CNA is CNA Plaza, Chicago, Illinois 60685. The address for
Loews is 667 Madison Avenue, New York, New York 10021. The Share ownership
information is based solely on the ownership reported by CNA in its Schedule
13G dated February 14, 1997 and does not reflect sales, if any, from such
date, including in the Tender Offer.
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<PAGE> 66
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of Shares by each
executive officer of the Company who owns Shares, each director of the Company
and by all directors and executive officers as a group, as of September 22,
1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENTAGE
OWNED OF CLASS
---------------- ----------
<S> <C> <C>
James J. Gaffney........................................ 0 *
Terence M. O'Toole...................................... 1,847,878(1) 45.3%
Thomas E. Petry......................................... 0 *
Robert L. Smialek....................................... 235,066(2) 5.6%
Barry S. Volpert........................................ 1,847,878(1) 45.3%
Robert F. Heffron....................................... 27,565(3) *
David A. Kauer.......................................... 9,433(4) *
Kenneth H. Koch......................................... 9,965(5) *
Leslie G. Jacobs........................................ 10,875(6) *
Philip K. Woodlief...................................... 9,746(7) *
All directors and executive officers as a group (8) (10
persons).............................................. 2,150,528 50.0%
</TABLE>
- ---------------
* Less than 1%
(1) Includes 64,000 Shares subject to stock options exercisable within 60 days
of September 22, 1997. The Shares listed for Mr. O'Toole and Mr. Volpert are
beneficially owned by Water Street or by Goldman Sachs of which Mr. O'Toole
and Mr. Volpert are Managing Directors; however, Mr. O'Toole and Mr. Volpert
disclaim beneficial ownership of such Shares except to the extent of their
indirect pecuniary interest in such Shares.
(2) Includes 160,000 Shares subject to stock options exercisable within 60 days
of September 22, 1997.
(3) Includes 26,665 Shares subject to stock options exercisable within 60 days
of September 22, 1997.
(4) Includes 8,833 Shares subject to stock options exercisable within 60 days of
September 22, 1997.
(5) Includes 8,665 Shares subject to stock options exercisable within 60 days of
September 22, 1997.
(6) Includes 10,475 Shares subject to stock options exercisable within 60 days
of September 22, 1997.
(7) Includes 9,345 Shares subject to stock options exercisable within 60 days of
September 22, 1997.
(8) Includes 287,983 Shares subject to stock options exercisable within 60 days
of September 22, 1997.
AFFILIATE TRANSACTIONS
Goldman Sachs, one of the Initial Purchasers, received an underwriting
discount in connection with the Offering in an amount of $3,375,000. Goldman
Sachs is an affiliate of GSCP, which is a lender under the New Credit Facility
and which received customary fees thereunder. In addition, Goldman Sachs is an
affiliate of Water Street and has acted as financial adviser to the Company in
connection with the Transactions for which Goldman Sachs has received fees of
$2,200,000 in the aggregate. See "Summary -- The Transactions."
62
<PAGE> 67
DESCRIPTION OF THE NEW CREDIT FACILITY
As of July 3, 1997, the Company entered into an Amended and Restated Credit
Agreement (the "New Credit Facility") with Citicorp USA, Inc. ("Citicorp"), as
Administrative Agent, The First National Bank of Chicago ("First Chicago") and
Goldman Sachs Credit Partners L.P. ("GSCP"), as Syndication Agents, and
Citicorp, First Chicago, and GSCP and the institutions from time to time party
to the Amended and Restated Credit Agreement as Lenders and Issuing Banks. The
New Credit Facility amended the Company's prior Credit Agreement (the "Old
Credit Facility"). At the closing of the New Credit Facility, an underwriting
fee was paid by the Company to the Administrative Agent and the Syndication
Agents.
The New Credit Facility provides for the following: a $200,000,000
revolving credit facility, with (i) a $50,000,000 sublimit for commercial and
standby letters of credit (including the opportunity to obtain letters of credit
in various selected foreign currencies); (ii) a $50,000,000 sublimit for
advances in selected foreign currencies; and (iii) a $10,000,000 sublimit for
swing loans. The New Credit Facility amended and restated in full the Old Credit
Facility and among other things, (a) increased the revolving credit commitments
of the lenders from $130,000,000 to $200,000,000; (b) extended the maturity date
of the revolving credit facility from March 31, 2001, to July 8, 2003; (c)
refinanced the outstanding amounts under the Company's term loans; (d) permitted
the Company to issue the Old Notes and redeem or repurchase the Company's common
stock and to use the Rolodex Proceeds for such purposes; (e) modified the
interest rate structure applicable to borrowings; (f) added Insilco Deutschland
GmbH as a borrower and established a mechanism by which the Company could
qualify other foreign subsidiaries as borrowers; and (g) permitted the Company
and any foreign borrowers to borrow in certain foreign currencies. The New
Credit Facility is a comprehensive document that requires the Company and its
subsidiaries on a consolidated basis to maintain compliance with certain
financial ratios, restricts the ability of the Company and its subsidiaries to
incur indebtedness, sell assets, and create liens, make acquisitions or other
investments, enter into accommodation obligations, pay dividends, make stock
purchases, and pay junior payments. The New Credit Facility also requires the
Company and its subsidiaries to maintain affirmative covenants and to maintain
certain financial and other reports.
The proceeds of the New Credit Facility were used to refinance the
indebtedness existing under the Old Credit Facility, to fund working capital in
the ordinary course of the business of the Company and its subsidiaries, to fund
acquisitions permitted under the terms of the New Credit Facility, and for other
general corporate purposes.
Interest accrues under the New Credit Facility at floating rates calculated
with respect to either LIBOR or Citibank New York's Base Rate, plus an
applicable margin. The applicable margin, in turn, fluctuates based on the
financial performance of the Company. Based on the Company's financial
performance, the Company may borrow at the Base Rate, plus 0.125%, which
approximates 8.625% as of September 24, 1997, or at LIBOR, plus 1.25%, which
approximates 6.9% as of September 24, 1997. Under the New Credit Facility, the
Company also pays an unused commitment fee, which also fluctuates based upon the
financial performance of the Company. The unused commitment fee is based on the
difference between the maximum amount of commitments under the New Credit
Facility and the daily outstanding principal balance of the revolving credit
obligations. As of September 24, 1997, the unused commitment fee is 0.375%. In
addition, the Company pays per annum fees for the issuance of letters of credit
based upon the undrawn stated amount. The fees for letters of credit are
calculated again upon the financial performance of the Company. As of September
24, 1997, the Company is paying 1.25% per annum of the undrawn stated amount of
issued and outstanding letters of credit. In addition, the Company pays to
Citicorp, as Administrative Agent, an annual agency fee. The applicable margins,
unused commitment fee, and letter of credit fees discussed above are each
calculated with respect to the Company's leverage ratio (the ratio of Funded
Debt (as defined therein) to EBITDA (as defined therein)). The New Credit
Facility provides that the Company notify the Administrative Agent that a rate
reduction or increase is required and provide the Administrative Agent with a
compliance certificate evidencing such change.
The New Credit Facility will terminate by its terms on July 8, 2003. No
principal payments are scheduled, but the maximum principal amount of the
revolving credit obligations under the New Credit
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<PAGE> 68
Facility will reduce by $20,000,000 at each of the third, fourth and fifth
anniversaries of the New Credit Facility's effective date. The Company is
required, however, to make mandatory prepayments on the New Credit Facility
which would reduce the maximum revolving credit commitments, subject to certain
exceptions, in the following circumstances: (i) an amount equal to 100% of any
net cash proceeds received by the Company on account of (a) any disposition of
assets and the receipt of certain insurance and condemnation proceeds (with
certain exceptions), (b) any issuance of debt securities (other than the
proceeds of the Old Notes), and (c) any sale and leaseback transaction in excess
of a certain aggregate amount; and (ii) an amount equal to 25% of any net cash
proceeds received by the Company on account of the issuance of any capital
stock. With respect to certain specified assets, or in the event the Company has
achieved on a pro forma basis a specified leverage ratio, only 50% of the net
cash proceeds are required to be applied to reduce the maximum revolving credit
commitments. In the latter event, if the Company does not reinvest the proceeds
of such asset sale or other disposition within 180 days after receipt thereof,
the maximum revolving credit commitments will be further reduced by an amount
equal to such uninvested amount. Interest is payable monthly and at the end of
each interest period for LIBOR and foreign currencies.
The lenders' respective obligations to extend credit to the borrowers under
the New Credit Facility are conditioned upon, among other things, the following:
(i) the continuing validity of the comprehensive representations and warranties
of the Company and its subsidiaries and the performance of the various financial
and other covenants in the New Credit Facility and in any other loan documents;
(ii) the Company's performance and compliance in all material respects with all
the terms, provisions, agreements and conditions set forth in the Indenture with
respect to the Notes and the absence of any default thereunder; and (iii) the
absence of any material adverse change in the business, condition, operations,
performance, properties or prospects of the Company or its subsidiaries taken as
a whole since December 31, 1996.
The New Credit Facility is and will be guaranteed by the Company (as to
foreign borrowers) and by substantially all of the Company's present and future
domestic subsidiaries. The obligations thereunder are secured by (i) all or a
substantial portion of the common stock or other interests in the Company's
present and future subsidiaries, (ii) the present and future property and
assets, including all accounts receivable, inventory, equipment, fixtures,
patents, trademarks, and specified real property, of the Company and its present
and future domestic subsidiaries (subject to certain qualifications and
exceptions), and (iii) a collateral assignment of intercompany notes and junior
security agreements securing all obligations of the domestic subsidiaries to the
Company. The security interests, pledges, patent and trademark pledges and
mortgages and deeds of trust are and shall be granted pursuant to security
agreements, pledge agreements, patent and trademark security agreements,
mortgages and deeds of trust in form and substance satisfactory to the
administrative agent, together with such other agreements, documents and
instruments which the administrative agent requires. The New Credit Facility
provides that the Company and its subsidiaries will provide the administrative
agent and the lenders future liens on certain real property and substantially
all personal property and will provide all material documentation relating to
property acquired after the date of the New Credit Facility.
The New Credit Facility provides for certain financial reports to be
delivered on a monthly, quarterly, and annual basis to the administrative agent
and to the lenders. The New Credit Facility also provides affirmative covenants,
requiring, among other things, the Company and its subsidiaries to maintain
corporate existence, pay taxes, maintain insurance, and comply with certain
other laws and regulations where the failure to comply would have a material
adverse effect. The New Credit Facility permits certain acquisitions under
certain terms and conditions, and up to agreed upon limits, which limits do not
include any portion of the acquisition price that is payable in the common stock
of the Company.
The New Credit Facility contains certain consolidated financial covenants,
including, but not limited to, covenants related to minimum consolidated net
worth, minimum fixed charge coverage ratio, minimum interest coverage ratio,
maximum leverage ratio and a limit on annual capital expenditures. These
financial covenants are subject to certain adjustments in financial performance
calculated in respect of projections submitted to the lenders. The minimum
consolidated net worth is calculated as of the end of each quarter. The minimum
fixed charge coverage ratio, the minimum interest coverage ratio, and the
maximum leverage ratio
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<PAGE> 69
are each determined as of the end of each quarter on a rolling (trailing) twelve
months basis. The maximum capital expenditure covenant is measured on an annual
basis.
The New Credit Facility also contains certain negative covenants, which,
among other things, restrict the ability of (i) the Company and its subsidiaries
to incur additional indebtedness in excess of certain agreed upon amounts and
excluding certain types of indebtedness; (ii) the Company and its domestic
subsidiaries to sell or transfer assets, in excess of certain agreed upon limits
and excluding certain types of assets; (iii) the Company and its domestic
subsidiaries to create or grant liens other than permitted liens, purchase money
liens, and other liens of certain types and liens which secure agreed upon
amounts; (iv) the Company and its domestic subsidiaries to make investments
other than permitted investments, and then only in prescribed amounts; (v) the
Company and its subsidiaries to enter into accommodation obligations, except for
certain types of accommodation obligations and in certain amounts; (vi) the
Company and its domestic subsidiaries to pay any dividends, redeem, purchase or
acquire any of the Company's shares, or other rights with respect thereto, or
pay any principal, premium or interest in respect to any subordinated
obligations with certain qualifications and exceptions (permitting, in the
ordinary course, the payment of interest on the Notes); (vii) the Company and
its subsidiaries to engage in businesses not substantially similar, related or
incidental to the present businesses of the Company and its subsidiaries; (viii)
the Company to enter into transactions with affiliates other than on an
arms-length basis; (ix) the Company, its domestic subsidiaries, and foreign
borrowers to consolidate, dissolve, merge, or enter into joint ventures, with
certain exceptions and under certain conditions; (x) the Company and its
domestic subsidiaries to enter into sale and lease-back transactions in excess
of certain limits; (xi) the Company and its subsidiaries to cancel or prepay
certain indebtedness; and (xii) the Company or its domestic subsidiaries to
amend the Notes or voluntarily repay, redeem, purchase or otherwise retire the
Notes.
The New Credit Facility contains specified events of default, which include
the failure to make payments of interest or principal when due, the breach of
certain affirmative or negative covenants, the breach of any representation or
warranty made by the Company or any of its subsidiaries, in any loan document, a
default as to other specified indebtedness or under material operating leases,
the commencement of a voluntary or involuntary bankruptcy case, the entry
against the Company or any of its subsidiaries (and the lapse of specified time
periods without discharge of the same) or their property of any judgment, writ,
order or warrant of attachment, or other similar process which is $10 million in
excess of applicable insurance coverage, the entry of any order, judgment or
decree which brings about the voluntary dissolution of the Company, the failure
of any security for the New Credit Facility, the occurrence of any termination
event under ERISA and the occurrence of any Change of Control (as defined
therein).
The New Credit Facility also requires certain other expenses of the
administrative agent, the syndication agents, the issuers of letters of credit,
and the lenders to be reimbursed by the Company and contains provisions for
indemnification by the Company of such members of the Company's bank group.
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<PAGE> 70
DESCRIPTION OF THE NOTES
The New Notes are to be issued under an Indenture, to be dated as of August
12, 1997 (the "Indenture"), between the Company and The Bank of New York, a New
York banking corporation, as trustee (the "Trustee").
The Indenture is, by its terms, subject to and governed by the Trust
Indenture Act of 1939, as amended (the "TIA"). The statements under this caption
relating to the New Notes and the Indenture are summaries and do not purport to
be complete, and are subject to, and are qualified in their entirety by
reference to, all provisions of the Indenture, including the definitions of
certain terms therein. Wherever defined terms or particular sections of the
Indenture are referred to, such defined terms and sections are incorporated
herein by reference. Copies of the Indenture and the Registration Rights
Agreement referred to below (see "The Exchange Offer") are available at the
corporate trust office of the Trustee. All references in this section to the
"Company" refer solely to Insilco Corporation, the issuer of the New Notes, and
not to its Subsidiaries.
GENERAL
The New Notes will be senior subordinated obligations of the Company, will
be limited to $150 million aggregate principal amount and will mature on August
15, 2007. The New Notes will be unsecured.
The New Notes are effectively subordinated to all existing and future
indebtedness and other liabilities (including trade payables and Capital Lease
Obligations) of the Company's Subsidiaries. The Company's domestic Subsidiaries
have joint and several liability for (and have pledged substantially all of
their assets as collateral for, and in certain cases guaranteed) indebtedness
under the New Credit Facility. See "Risk Factors -- Subordination of the New
Notes; Other Indebtedness" and "-- Structural Subordination." In addition,
subject to certain financial tests, the Company's Restricted Subsidiaries may
from time to time hereafter Incur additional Debt, including under the New
Credit Facility, to which the New Notes would be effectively subordinated.
INTEREST AND PAYMENTS
The New Notes will bear interest at the rate per annum shown on the front
cover of this Prospectus from August 12, 1997 or from the most recent Interest
Payment Date to which interest has been paid or provided for, payable
semi-annually on February 15 and August 15 of each year, commencing February 15,
1998, to the Person in whose name the Note (or any predecessor Note) is
registered (a "Holder") at the close of business on the preceding February 1 or
August 1, as the case may be. The New Notes will bear interest on overdue
principal and premium (if any) and, to the extent permitted by law, overdue
interest at the rate per annum shown on the front cover of this Prospectus plus
2%. Interest on the New Notes will be computed on the basis of a 360-day year of
twelve 30-day months. (sections 301, 308 and 311).
The principal of (and premium, if any) and interest on the New Notes will
be payable, and the transfer of New Notes will be registrable, at the office or
agency of the Company maintained for that purpose in the Borough of Manhattan,
The City of New York. In addition, payment of interest may, at the option of the
Company, be made by check mailed to the address of the Person entitled thereto
as it appears in the Security Register; provided, however, that all payments of
the principal (and premium, if any) and interest on New Notes the Holders of
which have given wire transfer instructions to the Company or its agent at least
10 Business Days prior to the applicable payment date will be required to be
made by wire transfer of immediately available funds to the accounts specified
by such Holders in such instructions. (sections 301, 306 and 1002).
OPTIONAL REDEMPTION
The New Notes will be subject to redemption, at the option of the Company,
in whole or in part, at any time on or after August 15, 2002 and prior to
maturity, upon not less than 30 nor more than 60 days' notice mailed to each
Holder of New Notes to be redeemed at such Holder's address appearing in the
Security Register, in amounts of $1,000 or an integral multiple of $1,000, at
the following Redemption Prices
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<PAGE> 71
(expressed as percentages of the principal amount redeemed), plus accrued
interest to but excluding the Redemption Date (subject to the right of Holders
of record on the relevant Regular Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date), if redeemed
during the twelve-month period beginning on August 15 of each of the years
indicated below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
--------------------------------------------- ----------------
<S> <C>
2002......................................... 105.125%
2003......................................... 103.417%
2004......................................... 101.708%
2005 and thereafter.......................... 100.000%
</TABLE>
(sections 203, 1101, 1105 and 1107).
If less than all the New Notes are to be redeemed, the particular New Notes
to be redeemed will be selected not more than 60 days prior to the Redemption
Date by the Trustee, from the Outstanding New Notes not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of portions (equal to $1,000
or any integral multiple thereof) of the principal amount of New Notes of a
denomination larger than $1,000. (sec. 1104).
MANDATORY REDEMPTION
Except as described below under "Repurchase at the Option of
Holders -- Asset Dispositions" and "-- Change of Control," the New Notes will
not have the benefit of any mandatory redemption or sinking fund obligations of
the Company.
REPURCHASE AT THE OPTION OF HOLDERS
Asset Dispositions
The Company may not make, and may not permit any Restricted Subsidiary to
make, any Asset Disposition (other than an Asset Disposition permitted under the
Indenture as described in "Covenants -- Mergers, Consolidations and Certain
Sales of Assets" below) in one transaction (or series of related transactions)
unless: (i) the Company (or such Restricted Subsidiary, as the case may be)
receives consideration at the time of such disposition at least equal to the
fair market value of the shares or other assets disposed of (as determined in
good faith by the Board of Directors and evidenced by their resolution) for any
transaction (or series of related transactions) involving in excess of $2
million; (ii) at least 80% of the consideration received by the Company (or such
Restricted Subsidiary) consists of: (u) cash, readily marketable cash
equivalents, readily marketable fixed-income securities or equity securities
traded on a national securities exchange or NASDAQ (valued, in the case of
securities, at the market value thereof when received by the Company or such
Restricted Subsidiary), (v) the assumption of Debt or other liabilities
reflected on the consolidated balance sheet of the Company and its Restricted
Subsidiaries in accordance with generally accepted accounting principles
(excluding Debt or any other liabilities subordinate in right of payment to the
New Notes) and release from all liability on such Debt or other liabilities
assumed, (w) assets used by, or stock or other ownership interests in, a Person
that upon the consummation of such Asset Disposition becomes a Restricted
Subsidiary and will be principally engaged in the business of the Company or any
of its Wholly Owned Restricted Subsidiaries substantially as such business was
conducted prior to such Asset Disposition (as determined by the Board of
Directors in good faith) or (x) any combination thereof and (iii) 100% of the
Net Available Proceeds from such Asset Disposition (including from the sale of
any marketable cash equivalents, fixed-income or equity securities received
therein), less any amounts ("Reinvested Amounts") invested, within one year from
the later of the date of such Asset Disposition or the receipt of such Net
Available Proceeds, in assets that will be used in the same or a substantially
similar or related business of the Company or any of its Wholly Owned Restricted
Subsidiaries as conducted prior to such Asset Disposition (as determined by the
Board of Directors in good faith), are applied by the Company or a Restricted
Subsidiary (a) first, within one year from the later of the date of such Asset
Disposition or the receipt of such Net Available Proceeds, to repayment of
Senior Debt of the Company or Debt of its Restricted Subsidiaries then
outstanding under any agreements or instruments which would require such
application or
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<PAGE> 72
which would prohibit payments pursuant to the following clause (b); (b) second,
to the extent Net Available Proceeds are not required to be applied to Senior
Debt or Debt of Restricted Subsidiaries as specified in clause (a), to purchases
of Outstanding New Notes pursuant to an Offer to Purchase at a purchase price
equal to 100% of their principal amount, plus accrued interest to the date of
purchase (subject to the rights of Holders of record on the relevant Regular
Record Date to receive interest due on an Interest Payment Date that is on or
prior to the purchase date), and, to the extent required by the terms thereof,
to purchases (on a pro rata basis with the New Notes) of any other Debt of the
Company or its Restricted Subsidiaries that is pari passu with the New Notes at
a price no greater than 100% of the principal amount thereof, plus accrued
interest to the date of purchase, in each case to the extent such purchases are
not prohibited by the terms of any Senior Debt of the Company or of any Debt of
Restricted Subsidiaries then outstanding; (c) third, to the extent of any
remaining Net Available Proceeds following purchases pursuant to the foregoing
clause (b), to the repayment of other Debt of the Company or Debt of a
Restricted Subsidiary, to the extent permitted under the terms thereof and (d)
fourth, to the extent of any remaining Net Available Proceeds, to any other use
as determined by the Company which is not otherwise prohibited by the Indenture.
(sec. 1017). The foregoing obligations will not continue after a discharge of
the Company or defeasance from its obligations with respect to the New Notes.
See "Defeasance" below.
Notwithstanding the foregoing, the Company will not be required to comply
with the requirements described in clause (ii) or clause (iii) of the preceding
paragraph for any Asset Disposition that is an Excepted Disposition, and the
Company will not be required to comply with the requirements described in clause
(iii) of the preceding paragraph except at any time and from time to time that
the aggregate amount of Net Available Proceeds, less Reinvested Amounts,
required to be applied pursuant to clause (iii) (and not theretofore so applied)
exceeds $10 million; provided, however, with respect to such clause (iii), that
if any Restricted Subsidiary in which a Reinvested Amount is invested becomes an
Unrestricted Subsidiary thereafter, such change in status, except under certain
circumstances, will be deemed an Asset Disposition with Net Available Proceeds
of cash in an amount equal to such Reinvested Amount (less any portion of such
Reinvested Amount theretofore distributed to the Company or any Restricted
Subsidiary), and such amount of cash will be applied pursuant to clause (iii)
above (subject to this proviso). (sec. 1017).
Any Offer to Purchase required by the provisions described above will be
effected by the sending of the written terms and conditions thereof (the "Offer
Document"), by first class mail, to Holders of the New Notes within 30 days
after the date which is one year after the later of the date of such Asset
Disposition or the receipt of the related Net Available Proceeds. The form of
the Offer to Purchase and the requirements that a Holder must satisfy to tender
any New Note pursuant to such Offer to Purchase are substantially the same as
those described below under "-- Change of Control."
Change of Control
Within 30 days following the consummation of a transaction that results in
a Change of Control (as defined below), the Company will commence an Offer to
Purchase all Outstanding New Notes, at a purchase price equal to 101% of their
aggregate principal amount, plus accrued interest to the date of purchase
(subject to the rights of Holders of record on the relevant Regular Record Date
to receive interest due on an Interest Payment Date that is on or prior to the
date of purchase). Such obligation will not continue after a discharge of the
Company or defeasance from its obligations with respect to the New Notes. See
"Defeasance."
A "Change of Control" will be deemed to have occurred in the event that,
after the date of the Indenture, the following occurs: (i) replacement of a
majority of the Board of Directors of the Company from the directors who
constituted the Board of Directors on the date of the Indenture for any reason
other than death, retirement or disability, and such replacement shall not have
been approved by the Board of Directors of the Company as constituted on the
date of the Indenture (or as changed over time with the approval of the Board of
Directors of the Company); or (ii) a Person or entity or group of Persons or
entities acting in concert, other than Water Street Corporate Recovery Fund I,
L.P. ("Water Street") or its Affiliates or any Person or entity or group of
Persons or entities acting in concert and controlled by Water Street or its
Affiliates, shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the
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<PAGE> 73
Company representing more than 50% of the total voting power of all classes of
the Voting Stock of the Company.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the New Notes resulting from a Change of Control.
Under the terms of the New Credit Facility, a Change of Control could
constitute an event of default thereunder and prohibit the redemption of the New
Notes. If an event of default under the New Credit Facility has occurred and is
continuing, payments owing on the New Notes could be blocked pursuant to the
subordination provisions of the New Notes. See "-- Subordination" below. To
repay the New Notes, it may be necessary for the Company first to recapitalize
or refinance the New Credit Facility and some or all of its outstanding
indebtedness (if any). There can be no assurance that such recapitalization or
refinancing, if required, would be accomplished on favorable terms, in a timely
manner or at all.
Prior to the mailing of an Offer Document, the Company will in good faith
seek to obtain any required consents of holders of Senior Debt or repay the
outstanding obligations thereunder. The right of holders to require the Company
to purchase New Notes pursuant to an Offer to Purchase will be subject to
obtaining the requisite consents or making such repayment.
Within 30 days following a Change of Control, an Offer Document will be
sent, by first class mail, to Holders of the New Notes, accompanied by such
information regarding the Company and its Subsidiaries as the Company in good
faith believes will enable the holders to make an informed decision with respect
to the Offer to Purchase, which at a minimum will include (a) the most recent
annual and quarterly financial statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in the
documents required to be filed with the Trustee pursuant to the provisions
described under "Covenants -- Provision of Financial Information" below (which
requirements may be satisfied by delivery of such documents together with the
Offer to Purchase), (b) a description of material developments in the Company's
business subsequent to the date of the latest of such financial statements
referred to in clause (a) (including a description of the events requiring the
Company to make the Offer to Purchase), (c) if applicable, appropriate pro forma
financial information concerning the Offer to Purchase and the events requiring
the Company to make the Offer to Purchase and (d) any other information required
by applicable law to be included therein. The Offer Document will contain all
instructions and materials necessary to enable holders of the New Notes to
tender New Notes pursuant to the Offer to Purchase. The Offer Document will also
state (i) that a Change of Control has occurred (or, if the Offer to Purchase is
delivered in connection with an Asset Disposition, that an Asset Disposition has
occurred) and that the Company will offer to purchase the holder's New Notes,
(ii) the Expiration Date of the Offer to Purchase, which will be, subject to any
contrary requirements of applicable law, not less than 30 days or more than 60
days after the date of such Offer Document, (iii) the Purchase Date for the
purchase of New Notes which will be within five Business Days after the
Expiration Date, (iv) the aggregate principal amount of New Notes to be
purchased (including, if less than 100%, the manner by which such purchase has
been determined pursuant to the Indenture) and the purchase price and (v) a
description of the procedure which a holder must follow to tender all or any
portion of the New Notes. (sections 101 and 1018).
To tender any Note, a holder must surrender such Note at the place or
places specified in the Offer Document prior to the close of business on the
Expiration Date (such Note being duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by, the holder thereof or its attorney duly authorized in writing). A
holder will be entitled to withdraw all or any portion of New Notes tendered if
the Company (or its Paying Agent) receives, not later than the close of business
on the Expiration Date, a telegram, facsimile transmission or letter setting
forth the name of the holder, the principal amount of the Note the holder
tendered, the certificate number of the Note the holder tendered and a statement
that such holder is withdrawing all or a portion of his tender. Any portion of a
Note tendered must be tendered in an integral multiple of $1,000 principal
amount. (sec. 101).
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SUBORDINATION
The payment of the principal of (and premium, if any) and interest on the
New Notes and all other Obligations in respect of the New Notes or on account of
any Claim (collectively, the "Subordinated Obligations") will, in certain
circumstances as set forth in the Indenture, be subordinated in right of payment
to the prior payment in full of all Senior Debt of the Company. Upon any payment
or distribution of assets of the Company to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets and liabilities or any bankruptcy, insolvency or
similar proceedings ("Insolvency Proceedings") of the Company, the holders of
Senior Debt of the Company will be entitled to receive payment in full of the
principal of (and premium, if any), interest on and all other Obligations in
respect of such Senior Debt, including all amounts due or to become due on all
such Senior Debt, or provision will be made for payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of such Senior
Debt, before the Holders of New Notes are entitled to receive any Securities
Payment. "Securities Payment" means any payment or distribution of any kind,
whether in cash, property or securities (including any payment or distribution
deliverable by reason of the payment of any other Debt subordinated to the New
Notes) on account of the Subordinated Obligations or on account of the purchase,
redemption or other acquisition of New Notes by the Company or any Subsidiary of
the Company. If notwithstanding the foregoing the Trustee or the Holder of any
Note receives during the pendency of any Insolvency Proceeding any Securities
Payment before all Senior Debt of the Company is paid in full or payment thereof
is provided for in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of such Senior Debt, then in such event such
Securities Payment will be required to be paid over or delivered forthwith to
the holders of Senior Debt for application to the payment of all Senior Debt of
the Company remaining unpaid, to the extent necessary to pay such Senior Debt in
full. Notwithstanding the foregoing, Holders of the New Notes may receive
Subordinated Securities. (sections 1301 and 1302).
The Company may not make any Securities Payment (except for Subordinated
Securities) if there has occurred and is continuing a default in the payment of
the principal of (or premium, if any) or interest on or any other payment
Obligation owing in respect of any Designated Senior Debt or if there has
occurred and is continuing any event of default with respect to any Designated
Senior Debt that has resulted in such Designated Senior Debt becoming or being
declared due and payable prior to the date on which it would otherwise have
become due and payable (a "Senior Payment Default"). In addition, if any default
(other than a Senior Payment Default) with respect to any Designated Senior Debt
permitting after notice or lapse of time (or both) the holders thereof (or a
trustee on behalf thereof) to accelerate the maturity thereof (a "Senior
Nonmonetary Default") has occurred and is continuing and the Company and the
Trustee have received written notice thereof from the administrative agent under
the New Credit Facility or the trustee or other authorized representative of the
holders of any Designated Senior Debt (in any case, a "Senior Representative"),
then the Company may not make any Securities Payment (except for Subordinated
Securities) for a period (a "Blockage Period") commencing on the date the
Company and the Trustee receive such written notice and ending on the earliest
of (x) 179 days after such date, (y) the date, if any, on which the Designated
Senior Debt to which such default relates is paid in full or such default is
waived or otherwise cured and (z) the date on which the Company and the Trustee
receive written notice from such Senior Representative terminating the Blockage
Period. If notwithstanding the foregoing the Trustee or the Holder of any Note
receives during the pendency of any Blockage Period any Securities Payment
before such Designated Senior Debt is paid in full or payment thereof is
provided for in cash or cash equivalents or otherwise in a manner satisfactory
to the holders of such Designated Senior Debt, then in such event such
Securities Payment will be required to be paid over or delivered forthwith to
the holders of such Designated Senior Debt for application to the payment
thereof, to the extent necessary to pay such Designated Senior Debt in full.
Notwithstanding the foregoing, Holders of the New Notes may receive Subordinated
Securities. (sec. 1303).
During any 360-day period, the aggregate of all Blockage Periods shall not
exceed 179 days and there shall be a period of at least 181 consecutive days in
each consecutive 360-day period when no Blockage Period is in effect. When no
Blockage Period is in effect, the Company may make all required payments
(including any such payments not made during any Blockage Period) in respect of
the New Notes not prohibited by the terms of these subordination provisions. No
Senior Nonmonetary Default that existed or was continuing on
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the date of commencement of any Blockage Period will be, or can be, made the
basis for the commencement of a subsequent Blockage Period, unless such default
has been cured or waived for a period of not less than 90 consecutive days.
(sec. 1303).
By reason of the subordination of the New Notes described above, in the
event of insolvency, creditors of the Company that are not holders of Senior
Debt of the Company or of the New Notes may recover less, ratably, than holders
of such Senior Debt and may recover more, ratably, than the Holders of the New
Notes, and the Company may be unable to fully satisfy its obligations in
connection with the New Notes.
The subordination provisions described above will cease to be applicable to
the New Notes upon any defeasance or covenant defeasance of the New Notes as
described below under "Defeasance."
As of June 30, 1997, the Company had Senior Debt of approximately $169.8
million. On June 30, 1997 upon giving effect to the Transactions, the Company on
a pro forma basis had Senior Debt of approximately $141.8 million.
COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Consolidated Debt
The Company may not, and may not permit any Restricted Subsidiary to, Incur
any Debt unless, immediately after giving pro forma effect to the Incurrence of
such Debt and the receipt and application of the proceeds thereof, the
Consolidated EBITDA Coverage Ratio of the Company and its Restricted
Subsidiaries for the four full fiscal quarters next preceding the Incurrence of
such Debt, calculated on a pro forma basis as if such Debt had been Incurred and
the proceeds thereof had been received and so applied at the beginning of the
four fiscal quarters, would be greater than 2.0 to 1.
Notwithstanding the foregoing limitation, the following Debt may be
Incurred:
(i) Debt Incurred by the Company or any Restricted Subsidiary under
the New Credit Facility in an aggregate principal amount at any time
outstanding not to exceed $200 million, less (A) $20 million at each of the
third, fourth and fifth anniversaries of the New Credit Facility's
effective date, plus (B) increased revolving credit commitments thereunder
in an aggregate amount not exceeding in the aggregate the amount of Debt
that is permitted to be Incurred, but has not been Incurred, under clauses
(iv) and (viii) of this paragraph, and plus (C) the amount of Debt Incurred
under the New Credit Facility on a term loan basis that is Incurred
pursuant to the immediately preceding paragraph, and, with respect to all
of the foregoing, any renewal, extension, refinancing or refunding (a
"refinancing") of such Debt in an amount that does not exceed the sum of
the amount of the revolving credit commitments and the amount of the
outstanding term Debt under the New Credit Facility immediately prior to
such renewal, extension, refinancing or refunding; provided that no Debt
Incurred on a term loan basis may be refinanced on a revolving credit
basis;
(ii) the original issuance by the Company of the Debt evidenced by the
Notes;
(iii) Debt (other than Debt described in another clause of this
paragraph) of the Company outstanding on the date of the Indenture after
giving effect to the application of the proceeds of the New Notes;
(iv) Debt in respect of Capital Lease Obligations, mortgage financings
or other purchase money obligations, in an aggregate principal amount at
any time outstanding not to exceed $15 million (including Debt refinanced
pursuant to clause (vii) of this paragraph and without duplication at such
time of any portion of any revolving credit commitment then in effect that
represents an increase made under the immediately preceding clause (i)(B)
in reliance on this clause (iv)), Incurred by the Company or any Restricted
Subsidiary for the purpose of financing all or any part of the acquisition
or improvement of any property used in the business of the Company or such
Restricted Subsidiary;
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(v) Debt owed by the Company to any Wholly Owned Restricted Subsidiary
or Debt owed by any Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary; provided, however, that (a) any such Debt (not
pledged as security for any Senior Debt) owing by the Company to a Wholly
Owned Restricted Subsidiary shall be Subordinated Debt evidenced by an
intercompany promissory note and (b) upon either (1) the transfer or other
disposition (excluding any pledge thereof as security for any Senior Debt)
by such Wholly Owned Restricted Subsidiary or the Company of any Debt so
permitted to a Person other than the Company or another Wholly Owned
Restricted Subsidiary or (2) the issuance (other than directors' qualifying
shares), sale, lease, transfer or other disposition (including by
consolidation or merger) of shares of Capital Stock (other than any pledge
thereof as security for any Senior Debt) of such Wholly Owned Restricted
Subsidiary to a Person other than the Company or another such Wholly Owned
Restricted Subsidiary, the provisions of this clause (vi) shall no longer
be applicable to such Debt and such Debt shall be deemed to have been
Incurred at the time of such issuance, sale, lease, transfer or other
disposition, as the case may be;
(vi) Debt Incurred by the Company or any Restricted Subsidiary
consisting of Permitted Interest Rate, Currency or Commodity Price
Agreements;
(vii) Debt which is exchanged for or the proceeds of which are used to
refinance or refund, or any extension or renewal of, outstanding Debt
Incurred pursuant to the preceding paragraph or clauses (ii), (iii) or (iv)
of this paragraph (each of the foregoing, a "refinancing") in an aggregate
principal amount not to exceed the principal amount of the Debt so
refinanced, plus the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of the Debt so
refinanced or the amount of any premium reasonably determined by the
Company as necessary to accomplish such refinancing by means of a tender
offer or privately negotiated repurchase and plus the expenses of the
Company or the Restricted Subsidiary, as the case may be, Incurred in
connection with such refinancing; provided, however, that (a) Debt the
proceeds of which are used to refinance the New Notes or Debt that is pari
passu with or subordinate in right of payment to the New Notes shall only
be permitted if (1) in the case of any refinancing of the New Notes or Debt
that is pari passu with the New Notes, the refinancing Debt is Incurred by
the Company and made pari passu with the New Notes or subordinated in right
of payment to the New Notes, and (2) in the case of any refinancing of Debt
that is subordinate in right of payment to the New Notes, the refinancing
Debt is Incurred by the Company and constitutes Subordinated Debt; (b) the
refinancing Debt by its terms, or by the terms of any agreement or
instrument pursuant to which such Debt is issued, (1) does not provide for
payments of principal of such Debt at the stated maturity thereof or by way
of a sinking fund applicable thereto or by way of any mandatory redemption,
defeasance, retirement or repurchase thereof (including any redemption,
defeasance, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon any event of default thereunder), in each
case prior to the final stated maturity of the Debt being refinanced and
(2) except as provided for by the terms of the Debt being refinanced, does
not permit redemption or other retirement (including pursuant to an offer
to purchase) of such Debt at the option of the holder thereof prior to the
final stated maturity of the Debt being refinanced other than a redemption
or other retirement at the option of the holder of such Debt (including
pursuant to an offer to purchase) which is conditioned upon provisions
substantially similar to those described above under "Repurchase at the
Option of Holders -- Asset Dispositions" and "-- Change of Control"; (c) in
the case of any refinancing of Debt Incurred by the Company, the
refinancing Debt may be Incurred only by the Company and, in the case of
any refinancing of Debt Incurred by a Restricted Subsidiary, the
refinancing Debt may be Incurred only by the Company or such Restricted
Subsidiary; provided, further, that Debt Incurred pursuant to this clause
(vii) may not be Incurred more than 90 days prior to the application of the
proceeds to repay the Debt to be refinanced; and
(viii) Debt not otherwise permitted to be Incurred by the Company or
any Restricted Subsidiary pursuant to clauses (i) through (vii) above,
which, together with any other outstanding Debt Incurred pursuant to this
clause (viii), has an aggregate principal amount at any time outstanding
not in excess of $15 million (without duplication at such time of any
portion of any revolving credit commitment then in
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effect that represents an increase made under the immediately preceding
clause (i)(B) in reliance on this clause (viii)). (sec. 1008).
Limitation on Debt and Preferred Stock of Subsidiaries
The Company may not cause, and may not permit, any Restricted Subsidiary to
Incur any Debt or issue any Preferred Stock except: (i) Debt Incurred by any
Restricted Subsidiary that is expressly permitted in the preceding paragraph;
(ii) Debt or Preferred Stock outstanding on the date of the Indenture after
giving effect to the application of the proceeds of the New Notes; (iii) Debt or
Preferred Stock issued to and held by the Company or a Wholly Owned Restricted
Subsidiary (provided that such Debt or Preferred Stock is at all times held by
the Company or a Wholly Owned Restricted Subsidiary); or (iv) Debt or Preferred
Stock Incurred or issued by a Person prior to the time (A) such Person became a
Restricted Subsidiary, (B) such Person merges into or consolidates with a
Restricted Subsidiary or (C) another Restricted Subsidiary merges into or
consolidates with such Person (in a transaction in which such Person becomes a
Restricted Subsidiary), which Debt or Preferred Stock was not Incurred or issued
in anticipation of such transaction and was outstanding prior to such
transaction. (sec. 1009).
Limitation on Layered Debt
The Company may not Incur any Debt which by its terms is both (i)
subordinated in right of payment to any Senior Debt and (ii) senior in right of
payment to the New Notes. (sec. 1010).
Limitation on Issuance of Guarantees of Subordinated Debt
The Company may not permit any Restricted Subsidiary, directly or
indirectly, to assume, guarantee or in any other manner become liable with
respect to any Debt of the Company that by its terms is pari passu with or
junior in right of payment to the New Notes. (sec. 1011).
Limitation on Restricted Payments
The Company may not, and may not permit any Restricted Subsidiary to,
directly or indirectly, (i) declare or pay any dividend, or make any
distribution, of any kind or character (whether in cash, property or securities)
in respect of the Capital Stock of the Company or any Restricted Subsidiary or
to the holders thereof in their capacity as such (excluding (u) dividends or
distributions to the extent payable in shares of the Capital Stock of the
Company (other than Redeemable Interests) or in options, warrants or other
rights to acquire the Capital Stock of the Company (other than Redeemable
Interests), (v) dividends or distributions by a Restricted Subsidiary to the
Company or another Restricted Subsidiary and (w) the payment of pro rata
dividends by a Restricted Subsidiary to holders of both minority and majority
interests in such Restricted Subsidiary), (ii) purchase, redeem or otherwise
acquire or retire for value (a) any Capital Stock of the Company or any Capital
Stock of or other ownership interests in any Subsidiary or any Affiliate or
Related Person of the Company or (b) any options, warrants or rights to purchase
or acquire shares of Capital Stock of the Company or any Capital Stock of or
other ownership interests in any Subsidiary or any Affiliate or Related Person
of the Company (excluding, in each case of (a) and (b), the purchase,
redemption, acquisition or retirement by any Restricted Subsidiary of any of its
Capital Stock, other ownership interests or options, warrants or rights to
purchase such Capital Stock or other ownership interests (x) owned by the
Company or any Restricted Subsidiary, (y) owned by any other Person if effected
on a pro rata basis with respect to holders of both minority and majority
interests in such Restricted Subsidiary or (z) owned by any officer, director or
employee of the Company, but solely for the purpose of enabling such Person (or
the Company on his or her behalf) to satisfy tax obligations in respect of his
or her exercise of options, warrants or rights to purchase Capital Stock of the
Company), (iii) make any Investment that is not a Permitted Investment or (iv)
redeem, defease, repurchase, retire or otherwise acquire or retire for value,
prior to any scheduled maturity, repayment or sinking fund payment, Debt of the
Company that is subordinate in right of payment to
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the New Notes (each of the transactions described in clauses (i) through (iv)
being a "Restricted Payment"), if:
(1) an Event of Default, or an event that with the lapse of time or
the giving of notice, or both, would constitute an Event of Default, shall
have occurred and be continuing;
(2) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the most recently ended four full fiscal
quarter period for which annual or quarterly financial statements are
publicly available immediately preceding the date of such Restricted
Payment, not have been permitted to Incur at least $1.00 of additional Debt
pursuant to the Consolidated EBITDA Coverage Ratio test described in the
first paragraph under "-- Limitation on Consolidated Debt" above; or
(3) upon giving effect to such Restricted Payment, the aggregate of
all Restricted Payments (excluding Restricted Payments permitted by clauses
(ii), (iii) and (iv) of the next succeeding paragraph) from the date of the
Indenture (the amount so expended, if other than in cash, determined in
good faith by the Board of Directors) exceeds the sum, without duplication,
of:
(a) 50% of the aggregate Consolidated Net Income (or, in case
Consolidated Net Income shall be negative, less 100% of such deficit)
for the period (taken as one accounting period) from June 30, 1997
through the end of the Company's most recently ended fiscal quarter for
which annual or quarterly financial statements are publicly available at
the time of such Restricted Payment;
(b) 100% of the aggregate net cash proceeds from the issuance and
sale (other than to a Restricted Subsidiary) of Capital Stock (other
than Redeemable Interests) of the Company and options, warrants or other
rights to acquire Capital Stock (other than Redeemable Interests and
Debt convertible into Capital Stock) of the Company and the principal
amount of Debt and Redeemable Interests of the Company that has been
converted into or exchanged for Capital Stock (other than Redeemable
Interests) of the Company after June 30, 1997, provided that any such
net proceeds received by the Company from an employee stock ownership
plan financed by loans from the Company or a Subsidiary of the Company
shall be included only to the extent such loans have been repaid with
cash on or prior to the date of determination;
(c) the amount by which the total consideration paid by the Company
in the Tender Offer is less than $110 million; and
(d) $25 million.
(sec. 1012).
The foregoing covenant will not be violated by reason of:
(i) the payment of any dividend within 60 days after declaration
thereof if at the declaration date such payment would have complied with
the foregoing covenant;
(ii) any payment made by the Company in connection with the
consummation of the Transactions;
(iii) any refinancing or refunding of Debt permitted pursuant to
clause (i) or (vii) of the second paragraph under "Limitation on
Consolidated Debt" above; and
(iv) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company or any options, warrants or
rights to purchase or acquire shares of Capital Stock of the Company in
exchange for, or out of the net cash proceeds of, the substantially
concurrent issuance or sale (other than to a Restricted Subsidiary) of
Capital Stock (other than Redeemable Interests) of the Company; provided
that the amount of any such net cash proceeds that are utilized for any
such purchase, redemption or other acquisition or retirement for value
shall be excluded from clause (3)(b) in the foregoing paragraph.
Upon the designation of any Restricted Subsidiary as an Unrestricted
Subsidiary, an amount equal to the greater of the book value and the fair market
value of all assets of such Restricted Subsidiary at the end of the
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Company's most recently ended fiscal quarter for which annual or quarterly
financial statements are publicly available prior to such designation will be
deemed to be a Restricted Payment at the time of such designation for purposes
of calculating the aggregate amount of Restricted Payments (including the
Restricted Payment resulting from such designation) permitted under provisions
described in the second preceding paragraph. (sec. 1012).
Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company may not, and may not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary (i) to pay dividends (in cash or otherwise) or make any other
distributions in respect of its Capital Stock or other ownership interests or
pay any Debt or other obligation owed to the Company or any other Restricted
Subsidiary; (ii) to make loans or advances to the Company or any other
Restricted Subsidiary; or (iii) to sell, lease or transfer any of its property
or assets to the Company or any Restricted Subsidiary. Notwithstanding the
foregoing, the Company may, and may permit any Restricted Subsidiary to, suffer
to exist any such encumbrance or restriction: (a) pursuant to any agreement in
effect on the date of the Indenture (including the New Credit Facility, the
Indenture and the New Notes); (b) pursuant to an agreement relating to any Debt
Incurred by such Restricted Subsidiary prior to the date on which such
Restricted Subsidiary was acquired by the Company and outstanding on such date
and not Incurred in anticipation of becoming a Restricted Subsidiary; (c)
pursuant to mortgages and other purchase money obligations in connection with
property acquired or improved in the ordinary course of business or liens in
connection therewith permitted to be Incurred under the Indenture as described
in "-- Limitation on Liens" below that impose restrictions of the nature
described in clause (iii) above on the property so acquired or improved; (d)
pursuant to an agreement effecting a renewal, refunding, refinancing or
extension of Debt Incurred pursuant to an agreement referred to in clause (a),
(b) or (c) above, provided, however, that the provisions contained in such
renewal, refunding, refinancing or extension agreement relating to such
encumbrance or restriction are no more restrictive in any material respect than
the provisions contained in the agreement the subject thereof (as determined in
good faith by the Board of Directors); (e) pursuant to customary non-assignment
provisions entered into in the ordinary course of business consistent with past
practices in leases, licenses or contracts to the extent such provisions
restrict the transfer, subletting or other disposition of any such lease,
license or contract; (f) pursuant to an agreement which has been entered into
for the sale or other disposition of all or substantially all of the Capital
Stock or assets of such Restricted Subsidiary, provided that consummation of
such transaction would not result in an Event of Default or an event that, with
the passing of time or the giving of notice or both, would constitute an Event
of Default, that such restriction terminates if such transaction is closed or
abandoned and that the closing or abandonment of such transaction occurs within
one year of the date such agreement was entered into; or (g) arising under any
applicable law, rule, regulation or order. (sec. 1013).
Limitation on Liens
The Company may not, and may not permit any Restricted Subsidiary to, Incur
or suffer to exist any Lien on or with respect to any property or assets now
owned or hereafter acquired to secure any Debt of the Company that is expressly
by its terms subordinate or junior in right of payment to any other Debt of the
Company without making, or causing such Restricted Subsidiary to make, effective
provision for securing the New Notes (a) equally and ratably with such Debt as
to such property or assets for so long as such Debt will be so secured or (b) in
the event such Debt is subordinate in right of payment to the New Notes, prior
to such Debt as to such property or assets for so long as such Debt will be
secured. (sec. 1014).
Limitation on Ownership of Capital Stock of Subsidiaries
The Company may not, and may not permit any Restricted Subsidiary to,
issue, transfer, convey, lease or otherwise dispose of any shares of Capital
Stock (other than directors' qualifying shares and shares pledged as security
for any Senior Debt) of a Restricted Subsidiary or securities convertible or
exchangeable into, or options, warrants, rights or any other interest with
respect to, Capital Stock of a Restricted Subsidiary to any
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Person other than the Company or a Wholly Owned Restricted Subsidiary except in
a transaction consisting of a sale (including a public offering) of all or part
of the Capital Stock of such Restricted Subsidiary owned by the Company and any
Restricted Subsidiary and that complies with the provisions described under
"Repurchase at the Option of Holders -- Asset Dispositions" above to the extent
such provisions apply; provided that after any sale of less than all of the
Capital Stock of any Restricted Subsidiary, the Company directly or indirectly
maintains voting power to elect a majority of the board of directors of such
Restricted Subsidiary. (sec. 1015).
Transactions with Affiliates and Related Persons
The Company may not, and may not permit any Restricted Subsidiary to, after
the date of the Indenture, enter into any transaction (or series of related
transactions) with an Affiliate or Related Person of the Company (other than the
Company or any Restricted Subsidiary), including any Investment, either directly
or indirectly, that involves total consideration or asset transfers in excess of
$1,000,000 (i) unless such transaction is on terms no less favorable to the
Company or such Restricted Subsidiary than those that could be obtained in a
comparable arm's-length transaction with an entity that is not an Affiliate or
Related Person and is in the best interests of the Company or such Restricted
Subsidiary and (ii) except for the Transactions. For any transaction that
involves in excess of $1,000,000 but less than or equal to $5,000,000, the Chief
Executive Officer of the Company shall determine that the transaction satisfies
the above criteria and shall evidence such a determination by a certificate
filed with the Trustee. For any transaction that involves in excess of
$5,000,000, a majority of the disinterested members of the Board of Directors
shall determine that the transaction satisfies the above criteria and shall
evidence such a determination by a Board Resolution filed with the Trustee. For
any transaction that involves in excess of $10,000,000, the Company shall also
obtain an opinion from a nationally recognized expert with experience in
appraising the terms and conditions of the type of transaction (or series of
related transactions) for which the opinion is required stating that such
transaction (or series of related transactions) is on terms no less favorable to
the Company or such Restricted Subsidiary than those that could be obtained in a
comparable arm's-length transaction with an entity that is not an Affiliate or
Related Person of the Company, which opinion shall be filed with the Trustee;
provided, however, that the foregoing restrictions will not apply to: (a)
reasonable employment, compensation, bonus or benefit arrangements entered into
in the ordinary course of business (including the granting of stock acquisition
rights and other incentives other than Redeemable Interests); the payment of
reasonable fees, expense reimbursements and customary indemnification, advances
and other similar arrangements with respect to officers and directors; and
reasonable loans and advances to employees in the ordinary course of business;
(b) required payments with respect to any Debt permitted by the Indenture as
described in "Covenants -- Limitation on Consolidated Debt" above; (c)
transactions permitted by the Indenture as described in "Covenants -- Limitation
on Restricted Payments" above; (d) any payments or other transactions pursuant
to any tax sharing agreement with any Person with which the Company or such
Restricted Subsidiary is required or permitted to file a consolidated tax return
or with which the Company or such Restricted Subsidiary is or could be part of a
consolidated group for tax purposes; and (e) any transaction with Goldman Sachs,
Water Street or any of their Affiliates to the extent that such transaction is
or was approved by a majority of the disinterested members of the Board of
Directors in good faith. (sec. 1016).
Provision of Financial Information
Whether or not the Company is required to be subject to Section 13(a) or
15(d) of the Exchange Act, or any successor provision thereto, the Company shall
file with the Commission the annual reports, quarterly reports and other
documents that the Company would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) or any successor provision thereto if
the Company were so required, such documents to be filed with the Commission on
or prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required so to file such documents if the Company were
so required. The Company shall also in any event within 15 days after each
Required Filing Date (i) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, without cost to such Holders, and
(ii) file with the Trustee, copies of the annual reports, quarterly reports and
other documents that the Company files with the Commission pursuant to such
Section 13(a) or 15(d) or any successor
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provision thereto or would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) or any successor provision thereto if
the Company were so required. If filing such documents by the Company with the
Commission is not permitted under the Exchange Act, the Company will upon
written request promptly provide copies of such documents to any prospective
holder of the New Notes. (sec. 1019).
Unrestricted Subsidiaries
The Company at any time may designate any Person that is a Subsidiary, or
after the date of the Indenture becomes a Subsidiary, of the Company as an
"Unrestricted Subsidiary," whereupon (and until such Person ceases to be an
Unrestricted Subsidiary) such Person and each other Person that is then or
thereafter becomes a Subsidiary of such Person will be deemed to be an
Unrestricted Subsidiary. In addition, the Company may at any time terminate the
status of any Unrestricted Subsidiary as an Unrestricted Subsidiary, whereupon
such Subsidiary and each other Subsidiary of the Company (if any) of which such
Subsidiary is a Subsidiary will be a Restricted Subsidiary. (sec. 1020).
Notwithstanding the foregoing, no change in the status of a Subsidiary of
the Company from a Restricted Subsidiary to an Unrestricted Subsidiary or from
an Unrestricted Subsidiary to a Restricted Subsidiary will be effective, and no
Person may otherwise become a Restricted Subsidiary, if:
(i) the Consolidated EBITDA Coverage Ratio of the Company and its
Restricted Subsidiaries for the four full fiscal quarters of the Company
next preceding the effective date of such purported change or other event,
calculated on a pro forma basis as if such change or other event had been
effective at the beginning of such period, would not exceed 2.0 to 1.0;
(ii) in the case of any change in status of a Restricted Subsidiary to
an Unrestricted Subsidiary, the Restricted Payment resulting from such
change would violate the provisions of the Indenture described under clause
(3) of the first paragraph under "Covenants -- Limitation on Restricted
Payments" above; or
(iii) such change or other event would otherwise result (after the
giving of notice or the lapse of time, or both) in an Event of Default.
In addition and notwithstanding the foregoing, no Restricted Subsidiary may
become an Unrestricted Subsidiary, and the status of any Unrestricted Subsidiary
as an Unrestricted Subsidiary will be deemed to have been immediately terminated
(whereupon such Subsidiary and each other Subsidiary of the Company (if any) of
which such Subsidiary is a Subsidiary will be a Restricted Subsidiary) at any
time when:
(1) such Subsidiary (A) has outstanding Debt that is Unpermitted Debt
or (B) owns or holds any Capital Stock of or other ownership interests in,
or a Lien on any property or other assets of, the Company or any of its
Restricted Subsidiaries; or
(2) the Company or any other Restricted Subsidiary (A) provides credit
support for, or a Guarantee of, any Debt of such Subsidiary (including any
undertaking, agreement or instrument evidencing such Debt) or (B) is
directly or indirectly liable for any Debt of such Subsidiary.
Any termination of the status of an Unrestricted Subsidiary as an
Unrestricted Subsidiary pursuant to the preceding sentence will be deemed to
result in a breach of this covenant in any circumstance in which the Company
would not be permitted to change the status of such Unrestricted Subsidiary to
the status of a Restricted Subsidiary pursuant to the provision of the Indenture
described under the preceding paragraph; provided, however, that (a) so long as
the aggregate principal amount outstanding of Unpermitted Debt does not exceed
$5 million, no such breach will be deemed to have occurred with respect to any
Unpermitted Debt until 15 days after the Company has become aware of such
Unpermitted Debt and such Unpermitted Debt remains outstanding or Unpermitted
Debt, and (b) any change of status of an Unrestricted Subsidiary to a Restricted
Subsidiary as aforesaid followed within one year by a change of status of such
Restricted Subsidiary to an Unrestricted Subsidiary will not be deemed an Asset
Disposition or cause any Reinvested Amount invested therein to be deemed Net
Available Proceeds or the book value or fair market value of the assets thereof
to be deemed a Restricted Payment. "Unpermitted Debt" means any Debt of a
Subsidiary of the
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Company if (x) a default thereunder (or under any instrument or agreement
pursuant to or by which such Debt is issued, secured or evidenced), or any right
that the holders thereof may have to take enforcement action against such
Subsidiary or its property or other assets, would permit (whether or not after
the giving of notice or the lapse time or both) the holders of any Debt of the
Company or any other Restricted Subsidiary to declare the same due and payable
prior to the date on which it otherwise would have become due and payable or
otherwise to take any enforcement action against the Company or such other
Restricted Subsidiary or (y) such Debt is secured by a Lien on any property or
other assets of the Company and any of its other Restricted Subsidiaries. (sec.
1020).
Each Person that is or becomes a Subsidiary of the Company will be deemed
to be a Restricted Subsidiary at all times when it is a Subsidiary of the
Company that is not an Unrestricted Subsidiary. Each Person that is or becomes a
Wholly Owned Subsidiary of the Company shall be deemed to be a Wholly Owned
Restricted Subsidiary at all times when it is a Wholly Owned Subsidiary of the
Company that is not an Unrestricted Subsidiary. (sec. 1020).
Mergers, Consolidations and Certain Sales of Assets
The Company (i) may not, and may not permit any Restricted Subsidiary to,
consolidate with or merge into any Person, provided that this clause (i) will
not prohibit any such consolidation or merger by a Restricted Subsidiary if (x)
such Restricted Subsidiary ceases to be a Restricted Subsidiary in such
consolidation or merger or (y) such consolidation or merger is with or into the
Company or another Restricted Subsidiary; (ii) may not permit any Person other
than a Restricted Subsidiary to consolidate with or merge into the Company or
any Restricted Subsidiary, provided that this clause (ii) will not prohibit any
such consolidation or merger with or into a Restricted Subsidiary if such
Restricted Subsidiary ceases to be a Restricted Subsidiary in such consolidation
or merger; and (iii) may not, directly or indirectly (in one transaction or a
series of related transactions), transfer, convey, sell, lease or otherwise
dispose of all or substantially all of the properties and assets of the Company
and its Subsidiaries on a consolidated basis unless, in each case (i), (ii) and
(iii) above:
(1) immediately before and after giving effect to such transaction (or
series of related transactions) and treating any Debt Incurred by the
Company or a Subsidiary of the Company as a result thereof as having been
Incurred by the Company or such Subsidiary at the time of such transaction
(or series of related transactions), no Event of Default, or event that
with the passing of time or the giving of notice, or both, will constitute
an Event of Default, shall have occurred and be continuing;
(2) in a transaction (or series of related transactions) in which the
Company does not survive or in which the Company transfers, conveys, sells,
leases or otherwise disposes of all or substantially all of its properties
and assets, the successor entity is a corporation, partnership, limited
liability company or trust and is organized and validly existing under the
laws of the United States of America, any state thereof or the District of
Columbia and expressly assumes, by a supplemental indenture executed and
delivered to the Trustee in form satisfactory to the Trustee, all the
Company's obligations under the Indenture;
(3) the Company or its successor entity would, at the time of such
transaction (or series of related transactions) and after giving pro forma
effect thereto as if such transaction (or series of related transactions)
had occurred at the beginning of the most recently ended four full fiscal
quarter period for which annual or quarterly financial statements are
publicly available immediately preceding the date of such transaction (or
series of related transactions), have been permitted to Incur at least
$1.00 of additional Debt pursuant to the Consolidated EBITDA Coverage Ratio
test described in the first paragraph under "Covenants -- Limitation on
Consolidated Debt" above;
(4) if, as a result of any such transaction, property or assets of the
Company would become subject to a Lien prohibited by the covenant described
above under "Covenants -- Limitation on Liens," the Company or its
successor entity will have secured the New Notes as required by such
covenant; and
(5) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel as specified in the Indenture. (sec. 801).
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CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided. (sec. 101).
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and 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 to the foregoing.
"Asset Disposition" means, with respect to the Company or any Restricted
Subsidiary, any transfer, conveyance, sale, lease or other disposition by the
Company or such Restricted Subsidiary (including a consolidation or merger or
other sale of such Restricted Subsidiary with, into or to another Person in a
transaction in which such Restricted Subsidiary ceases to be a Restricted
Subsidiary) of (i) shares of Capital Stock (other than directors' qualifying
shares) or other ownership interests of any Restricted Subsidiary, (ii)
substantially all of the assets of the Company or such Restricted Subsidiary
representing a division or line of business or (iii) other assets or rights of
the Company or any Restricted Subsidiary outside of the ordinary course of
business, but excluding, in each case of clauses (i), (ii) and (iii), (a) any
disposition in the ordinary course of business of obsolete equipment or other
property used in the business of the Company or any Restricted Subsidiary that
is no longer used or useful in such business, (b) any disposition by the Company
or any Restricted Subsidiary to the Company or any Wholly Owned Restricted
Subsidiary, (c) required payments with respect to any Debt permitted by the
Indenture as described in "Covenants -- Limitation on Consolidated Debt" above,
(d) any disposition that is permitted under the Indenture as described in
"Covenants -- Limitation on Restricted Payments" above, and (e) the disposition
of all or substantially all of the assets of the Company permitted under the
Indenture as described in "Covenants -- Mergers, Consolidations and Certain
Sales of Assets" above.
"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other Debt arrangements conveying
the right to use) real or personal property of such Person that is required to
be classified and accounted for as a capital lease or a liability on the face of
a balance sheet of such Person in accordance with generally accepted accounting
principles. The stated maturity of such obligation shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty. The principal amount of such obligation shall be the capitalized amount
thereof that would appear on the face of a balance sheet of such Person in
accordance with generally accepted accounting principles.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person.
"Claim" means any and all rights to payment under or in respect of any of
the New Notes or the Indenture, all rights, remedies, demands, causes of action
and claims of every type and description at any time held or asserted by, or
arising in favor of, any holder of a Note against the Company or any of its
Subsidiaries or Affiliates or any of their assets, in each case on account of
any breach of any promise, obligation, agreement, indemnity, representation,
warranty or covenant in a Note or the Indenture or the performance or
nonperformance or payment or nonpayment thereof.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated EBITDA" of any Person means for any period, on a consolidated
basis for such Person and its Consolidated Subsidiaries, the sum of the amounts
for such period of (i) Consolidated Net Income, (ii) Consolidated Interest
Expense (but excluding any interest capitalized in accordance with generally
accepted accounting principles), (iii) Consolidated Income Tax Expense, (iv)
depreciation and amortization
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expense, (v) other non-cash charges and (vi) other non-operating expenses that
have been deducted in the determination of Consolidated Net Income; provided,
however, that for each such Consolidated Subsidiary the items (i) through (vi)
shall be included in such sum only (x) to the extent and in the same proportion
that the Consolidated Net Income of such Consolidated Subsidiary was included in
calculating the Consolidated Net Income of such Person and (y) only to the
extent that the amount specified in clause (x) is not restricted from the
payment of dividends or the making of distributions to such Person during such
period.
"Consolidated EBITDA Coverage Ratio" of any Person means for any period the
ratio of (i) Consolidated EBITDA of such Person for such period to (ii) the sum
of (A) Consolidated Interest Expense of such Person for such period, plus (B)
the annual interest expense (including the amortization of debt discount but
excluding the fees and expenses incurred in connection with the amortization of
the Old Credit Facility) with respect to any Debt Incurred or proposed to be
Incurred by such Person or its Consolidated Subsidiaries since the beginning of
such period to the extent not included within clause (ii)(A), minus (C)
Consolidated Interest Expense of such Person with respect to any Debt that is no
longer outstanding or that will no longer be outstanding as a result of the
transaction with respect to which the Consolidated EBITDA Coverage Ratio is
being calculated, to the extent included within clause (ii)(A); provided,
however, that in making such computation, the Consolidated Interest Expense of
such Person attributable to interest on any Debt bearing a floating interest
rate shall be computed on a pro forma basis as if the rate in effect on the date
of computation had been the applicable rate for the entire period; and provided,
further, that, in the event such Person or any of its Consolidated Subsidiaries
has made acquisitions or dispositions of assets not in the ordinary course of
business (including by merger, consolidation or purchase of Capital Stock)
during or after such period, the computation of the Consolidation EBITDA
Coverage Ratio (and for the purpose of such computation, the calculation of
Consolidated Net Income, Consolidated Interest Expense, Consolidated Income Tax
Expense and Consolidated EBITDA) shall be made on a pro forma basis as if the
acquisitions or dispositions had taken place on the first day of such period.
"Consolidated Income Tax Expense" of any Person means for any period the
consolidated provision for income taxes of such Person and its Consolidated
Subsidiaries for such period determined in accordance with generally accepted
accounting principles.
"Consolidated Interest Expense" of any Person means for any period, on a
consolidated basis for such Person and its Consolidated Subsidiaries, all of the
following determined in accordance with generally accepted accounting
principles: (i) the consolidated interest expense included in a consolidated
income statement (net of interest income), (ii) the portion of any rental
obligation in respect of any Capital Lease Obligation allocable to interest
expense in accordance with generally accepted accounting principles; (iii) the
amortization of Debt discounts (but excluding the amortization of fees and
expenses incurred in connection with the amortization of the Old Credit Facility
and the amount of financing costs and expenses that are capitalized and
amortized); (iv) to the extent not included in total interest expense, any net
payments made or received during such period under interest rate or currency
swaps, hedges or exchanges or similar derivative agreements, including any
amortized portion of such payments and (v) any interest capitalized in
accordance with generally accepted accounting principles.
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person and its Consolidated
Subsidiaries for such period determined in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (a) the
net income (or loss) of any Person acquired by such Person or a Subsidiary of
such Person in a pooling-of-interests transaction for any period prior to the
date of such transaction (subject to the final proviso of the definition of
Consolidated EBITDA Coverage Ratio when Consolidated Net Income is being
computed for purposes of calculating the Consolidated EBITDA Coverage Ratio),
(b) the net income (but not net loss) of any Consolidated Subsidiary of such
Person to the extent restricted from the payment of dividends or the making of
distributions to such Person during such period, (c) the net income (or loss) of
any Person that is not a Consolidated Subsidiary of such Person except to the
extent of the amount of dividends or other distributions actually paid to such
Person by such other Person during such period, (d) extraordinary gains and
losses (and any unusual gains and losses arising outside the ordinary course of
business not included in extraordinary gains and losses,
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(e) net gains and losses in respect of dispositions of assets other than in the
ordinary course of business and (f) the tax effect of any of the items described
in clauses (a) through (e) above.
"Consolidated Net Worth" of any Person at any date means the consolidated
stockholders' equity of such Person and its Consolidated Subsidiaries at such
date, as determined on a consolidated basis in accordance with generally
accepted accounting principles, less amounts attributable to Redeemable
Interests of such Person; provided, however, that, with respect to the Company
and its Restricted Subsidiaries, adjustments following the date of the Indenture
to the accounting books and records of the Company and its Restricted
Subsidiaries in accordance with Accounting Principles Board Opinions Nos. 16 and
17 (or successor opinions thereto) or otherwise resulting from the acquisition
of control of the Company by another Person shall not be given effect to.
"Consolidated Subsidiaries" of any Person means all other Persons that
would be accounted for as consolidated Persons in such Person's financial
statements in accordance with generally accepted accounting principles;
provided, however, that, for any particular period during which any Subsidiary
of the Company was an Unrestricted Subsidiary, "Consolidated Subsidiaries" will
exclude such Subsidiary for such period (or portion thereof) during which it was
an Unrestricted Subsidiary.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including payment obligations Incurred in connection with the acquisition of
property, assets or businesses, (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (iv) every obligation of such
Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business), (v) every Capital Lease Obligation of such Person,
(vi) the maximum fixed redemption or repurchase price of Redeemable Interests of
such Person at the time of determination, (vii) the market value of any
indebtedness, obligation or other liability of such Person in respect of any
interest rate or currency swap, hedge or exchange or similar derivative
agreement with any counterparty thereto, net of indebtedness, obligations or
other liabilities owed to such Person by such counterparty and (viii) every
obligation of the type referred to in clauses (i) through (vii) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has Guaranteed or for which such Person is responsible or liable,
directly or indirectly, jointly or severally, as obligor, Guarantor or
otherwise, but excluding from Debt (a) any indebtedness, obligations or other
liabilities subject to the Plan of Reorganization and (b) any indebtedness or
other liabilities incurred in connection with obligations incurred to pay
premiums for corporate owned life insurance policies purchased by the Company in
an aggregate amount not to exceed the aggregate cash value of such policies.
"Designated Senior Debt" means (i) all Obligations in respect of the New
Credit Facility and (ii) all Obligations in respect of any other Senior Debt of
the Company in each case in an outstanding principal amount not less than $10
million.
"Excepted Disposition" means a transfer, conveyance, sale, lease or other
disposition by the Company or any Restricted Subsidiary of (i) the Capital Stock
or any or all of the assets of Taylor Publishing Company, (ii) certain assets of
a Restricted Subsidiary that may be required to be divested, in an amount not to
exceed $8 million, in connection with an action by the Federal Trade Commission
relating to the acquisition by the Company of certain assets of Helima-Helvetion
International, Inc. or (iii) any other asset of the Company or any Restricted
Subsidiary for which the Company or any Restricted Subsidiary receives a
mortgage or a purchase money security interest the principal amount of which at
any time outstanding does not exceed $8 million or, taken together with all
other mortgages and purchase money security interests in respect of any other
such assets, the aggregate principal amount of which at any time outstanding
does not exceed $15 million.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing any Debt, or dividends or distributions on any equity
security, of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, and including, without limitation, any obligation of
such Person,
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(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Debt, (ii) to purchase property, securities
or services for the purpose of assuring the holder of such Debt of the payment
of such Debt, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Debt (and "Guaranteed," "Guaranteeing"
and "Guarantor" shall have meanings correlative to the foregoing); provided,
however, that the Guarantee by any Person shall not include endorsements by such
Person for collection or deposit, in either case, in the ordinary course of
business.
"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
or the recording, as required pursuant to generally accepted accounting
principles or otherwise, of any such Debt or other obligation on the balance
sheet of such Person (and "Incurrence", "Incurred", "Incurrable" and "Incurring"
shall have meanings correlative to the foregoing); provided, however, that a
change in generally accepted accounting principles that results in an obligation
of such Person that exists at such time becoming Debt shall not be deemed an
Incurrence of such Debt.
"Interest Rate, Currency or Commodity Price Agreement" of any Person means
any forward contract, futures contract, swap, option or other financial
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreements) relating to, or the value of which is dependent upon,
interest rates, currency exchange rates or commodity prices or indices
(excluding contracts for the purchase or sale of goods in the ordinary course of
business).
"Investment" by any Person in any other Person means (i) any direct or
indirect loan, advance or other extension of credit or capital contribution to
or for the account of such other Person (by means of any transfer of cash or
other property to any Person or any payment for property or services for the
account or use of any Person, or otherwise), (ii) any direct or indirect
purchase or other acquisition of any Capital Stock, bond, note, debenture or
other debt or equity security or evidence of Debt, or any other ownership
interest, issued by such other Person, whether or not such acquisition is from
such or any other Person, (iii) any direct or indirect payment by such Person on
a Guarantee of any obligation of or for the account of such other Person or (iv)
any other investment of cash or other property by such Person in or for the
account of such other Person.
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, Receivables Sale, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Net Available Proceeds" means cash, readily marketable cash equivalents,
readily marketable fixed-income securities and equity securities traded on a
national securities exchange or NASDAQ (valued, in the case of securities, at
the market value thereof when received by the Company or such Restricted
Subsidiary) received (including by way of sale or discounting of a note,
installment receivable or other receivable, but excluding any other
consideration received in the form of an assumption by any transferee of Debt or
other obligations relating to the properties or assets transferred, or otherwise
received in any non-cash form) from an Asset Disposition by the Company or any
Restricted Subsidiary, net of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses Incurred and all federal, state,
provincial, foreign and local taxes required to be accrued as a liability as a
consequence of such Asset Disposition, (ii) all payments made by the Company or
any Restricted Subsidiary on any Debt which is secured by assets disposed of in
such Asset Disposition in accordance with the terms of any Lien upon or with
respect to such assets or which must by the terms of such Lien, or in order to
obtain a necessary consent to such Asset Disposition or by applicable law, be
repaid out of the proceeds from such Asset Disposition, (iii) amounts provided
as a reserve by the Company or any Restricted Subsidiary, in accordance with
generally accepted accounting principles, against liabilities under any
indemnification obligations to the buyer in such Asset Disposition (except to
the extent and at the time any such amounts are released from any such reserve,
such amounts shall constitute Net
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Available Proceeds) and (iv) all distributions and other payments made to
minority interest holders in Restricted Subsidiaries or joint ventures as a
result of such Asset Disposition.
"New Credit Facility" means, collectively, the Credit Agreement dated as of
July 3, 1997 among the Company, certain of its Subsidiaries, the financial
institutions from time to time party thereto as Lenders and Issuing Banks, The
First National Bank of Chicago and Goldman Sachs Credit Partners L.P., as
syndication agents, and Citicorp USA, Inc., in its separate capacity as
collateral and administrative agent for the Lenders and Issuing Banks, and the
Loan Documents (as defined therein) (or other analogous documents entered into
in connection with any refinancing thereof), in each case as the same may from
time to time be amended, renewed, supplemented or otherwise modified at the
option of the parties thereto; and any other agreement pursuant to which any of
the Debt, commitments, Obligations, costs, expenses, fees, reimbursements and
other indemnities payable or owing under the New Credit Facility may be
refinanced, restructured, renewed, extended, refunded or increased, as any such
other agreement may from time to time at the option of the parties thereto be
amended, supplemented, renewed or otherwise modified.
"Obligations" mean any principal, interest, penalties, expenses, fees,
indemnities, reimbursements, damages and other liabilities payable under the
documentation governing any Debt.
"Old Credit Facility" means the revolving credit and term loan facility to
which the Company and certain of its Subsidiaries were parties that was replaced
by, and repaid in full by advances under, the New Credit Facility.
"payment in full," together with any correlative term such as "paid in
full" and "pay in full," means with respect to any Obligation payment in full
thereof in cash.
"Permitted Interest Rate, Currency or Commodity Price Agreement" of any
Person means any Interest Rate, Currency or Commodity Price Agreement entered
into with one or more financial institutions that is designed to protect such
Person against fluctuations in interest rates or currency exchange rates with
respect to Debt Incurred or, in the case of currency or commodity protection
agreements, against currency exchange rate or commodity price fluctuations
relating to then existing financial obligations or then existing or sold
production and, in any case, not for purposes of speculation.
"Permitted Investment" means (i) Investments in the Company or any Person
that is, or as a consequence of such Investment becomes, a Restricted
Subsidiary, (ii) securities either issued directly or fully guaranteed or
insured by the government of the United States of America or any agency or
instrumentality thereof having maturities of not more than one year, (iii) time
deposits and certificates of deposit, demand deposits and banker's acceptances
having maturities of not more than one year from the date of deposit, of any
domestic commercial bank having capital and surplus in excess of $500 million
and having a peer group rating of B or better (or the equivalent thereof) by
Thompson BankWatch, Inc. or outstanding long-term debt rated BBB or better (or
the equivalent thereof) by Standard & Poor's Ratings Group or Baa2 or better (or
the equivalent thereof) by Moody's Investors Service, Inc., (iv) demand deposits
made in the ordinary course of business and consistent with the Company's
customary cash management policy in any domestic office of any commercial bank
organized under the laws of the United States of America or any state thereof,
(v) insured deposits issued by commercial banks of the type described in clause
(iv) above, (vi) mutual funds whose investment guidelines restrict such funds'
investments primarily to those satisfying the provisions of any of clauses (ii),
(iii), (vii) and (viii) of this definition, (vii) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any bank meeting the
qualifications specified in clause (iii) above, (viii) commercial paper (other
than commercial paper issued by an Affiliate or Related Person) rated A-1 or the
equivalent thereof by Standard & Poor's Ratings Group or P-1 or the equivalent
thereof by Moody's Investors Service, Inc., and in each case maturing within 360
days, (ix) receivables owing to the Company or a Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms, (x) any Investment
consisting of loans and advances to employees of the Company or any Restricted
Subsidiary for travel, entertainment, relocation, employee incentive plans or
other expenses in the ordinary course of business, (xi) any Investment
consisting of a Permitted Interest Rate, Currency or Commodity Price Agreement,
(xii) any Investment acquired by the Company or any of its Restricted
Subsidiaries (A) in
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exchange for any other Investment or accounts receivable held by the Company or
any such Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer of such
other Investment or the obligor with respect to such accounts receivable or (B)
as a result of a foreclosure by the Company or any of its Restricted
Subsidiaries with respect to any secured Investment or other transfer of title
with respect to any secured Investment in default, (xiii) any Investment that
constitutes part of the consideration from an Asset Disposition made pursuant
to, and in compliance with, the covenant described above under "Repurchase at
the Option of Holders -- Asset Dispositions," (xiv) Investments the payment for
which consists exclusively of Capital Stock (exclusive of Redeemable Interests)
of the Company and (xv) Investments existing as of the date of the Indenture of
the Company or any Subsidiary of the Company.
"Post-Petition Interest" means all interest accrued or accruing after the
commencement of any Insolvency Proceeding (and interest that would accrue but
for the commencement of any Insolvency Proceeding) in accordance with and at the
contract rate (including, without limitation, any rate applicable upon default)
specified in the agreement or instrument creating, evidencing or governing any
Senior Debt, whether or not, pursuant to applicable law or otherwise, the claim
for such interest is allowed as a claim in such Insolvency Proceeding.
"Preferred Stock" of any Person means Capital Stock of such Person of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"Receivables" means receivables, chattel paper, instruments, documents or
intangibles evidencing or relating to the right to payment of money.
"Receivables Sale" of any Person means any sale of Receivables of such
Person (pursuant to a purchase facility or otherwise), other than in connection
with a disposition of the business operations of such Person relating thereto or
a disposition of defaulted Receivables for purpose of collection and not as a
financing arrangement.
"Redeemable Interest" of any Person means any equity security of or other
ownership interest in such Person that by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable) or
otherwise (including upon the occurrence of an event) matures or is required to
be redeemed (pursuant to any sinking fund obligation or otherwise) or is
convertible into or exchangeable for Debt or is redeemable at the option of the
holder thereof, in whole or in part, at any time prior to the final Stated
Maturity of the New Notes.
"Related Person" of any Person means any other Person directly or
indirectly owning (a) 5% or more of the outstanding Common Stock of such Person
(or, in the case of a Person that is not a corporation, 5% or more of the equity
interest in such Person) or (b) 5% or more of the combined voting power of the
Voting Stock of such Person.
"Restricted Subsidiary" means (i) at any date, a Subsidiary of the Company
that is not an Unrestricted Subsidiary as of such date and (ii) for any period,
a Subsidiary of the Company that for any portion of such period is not an
Unrestricted Subsidiary, provided that such term shall mean such Subsidiary only
for such portion of such period.
"Senior Debt" means with respect to the Company (i) all Debt and other
Obligations owing in respect of the New Credit Facility (including, without
limitation, all loans, letters of credit and other extensions of credit
thereunder and all expenses, fees, reimbursements, indemnities and other amounts
owing pursuant thereto), (ii) all Debt referred to in clauses (i), (ii), (iii),
(v), (vii) or (viii) of the definition of Debt, whether Incurred on or prior to
the date of the Indenture or thereafter Incurred, and (iii) amendments,
modifications, renewals, extensions, refinancings and refundings of any such
Debt; provided, however, the following shall not constitute Senior Debt: (a) any
Debt owed to a Person when such Person is a Subsidiary of the Company, (b) any
Debt which by the terms of the instrument creating or evidencing the same is
pari passu with or subordinate in right of payment to the New Notes, (c) any
Debt Incurred in violation of the Indenture or
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(d) any Debt which is subordinate in right of payment in any respect to any
other Debt of the Company. For purposes of this definition, "Debt" includes any
obligation to pay principal, premium (if any), interest, penalties,
reimbursement or indemnity amounts, fees and expenses (including Post-Petition
Interest). To the extent any payment of Senior Debt (whether by or on behalf of
the Company, as proceeds of security or enforcement or any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to a trustee, receiver or other similar party under any bankruptcy,
insolvency, receivership or similar law, then if such payment is recovered by,
or paid over to, such trustee, receiver or other similar party, the Senior Debt
or part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment had not occurred. All Senior Debt
shall be and remain Senior Debt for all purposes of the Indenture, whether or
not subordinated in any Insolvency Proceeding.
"Subordinated Debt" means Debt of the Company as to which the payment of
principal of (and premium, if any) and interest and other payment obligations in
respect of such Debt shall be subordinate to the prior payment in full of the
New Notes to at least the following extent: (i) no payments of principal of (or
premium, if any) or interest on or otherwise due in respect of such Debt may be
permitted for so long as any default in the payment of principal (or premium, if
any) or interest on the New Notes exists; (ii) in the event that any other
default exists with respect to the New Notes that with the passing of time or
the giving of notice, or both, would constitute an event of default, upon notice
by Holders of 25% or more in principal amount of the New Notes to the Trustee,
the Trustee shall have the right to give notice to the Company and the holders
of such Debt (or trustees or agents therefor) of a payment blockage, and
thereafter no payments of principal of (or premium, if any) or interest on or
otherwise due in respect of such Debt may be made for a period of 179 days from
the date of such notice; and (iii) such Debt may not (x) provide for payments of
principal of such Debt at the stated maturity thereof or by way of a sinking
fund applicable thereto or by way of any mandatory redemption, defeasance,
retirement or repurchase thereof by the Company (including any redemption,
retirement or repurchase which is contingent upon events or circumstances, but
excluding any retirement required by virtue of acceleration of such Debt upon an
event of default thereunder), in each case prior to the final Stated Maturity of
the New Notes or (y) permit redemption or other retirement (including pursuant
to an offer to purchase made by the Company) of such other Debt at the option of
the holder thereof prior to the final Stated Maturity of the New Notes, other
than a redemption or other retirement at the option of the holder of such Debt
(including pursuant to an offer to purchase made by the Company) which is
conditioned upon a change of control of the Company pursuant to provisions
substantially similar to those described under "Change of Control" (and which
shall provide that such Debt will not be repurchased pursuant to such provisions
prior to the Company's repurchase of the New Notes required to be repurchased by
the Company pursuant to the provisions described under "Change of Control").
"Subordinated Securities" mean securities distributed to the holders of the
New Notes (i) in an Insolvency Proceeding, pursuant to a plan of reorganization
consented to by each class of Senior Debt or (ii) outside an Insolvency
Proceeding, but only if, in each case, all of the terms and conditions of such
securities (including, without limitation, term, tenor, interest, amortization,
subordination, covenants and defaults) are in all material respects at least as
favorable (and provide the same relative benefits) to the holders of Senior Debt
and, in the case of an Insolvency Proceeding, to the holders of any security
distributed in such Insolvency Proceeding on account of Senior Debt as the terms
and conditions of the New Notes and the Indenture are and provide to the holders
of Senior Debt.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
"Unrestricted Subsidiary" means (i) at any date, a Subsidiary of the
Company that is an Unrestricted Subsidiary in accordance with the provisions of
the Indenture described under the caption "Certain Covenants -- Unrestricted
Subsidiaries" and (ii) for any period, a Subsidiary of the Company that for any
portion of such period is an Unrestricted Subsidiary in accordance with the
provisions of the Indenture as
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described under the caption "Certain Covenants -- Unrestricted Subsidiaries,"
provided that such term shall mean such Subsidiary only for such portion of such
period.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary all of
the outstanding Capital Stock or other ownership interests of which (other than
directors' qualifying shares) shall at the time be owned by the Company or by
one or more Wholly Owned Restricted Subsidiaries or by the Company and one or
more Wholly Owned Restricted Subsidiaries.
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture: (a) failure to
pay any interest on any Note when due, continuing for 30 days; (b) failure to
pay principal of (or premium, if any, on) any Note when due; (c) failure to
perform or comply with the provisions described under "Covenants -- Mergers,
Consolidations and Certain Sales of Assets" or the provisions described under
"Repurchase at the Option of Holders -- Asset Dispositions" and "-- Change of
Control"; (d) failure to perform any other covenant or warranty of the Company
in the Indenture or the Notes, continuing for 60 days after written notice to
the Company and the Trustee from Holders of at least 25% in principal amount of
the Outstanding Notes as provided in the Indenture; (e) a default or defaults
under any bonds, debentures, notes or other evidences of, or obligations
constituting, Debt by the Company or any Restricted Subsidiary or under any
mortgages, indentures, instruments or agreements under which there may be issued
or existing or by which there may be secured or evidenced any Debt of the
Company or any Restricted Subsidiary, in each case with a principal or similar
amount then outstanding, individually or in the aggregate, in excess of $15
million, whether such Debt now exists or is hereafter created, which default or
defaults constitute a failure to pay any portion of the principal or similar
amount of such Debt when due and payable after the expiration of any applicable
grace period with respect thereto or will have resulted in such Debt becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable; (f) the rendering of a final judgment or judgments
(not subject to appeal) against the Company or any of its Restricted
Subsidiaries in an aggregate amount in excess of $15 million (in excess of
applicable insurance coverage) which remains unstayed, undischarged or unbonded
for a period of 60 days thereafter; and (g) certain events of bankruptcy,
insolvency or reorganization affecting the Company or any Restricted Subsidiary
of the Company. (sec. 501).
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
have offered to the Trustee reasonable indemnity. (sec. 603). Subject to such
provisions for the indemnification of the Trustee and certain other conditions
provided in the Indenture, the Holders of a majority in aggregate principal
amount of the Outstanding Notes will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee. (sec. 512).
If an Event of Default (other than an Event of Default of the type
described in clause (g) above) occurs and is continuing, either the Trustee or
the Holders of at least 25% in aggregate principal amount of the Outstanding
Notes may accelerate the maturity of all Notes. If an Event of Default of the
type described in clause (g) above occurs, the principal amount of and any
accrued interest on the Notes then outstanding will become immediately due and
payable; provided, however, that after such acceleration, but before a judgment
or decree based on acceleration, the Holders of a majority in aggregate
principal amount of Outstanding Notes may, under certain circumstances, rescind
and annul such acceleration if all Events of Default, other than the non-payment
of accelerated principal amount have been cured or waived as provided in the
Indenture. (sec. 502). For information as to waiver of defaults, see
"Modification and Waiver" below.
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless the Holders of at least 25% in aggregate principal amount of
the
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Outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the Outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days. (sec.
507). However, such limitations do not apply to a suit instituted by a Holder of
a Note for enforcement of payment of the principal of and premium, if any, or
interest on such Note on or after the respective due dates expressed in such
Note. (sec. 508).
In the case any Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium that the Company would have had to pay if the
Company then had elected to redeem the New Notes pursuant to the provisions
described above under "Repurchase at the Option of Holders," an equivalent
premium will become and be immediately due and payable upon the acceleration of
the Notes.
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. The Company will be
required to deliver to the Trustee, as soon as possible and in any event within
30 days after the Company becomes aware of the occurrence of an Event of Default
or an event which, with notice or the lapse of time or both, would constitute an
Event of Default, an Officers' Certificate setting forth the details of such
Event of Default or default, and the action which the Company proposes to take
with respect thereto. (sec. 1021).
DEFEASANCE
The Indenture will provide that, at the option of the Company, (a) if
applicable, the Company will be discharged from any and all obligations in
respect of the Outstanding New Notes or (b) if applicable, the Company may omit
to comply with certain restrictive covenants, and that such omission shall not
be deemed to be an Event of Default under the Indenture and the Notes, in either
case (a) or (b) upon irrevocable deposit with the Trustee, in trust, of money
and/or U.S. Government Obligations that will provide money in an amount
sufficient in the opinion of a nationally recognized firm of independent
certified public accountants to pay the principal of and premium, if any, and
each installment of interest, if any, on the Outstanding Notes. With respect to
clause (b), the obligations under the Indenture other than with respect to such
covenants and the Events of Default other than the Events of Default relating to
such covenants above shall remain in full force and effect. Such trust may only
be established if, among other things (i) with respect to clause (a), the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling or there has been a change in law, which in the Opinion of
Counsel provides that Holders of the Notes will not recognize gain or loss for
Federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred; or, with respect to clause (b), the
Company has delivered to the Trustee an Opinion of Counsel to the effect that
the Holders of the Notes will not recognize gain or loss for Federal income tax
purposes as a result of such deposit and defeasance and will be subject to
Federal income tax on the same amount, in the same manner and at the same times
as would have been the case if such deposit and defeasance had not occurred;
(ii) no Event of Default or event that with the passing of time or the giving of
notice, or both, shall constitute an Event of Default shall have occurred or be
continuing; (iii) the Company has delivered to the Trustee an Opinion of Counsel
to the effect that such deposit shall not cause the Trustee or the trust so
created to be subject to the Investment Company Act of 1940; and (iv) certain
other customary conditions precedent are satisfied. (sections 1201, 1202, 1203
and 1204).
In the event the Company omits to comply with its remaining obligations
under the Indenture and the New Notes after a defeasance of the Indenture with
respect to the Notes as described under clause (b) above and the Notes are
declared due and payable because of the occurrence of any Event of Default, the
amount of money and U.S. Government Obligations on deposit with the Trustee may
be insufficient to pay amounts due on the Notes at the time of the acceleration
resulting from such Event of Default. However, the Company will remain liable in
respect of such payments.
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MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Notes; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Note affected thereby, (a) change the Stated Maturity of the
principal of, or any installment of interest on, any Note, (b) reduce the
principal amount of, (or the premium) or interest on, any Note, (c) change the
place or currency of payment of principal of (or premium), or interest on, any
Note, (d) impair the right to institute suit for the enforcement of any payment
on or with respect to any Note, (e) reduce the above-stated percentage of
Outstanding Notes necessary to modify or amend the Indenture, (f) reduce the
percentage of aggregate principal amount of Outstanding Notes necessary for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults, (g) modify any provisions of the Indenture relating to the
modification and amendment of the Indenture or the waiver of past defaults or
covenants, except as otherwise specified, (h) modify any of the provisions of
the Indenture relating to the subordination of the Notes in a manner adverse to
the Holders or (i) modify the provisions described under "Repurchase at the
Option of Holders -- Asset Dispositions" and under "-- Change of Control" in a
manner adverse to the Holders in any material respect. (sec. 902).
The Holders of a majority in aggregate principal amount of the Outstanding
Notes, on behalf of all Holders of Notes, may waive compliance by the Company
with certain restrictive provisions of the Indenture. The Holders of a majority
in aggregate principal amount of the Outstanding Notes, on behalf of all Holders
of New Notes, may waive any past default under the Indenture, except a default
in the payment of principal, premium or interest. (sec. 513).
No amendment, waiver or modification of any subordination provision adverse
to the holders of Senior Debt will be effective against any holder of Senior
Debt unless expressly consented to in writing by or on behalf of such holder (or
by any specified percentage of holders of a class of Senior Debt required to
consent thereto) pursuant to the terms of the agreement or instrument creating,
evidencing or governing such Senior Debt.
NOTICES
Notices to Holders will be given by mail to the addresses of such Holders
as they may appear in the Security Register. (sections 101 and 106).
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Note is registered as the absolute owner
thereof (whether or not such Note may be overdue) for the purpose of making
payment and for all other purposes. (sec. 309).
GOVERNING LAW
The Indenture and the New Notes will be governed by, and construed in
accordance with, the laws of the State of New York, without regard to its
conflict of law principles.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs.
The Indenture and provisions of the TIA incorporated by reference therein
contain limitations on the rights of the Trustee, should it become a creditor of
the Company, to obtain payment of claims in certain cases or to realize on
certain property received by it in respect of any such claim as security or
otherwise. The
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Trustee is permitted to engage in other transactions with the Company or any
Affiliate, provided, however, that if it acquires any conflicting interest (as
defined in the Indenture or in the TIA), it must eliminate such conflict or
resign. The Bank of New York, the Trustee under the Indenture, may become a
lender under the New Credit Facility and may engage in other transactions with
the Company or its subsidiaries in connection with which The Bank of New York
may be or become a creditor.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the New Notes will be issued in fully
registered form, without coupons in denominations of $1,000 and integral
multiples thereof. Notes will not be issued in bearer form. Except as described
below, the New Notes will be deposited upon issuance with the Trustee as
Custodian for DTC in global form (the "Global Certificate").
DTC has advised the Company that it is (i) a limited purpose trust company
organized under the laws of the State of New York, (ii) a "banking organization"
within the meaning of the New York banking law, (iii) a member of the Federal
Reserve System, (iv) a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended, and (v) a "Clearing Agency" registered pursuant to
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants (collectively, the "Participants") and facilitates the clearance
and settlement of securities transactions between Participants through
electronic book-entry changes to the accounts of its Participants, thereby
eliminating the need for physical transfer and delivery of certificates.
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain other
organizations. Indirect access to DTC's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants") that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly.
The Company expects that pursuant to procedures established by DTC (i) upon
deposit of the Global Certificate representing New Notes, DTC will credit the
account of Participants tendering Old Notes in exchange for New Notes with an
interest in the Global Certificate and (ii) ownership of beneficial interests
therein will be effected only through records maintained by DTC (with respect to
interests of Participants), Participants and Indirect Participants. The laws of
some states require that certain persons take physical delivery in definitive
form of securities that they own and that security interests in negotiable
instruments can only be perfected by delivery of certificates representing the
instruments. Consequently, the ability to transfer the Notes or to pledge the
Notes as collateral to persons in such states will be limited to such extent.
So long as DTC or its nominee is the registered owner of a Global
Certificate, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by the Global Certificate for all
purposes under the Indenture and the Notes. Except as provided below, owners of
beneficial interests in a Global Certificate will not be entitled to have Notes
represented by such Global Certificate registered in their names, will not
receive or be entitled to receive physical delivery of Certificated Notes, and
will not be considered the owners or holders thereof under the Indenture for any
purpose, including with respect to the giving of any direction, instruction or
approval to the Trustee thereunder. As a result, the ability of a person having
a beneficial interest in Notes represented by a Global Certificate to pledge or
transfer such interest to persons or entities that do not participate in DTC's
system or otherwise to take action with respect to such interest, may be
affected by the lack of a physical certificate evidencing such interest.
Accordingly, each holder of New Notes owning a beneficial interest in a
Global Certificate must rely on the procedures of DTC and, if such holder of New
Notes is not a Participant or an Indirect Participant, on the procedures of the
Participant through which such holder of New Notes owns its interest, to
exercise any rights of a holder of Notes under the Indenture. The Company
understands that under existing industry practice, in the event the Company
requests any action of a holder of New Notes or a holder of New Notes that is an
owner of a beneficial interest in a Global Certificate desires to take any
action that DTC, as the holder of such Global Certificate, is entitled to take,
DTC would authorize the Participant to take such action or would otherwise act
upon the instruction of such holder of New Notes. Neither the Company nor the
Trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of the
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New Notes by DTC, or for maintaining, supervising or reviewing any records of
DTC relating to such New Notes or for any other matter relating to the actions
or procedures of DTC.
Payments with respect to the principal of, premium, if any, and interest
on, any Notes represented by a Global Certificate registered in the name of DTC
or its nominee on the applicable record date will be payable by the Trustee to
or at the direction of DTC or its nominee in its capacity as the registered
holder of the Global Certificate representing such Notes under the Indenture.
Under the terms of the Indenture, the Company and the Trustee may treat the
persons in whose names the Notes, including the Global Certificate, are
registered as the owners thereof for the purpose of receiving such payment and
for any and all other purposes whatsoever. Consequently, neither the Company nor
the Trustee has or will have any responsibility or liability for the payment of
such amounts to beneficial owners of interests in the Global Certificate
(including principal, premium, if any, and interest), or to immediately credit
the accounts of the relevant Participants with such payment, in an amount
proportionate to their respective holdings in principal amount of the Global
Certificate as shown on the records of DTC. The Company expects that payments by
the Participant and the Indirect Participant to the beneficial owners of
interests in the Global Certificate will be governed by standing instructions
and customary practice and will be the responsibility of the Participant or the
Indirect Participant and DTC.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from the sources the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
Certificated Notes
If (i) the Company notifies the Trustee in writing that DTC is no longer
willing or able to act as a depository or DTC ceases to be registered as a
clearing agency under the Exchange Act and the Company is unable to locate a
qualified successor within 90 days, (ii) the Company, at its option, notifies
the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture or (iii) upon the occurrence of certain
other events, then, upon surrender by DTC of its Global Certificate, then
Certificated Notes will be issued to each person that DTC identifies as the
beneficial owner of the Notes represented by the Global Certificate. In
addition, subject to certain conditions, any person having a beneficial interest
in a Global Certificate may, upon request to the Trustee, exchange such
beneficial interest for Certificated Notes. Upon any such issuance, the Trustee
is required to register such Certificated Notes in the name of such person or
persons (or the nominee of any thereof), and cause the same to be delivered
thereto.
PLAN OF DISTRIBUTION
Except as described below, (i) a broker-dealer may not participate in the
Exchange Offer in connection with a distribution of the New Notes, (ii) such
broker-dealer would be deemed an underwriter in connection with such
distribution and (iii) such broker-dealer would be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transactions. A broker-dealer may, however,
receive New Notes for its own account pursuant to the Exchange Offer in exchange
for Old Notes when such Old Notes were acquired as a result of market-making
activities or other trading activities. Each such broker-dealer must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer (other than an "affiliate" of the Company) in
connection with resales of such New Notes. The Company has agreed that for a
period of 90 days after the Expiration Date, it will make this Prospectus, as
amended or supplemented, available to any such broker-dealer for use in
connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be
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made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of the New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in a Letter of Transmittal. The Company has agreed to pay all expenses incident
to the Exchange Offer, other than commissions or concessions of any brokers and
dealers, including, subject to the Letter of Transmittal, transfer taxes, and
will indemnify the holders of the Old Notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
The New Notes will constitute a new issue of securities with no established
trading market. The Company has been advised by the Initial Purchasers that
following completion of the Exchange Offer, the Initial Purchasers intend to
make a market in the New Notes. However, the Initial Purchasers are not
obligated to do so and any market-making activities with respect to the New
Notes may be discontinued at any time without notice. Accordingly, no assurance
can be given that an active public or other market will develop for the New
Notes or as to the liquidity of or the trading market for the New Notes. If a
trading market does not develop or is not maintained, holders of the New Notes
may experience difficulty in reselling the New Notes or may be unable to sell
them at all. If a market for the New Notes develops, any such market may cease
to continue at any time. In addition, if a market for the New Notes develops,
the market prices of the New Notes may be volatile. Factors such as fluctuations
in the Company's earnings and cash flow, the difference between the Company's
actual results and results expected by investors and analysts and economic
developments could cause the market prices of the New Notes to fluctuate
substantially.
VALIDITY OF THE NEW NOTES
The validity of the New Notes will be passed upon by Fried, Frank, Harris,
Shriver & Jacobson (a partnership including professional corporations), New
York, New York, the Company's counsel.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996 and 1995 and for each of the years in the three year period ended December
31, 1996 have been included in this Prospectus in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, to the extent
and for the periods indicated in their report thereon, which is based partially
on the report of other auditors and upon the authority of such firm as experts
in accounting and auditing.
91
<PAGE> 96
INSILCO CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditors' Report........................................................ F-2
Consolidated Balance Sheets......................................................... F-3
-- December 31, 1995
-- December 31, 1996
-- June 30, 1997 (unaudited)
Consolidated Statements of Operations............................................... F-5
-- Year ended December 31, 1994
-- Year ended December 31, 1995
-- Year ended December 31, 1996
-- Six months ended June 30, 1996 (unaudited)
-- Six months ended June 30, 1997 (unaudited)
Consolidated Statement of Stockholders' Equity (Deficit)............................ F-6
-- For the years ended December 31, 1994, 1995, 1996
and six months ended June 30, 1997 (unaudited)
Consolidated Statements of Cash Flows............................................... F-7
-- Year ended December 31, 1994
-- Year ended December 31, 1995
-- Year ended December 31, 1996
-- Six months ended June 30, 1996 (unaudited)
-- Six months ended June 30, 1997 (unaudited)
Notes to Consolidated Financial Statements.......................................... F-8
</TABLE>
F-1
<PAGE> 97
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Insilco Corporation:
We have audited the accompanying consolidated financial statements of Insilco
Corporation and subsidiaries as listed in the accompanying index. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the 1995 and 1996
financial statements of Thermalex, Inc., a 50 percent owned investee company.
The Company's investment in Thermalex, Inc. at December 31, 1995 and 1996, was
$9.0 million and $8.5 million, respectively, and its equity in earnings of
Thermalex, Inc. was $2.3 million and $2.9 million, for the years 1995 and 1996,
respectively. The financial statements of Thermalex, Inc. were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for Thermalex, Inc., is based solely on the
report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Insilco Corporation and
subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the years in the three year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Columbus, Ohio
January 31, 1997, except as to
Notes 3, 18(c) and 20, which are as of
March 5, 1997
F-2
<PAGE> 98
INSILCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1997
--------------------- -------------
1995 1996 (UNAUDITED)
-------- -------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 9,894 3,481 111,200
Trade receivables, net.............................. 86,086 73,874 90,920
Other receivables................................... 8,452 8,499 7,276
Inventories:
Raw materials and supplies....................... 27,176 27,677 25,402
Work in process.................................. 20,390 25,570 21,786
Finished goods................................... 21,723 13,138 10,493
-------- ------- -------
Total inventories.............................. 69,289 66,385 57,681
-------- ------- -------
Deferred tax asset.................................. 7,228 29,859 2,174
Prepaid expenses and other current assets........... 6,395 7,010 6,616
-------- ------- -------
Total current assets........................... 187,344 189,108 275,867
-------- ------- -------
Property, plant and equipment:
Land................................................ 5,047 6,310 6,303
Buildings........................................... 21,012 32,772 33,244
Machinery and equipment............................. 102,883 125,211 125,442
-------- ------- -------
128,942 164,293 164,989
Less accumulated depreciation....................... (37,707) (49,914) (54,592)
-------- ------- -------
Net property, plant and equipment.............. 91,235 114,379 110,397
-------- ------- -------
Deferred tax asset.................................... 29,653 7,542 4,950
Other assets and deferred charges..................... 21,869 18,762 9,683
Goodwill, net......................................... -- 13,659 13,678
Investment in Thermalex............................... 10,028 8,550 8,636
-------- ------- -------
Total assets................................... $340,129 352,000 423,211
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 99
INSILCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1997
--------------------- -------------
1995 1996 (UNAUDITED)
-------- -------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt................... $ 18,642 24,272 24,708
Current portion of other long-term obligations...... 7,975 6,661 5,608
Accrued interest payable............................ 4,089 3,113 1,070
Accounts payable.................................... 45,336 37,984 34,831
Customer deposits................................... 19,722 23,490 15,039
Salaries and wages payable.......................... 8,102 9,838 8,843
Accrued income taxes................................ 3,126 3,596 11,823
Accrued expenses.................................... 35,432 32,198 28,975
-------- ------- -------
Total current liabilities...................... 142,424 141,152 130,897
Long-term debt, excluding current portion............. 167,847 136,770 145,112
Other long-term obligations, excluding current
portion............................................. 45,637 40,676 38,740
-------- ------- -------
Total liabilities.............................. 355,908 318,598 314,749
-------- ------- -------
Stockholders' equity (deficit):
Common stock, $.001 par value; 15,000,000 shares
authorized; 9,852,751 shares issued in 1995,
9,810,794 in 1996 and 10,140,749 in 1997;
9,650,497 shares outstanding in 1995, 9,487,740
in 1996 and 9,673,069 in 1997.................... 10 10 10
Treasury stock, at cost............................. (6,813) (10,745) (16,268)
Additional paid-in capital.......................... 67,192 81,496 90,203
Accumulated earnings (deficit)...................... (76,168) (37,115) 37,411
Foreign currency translation adjustments............ -- (244) (2,894)
-------- ------- -------
Total stockholder's equity (deficit)........... (15,779) 33,402 108,462
-------- ------- -------
Commitments and contingencies (See Notes 9, 11, 12 and
17)
Total liabilities and stockholder's equity
(deficit)................................... $340,129 352,000 423,211
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 100
INSILCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------- ---------------------
1994 1995 1996 1996 1997
---------- ---------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales.......................................... $ 543,630 561,203 572,474 300,497 287,012
Cost of products sold.......................... 372,842 385,720 389,893 202,752 195,436
Depreciation................................... 13,570 14,758 16,593 8,058 9,585
Selling, general and administrative expenses... 97,700 97,736 106,649 56,773 50,811
Nonrecurring charges........................... -- 6,200 -- -- --
Amortization of goodwill....................... -- -- 238 29 213
Amortization of Reorganization Goodwill........ 69,217 32,172 -- -- --
--------- ---------- --------- --------- ---------
Operating income (loss).................... (9,699) 24,617 59,101 32,885 30,967
--------- ---------- --------- --------- ---------
Other income (expense):
Interest expense............................. (29,113) (19,546) (18,386) (9,400) (7,762)
Interest income.............................. 1,842 1,577 1,010 460 2,078
Equity in net income of Thermalex............ 1,334 2,335 2,922 1,363 1,547
Gain on sale of Rolodex...................... -- -- -- -- 95,001
Other income, net............................ 1,329 9,791 7,216 1,741 69
--------- ---------- --------- --------- ---------
(24,608) (5,843) (7,238) (5,836) 90,933
--------- ---------- --------- --------- ---------
Income (loss) from continuing operations
before income taxes and extraordinary
item..................................... (34,307) 18,774 51,863 27,049 121,900
Income tax expense............................. (8,585) (16,199) (12,810) (9,098) (47,374)
--------- ---------- --------- --------- ---------
Income (loss) from continuing operations
before extraordinary item................ (42,892) 2,575 39,053 17,951 74,526
Discontinued operations, net of tax:
Income from operations....................... 2,204 -- -- -- --
Gain on disposal............................. 10,710 -- -- -- --
--------- ---------- --------- --------- ---------
Income from discontinued operations........ 12,914 -- -- -- --
--------- ---------- --------- --------- ---------
Income (loss) before extraordinary item.... (29,978) 2,575 39,053 17,951 74,526
Extraordinary item, net of tax................. (2,156) -- -- -- --
--------- ---------- --------- --------- ---------
Net income (loss).......................... $ (32,134) 2,575 39,053 17,951 74,526
========= ========== ========= ========= =========
Earnings (loss) per common share and common
share equivalents:
Continuing operations........................ $ (4.42) 0.25 3.95 1.81 7.55
Discontinued operations...................... 1.33 -- -- -- --
Extraordinary item........................... (0.23) -- -- -- --
--------- ---------- --------- --------- ---------
Net income (loss) per common share and
common share equivalents................. $ (3.32) 0.25 3.95 1.81 7.55
========= ========== ========= ========= =========
Weighted average number of common shares
outstanding and common share equivalents..... 9,710,048 10,132,174 9,891,631 9,908,973 9,875,401
========= ========== ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 101
INSILCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, 1996 AND SIX MONTHS ENDED JUNE 30,
1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL
COMMON ADDITIONAL ACCUMULATED CUMULATIVE STOCKHOLDERS'
STOCK PAR TREASURY PAID-IN EQUITY TRANSLATION EQUITY
VALUE $.001 STOCK CAPITAL (DEFICIT) ADJUSTMENT (DEFICIT)
----------- -------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993.......... $10 -- 65,104 (46,609) -- 18,505
Net loss............................ -- -- -- (32,134) -- (32,134)
Shares issued....................... -- -- 178 -- -- 178
--- ------- ------ ------- ------ -------
Balance at December 31, 1994.......... 10 -- 65,282 (78,743) -- (13,451)
Net income.......................... -- -- -- 2,575 -- 2,575
Shares issued upon exercise of stock
options........................... -- -- 226 -- -- 226
Purchase of treasury stock.......... -- (6,813) -- -- -- (6,813)
Tax benefit from reduction of
valuation allowance for deferred
tax assets........................ -- -- 1,612 -- -- 1,612
Tax benefit from exercise of stock
options........................... -- -- 72 -- -- 72
--- ------- ------ ------- ------ -------
Balance at December 31, 1995.......... 10 (6,813) 67,192 (76,168) -- (15,779)
Net income.......................... -- -- -- 39,053 -- 39,053
Shares issued upon exercise of stock
options........................... -- -- 1,071 -- -- 1,071
Purchase of treasury stock.......... -- (3,932) -- -- -- (3,932)
Tax benefit from reduction of
valuation allowance for deferred
tax assets........................ -- -- 10,237 -- -- 10,237
Tax benefit from exercise of stock
options........................... -- -- 402 -- -- 402
Restricted stock.................... -- -- 3,300 -- -- 3,300
Reserved shares..................... -- -- (706) -- -- (706)
Foreign translation adjustment...... -- -- -- -- (244) (244)
--- ------- ------ ------- ------ -------
Balance at December 31, 1996.......... 10 (10,745) 81,496 (37,115) (244) 33,402
Net income (unaudited).............. -- -- -- 74,526 -- 74,526
Shares issued upon exercise of stock
options (unaudited)............... -- -- 5,581 -- -- 5,581
Purchase of treasury stock
(unaudited)....................... -- (5,523) -- -- -- (5,523)
Tax benefit from exercise of stock
options (unaudited)............... -- -- 2,556 -- -- 2,556
Restricted stock (unaudited)........ -- -- 570 -- -- 570
Foreign translation adjustment
(unaudited)....................... -- -- -- -- (2,650) (2,650)
--- ------- ------ ------- ------ -------
Balance at June 30, 1997
(unaudited)......................... $10 (16,268) 90,203 37,411 (2,894) 108,462
=== ======= ====== ======= ====== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 102
INSILCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- ------------------
1994 1995 1996 1996 1997
--------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................... $ (32,134) 2,575 39,053 17,951 74,526
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization............... 82,787 46,930 16,831 8,090 9,798
Deferred tax expense........................ (1,626) 12,661 10,016 7,187 31,266
Gain on divestitures, net................... -- -- (2,493) -- (95,001)
Noncash charges in lieu of taxes............ 7,957 842 -- -- --
Other noncash charges and credits........... (1,738) (6,985) (4,904) 11 (911)
Change in operating assets and liabilities:
Receivables.............................. (4,017) (8,836) 11,749 1,920 (27,063)
Inventories.............................. (4,800) (461) (2,899) (6,695) 563
Payables and other....................... 2,901 (5,519) (9,601) (16,656) 3,239
Other long-term liabilities.............. (3,116) (3,463) (2,329) (1,475) (1,576)
Discontinued operations.................. (11,909) -- -- -- --
--------- ------- ------- ------- -------
Net cash provided by (used in)
operating activities................. 34,305 37,744 55,423 10,333 (5,159)
--------- ------- ------- ------- -------
Cash flows from investing activities:
Acquisitions of businesses, net of cash
acquired...................................... -- -- (37,726) (5,129) --
Proceeds from divestitures...................... 50,788 -- 21,818 -- 112,610
Capital expenditures............................ (19,163) (22,159) (22,579) (9,266) (10,315)
Other investing activities...................... 4,670 7,481 8,704 2,058 3,039
--------- ------- ------- ------- -------
Net cash provided by (used in)
investing activities................. 36,295 (14,678) (29,783) (12,337) 105,334
--------- ------- ------- ------- -------
Cash flows from financing activities:
Retirement of long-term debt.................... (335,309) (12,926) (26,330) (8,287) (5,917)
Proceeds from debt borrowings, net.............. 226,500 600 -- 15,653 15,340
Purchase of treasury stock...................... -- (6,813) (3,932) (3,353) (1,887)
Payment of prepetition liabilities.............. (2,963) (2,949) (2,862) (1,651) (1,708)
Proceeds from sale of stock..................... 178 226 1,071 656 1,944
Debt financing costs............................ (4,054) -- -- -- --
--------- ------- ------- ------- -------
Net cash provided by (used in)
financing activities................. (115,648) (21,862) (32,053) 3,018 7,772
--------- ------- ------- ------- -------
Effect of exchange rate changes on cash........... -- -- -- -- (228)
--------- ------- ------- ------- -------
Net increase (decrease) in cash and
cash equivalents..................... (45,048) 1,204 (6,413) 1,014 107,719
Cash and cash equivalents at beginning of
period.......................................... 53,738 8,690 9,894 9,894 3,481
--------- ------- ------- ------- -------
Cash and cash equivalents at end of period........ $ 8,690 9,894 3,481 10,908 111,200
========= ======= ======= ======= =======
Supplemental Information--cash paid for:
Interest, net of capitalized amount............. $ 42,494 18,199 17,820 8,858 7,332
========= ======= ======= ======= =======
Income taxes.................................... $ 1,899 2,407 2,081 1,277 6,293
========= ======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 103
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1995 AND 1996
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 (UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
The consolidated financial statements include the financial statements of
Insilco Corporation (the "Company") and its wholly owned subsidiaries. The
Company's 50% owned subsidiary is accounted for under the equity method.
All significant intercompany balances and transactions have been
eliminated.
(b) "Fresh Start" Accounting
On March 31, 1993, the Company adopted the "fresh start" accounting
principles prescribed by the Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code" (the
"Reorganization SOP"), issued by the American Institute of Certified
Public Accountants. The "fresh start" accounting principles required the
Company to value its assets and liabilities at fair values and eliminate
its accumulated deficit.
"Fresh start" accounting was required because on April 1, 1993 the Company
and certain of its subsidiaries emerged from Chapter 11 of the United
States Bankruptcy Code (the "Chapter 11 cases") pursuant to a plan of
reorganization (the "Plan of Reorganization"). For financial reporting
purposes, the effective date of the Plan of Reorganization was March 31,
1993 (the "Plan Effective Date"). For periods prior to the Plan Effective
Date, the Company sometimes is referred to herein as the "Predecessor".
The Chapter 11 cases were commenced on January 13, 1991 (the "Petition
Date").
(c) Cash Equivalents
All highly liquid debt instruments with original maturities of three
months or less are considered to be cash equivalents.
(d) Trade receivables
Trade receivables are presented net of allowances for doubtful accounts
and sales returns of $11,303,000 and $4,978,000 at December 31, 1995 and
1996, respectively, and $3,089,000 (unaudited) at June 30, 1997.
(e) Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out cost method.
(f) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation of plant
and equipment is calculated on the straight-line method over the assets'
estimated useful lives, which range from three to 25 years.
(g) Reorganization Goodwill
Reorganization Goodwill, consisted of the excess of the Company's
reorganization value over the aggregate fair value of its tangible and
identified intangible assets at the Plan Effective Date and was amortized
over a three year period. Reorganization Goodwill was fully amortized at
December 31, 1995.
F-8
<PAGE> 104
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(h) Other Assets
Included in other assets are debt issuance costs, net of accumulated
amortization, of $3,042,000 and $1,666,000 at December 31, 1995 and 1996,
respectively, and $1,151,000 (unaudited) at June 30, 1997. The costs are
being amortized using the effective interest method over the life of the
related debt.
(i) Goodwill
Goodwill represents the excess of the purchase price of acquisitions over
the fair values of net assets acquired and is generally being amortized on
a straight-line basis over periods from 30 to 40 years. The recovery of
the carrying value of Goodwill is periodically evaluated in relation to
the operating performance and future undiscounted net cash flows of the
related businesses acquired.
(j) Interest Rate Hedges
The Company uses interest rate hedges to limit its exposure to the
interest rate risk associated with its floating rate long-term bank debt.
Unamortized premiums related to purchased interest rate caps are included
in other assets in the balance sheet and are amortized using the interest
method over the life of the related agreements. Amounts received under cap
agreements and net amounts received (or paid) under swap agreements are
recorded as a reduction (addition) to interest expense.
(k) Post-retirement Benefit Costs
The estimated cost of providing post-retirement benefit costs, principally
health care, to participating employees (less than 6% of total employees)
is accrued during the years the employee renders the necessary service.
(l) Environmental Remediation and Compliance
Environmental remediation and compliance expenditures are expensed or
capitalized, in accordance with generally accepted accounting principles.
Liabilities are recorded when it is probable the obligations have been
incurred and the amounts can be reasonably estimated.
In 1996, the Company adopted Statement of Position ("SOP") 96-1
Environmental Remediation Liabilities, which had no material impact on the
Company's results of operations or financial position. SOP 96-1 provides
guidance on the accounting for environmental remediation liabilities that
relate to contamination from the past.
(m) Fair Value of Financial Instruments
Cash, accounts receivable, accounts payable and accrued liabilities are
reflected in the financial statements at fair value because of the
short-term maturity of those instruments. The fair values of the Company's
debt and other financial instruments are disclosed in Note 8.
(n) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred income taxes are recognized for all temporary differences between
the financial reporting and tax basis of assets and liabilities based upon
enacted tax laws and statutory tax rates applicable to the periods in
which the differences are expected to affect taxable income.
(o) Advertising and Research and Development Costs
The Company expenses advertising and research and development costs as
they are incurred.
F-9
<PAGE> 105
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(p) Earnings Per Share
Earnings per share were determined using the weighted average of the
shares issued and reserved for issuance (see Note 12). When dilutive,
stock options were included as share equivalents using the treasury stock
method. The weighted average number of common shares and common share
equivalents used for calculation of the primary earnings per share as of
December 31, 1994, 1995 and 1996 were 9,710,048, 10,132,174 and 9,891,631,
respectively, and 9,908,973 (unaudited) and 9,875,401 (unaudited) as of
June 30, 1996 and 1997, respectively.
In 1994, stock options were anti-dilutive. In 1995, fully diluted net
income per share based upon 10,150,692 common shares and common share
equivalents was $0.25 per share. In 1996, fully diluted net income per
share based upon 9,955,079 common shares and common share equivalents was
$3.92 per share. For the six months ended June 30, 1996 and 1997, stock
options were anti-dilutive.
In March 1997, the Financial Accounting Standards Board released Statement
of Financial Accounting Standards ("SFAS") SFAS No. 128, Earnings Per
Share, which simplifies the method for calculating earnings per share. As
defined in SFAS No. 128 "basic earnings per share" is determined using
only the weighted average of the shares issued and reserved for issuance,
while "diluted earnings per share" includes stock options (when dilutive)
as share equivalents using the treasury stock method. If SFAS No. 128 had
been adopted as of December 31, 1996, basic earnings per share for 1996
would have been $4.10 per share and diluted earnings per share would have
been $3.95 per share. If SFAS No. 128 had been adopted as of June 30,
1997, basic earnings per share would have been $7.78 (unaudited) and
diluted earnings per share would have been $7.55 (unaudited).
(q) Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results are likely to differ from
those estimates and assumptions, but management does not believe such
differences will materially affect the Company's financial position,
results of operations or cash flows.
(r) Impairment of Long-Lived Assets
On December 31, 1995, the Company adopted the Statement of Financial
Accounting Standards ("SFAS") No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of which had no
material impact on the Company's results of operations or financial
position in 1995 or 1996. SFAS No. 121 provides guidance for the
recognition of impairment losses related to long-lived assets and certain
intangibles and related goodwill for assets to be held and used and assets
to be disposed of.
(s) Accounting for Stock-Based Compensation
Prior to January 1, 1996, the Company accounted for its stock option plan
in accordance with the provisions of Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense would be recorded on the
date of grant only if the current market price of the underlying stock
exceeded the exercise price. On January 1, 1996, the Company adopted SFAS
No. 123, Accounting for Stock-Based Compensation, which permits entities
to recognize as expense over the vesting period the fair value of all
stock-based awards on the date of grant. Alternatively, SFAS No. 123 also
allows entities to continue to apply the provisions of APB Opinion No. 25
and provide pro forma net income and pro forma earnings per share
F-10
<PAGE> 106
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
disclosures for employee stock option grants made in 1995 and future years
as if the fair-value-based method defined in SFAS No. 123 had been
applied. The Company has elected to continue to apply the provisions of
APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS
No. 123.
(2) RECLASSIFICATIONS
Certain 1994 and 1995 amounts have been reclassified to conform with 1996
presentation.
(3) DIVESTITURES
The Office Products business of the Company's Office Products/Specialty
Publishing Group was divested in three separate transactions during 1996
and the first quarter of 1997. The 1996 transactions included the
divestitures of the Company's computer accessories business and electronic
file organizer business for proceeds aggregating $21,818,000 which were
used to reduce the outstanding amounts on the Company's bank loans.
On March 5, 1997 the remainder of the Office Products business which
consisted of the Rolodex business unit was sold for $117,000,000 in cash.
The Company expects to largely offset the cash taxes resulting from the
sale by utilizing its usable tax loss carryforwards. The Company is
considering various alternatives for the use of the proceeds including a
possible one time distribution of the proceeds to shareholders or a
repurchase of shares.
(4) ACQUISITIONS
In 1996, the Company acquired Great Lake, Inc., ("Great Lake") which serves
the automotive, heavy truck and industrial manufacturing radiator
replacement market and the automotive aluminum tube business of Helmut
Lingemann GmbH & Co. ("Lingemann") for approximately $37,726,000 including
transaction fees and expenses. The Lingemann transactions include the
purchase of stock of Lingemann's German subsidiary, ARUP Alu-Rohr
und-Profil GmbH, and the automotive aluminum tube business assets of its
Duncan, South Carolina based Helima-Helvetion International, Inc. This cash
transaction was financed principally from borrowings under the Company's
Bank Credit Agreement (See Note 7).
These acquisitions have been accounted for as purchases and, accordingly,
the purchase prices have been allocated to the assets and liabilities
acquired based on their fair values at the acquisition dates. The operating
results of the businesses acquired have been included for the period
subsequent to their acquisition dates. (See Note 20 for pro forma results.)
The fair value of the assets acquired totaled $47,478,000 and the
liabilities assumed totaled $9,752,000.
(5) DISCONTINUED OPERATIONS
On August 1, 1994, the Company sold substantially the entire paint products
segment for net proceeds of $50,788,000, resulting in a gain of
$10,710,000, net of taxes totaling $8,224,000. The tax on the gain was
offset by utilization of Federal and state net operating loss and capital
loss carryforwards and did not result in significant cash payments. The net
proceeds were utilized to reduce the Company's long-term debt.
As a result of the sale, the paint products segment is accounted for as a
discontinued operation. Revenues associated with the discontinued paint
products segment for 1994 were $61,920,000.
(6) INVESTMENT IN THERMALEX
Thermalex, Inc. ("Thermalex") is a joint venture, formed in 1985 between
the Company's Thermal Components Division and Mitsubishi Aluminum, Ltd.,
which sells aluminum extruded products to the automobile industry. The
Company's equity investment in Thermalex represents a 50% ownership
F-11
<PAGE> 107
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
interest. Under the equity method of accounting, the Company's share of the
net income of Thermalex is reflected as earned in "other income" in the
accompanying statements of operations and any cash distributions are
credited against the investment as received. The Company received $400,000
and $3,400,000 of dividend distributions from Thermalex in 1995 and 1996,
respectively. For the six months ended June 30, 1996 and 1997 the Company
received $400,000 (unaudited) and $1,460,000 (unaudited), respectively, of
dividend distributions from Thermalex.
Sales for Thermalex for the years ended December 31, 1994, 1995 and 1996
were $34,510,000, $44,839,000 and $48,057,000, respectively. Net income for
the years ended December 31, 1994, 1995 and 1996 was $2,723,000, $4,670,000
and $5,844,000, respectively. Total assets were $32,631,000 and $28,629,000
at December 31, 1995 and 1996, respectively. Stockholders' equity was
$18,058,000 and $17,102,000 at December 31, 1995 and 1996, respectively.
Sales for the six months ended June 30, 1996 and 1997 were $24,042,000
(unaudited) and $25,366,000 (unaudited), respectively. Net income for the
six months ended June 30, 1996 and 1997 was $2,724,000 (unaudited) and
$3,094,000 (unaudited), respectively. Total assets and stockholders' equity
as of June 30, 1997 were $35,755,000 (unaudited) and $17,275,000
(unaudited), respectively.
During 1993, the Company loaned $4,200,000 to Thermalex at 7.95% with a
maturity date of December 15, 1999 which was fully paid as of December 31,
1996. The unpaid balance as of December 31, 1995 of $1,000,000 was included
in the Company's equity investment in Thermalex.
(7) LONG-TERM DEBT
A summary of long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1995 1996 1997
-------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Bank term loan................................... $139,500 116,677 111,052
Bank revolving credit facility................... 44,600 41,300 56,640
Miscellaneous.................................... 2,389 3,065 2,128
-------- ------- -------
186,489 161,042 169,820
Less current portion............................. (18,642) (24,272) (24,708)
-------- ------- -------
$167,847 136,770 145,112
======== ======= =======
</TABLE>
In November 1994, the Company entered into a bank credit agreement that
provided up to $285,000,000 in bank loans pursuant to two credit facilities
(the "Bank Credit Agreement"). The Bank Credit Agreement consists of a
$130,000,000 revolving credit facility, with a $50,000,000 sublimit for
issuance of letters of credit and an initial $155,000,000 term loan
($116,677,000 at December 31, 1996). The bank loans bear interest at
various floating rates, at the Company's option, which approximate the one
to six month LIBOR rates plus 1.25% (such LIBOR rates approximated 5.5% to
5.8% at December 31, 1996). The Company has limited its exposure to
fluctuations of interest rates on a portion of debt as explained in Note 8.
Annual commitment fees consist of 3/8% of the average daily unused
commitment and 1 1/4% of the average daily outstanding letters of credit.
Letters of credit aggregating $10,430,000 were outstanding at December 31,
1996. The term loan is payable in quarterly installments through March 31,
2001. Partial proceeds from asset sales must be applied to the term loan
under certain circumstances. The revolving credit facility will terminate
and all amounts outstanding, if any, will be due on March 31, 2001.
F-12
<PAGE> 108
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Aggregate principal payments of the Company's bank term loan for the five
years subsequent to December 31, 1996 are as follows: in
1997 -- $23,250,000, in 1998 -- $26,625,000, in 1999 -- $30,125,000, in
2000 -- $32,375,000, and in 2001 -- $4,302,000.
The Bank Credit Agreement is guaranteed on a joint and several basis by the
Company's material directly and indirectly wholly owned subsidiaries (the
"Guarantors") and has been secured by substantially all assets of the
Guarantors. The Bank Credit Agreement contains various restrictions and
conditions regarding capital expenditures, payment of dividends, asset
sales, investments, sale of stock, incurrence of additional indebtedness,
financial covenants and other matters. The Company was in compliance with
these covenants as of December 31, 1996.
In 1994, proceeds from the Bank Credit Agreement were utilized to prepay
amounts outstanding under the Company's 10 3/8% Notes and 9 1/2% Senior
Notes, both of which were due on July 1, 1997 (collectively the "Old
Notes") and to replace the Company's post-reorganization secured revolving
credit facility (the "Revolving Credit Facility"). As a result of the
prepayment, the Company recorded an extraordinary charge of $2,156,000, net
of a $1,345,000 tax benefit, due to the call premium required by the Old
Notes and expensing the related unamortized debt financing costs.
(8) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has determined the fair value of its debt and other financial
instruments as follows:
Term Loan and Revolver Loan
The fair value of the bank term loan and revolving credit facility was
determined to approximate the carrying value at December 31, 1995 and 1996
based upon the present value of expected cash flows considering expected
maturities and using interest rates currently available to the Company for
long-term borrowings with similar terms.
Miscellaneous Debt
The fair value of miscellaneous long-term debt is estimated to approximate
the carrying amount because there have not been any significant changes in
market conditions or specific circumstances since the instruments were
recorded at fair value in connection with "fresh start" accounting on the
Plan Effective Date.
Interest Rate Hedges
The fair values of the forward rate, interest rate cap and interest rate
swap obligations at December 31, 1996 were less than the carrying values by
$1,281,000. Quotes from counterparties were used to determine the fair
values of these agreements.
At December 31, 1996, the Company's forward rate agreements fixed the
interest rate on $55,000,000 of its floating rate bank debt (from 11/29/96
to 5/30/97) to a weighted average rate of 6.97% and its swap agreement
fixed the interest rate on $45,000,000 (from 5/30/95 to 5/30/98) at 8.99%.
At December 31, 1996 the Company's cap agreements limit the maximum
interest rate at $40,000,000 of its floating rate debt (from 5/28/95 to
5/27/97) to 8.25%.
The Company is exposed to market risk for changes in interest rates, but
has no off-balance sheet risk of accounting loss. The Company manages
exposure to counterparty credit risk by entering into such transactions
with major financial institutions that are expected to perform under the
terms of such agreements.
F-13
<PAGE> 109
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) OTHER LONG-TERM LIABILITIES
A summary of other long-term liabilities follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
------- ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Prepetition and other tax liabilities.............. $17,271 13,242 9,974
Post-retirement benefits, other than pensions...... 21,622 21,641 22,502
Environmental liabilities.......................... 12,294 9,208 8,840
Deferred compensation and other.................... 2,425 3,246 3,032
------- ------ ------
53,612 47,337 44,348
Less current portion............................... (7,975) (6,661) (5,608)
------- ------ ------
$45,637 40,676 38,740
======= ====== ======
</TABLE>
Prepetition and other tax liabilities
The Company entered into an agreement with the Internal Revenue Service
settling Federal income tax claims filed in the Chapter 11 cases for open
taxable years through 1990. In addition to this agreement, the tax
liabilities include Prepetition state tax claim settlements, negotiated
payment terms on certain foreign Prepetition tax liabilities, and an
estimate of the Company's obligation for curative action required by the
IRS to cure certain operational defects in one of the Company's defined
contribution plans.
Post-retirement benefits, other than pensions
The Company maintains nine post-retirement health care and life insurance
benefit plans, four of which cover approximately 500 present retirees (the
"Retiree Plans") and five of which cover certain retirees and current
employees of four operating units (the "Open Plans"). The Company pays
benefits under the plans when due and does not fund its plan obligations as
they accrue.
During 1996 the Company amended its retiree health care plans to limit the
Company's contributions and to adopt a cost-sharing method based upon a
retiree's years of service. As a result, the accumulated postretirement
benefit obligation (APBO) for these retiree health care plans was reduced
by approximately $3.4 million.
The Company's accrued post-retirement benefit cost is attributable to the
Retiree Plans and one of the Open Plans, in which approximately 100
retirees and 300 current employees were participants. It has been assumed
that plan participant contributions, if any, under these five plans will
increase as a result of increases in medical costs. The other Open Plans
have been, and are assumed will continue to be, fully self-funded by their
participants.
Periodic post-retirement benefits costs under the plans consist of service
costs representing the cost of benefits earned by participating employees
in one of the Open Plans and interest costs attributable to the Company's
accrued obligations.
F-14
<PAGE> 110
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The components of net periodic post-retirement benefit cost follow (in
thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------ ----- -----
<S> <C> <C> <C>
Service Cost............................................. $ 657 503 492
Interest Cost............................................ 1,485 1,401 1,154
Amortization of prior service costs...................... -- (145) (365)
------ ----- -----
$2,142 1,759 1,281
====== ===== =====
</TABLE>
The plans' status reconciled with amounts recognized in the consolidated
balance sheet at December 31 follows (in thousands):
<TABLE>
<CAPTION>
1995 1996
------- ------
<S> <C> <C>
Accumulated post-retirement benefit obligations for retirees.... $11,263 7,828
Other fully eligible plan participants.......................... 2,719 2,302
Other active plan participants.................................. 5,224 4,440
------ -----
Total APBO.................................................... 19,206 14,570
Prior service cost.............................................. 2,396 4,777
Unrecognized net gain........................................... 20 2,765
------ -----
Accrued post-retirement benefit costs......................... $21,622 22,112
====== =====
</TABLE>
At December 31, 1995 and 1996, the weighted-average discount rates used in
determining the accumulated post-retirement benefit obligation were 7.25%
and 7.75%, respectively. The recorded health care cost trend rate assumed
in measuring the accumulated post-retirement benefit obligation was 8% in
1997, declining to an ultimate rate of 5% in 2010 and thereafter. If these
trend rate assumptions were increased by 1%, the accumulated
post-retirement benefit obligation would increase by approximately 14%
($2,045,000). The effect of this change on the sum of service cost and
interest cost components of the net periodic post-retirement benefit cost
for the year ending December 31, 1996 would be an increase of approximately
14% ($236,000).
Environmental liabilities
The Company's operations are subject to extensive Federal, state and local
laws and regulations relating to the generation, storage, handling,
emission, transportation and discharge of materials into the environment.
The Company has a program for monitoring its compliance with applicable
environmental regulations, the interpretation of which often is subjective.
This program includes, but is not limited to, regular reviews of the
Company operations' obligations to comply with environmental laws and
regulations in order to determine the adequacy of the recorded liability
for remediation activities.
As a result of the Chapter 11 cases, a significant amount of uncertainty
has been removed concerning the Company's liability for remediation
activities relating to acts or omissions of the Company prior to the
Petition Date at previously owned sites and independent waste management
facilities. Claims filed in the Chapter 11 cases and other known
environmental obligations that relate to locations owned by the Company
subsequent to the Petition Date or upon which the Company currently
conducts operations will be paid in cash as the environmental remediation
activities are incurred. The environmental liabilities included in other
long-term obligations represent the estimate of cash obligations that will
be required in future years for these environmental remediation activities.
The Company has estimated the potential exposure and accrued liability to
be approximately $9,208,000 and $8,840,000 relating to these environmental
matters at December 31, 1996 and June 30, 1997, respectively. These
liabilities are undiscounted and do not assume any possible recoveries from
insurance coverage or claims which the
F-15
<PAGE> 111
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Company may have against third parties. The estimate is based upon in-house
engineering expertise and the professional services of outside consulting
and engineering firms. In addition, as a result of the Chapter 11 cases, a
significant portion of the claims filed in the Bankruptcy Court were
allowed as general unsecured claims to be discharged consistent with the
Plan of Reorganization. Remaining claims related to environmental
remediation obligations that are expected to be settled for stock are
included in the Company's issued shares (see Note 12 for description of the
reserved shares) and as such are not included in other long-term
liabilities. Because of uncertainty associated with the estimation of these
liabilities and potential regulatory changes, it is reasonably possible
that these estimated liabilities could change in the near term but it is
not expected that the effect of any such change would be material to the
financial statements in the near term.
(10) PENSION
Pension Plans
The Company has defined benefit pension plans covering certain of its
employees. The benefits under these plans are based primarily on employees'
years of service and compensation near retirement. The Company's funding
policy is consistent with the funding requirements of Federal laws and
regulations. Plan assets consist principally of equity investments,
government obligations and corporate debt securities. The Company also
contributes to various multi-employer plans sponsored by bargaining units
for its union employees.
In the fourth quarter of 1995, the Company adopted a lump sum settlement
feature for retirees and certain vested plan participants which resulted in
the settlement of more than $42,000,000 in pension obligations. The Company
recorded a gain on the settlement of $4,300,000 in the fourth quarter of
1995.
A summary of the plans' funded status reconciled with amounts recognized in
the consolidated balance sheet at December 31 follows (in thousands):
<TABLE>
<CAPTION>
1995 1996
---------------------------- ----------------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Plan assets at fair value...... $83,113 10,042 81,025 11,467
------- ------ ------- ------
Actuarial present value of
benefit obligations:
Vested benefits.............. 76,224 13,150 62,230 14,078
Nonvested benefits........... 1,022 330 906 606
------- ------ ------- ------
Accumulated obligation......... 77,246 13,480 63,136 14,684
Benefits attributable to future
compensation increases....... 4,536 283 2,504 549
------- ------ ------- ------
Projected benefit
obligations.................. 81,782 13,763 65,640 15,233
------- ------ ------- ------
Plan assets less projected
benefit obligation........... 1,331 (3,721) 15,385 (3,766)
Unrecognized gains............. (4,772) (1,446) (17,227) (550)
Unrecognized prior service
costs........................ 203 1,893 (1,260) 1,736
------- ------ ------- ------
Pension liability............ $(3,238) (3,274) (3,102) (2,580)
======= ====== ======= ======
</TABLE>
F-16
<PAGE> 112
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The components of pension cost follow (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- ------
<S> <C> <C> <C>
Service cost......................................... $ 2,729 1,848 2,381
Interest cost........................................ 9,844 10,297 6,066
Actual return on assets.............................. (1,228) (27,531) (9,099)
Net amortization and deferral........................ (9,088) 17,375 2,183
------- ------- -----
Net pension cost................................... $ 2,257 1,989 1,531
======= ======= =====
</TABLE>
In addition, the Company recognized pension costs of $565,000 in 1994,
$580,000 in 1995 and $880,000 in 1996, related to contributions to
multi-employer plans.
The assumptions used in accounting for the pension plans as of December 31
follow:
<TABLE>
<CAPTION>
1995 1996
------ -------
<S> <C> <C>
Discount rates.................................................. 7.25% 7.75%
Rates of increase in compensation levels........................ 4.5% 4.5%
Expected long-term rate of return on assets..................... 9.0% 9.0%
</TABLE>
In addition to the defined benefit plans described above, the Company
sponsors a qualified defined contribution 401(k) plan covering
substantially all non-union employees of the Company and its subsidiaries.
The Company matches 50% of a participant's voluntary contributions up to a
maximum of 3% of a participant's compensation. The Company's contribution
expense was approximately $717,000 in 1994, $666,000 in 1995 and $738,000
in 1996.
(11) INCOME TAX EXPENSE
The Company's actual income tax obligations during 1994, 1995 and 1996 were
substantially less than the total amount of income taxes recognized because
previously generated net operating losses and other net deferred tax assets
were utilized to reduce the tax obligations ("noncash components" of income
tax expense). The components of total income taxes and a reconciliation of
total income taxes to the actual income tax obligations follow:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Total income taxes:
Continuing operations............................. $ 8,585 16,199 12,810
Discontinued operations........................... 8,224 -- --
Extraordinary items............................... (1,345) -- --
Stockholders' equity.............................. -- (72) (402)
------- ------- -------
Total income taxes........................... 15,464 16,127 12,408
Noncash allocations:
Deferred income taxes............................. 1,626 (12,661) (10,016)
Charges in lieu of taxes:
Continuing operations.......................... (7,957) (842) --
Discontinued operations........................ (8,224) -- --
Extraordinary item............................. 1,345 -- --
------- ------- -------
Actual income tax obligations................ $ 2,254 2,624 2,392
======= ======= =======
</TABLE>
F-17
<PAGE> 113
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Deferred tax assets previously recognized on the balance sheet are
presented as a component of deferred income tax expense from continuing
operations when realized. In accordance with the Reorganization SOP,
pre-reorganization deferred tax assets not previously recognized on the
balance sheet are recorded as a reduction to Reorganization Goodwill (until
reduced to zero and then as an addition to paid-in capital) when realized
and are presented as "charges in lieu of taxes."
Pretax income (loss) from continuing operations by domestic and foreign
source follows (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
-------- ------ ------
<S> <C> <C> <C>
Domestic............................................. $(44,832) 4,818 39,865
Foreign.............................................. 10,525 13,956 11,998
-------- ------ ------
$(34,307) 18,774 51,863
======== ====== ======
</TABLE>
Income tax expense attributable to income from continuing operations
differs from the amount computed by applying the Federal statutory rate to
pretax income (loss) from continuing operations due to the following (in
thousands):
<TABLE>
<CAPTION>
1994 1995 1996
-------- ------ ------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)............ $(12,007) 6,571 18,152
Goodwill amortization................................ 24,226 11,260 22
State and local taxes, net of federal tax benefit.... 1,418 1,845 1,467
Foreign tax rate differential........................ (2,976) (1,445) (2,076)
Change in deferred tax asset valuation allowance..... (1,626) (367) (426)
Equity in earnings of affiliates not subject to
taxation because of dividends-received deduction
for tax purposes................................... (374) (654) (818)
Benefit of capital loss carryforward................. -- -- (2,781)
Other, net........................................... (76) (1,011) (730)
-------- ------ ------
Income tax expense................................. $ 8,585 16,199 12,810
======== ====== ======
</TABLE>
The components of income tax expense from continuing operations follow (in
thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Current:
Federal.............................................. $ 342 758 542
State, local and foreign............................. 1,912 1,938 2,252
------ ------ ------
2,254 2,696 2,794
------ ------ ------
Deferred:
Federal.............................................. 5,787 12,370 8,336
State, local and foreign............................. 544 1,133 1,680
------ ------ ------
6,331 13,503 10,016
------ ------ ------
Total............................................. $8,585 16,199 12,810
====== ====== ======
</TABLE>
F-18
<PAGE> 114
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The components of deferred income tax expense (benefit) attributable to
income from continuing operations follow (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------- ------ ------
<S> <C> <C> <C>
Deferred tax expense exclusive of other components.... $ -- 13,028 10,442
Charges in lieu of taxes.............................. 7,957 842 --
Changes in the valuation allowance for deferred tax
assets allocated to income tax expense.............. (1,626) (367) (426)
------- ------ ------
$ 6,331 13,503 10,016
======= ====== ======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31 follow (in thousands):
<TABLE>
<CAPTION>
1995 1996
-------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards............................ $ 37,491 38,783
Accrued liabilities, primarily due to accrual for financial
reporting purposes....................................... 25,682 20,346
Pension and other post retirement benefits, primarily due to
accrual for financial reporting purposes................. 10,697 11,105
Capital loss carryforwards.................................. 7,234 8,812
Other....................................................... 8,808 2,537
-------- -------
Total gross deferred tax assets.......................... 89,912 81,583
Less valuation allowance............................ (44,952) (34,116)
-------- -------
44,960 47,467
-------- -------
Deferred tax liabilities:
Plant and equipment, principally due to differences in
depreciation............................................. (7,412) (9,199)
Other....................................................... (667) (867)
-------- -------
Total gross deferred tax liabilities..................... (8,079) (10,066)
-------- -------
Net deferred tax asset............................ $ 36,881 37,401
======== =======
</TABLE>
The net reduction in the valuation allowance for deferred tax assets for
the years ended December 31, 1995 and 1996 was $7,623,000 and $10,836,000,
respectively, which primarily resulted from the recognition of additional
deferred tax assets and the expiration of capital loss carryforwards.
During the fourth quarters of 1995 and 1996, deferred tax assets of
$9,180,000 and $10,663,000, respectively, were recognized because it was
concluded that it was more likely than not that additional deferred tax
assets would be realized in future years. Accordingly, the recognition of a
pre-reorganization deferred tax asset of $7,201,000 in 1995 was recorded as
a reduction to Reorganization Goodwill, $1,612,000 and $10,237,000, in 1995
and 1996 respectively, was recorded as an increase to additional paid-in
capital and $367,000 and $426,000 was recorded as a component of deferred
income tax benefit from continuing operations in 1995 and 1996,
respectively. Recognition, if any, of tax benefits subsequent to December
31, 1996 relating to unrecognized deferred tax assets are expected to be
allocated as follows (in thousands):
<TABLE>
<S> <C>
Income tax benefit that would be reported in the consolidated
statements of operations................................... $11,314
Additional paid-in capital................................... 22,802
-------
$34,116
=======
</TABLE>
F-19
<PAGE> 115
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The reduction in the 1995 deferred tax asset valuation allowance described
above followed evaluation of actual 1994 and 1995 taxable income and
projections of future taxable income. The reduction of the 1996 deferred
tax asset valuation allowance described above followed the decision to
pursue the sale of the Rolodex business unit (completed in March 1997) as
well as projections of future taxable income. In order to fully realize the
net deferred tax assets recognized, the Company will need to generate
future taxable income of approximately $193 million prior to the year 2000.
Combined cumulative taxable income, before utilization of net operating
loss carryforwards, for the past three years approximated $28 million.
Based upon an evaluation of historical and projected future taxable income,
the Company believes it is more likely than not that it will generate
sufficient future taxable income to realize its net deferred tax asset of
$37,401,000 at December 31, 1996. The amount of deferred tax assets
considered realizable, however, could be reduced in the near term if
estimates of future taxable income through the year 1999 are reduced.
At December 31, 1996, the Company had Federal net operating loss
carryforwards of approximately $88,222,000 which can be used to offset
taxable income, which begin to expire in 2005. The Company's ability to
utilize its pre-reorganization operating loss carryforwards is generally
subject to the annual limitation of approximately $9,200,000. In addition
to the annual limitation, operating loss carryforwards may be utilized for
built in gains. Net operating losses not subject to the annual limitation
(before consideration of built in gains) approximated $35,888,000 at
December 31, 1996. The Company also has capital loss carryforwards of
approximately $25,177,000 at December 31, 1996 which will begin to expire
in 1998.
(Unaudited) Income tax expense for the six months ended June 30, 1997 has
been provided based upon the taxes expected to be incurred.
The Company and its domestic subsidiaries file a consolidated U.S. Federal
income tax return. The consolidated Federal income tax returns for 1991,
1992 and 1993 are presently being examined by the Internal Revenue Service.
Management believes that the ultimate outcome of this examination will not
have a material adverse effect on the financial condition, results of
operations or liquidity of the Company.
(12) STOCKHOLDERS' EQUITY (DEFICIT)
The Company's authorized capital stock consists of 15,000,000 shares of
common stock. Each share entitles its holder to one vote on matters
submitted to stockholders. The shares of common stock consisted of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ JUNE 30,
1995 1996 1997
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Issued shares................................. 9,574,646 9,647,237 10,036,116
Issuable shares............................... 55,910 42,986 31,334
Reserved shares............................... 222,195 120,571 73,299
--------- --------- ----------
9,852,751 9,810,794 10,140,749
========= ========= ==========
</TABLE>
The issuable shares are those available for settled claims pending the
return of required information by the claim holders to the Company. The
reserved shares are those available to satisfy certain disputed Prepetition
claims to be resolved in the Bankruptcy Court. During 1996, 101,624
reserved shares were eliminated because it was determined that prepetition
claims would be settled for amounts less than previously estimated. To the
extent that the remaining disputed claims are resolved for more or less
than the reserved amount, the impact may be more or less dilutive to the
Company's stockholders.
F-20
<PAGE> 116
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Water Street Corporate Recovery Fund I, L.P., an investment partnership of
which Goldman, Sachs & Co. ("Goldman Sachs") is the general partner, is the
Company's principal stockholder, owning approximately 62% Company's
outstanding shares of common stock.
Under the Company's 1993 Long-Term Incentive Plan and 1993 Nonemployee
Director Stock Incentive Plan, which became effective as of April 1, 1993,
1,860,000 shares of common stock have been reserved for issuance to
eligible employees and nonemployee directors. As of December 31, 1996, the
reserve has been reduced by awards for 183,336 shares and 1,179,549 granted
options.
Of the shares awarded, 10,000 were purchased in 1994 for $17.75 per share
and 33,333 in 1993 for $15.00 per share, and the restrictions on the
transferability of these shares will lapse in all events no later than
three years after the award. Restrictions on the other 140,003 shares
awarded, for which a nominal amount was paid, generally lapsed during 1995
and 1994 as the market value of the Company's stock attained targeted
levels.
The Company repurchased 97,500 shares of its common stock during 1996 at
prices ranging from $30.60 to $36.125 under the $15,000,000 stock buyback
program approved by the Company's Board of Directors on July 26, 1995.
During the last half of 1995 the Company had repurchased 197,500 shares of
its common stock at prices ranging from $32.375 to $36.875 under the stock
buyback program.
(13) STOCK OPTION PLAN
Under the Company's 1993 Long-term Incentive Plan, 560,000 share grants in
1993 become exercisable in 20% annual increments and such options expire 5
years after the grant date. All other options become exercisable in 33 1/3%
annual increments and expire 10 years after the grant date. Options not
exercised by their expiration date expire on that date. The options were
considered common stock equivalents for earnings per share purposes for
1996 and 1995, but the stock options were not included in the earnings per
share calculation in 1994 because they were anti-dilutive.
The per share weighted-average fair value of stock options granted during
1995 and 1996 was $18.58 and $19.20 on the date of grant using the Black
Scholes option-pricing model with the following weighted-average
assumptions: 1995 -- expected dividend yield 0.0%, risk-free interest rate
of 6.31%, and an expected life of 7 years. 1996 -- expected dividend yield
0.0%, risk-free interest rate of 6.27%, and an expected life of 7 years;
The Company applies APB Opinion No. 25 in accounting for its stock option
plans and, accordingly, no compensation cost has been recognized for its
stock options in the financial statements. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS No. 123, the Company's net income, and earnings per
share would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1995 1996
------ ------
<S> <C> <C> <C>
Net income As reported $2,575 39,053
Pro forma 2,562 38,748
Earnings per share As reported 0.25 3.95
Pro forma 0.25 3.92
</TABLE>
Pro forma net income reflects only options granted in 1995 and 1996.
Therefore, the full impact of calculating compensation cost for stock
options under SFAS No. 123 is not reflected in the pro forma net income
amounts presented above because compensation cost is reflected over the
options' vesting period of 3 years and compensation cost for options
granted prior to January 1, 1995 is not considered.
F-21
<PAGE> 117
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A summary of the options granted follows:
<TABLE>
<CAPTION>
NUMBER OF
SHARES
---------
<S> <C>
Options outstanding December 31, 1993.................................... 844,500
Granted at $16.50 -- $26.50 per share.................................. 109,800
Granted at $30.00 per share............................................ 156,300
Forfeited at $15.00 -- $30.00 per share................................ (16,333)
Exercised at $23.63 -- $23.75 per share................................ (2,099)
---------
Options outstanding December 31, 1994.................................... 1,092,168
Granted at $30.00 -- $38.50 per share.................................. 12,850
Forfeited at $15.00 -- $30.00 per share................................ (28,369)
Exercised at $15.00 -- $17.25 per share................................ (12,646)
---------
Options outstanding December 31, 1995.................................... 1,064,003
Granted at $31.13 -- $35.56 per share.................................. 102,900
Forfeited at $15.00 -- $35.00 per share................................ (36,670)
Exercised at $15.00 -- $30.00 per share................................ (59,668)
---------
Options outstanding December 31, 1996.................................... 1,070,565
Unaudited:
Granted at $36.75 -- $38.50 per share.................................. 128,000
Forfeited at $15.00 -- $35.00 per share................................ (26,719)
Exercised at $15.00 -- $35.00 per share................................ (328,954)
---------
Options outstanding June 30, 1997........................................ 842,892
=========
Options exercisable follow:
December 31, 1994 at $15.00 -- $30.00 per share........................ 202,650
December 31, 1995 at $15.00 -- $30.00 per share........................ 471,614
December 31, 1996 at $15.00 -- $38.50 per share........................ 682,681
June 30, 1997 at $15.00 -- $38.50 per share............................ 499,001
</TABLE>
At December 31, 1996, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $15.00 -- $38.50 and
4.38 years, respectively.
At December 31, 1995 and 1996, the weighted-average exercise price of
exercisable options was $20.87 and $21.45, respectively.
(14) OTHER INCOME
Other income for 1994 included a $1,167,000 gain related to the collection
of notes receivable in excess of their financial statement carrying amount.
Other income for 1995 included favorable adjustments of $3,600,000 related
to the Company's environmental liabilities following a review of its
liabilities from previously divested operations and $1,494,000 related to
the resolutions of several legal disputes. In addition, other income
included a $3,973,000 gain on the sale of idle corporate assets. Other
income for 1996 included a $3,125,000 pretax gain on the sale of the
Rolodex electronics product line. Other income also included a favorable
adjustment of $2,200,000 related to the Company's environmental liabilities
following completion of a site clean-up for an amount less than previously
estimated.
F-22
<PAGE> 118
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(15) NONRECURRING CHARGES
During the three months ended June 30, 1995, the Company recorded
$6,200,000 in charges relating primarily to an additional valuation
allowance for customer returns and uncollectible accounts receivable at
Rolodex, the Company's office supply unit, to recognize a number of open
and unresolved customer chargebacks, primarily originating in prior years.
(16) RELATED PARTY TRANSACTIONS
During 1994, the Company paid Goldman Sachs a fee of $750,000 for its
advisory services in connection with the sale of the paint products
segment. In addition, the Company paid $86,000 and $6,000 in 1994 and 1995,
respectively, as reimbursement of expenses relating to this and other
advisory services. During 1996, the Company paid Goldman Sachs $1,000,000
in transaction fees in connection with the purchase of Lingemann (see Note
4). During the six months ended June 30, 1997, the Company paid $1,996,000
(unaudited) as a fee and expenses in connection with the divestiture of the
Office Products business. In connection with such services, the Company
provides for the indemnification of Goldman Sachs against various
liabilities, including liabilities under the Federal securities laws.
As discussed in Note 7, the Company entered into a new bank credit
agreement in 1994. Pearl Street L.P., an affiliate of Goldman Sachs, had an
initial participating interest of $27,500,000 in the credit facilities
provided to the Company. Pearl Street L.P. received $931,000 and $44,000
from the agent bank for its portion of the arrangement fee and interest,
respectively, paid by the Company during 1994.
(17) COMMITMENTS AND CONTINGENCIES
Rental expense for operating leases totaled $3,184,000, $3,436,000 and
$3,954,000 for the years ended December 31, 1994, 1995 and 1996,
respectively. For the six months ended June 30, 1996 and 1997 rental
expense for operating leases totaled $2,095,000 (unaudited) and $1,974,000
(unaudited), respectively. These leases primarily relate to production
facilities. Rentals received for subleases for operating leases totaled $0
in 1994, $136,000 in 1995 and $206,000 in 1996 and $100,000 (unaudited) and
$118,000 (unaudited) for the six months ended June 30, 1996 and 1997,
respectively.
Future minimum lease payments under contractually noncancellable operating
leases (with initial lease terms in excess of one year) for years
subsequent to December 31, 1996 are as follows: 1997, $3,479,000; 1998,
$2,861,000; 1999, $2,027,000; 2000, $1,196,000; 2001, $706,000; and
thereafter, $313,000. Future minimum rentals to be received under
noncancelable subleases for years subsequent to December 31, 1996 are as
follows: 1997: $248,000, 1998: $260,000, 1999: $260,000, 2000: $260,000,
2001: $22,000 and thereafter, $0.
The Company is implicated in various claims and legal actions arising in
the ordinary course of business. In addition, certain claims filed in the
Bankruptcy Court are in dispute. The Company has recorded these disputed
claims at the estimated settlement amounts ultimately expected to be
allowed following the Bankruptcy Court litigation. It is reasonably
possible that the estimated settlement amounts could change in the near
term but it is not expected that such a change would have a material effect
on the financial statements in the near term. Those claims or liabilities
not subject to Bankruptcy Court litigation will be addressed in the
ordinary course of business and be paid in cash as expenses are incurred.
The United States Federal Trade Commission ("FTC") is investigating the
Company's acquisition of the automotive tubing business assets of
Helima-Helvetion International, Inc. ("HHI") to determine if the
acquisition violated federal antitrust laws. The Company has responded to
various FTC requests for information concerning the relevant market and
competitive conditions in that market. At this time it is not known whether
the investigation will result in the issuance of a complaint, or if such
complaint is issued, the relief that will be sought or obtained. The 1996
revenues associated with the automotive
F-23
<PAGE> 119
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
tubing business acquired from HHI were $2,019,000, and the tangible net
assets at December 31, 1996 were $6,988,000.
In the opinion of management, the ultimate disposition of the matters
discussed above will not have a material adverse effect on the Company's
consolidated financial position, results of operations or liquidity. At
December 31, 1996, all unresolved bankruptcy settlements are included in
the shares reserved to satisfy claims.
(18) BUSINESS SEGMENT INFORMATION
The Company manufactures and supplies a diversity of products in three
primary business segments. The segments and products are discussed below:
(a) Automotive Components Group
The Automotive Components Group is made up of three operating units,
Thermal Components Group ("Thermal"), Steel Parts Corporation ("Steel
Parts") and Romac Metals ("Romac"). The businesses in this segment
manufacture tubing and other heat transfer components and assemblies and
automotive parts.
Thermal's businesses are involved in the manufacture of welded aluminum
and copper/brass tubing and heat exchangers. Thermal's heat-transfer
products have a broad range of applications in motor vehicles, railroad
locomotives, construction and other industrial equipment.
Thermal uses a direct sales force and independent sales representatives to
market its products to both original equipment manufacturers ("OEMs") and
aftermarket customers primarily in the United States, China and Europe. In
1994, 1995 and 1996, aftermarket sales were approximately 39%, 37% and
33%, respectively, of revenues. Aftermarket sales through June 30, 1996
and 1997 were approximately 40% (unaudited) and 30% (unaudited),
respectively, of revenues.
On February 1, 1996, the Company acquired Great Lake, Inc. and Kar Tool
Co., Inc., which serve the automotive, heavy truck and industrial
manufacturing radiator replacement market. These acquisitions did not have
a material effect on the Company's financial position or its liquidity.
On July 10, 1996, the Company acquired the automotive aluminum tube
business of Helmut Lingemann GmbH & Co. The transactions include the
purchase of stock of Lingemann's German subsidiary, ARUP Alu-Rohr
und-Profil GmbH, and the automotive aluminum tube business assets of its
Duncan, South Carolina based subsidiary Helmina-Helvetion International,
Inc.
Steel Parts is a manufacturer of close tolerance, value-added stampings
for the automotive industry. Its products include clutch plates for
automatic transmissions, suspension parts for vibration-reducing
assemblies and engine mounts. Substantially all of Steel Parts' sales are
made to the domestic automobile industry, either directly or indirectly
through other independent automotive parts suppliers. Approximately 66%,
67% and 70% of Steel Parts' sales were to one of the "Big 3" domestic
automobile manufacturers in 1994, 1995 and 1996, respectively.
Approximately 71% (unaudited) of Steel Parts sales were to one of the "Big
3" domestic automobile manufacturers for both the six months ended June
30, 1996 and 1997. The strong domestic automotive market resulted in Steel
Parts operating at or near capacity for most of 1994, 1995 and 1996.
Romac manufactures stainless steel tubing used principally in marine and
architectural applications.
F-24
<PAGE> 120
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(b) Technologies Group
The Technologies Group consists of four operating units, Stewart Connector
Systems, Inc. ("Stewart Connector"), Signal Transformer Co., Inc.
("Signal"), Stewart Stamping Corporation ("Stewart Stamping"), and Escod
Industries ("Escod"), which manufacture telecommunication and electrical
component products, including: specialized connector systems, power
transformers, precision stampings, wireform and wire assemblies, and cable
and wire assemblies.
Stewart Connector designs and manufactures high speed data connectors
primarily for the computer networking and cellular telephone markets.
Stewart Connector sells its products throughout the world, directly and
through sales subsidiaries, and through a network of manufacturers'
representatives. Foreign sales accounted for approximately 35% of Stewart
Connector's sales in 1994, 43% in 1995 and 40% in 1996. For the six month
periods through June 30, 1996 and 1997 foreign sales accounted for 40%
(unaudited) and 43% (unaudited), respectively, of Stewart Connector's
sales. It maintains a direct sales office in Japan.
Signal manufactures custom and off-the-shelf small power transformers used
in telecommunications products, medical instrumentation, electronic
security systems, entertainment equipment and industrial process controls.
Signal markets its products directly, utilizing catalogs and print
advertising, and indirectly through independent sales representatives. It
has a customer base of over nine thousand accounts, consisting of both
OEMs and aftermarket resellers.
Stewart Stamping is a tool designer and subcontract manufacturer of high
volume precision metal stamped and wire formed parts. Stewart Stamping
serves a wide variety of markets, including electrical devices such as
circuit breakers, electrical fuses, lighting and process controls and the
electronic industries in passive components such as capacitor cans and
connector contacts. Stewart Stamping sells its products, directly and
indirectly through manufacturing representatives, primarily in the U.S.
Escod is a subcontract manufacturer in a highly fragmented market for wire
and cable assemblies, primarily for the digital telecommunications switch
market. Telecommunications and computer OEMs account for the bulk of
Escod's sales. Despite successful recent customer diversification, two
telecommunications OEMs together accounted for approximately 65%, 60% and
66% of total sales revenues in 1994, 1995 and 1996, respectively. For the
six month periods through June 30, 1996 and 1997 Escod's sales to two
telecommunications OEMs accounted for 68% (unaudited) and 70% (unaudited),
respectively, of sales. Escod's dependence on these two major customers
makes its revenues and operating income sensitive to changes in demand
from those customers.
(c) Office Products/Specialty Publishing Group
The Office Products/Specialty Publishing Group includes two operating
units: the Rolodex/Curtis operation, which manufactures and markets a
variety of office products and computer accessories and is comprised of
the Rolodex division, Rolodex de Puerto Rico, Inc. ("Rolodex-PR"), and
Curtis Manufacturing, Inc. ("Curtis"); and Taylor Publishing Company
("Taylor"), a wholly owned subsidiary engaged in yearbook and other
specialty printing and publishing. In late 1996 and early 1997, the
Company sold the office products businesses. On September 3, 1996, the
Company sold Curtis. On October 4, 1996, the Company sold its Rolodex
electronics product line. On March 5, 1997, the Company sold the remainder
of its Rolodex business.
Taylor is engaged primarily in the contract printing of scholastic
yearbooks for high schools, middle and elementary schools, colleges and
universities. Its principal yearbook customers are secondary (middle and
senior high) schools throughout the United States. Taylor also publishes a
variety of specialty publications on a contract basis and a limited number
of its own publishing titles. Through its
F-25
<PAGE> 121
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
reunion services division, Taylor also provides reunion planning and other
services for alumni of schools, colleges and academies.
Rolodex(R) products include desktop filing devices, business card files,
electronic data bank organizers, manual personal organizers, telephone
finding lists and paper punches. Rolodex uses its own sales force as well
as independent manufacturers' representatives to market its products to
office superstores, mass merchandisers and the traditional commercial
office supply market on a nationwide basis.
Sales of the electronic products line divested in October 1996 totaled
$9,330,000 in 1996 for the period until the date of sale. Sales of
Curtis(R) brand and Curtis by Rolodex(TM) computer accessories totaled
$12,109,000 in 1996 for the period until the date of sale. Sales for
Rolodex Offices Products (exclusive of Curtis sales and sales of
electronic products) were $58,600,000 in 1996.
(d) Allocation of Intangibles
In accordance with the Reorganization SOP, the Company has allocated
Reorganization Goodwill and resulting amortization to its identifiable
segments.
(e) Unallocated Corporate Overhead
Segment operating income (loss) reflects the allocation of corporate
overhead. Unallocated corporate overhead in 1994 consists of overhead
associated with discontinued operations.
F-26
<PAGE> 122
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Operating information of each business segment, excluding divested
subsidiaries, follows (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ ------------------
1994 1995 1996 1996 1997
-------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
AUTOMOTIVE COMPONENTS GROUP
Sales............................... $173,079 180,251 209,722 101,480 116,266
Cost of sales....................... 130,183 134,673 156,481 75,802 85,463
Selling, general and administrative
expenses......................... 14,424 15,811 19,627 9,195 12,096
Allocated corporate overhead........ 2,194 1,282 2,981 1,543 1,870
Depreciation........................ 4,024 4,674 6,718 2,662 4,237
Amortization of Reorganization
Goodwill......................... 7,313 3,404 -- -- --
-------- ------- ------- ------- -------
Segment operating income......... $ 14,941 20,407 23,915 12,278 12,600
======== ======= ======= ======= =======
TECHNOLOGIES GROUP
Sales............................... $164,909 170,615 183,663 92,181 97,961
Cost of sales....................... 116,061 116,253 127,337 62,581 68,721
Selling, general and administrative
expenses......................... 17,736 19,750 23,190 11,924 12,757
Allocated corporate overhead........ 2,870 1,412 3,152 1,631 1,971
Depreciation........................ 5,437 5,714 5,531 2,642 3,141
Amortization of Reorganization
Goodwill......................... 15,419 7,176 -- -- --
-------- ------- ------- ------- -------
Segment operating income......... $ 7,386 20,310 24,453 13,403 11,371
======== ======= ======= ======= =======
OFFICE PRODUCTS/SPECIALTY PUBLISHING
GROUP
Sales............................... $205,642 210,337 179,089 106,836 72,785
Cost of sales....................... 126,598 134,794 106,075 64,369 41,252
Selling, general and administrative
expenses......................... 55,700 57,577 54,450 30,705 21,168
Nonrecurring charges................ -- 6,200 -- -- --
Allocated corporate overhead........ 3,599 1,904 3,487 1,804 1,162
Depreciation........................ 4,073 4,310 4,260 2,712 2,163
Amortization of Reorganization
Goodwill......................... 46,485 21,592 -- -- --
-------- ------- ------- ------- -------
Segment operating income
(loss)......................... $(30,813) (16,040) 10,817 7,246 7,040
======== ======= ======= ======= =======
</TABLE>
F-27
<PAGE> 123
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A reconciliation of segment operating income (loss) to consolidated
operating income (loss) follows (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------- ----------------
1994 1995 1996 1996 1997
------- ------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total segment operating income (loss)........ $(8,486) 24,677 59,185 32,927 31,011
Unallocated corporate overhead............... (1,177) -- -- -- --
Corporate depreciation....................... (36) (60) (84) (42) (44)
------- ------ ------ ------ ------
Consolidated operating income (loss)....... $(9,699) 24,617 59,101 32,885 30,967
======= ====== ====== ====== ======
</TABLE>
A summary of identifiable assets of each business segment follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1997
--------------------- -------------
1995 1996 (UNAUDITED)
-------- -------
<S> <C> <C> <C>
Automotive Components Group..................... $ 97,269 144,573 148,554
Technologies Group.............................. 98,352 83,397 88,936
Office Products/Specialty Publishing Group...... 78,399 67,822 53,693
Corporate....................................... 66,109 56,208 132,028
-------- ------- -------
$340,129 352,000 423,211
======== ======= =======
</TABLE>
Corporate assets include cash, deferred taxes and other assets. A summary
of capital expenditures of each business segment follows (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------- ---------------
1994 1995 1996 1996 1997
------- ------ ------ ----- ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Automotive Components Group................... $ 8,099 10,244 7,447 1,876 5,494
Technologies Group............................ 4,770 7,044 9,597 4,407 3,425
Office Products/Specialty Publishing Group.... 6,105 4,745 5,446 2,919 1,359
Corporate..................................... 189 126 89 64 37
Discontinued operations....................... 450 -- -- -- --
------- ------ ------ ----- ------
$19,613 22,159 22,579 9,266 10,315
======= ====== ====== ===== ======
</TABLE>
In 1994, export sales were less than 10% of total sales. In 1995, export
sales were $59,669,000 or 11% of total sales. Export sales in 1995 to
Europe, Asia, Canada and Mexico were $19,777,000, $18,493,000, $8,892,000
and $5,280,000, respectively. All other export sales in 1995 totaled
$7,227,000. In 1996, export sales were $71,571,000 or 12% of total sales.
Export sales in 1996 to Europe, Asia, Canada and Mexico were $29,858,000,
$17,133,000, $8,340,000 and $6,813,000, respectively. All other export
sales totaled $9,427,000.
For the six months ended June 30, 1996, export sales were $33,319,000 or
11% of total sales. Export sales for the six months ended June 30, 1996 to
Europe, Asia, Canada and Mexico were $11,447,000, $10,525,000, $4,819,000
and $3,164,000, respectively. All other export sales for the first six
months of 1996 totaled $3,364,000. For the six months ended June 30, 1997,
export sales were $35,576,000 or 12% of total sales. Export sales for the
six months ended June 30, 1997 to Europe, Asia, Canada, and Mexico were
$16,382,000, $7,223,000, $5,255,000 and $2,656,000, respectively. All
other export sales
F-28
<PAGE> 124
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
for the first six months of 1997 totaled $4,060,000. The Company's
transactions are primarily in U.S. dollars.
(19) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
A summary of the quarterly financial information follows (in thousands):
1995
<TABLE>
<CAPTION>
MARCH 31 JUNE 30(1) SEPT 30 DEC 31(2)
-------- ---------- ------- ---------
<S> <C> <C> <C> <C>
Sales................................. $121,375 167,221 137,620 134,987
Gross Profit.......................... 37,913 55,756 41,621 39,243
Net income............................ 70 3,321 (1,564) 748
Per Share:
Net income.......................... $ 0.01 0.33 (0.15) 0.07
</TABLE>
1996
<TABLE>
<CAPTION>
MARCH 31 JUNE 30 SEPT 30(3) DEC 31(4)
-------- ------- ---------- ---------
<S> <C> <C> <C> <C>
Sales................................. $122,449 178,048 142,893 129,084
Gross Profit.......................... 34,882 55,621 41,038 36,230
Net income............................ 6,146 11,805 8,482 12,620
Per Share:
Net income.......................... $ 0.61 1.20 0.86 1.27
</TABLE>
1997
<TABLE>
<CAPTION>
MARCH 31(5) JUNE 30
----------- -------
<S> <C> <C> <C> <C>
Sales............................... $ 117,341 169,671
Gross Profit........................ 31,256 52,170
Net income.......................... 63,319 11,207
Per Share:
Net income........................ $ 6.39 1.14
</TABLE>
- ---------------
(1) Includes the following: a) nonrecurring charges of $6,200,000 (See Note
15), b) $3,600,000 favorable adjustment to the Company's environmental
liabilities, c) $1,494,000 of favorable adjustments related to the
resolution of several legal disputes (see Note 14).
(2) Includes the following: a) Pretax gain of $4,300,000 related to a
change in the Company's pension plan (See Note 10), b) gain of
$2,300,000 from the sale of idle corporate assets, c) charges totaling
$3,900,000 for Rolodex/Curtis primarily for customer chargebacks and
sales returns.
(3) Includes a $2,200,000 favorable adjustment to the Company's
environmental liabilities.
(4) Includes the following: a) Pretax gain of $3,125,000 on the sale of
Rolodex electronics product line (See Note 3), b) recognition of a tax
benefit of $3,207,000 primarily related to a capital loss carryforward.
(5) Includes a pretax gain of $95,001,000 on the divestiture of the Office
Products business.
(20) PRO FORMA RESULTS OF OPERATIONS
The following pro forma financial information presents consolidated sales
and results of operations as if the divestitures of Curtis, Rolodex
electronics product line and the Rolodex business unit (see Note 3)
F-29
<PAGE> 125
INSILCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
had occurred as of the beginning of the periods presented. The pro forma
effect of the acquisition of the automotive aluminum tube business of
Lingemann (see Note 4) is included as if the acquisition occurred at the
beginning of the year ended December 31, 1996. The effect of the
acquisition for year ended December 31, 1995, is not included because
operating information is not available for that period. The pro forma
results of operations are as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER SIX MONTHS ENDED
31, JUNE 30,
--------------------- --------------------
1995 1996 1996 1997
-------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Sales.................................. $455,379 507,140 269,454 276,215
Net income............................. 4,685 32,456 15,037 15,993
Net income per common share and share
equivalent........................... $ 0.46 3.28 1.52 1.62
</TABLE>
(21) SUBSEQUENT EVENT (UNAUDITED)
Following the sale of the Rolodex business unit, the Company decided to (i)
refinance its existing indebtedness, (ii) seek to obtain up to $150,000,000
of new debt (the "Notes") and (iii) effect a repurchase of shares in an
amount of approximately $220,000,000.
The Company subsequently entered into a new credit facility as of July 3,
1997 which, among other things, provides for, (i) a $200,000,000 revolving
credit facility, (ii) a $50,000,000 sublimit for commercial and standby
letters of credit (including the opportunity to obtain letters of credit in
various selected foreign currencies) and (iii) a $50,000,000 sublimit for
advances in selected foreign currencies. The closing of the new credit
facility permitted the Company on July 10, 1997 to refinance the entire
outstanding amount of its existing bank indebtedness. The new credit
facility permits the Company to issue the Notes, subject to certain
conditions.
On July 10, 1997, the Company purchased, using the proceeds from the sale
of the Rolodex business unit, (i) 2,805,194 shares from Water Street at
$38.50 per share in cash for an aggregate purchase price of $107,999,969
and (ii) 51,948 shares from Mr. Smialek, the President and Chairman of the
Board of the Company, at $38.50 per share.
On July 11, 1997, the Company commenced a tender offer pursuant to which it
offered to purchase up to 2,857,142 shares at a price of $38.50 per share
in cash. The tender offer expired on August 12, 1997. Upon expiration of
the tender offer 2,857,142 shares had been tendered and the Company
purchased all of the shares tendered. The purchase of the shares tendered
in the tender offer was paid for from the proceeds of the issuance and sale
of the Notes.
F-30
<PAGE> 126
==========================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE
ACCOMPANYING LETTER OF TRANSMITTAL IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL,
OR BOTH TOGETHER CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO
BUY ANY SECURITIES OTHER THAN THE NEW NOTES, TO WHICH IT RELATES OR AN OFFER TO
SELL, OR THE SOLICITATION OF AN OFFER TO BUY THE NEW NOTES, IN ANY CIRCUMSTANCES
IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS NOT BEEN A CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................... 2
Incorporation of Certain Information by
Reference............................... 2
Prospectus Summary........................ 3
Risk Factors.............................. 17
Use of Proceeds........................... 21
Capitalization............................ 22
The Exchange Offer........................ 23
Certain Federal Income Tax Consequences... 30
Unaudited Pro Forma Condensed Consolidated
Financial Information................... 31
Selected Consolidated Financial Data...... 38
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 41
Disclosure Regarding Forward Looking
Statements.............................. 51
Businesses and Properties................. 51
Management................................ 59
Principal Stockholders.................... 61
Description of the New Credit Facility.... 63
Description of the Notes.................. 66
Plan of Distribution...................... 90
Validity of the New Notes................. 91
Experts................................... 91
Index to Consolidated Financial
Statements.............................. F-1
</TABLE>
==========================================================
==========================================================
INSILCO CORPORATION
OFFER TO EXCHANGE 10 1/4% SENIOR
SUBORDINATED NOTES, DUE 2007, WHICH
HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, FOR ANY AND ALL
OUTSTANDING 10 1/4% SENIOR SUBORDINATED
NOTES DUE 2007
----------------------
PROSPECTUS
----------------------
==========================================================
<PAGE> 127
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
INSILCO CORPORATION
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
The 10 1/4 Senior Subordinated Notes due 2007 (the "New Notes") were issued
in exchange for the Old Notes (as defined herein) by Insilco Corporation, a
Delaware corporation (the "Company").
Interest on the Notes will be payable semi-annually on February 15 and
August 15 of each year (each, an "Interest Payment Date"), commencing on
February 15, 1998. The Notes will mature on August 15, 2007 and will not be
subject to redemption at the option of the Company except as follows. The
Company may redeem the Notes, in whole or in part, at any time on or after
August 15, 2002 and prior to maturity, upon not less than 30 nor more than 60
days notice mailed to each holder of the Notes, at the redemption prices set
forth herein, plus accrued interest, if any, to but excluding the date of
redemption. Holders of record on the relevant Regular Record Date will be
entitled to receive interest due on an Interest Payment Date that is on or prior
to the relevant date of redemption.
Upon a Change of Control, holders of the New Notes may require the Company
to purchase all or a portion of the New Notes at a purchase price equal to 101%
of their aggregate principal amount, plus accrued interest, if any, to but
excluding the purchase date. Additionally, the Company will be obligated in
certain circumstances to make an offer to purchase the New Notes at a purchase
price equal to 100% of the principal amount thereof, plus accrued interest, if
any, to but excluding the purchase date with the Net Available Proceeds of Asset
Dispositions. See "Description of the Notes."
The New Notes will be senior subordinated unsecured obligations of the
Company. The New Notes will be subordinated in right of payment to all existing
and future Senior Debt (as defined herein), of the Company, including the New
Credit Facility (as defined herein), will be structurally subordinate to all
existing and future indebtedness of the Company's subsidiaries, will rank pari
passu in right of payment with any future senior subordinated indebtedness of
the Company and will rank senior in right of payment to any future indebtedness
of the Company that may be subordinated thereto. On a pro forma basis as of June
30, 1997, the Company had Senior Debt of approximately $141.8 million. The
Company's domestic subsidiaries have joint and several liability for (and have
pledged substantially all of their assets as collateral for, and in certain
cases guaranteed) indebtedness under the New Credit Facility. See "Description
of the Notes" and "Description of the New Credit Facility."
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE [ ] FOR A DISCUSSION OF CERTAIN FACTORS
WHICH INVESTORS SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND AN
INVESTMENT IN THE NEW NOTES OFFERED HEREBY
------------------------
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.
------------------------
THIS PROSPECTUS HAS BEEN PREPARED FOR AND IS TO BE USED BY GOLDMAN, SACHS & CO.
IN CONNECTION WITH OFFERS AND SALES IN MARKET-MAKING TRANSACTIONS OF THE
EXCHANGE NOTES. THE COMPANY WILL NOT RECEIVE ANY OF THE PROCEEDS OF SUCH SALES.
GOLDMAN, SACHS & CO. MAY ACT AS A PRINCIPAL OR AGENT IN SUCH TRANSACTIONS. THE
EXCHANGE NOTES MAY BE OFFERED IN NEGOTIATED TRANSACTIONS OR OTHERWISE.
The date of this Prospectus is , 1997.
A-1
<PAGE> 128
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
RISK FACTORS -- TRADING MARKET FOR THE NEW NOTES
There is no existing market for the New Notes, and there can be no
assurance regarding the future development of a market for the New Notes or the
ability of the Holders of the New Notes to sell their New Notes or the price at
which such Holders may be able to sell their New Notes. If such market were to
develop, the New Notes could trade at prices that may be higher or lower than
their initial offering price depending on many factors, including prevailing
interest rates, the Company's operating results and the market for similar
securities. Although it is not obligated to do so, Goldman Sachs intends to make
a market in the New Notes. Any such market-making activity may be discontinued
at any time, for any reason, without notice at the sole discretion of Goldman
Sachs. No assurance can be given as to the liquidity of or the trading market
for the New Notes.
Goldman Sachs may be deemed to be an affiliate of the Company and, as such,
may be required to deliver a prospectus in connection with its market-making
activities in the New Notes. Pursuant to the Registration Rights Agreement, the
Company agreed to file and maintain a registration statement that would allow
Goldman Sachs to engage in market-making transactions in the New Notes. Subject
to certain exceptions set forth in the Registration Rights Agreement, the
registration statement will remain effective for as long as Goldman Sachs may be
required to deliver a prospectus in connection with market-making transactions
in the New Notes. The Company has agreed to bear substantially all the costs and
expenses related to such registration statement.
This Prospectus is delivered in connection with the sales of the New Notes
by Goldman Sachs in market-making transactions. The Company will not receive any
of the proceeds from such transactions.
A-2
<PAGE> 129
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
USE OF PROCEEDS
This Prospectus is delivered in connection with the sales of the New Notes
by Goldman Sachs in market-making transactions. The Company will not receive any
of the proceeds from such transactions.
A-3
<PAGE> 130
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
PLAN OF DISTRIBUTION
This Prospectus is to be used by Goldman Sachs in connection with offers
and sales of the New Notes in market-making transactions effected from time to
time. Goldman Sachs may act as a principal or agent in such transactions,
including as agent for the counterparty when acting as principal or as agent for
both counterparties, and may receive compensation in the form of discounts and
commissions, including from both counterparties when it acts as agent for both.
Such sales will be made at prevailing market prices at the time of sale, at
prices related thereto or at negotiated prices.
Affiliates of Goldman Sachs currently own 45.3% of the Company's Common
Stock. See "Ownership of Capital Stock."
The Company has been advised by Goldman Sachs that, subject to applicable
laws and regulations, Goldman Sachs currently intends to make a market in the
New Notes following completion of the Exchange Offer. However, Goldman Sachs is
not obligated to do so and any such market-making may be interrupted or
discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act. There can be no assurance that an active trading market will
develop or be sustained. See "Risk Factors -- Trading Market for the New Notes."
Goldman Sachs has provided investment banking services to the Company in
the past and may provide such services and financial advisory services to the
Company in the future. Goldman Sachs acted as one of the Initial Purchasers in
connection with the initial sale of the Notes and such Initial Purchasers
received an underwriting discount of approximately $4.5 million in connection
therewith.
Goldman Sachs and the Company have entered into a registration rights
agreement with respect to the use by Goldman Sachs of this Prospectus. Pursuant
to such agreement, the Company agreed to bear all registration expenses incurred
under such agreement, and the Company agreed to indemnify Goldman Sachs against
certain liabilities, including liabilities under the Securities Act.
A-4
<PAGE> 131
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE 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 THE COMPANY OR GOLDMAN SACHS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE NEW NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY ANY OF THE NEW NOTES TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO
SUCH PERSON. 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 DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. [ ]
Incorporation of Certain Information
by Reference........................ [ ]
Prospectus Summary.................... [ ]
Risk Factors.......................... [ ]
Use of Proceeds....................... [ ]
Capitalization........................ [ ]
Unaudited Pro Forma Condensed
Consolidated Financial
Information......................... [ ]
Selected Consolidated Financial
Data................................ [ ]
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... [ ]
Disclosure Regarding Forward Looking
Statements.......................... [ ]
Businesses and Properties............. [ ]
Management............................ [ ]
Principal Stockholders................ [ ]
Description of the New Credit
Facility............................ [ ]
Description of Notes.................. [ ]
Plan of Distribution.................. [ ]
Validity of the New Notes............. [ ]
Experts............................... [ ]
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
======================================================
======================================================
INSILCO CORPORATION
10 1/4% SENIOR SUBORDINATED NOTES,
DUE 2007
--------------------
PROSPECTUS
--------------------
======================================================
A-5
<PAGE> 132
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Restated Certificate of Incorporation and Article VII, Section 1 of the
By-Laws of the Company authorize indemnification of officers and directors to
the full extent permitted under Delaware law.
The indemnification provided for in the Delaware General Corporation Law is
not exclusive of any other rights of indemnification, and a corporation may
maintain insurance against liabilities for which indemnification is not
expressly provided by the Delaware General Corporation Law.
Section 145 of the Delaware Corporation Law, as amended, provides in regard
to indemnification of directors and officers as follows:
"145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE.-- (a) A corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests if the corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation a s director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section.
II-1
<PAGE> 133
Such determination shall be made (1) by a majority vote of the directors
who are not parties to such action, suit or proceeding, even though less
than a quorum, or (2) if there are not such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power an authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, shall stand in the same position under this section
with respect to the resulting or surviving corporation as he would have
with respect to such constituent corporation if its separate existence had
continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries and an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise, The Court of
Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees)."
II-2
<PAGE> 134
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
*2(a) -- Amended and Restated Plan of Reorganization Jointly Proposed by the Debtors and
the Official Joint Committee of Unsecured Creditors dated November 23, 1992 (Form
T-3, Exhibit T3E-3, file No. 22-23356).
*2(b) -- Order Confirming Plan of Reorganization and Approving Settlements Pursuant to
Bankruptcy Rule 9019 dated November 24, 1992 (Form T-3, Exhibit T3E-4, File No.
22-23356).
*2(c) -- Order on Motion for Order in Aid of Implementation of Plan dated March 23, 1993
(Form T-3, Exhibit T3E, File No. 22-23356).
*2(d) -- Order on Debtors' Supplemental Motion for Order in Aid of Implementation of Plan
dated March 23, 1993 (Form T-3, Exhibit T3E-6, File No. 22-23356).
*2(e) -- Notice of (1) Order Confirming Plan of Reorganization, (2) Effective Date and (3)
Administrative Claims Bar Date dated April 1, 1993 (Form 10, Exhibit 2(e), File
No. 0-22098).
*2(f) -- Order on Motion for Order in Aid of Implementation of Plan dated September 14,
1993 (Form 10/A, Amendment No. 2 to Form 10, Exhibit 2(f), File No. 0-22098).
*2(g) -- Share Purchase Agreement, dated as of June 28, 1996, between the Company's
subsidiary, GUVAB Gesellschaft fur Unternehmensbeteililgungen und
Vermogensverwaltung im aluminiumverarbeitenden Bereich mbH ("GUVAB") , and
Lingemann (Form 8-K dated July 10, 1996, File No. 0-22098).**
*2(h) -- Asset Purchase Agreement, dated as of July 1, 1996, among the Company's
subsidiary, HHI Acquisition Corp., Lingemann, and Helima-Helvetion International,
Inc. (Form 8-K dated July 10, 1996, File No. 0-22098).**
*2(i) -- Stock Purchase Agreement, dated as of September 3, 1996, between the Company's
subsidiary and Esselte Corporation (Form 8-K dated September 6, 1996, File No.
0-22098).**
*2(j) -- Asset Purchase Agreement, dated as of October 4, 1996, between the Company and
Franklin Electronic Publishers, Inc. and List of Omitted Schedules (Form 8-K dated
March 5, 1997, File No. 0-22098).**
*2(k) -- Asset Purchase Agreement, dated as of February 12, 1997, between the Company and
Newell Co. (Form 8-K dated March 5, 1997, File No. 0-22098).**
*3(a) -- Amended and Restated Certificate of Incorporation of the Company (Form 10, Exhibit
3(a), File No. 0-22098).
*3(b) -- Amended and Restated Bylaws of the Company (Form 10, Exhibit 3(b), File No.
0-22098).
*4(a) -- Settlement Agreement and Stipulated Order by and between the Company, certain
subsidiaries of the Registrant, The Valspar Corporation and the United States of
America by order of the United States District Court for the Western District of
Texas, San Antonio Division, dated January 19, 1993 (Form 10, Exhibit 4(h), File
No. 0-22098).
*4(b) -- Stipulation regarding Settlement Agreement and Stipulated Order amending Exhibit
4(h) (Form 10, Exhibit 4(i), File No. 0-22098).
*4(c) -- Credit Agreement, dated as of October 21, 1994, among the Company, the
institutions from time to time parties thereto as Lenders, the institutions from
time to time parties thereto as Issuing Banks, Citicorp USA, Inc. and Pearl Street
L.P., as Co-Agents, and Citicorp USA, Inc., as Administrative Agent (Form S-8
Registrations Statement, as amended, Exhibit 4(o), File No. 33-86938).**
</TABLE>
II-3
<PAGE> 135
<TABLE>
<S> <C> <C>
*4(d) -- First Amendment to Credit Agreement, dated as of November 21, 1994, among the
Company, the institutions from time to time parties thereto as Lenders, the
institutions from time to time parties thereto as Issuing Banks, Citicorp USA,
Inc. and Pearl Street L.P., as Co-Agents, and Citicorp USA, Inc., as
Administrative Agent (Form S-8 Registration Statement, as amended, Exhibit 4(p),
File No. 33-86938).**
*4(e) -- Second Amendment to Credit Agreement, dated as of March 8, 1995, among the
Company, the institutions from time to time parties thereto as Lenders, the
institutions from time to time parties thereto as Issuing Banks, Citicorp USA,
Inc. and Pearl Street L.P., as Co-Agents, and Citicorp USA, Inc., as
Administrative Agent; (Form 10-K for the year ended December 31, 1994, Exhibit
4(f), File No. 0-22098).**
*4(f) -- Third Amendment to Credit Agreement, dated as of July 18, 1995, among the Company,
the institutions from time to time parties thereto as Lenders, the institutions
from time to time parties thereto as Issuing Banks, Citicorp USA, Inc. and Pearl
Street L.P., as Co-Agents, and Citicorp USA, Inc., as Administrative Agent (Form
10-Q for the quarter ended June 30, 1995, Exhibit 4(g), File No. 0-22098).**
*4(g) -- Fourth Amendment to Credit Agreement, dated as of June 21, 1996, among the
Company, the institutions from time to time parties thereto as Lenders, the
institutions from time to time parties thereto as Issuing Banks, Citicorp USA,
Inc. and Pearl Street L.P., as Co-Agents, and Citicorp USA, Inc., as
Administrative Agent (Form 8-K dated July 10, 1006, File No. 0-22098).
*4(h) -- Fifth Amendment to Credit Agreement, dated as of June 21, 1996, among the Company,
the institutions from time to time parties thereto as Lenders, the institutions
from time to time parties thereto as Issuing Banks, Citicorp USA, Inc. and Pearl
Street L.P., as Co-Agents, and Citicorp USA, Inc., as Administrative Agent (Form
10-K dated March 27, 1997, File No. 0-22098).
*4(i) -- Amended and Restated Credit Agreement, dated July 3, 1997 (Schedule 13e-4, Exhibit
(b)(1), dated July 11, 1997).
4(j) -- Indenture, dated as of August 12, 1997 between the Company and the Trustee.
4(k) -- Form of New Note (included in Exhibit 4(j) above).
4(l) -- Purchase Agreement, dated as of August 7, 1997, among the Company and Goldman,
Sachs & Co., McDonald & Company Securities, Inc. and Citicorp Securities Inc. (the
"Initial Purchasers").
4(m) -- Exchange and Registration Rights Agreement, dated as of August 12, 1997, between
the Company and the Initial Purchasers.
5 -- Opinion of Fried, Frank, Harris, Shriver & Jacobson regarding the legality of the
New Notes being registered.
*10(a) -- The Company's 1993 Long-Term Incentive Plan (Form 10, Exhibit 10(j), File No.
0-22098).
*10(b) -- Supplemental Terms and Conditions Applicable to December 1993 Option Award Under
the Company 1993 Long-Term Incentive Plan (Form S-8 Registrations Statement, as
amended Exhibit 4(b), File No. 33-86938).
*10(c) -- Employment Agreement dated as of May 1, 1993 between the Company and Robert L.
Smialek, as amended and restated (Form 10/A, Amendment No. 1 to Form 10, Exhibit
10(k), File No. 0-22098).
*10(d) -- Restricted Stock Agreement dated as of June 26, 1994 between the Company and James
D. Miller. (Form 10-K for the year ended December 31, 1994, Exhibit 10(e), File
No. 0-22098).
*10(e) -- Form of Indemnification Agreement adopted by the Company as of July 30, 1990,
entered into between the Registrant and certain of its officers and directors
individually, together with a schedule identifying the other documents omitted and
the material details in which such documents differ (Form 10, Exhibit 10(n), File
No. 0-22098).
</TABLE>
II-4
<PAGE> 136
<TABLE>
<S> <C> <C>
*10(f) -- The Company's 1993 Nonemployee Director Stock Incentive Plan (Form 10/A, Amendment
No. 1 to form 10, Exhibit 10(p), File No. 0-22098).
*10(g) -- Value Appreciation Agreement as of December, 1996, entered into between the
Registrant and the following officers: David M. Aronowitz, Robert F. Heffron, Les
G. Jacobs, David A Kauer, Kenneth H. Koch and Philip K. Woodlief (Form 10-K, dated
March 27, 1997, File No. 0-22098).
*10(h) -- Form of Income Protection Agreement adopted by the Company as of December, 1996,
entered into between the Registrant and the officers identified in Exhibit 10(g)
(Form 10-K, dated March 27, 1997, File No. 0-22098).
*10(i) -- Stock Purchase Agreement by and between the Company and Water Street Corporate
Recovery Fund I, L.P., dated July 10, 1997 (Schedule 13E-4, Exhibit (c)(2), filed
July 11, 1997).
*10(j) -- Stock Purchase Agreement by and between the Company and Robert L. Smialek, dated
July 10, 1997 (Schedule 13E-4, Exhibit (c)(1), filed July 11, 1997).
10(k) -- Amendment, dated August 11, 1997, to Stock Purchase Agreement by and between the
Company and Water Street Corporate Recovery Fund I, L.P., dated July 10, 1997.
12 -- Computation of Ratio of Earnings to Fixed Charges
*21 -- Subsidiaries of the Registrant (Form 10-Q for the quarter ended September 30,
1996, File No. 0-22098).
23(a) -- Consent of KPMG Peat Marwick LLP.
23(b) -- Consent of Fried, Frank, Harris, Shriver & Jacobson (included in Exhibit 5).
24 -- Power of Attorney of officers and directors of the Registrant appearing on the
signature page hereof.
25 -- Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939
(T-1) of The Bank of New York (bound separately).
99(a) -- Form of Letter of Transmittal
99(b) -- Form of Notice of Guaranteed Delivery
</TABLE>
- ---------------
* Incorporated by reference, as indicated.
** The Registrant agrees to furnish to the Securities and Exchange Commission
upon request copies of any omitted schedule or exhibit to Exhibits 2(g), (h),
(i), (j), and (k) and 4(c), 4(d), and 4(e), and 4(f).
(b) Financial Statement Schedules.
<TABLE>
<S> <C>
Report of Independent Auditors on Financial Statement Schedule........ S-1
Schedule II -- Valuation and Qualifying Accounts...................... S-2
</TABLE>
All supporting schedules other than the above have been omitted because
they are not required or the information required to be set forth therein is
included in the consolidated financial statements or in the rules thereto.
ITEM 22. UNDERTAKINGS
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or
II-5
<PAGE> 137
high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; (iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrants pursuant to the foregoing provisions
or otherwise, the Registrants have 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 Registrants of expenses incurred
or paid by a director, officer or controlling person of the Registrants in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrants will, unless in the opinion of
their counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
(5) 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 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-6
<PAGE> 138
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN NEW YORK, NEW YORK ON THE 26 DAY OF
SEPTEMBER, 1997.
INSILCO CORPORATION
By: /s/ KENNETH H. KOCH
--------------------------------------
Name: Kenneth H. Koch
Title: Vice President and General
Counsel
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE FIRST ABOVE WRITTEN:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ ------------------------------------- -----------------------
<C> <S> <C>
* Chairman of the Board, President and September 26, 1997
- ------------------------------ Chief Executive Officer
Robert L. Smialek
* Vice President and Corporate September 26, 1997
- ------------------------------ Controller
Philip K. Woodlief
* Director September 26, 1997
- ------------------------------
James J. Gaffney
* Director September 26, 1997
- ------------------------------
Terence M. O'Toole
* Director September 26, 1997
- ------------------------------
Thomas E. Petry
* Director September 26, 1997
- ------------------------------
Barry S. Volpert
*By: /s/ KENNETH H. KOCH
- ------------------------------
Kenneth H. Koch
Attorney-in-Fact
</TABLE>
II-7
<PAGE> 139
The Board of Directors
Insilco Corporation:
The audits referred to in our report dated January 31, 1997, except as to Notes
3, 18(c) and 20 to the consolidated financial statements, which are as of March
5, 1997, included the related financial statement schedules as of December 31,
1996, and for each of the years in the three-year period ended December 31,
1996, included in the registration statement. These financial statement
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statement schedules based on our
audits. In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
We consent to the use of our report included herein, which is based partially on
the report of other auditors, and to the reference to our firm under the heading
"Experts" in the prospectus.
KPMG Peat Marwick LLP
Columbus, Ohio
September 26, 1997
S-1
<PAGE> 140
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-------------------------
(2)
(1) CHARGED
BALANCE AT CHARGED TO TO OTHER BALANCE
BEGINNING COSTS AND ACCOUNTS DEDUCTIONS AT END
DESCRIPTION OF PERIOD EXPENSES (DESCRIBE) (DESCRIBE) OF PERIOD
- -------------------------------------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1995:
Allowances deducted from assets:
Accounts receivable (for doubtful
receivables)................... $ 2,247 9,775 -- (719)(a) 11,303
Inventory (primarily for
obsolescence).................. 4,094 9,031 -- (6,971)(b) 6,154
For the year ended December 31, 1996:
Allowances deducted from assets:
Accounts receivable (for doubtful
receivables)................... 11,303 2,298 -- (8,623)(a) 4,978
Inventory (primarily for
obsolescence).................. 6,154 2,606 -- (2,644)(b) 6,116
</TABLE>
- ---------------
Notes: (a) Primarily accounts written-off, net of recoveries.
(b) Primarily obsolete parts written-off.
S-2
<PAGE> 1
Exhibit 4(j)
INSILCO CORPORATION
As Issuer
to
THE BANK OF NEW YORK
As Trustee
----------------
Indenture
Dated as of August 12, 1997
----------------
$150,000,000
10.25% SENIOR SUBORDINATED NOTES DUE 2007
-1-
<PAGE> 2
TABLE OF CONTENTS
Page
RECITALS OF THE COMPANY................................................. 1
ARTICLE ONE
Definitions and Other Provisions of General Application
SECTION 101. Definitions........................................... 2
Act......................................................... 3
Affiliate................................................... 3
Agent Member................................................ 3
Applicable Procedures....................................... 3
Asset Disposition........................................... 4
Authenticating Agent........................................ 4
Base Interest............................................... 4
Board of Directors.......................................... 4
Board Resolution............................................ 4
Business Day................................................ 5
Capital Lease Obligation.................................... 5
Capital Stock............................................... 5
Cedel....................................................... 5
Change of Control........................................... 5
Claim....................................................... 5
Commission.................................................. 6
Common Stock................................................ 6
Company..................................................... 6
Company Order............................................... 6
Company Request............................................. 6
Consolidated EBITDA......................................... 6
Consolidated EBITDA Coverage Ratio.......................... 7
Consolidated Income Tax Expense............................. 7
Consolidated Interest Expense............................... 8
Consolidated Net Income..................................... 8
Consolidated Net Worth...................................... 9
Consolidated Subsidiaries................................... 9
Corporate Trust Office...................................... 9
Corporation................................................. 9
Debt........................................................ 9
- ------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-i-
<PAGE> 3
Defaulted Interest.........................................10
Defeasance.................................................10
Depositary.................................................10
Designated Senior Debt.....................................11
DTC........................................................11
Euroclear..................................................11
Event of Default...........................................11
Excepted Disposition.......................................11
Exchange Act...............................................11
Exchange and Registration Rights Agreement.................11
Exchange Offer.............................................12
Exchange Registration Statement............................12
Exchange Securities........................................12
Expiration Date............................................12
Global Security............................................12
Guarantee..................................................12
Holder.....................................................13
Incur......................................................13
Indenture..................................................13
Initial Purchasers.........................................13
Insolvency Proceeding......................................13
Interest Payment Date......................................13
Interest Rate, Currency or Commodity Price
Agreement...............................................13
Investment.................................................14
Lien.......................................................14
Maturity...................................................14
Net Available Proceeds.....................................14
New Credit Facility........................................15
Notice of Default..........................................16
Obligations................................................16
Offer Document.............................................16
Offer Expiration Date......................................16
Offer to Purchase..........................................16
Officers' Certificate......................................19
Old Credit Facility........................................19
Opinion of Counsel.........................................19
Original Securities........................................20
Outstanding................................................20
Paying Agent...............................................21
payment in full............................................21
Permitted Interest Rate, Currency or Commodity
Price Agreement.........................................21
Permitted Investment.......................................21
Person.....................................................22
- ------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-ii-
<PAGE> 4
Plan of Reorganization ....................................22
Post-Petition Interest.....................................23
Predecessor Security.......................................23
Preferred Stock............................................23
Public Offering............................................23
Purchase Agreement.........................................23
Purchase Amount............................................23
Purchase Date..............................................23
Purchase Price.............................................24
Receivables................................................24
Receivables Sale...........................................24
Redeemable Interest........................................24
Redemption Date............................................24
Redemption Price...........................................24
Registered Securities......................................24
Registration Default.......................................24
Registration Default Period................................25
Regular Record Date........................................25
Regulation S...............................................25
Regulation S Certificate...................................25
Regulation S Global Security...............................25
Regulation S Legend........................................25
Regulation S Securities....................................25
Reinvested Amounts.........................................26
Related Person.............................................26
Required Filing Dates......................................26
Restricted Global Security.................................26
Restricted Payment.........................................26
Restricted Period..........................................26
Restricted Securities......................................26
Restricted Securities Certificate..........................26
Restricted Securities Legend...............................27
Restricted Subsidiary......................................27
Rule 144A..................................................27
Rule 144A Securities.......................................27
Securities.................................................27
Securities Act.............................................27
Securities Act Legend......................................27
Security Register..........................................27
Security Registrar.........................................27
Senior Debt................................................27
Shares.....................................................28
Shelf Registration Statement...............................28
Special Interest...........................................28
Special Record Date........................................28
- ------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-iii-
<PAGE> 5
Stated Maturity............................................28
Subordinated Debt..........................................29
Subordinated Obligations"..................................30
Subordinated Securities....................................30
Subsidiary.................................................30
Successor Company..........................................30
Successor Security.........................................30
Tender Offer...............................................31
Transactions...............................................31
Trust Indenture Act........................................31
Trustee....................................................31
Unpermitted Debt...........................................31
Unrestricted Securities Certificate........................31
Unrestricted Subsidiary....................................31
U.S. Person................................................31
Vice President.............................................32
Voting Stock...............................................32
Water Street...............................................33
Wholly Owned Restricted Subsidiary.........................33
SECTION 102. Compliance Certificates and Opinions.................33
SECTION 103. Form of Documents Delivered to Trustee...............34
SECTION 104. Acts of Holders; Record Dates........................34
SECTION 105. Notices, Etc., to Trustee and
the Company...........................................37
SECTION 106. Notice to Holders; Waiver............................38
SECTION 107. Conflict with Trust Indenture Act....................39
SECTION 108. Effect of Headings and Table of Contents.............39
SECTION 109. Successors and Assigns...............................39
SECTION 110. Separability Clause..................................39
SECTION 111. Benefits of Indenture................................40
SECTION 112. Governing Law........................................40
SECTION 113. Legal Holidays.......................................40
ARTICLE TWO Security Forms
SECTION 201. Forms Generally; Initial Forms of
Rule 144A and Regulation S
Securities............................................40
SECTION 202. Form of Face of Security.............................41
SECTION 203. Form of Reverse of Security..........................47
SECTION 204. Form of Trustee's Certificate of
Authentication........................................51
ARTICLE THREE The Securities
- ------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-iv-
<PAGE> 6
SECTION 301. Title and Terms......................................52
SECTION 302. Denominations........................................54
SECTION 303. Execution, Authentication, Delivery
and Dating...........................................54
SECTION 304. Temporary Securities.................................55
SECTION 305. Global Securities....................................56
SECTION 306. Registration, Registration of Transfer
and Exchange Generally; Restrictions
on Transfer and Exchange; Securities
Act Legends...........................................58
SECTION 307. Mutilated, Destroyed, Lost and
Stolen Securities.....................................63
SECTION 308. Payment of Interest; Interest
Rights Preserved......................................64
SECTION 309. Persons Deemed Owners................................66
SECTION 310. Cancellation.........................................66
SECTION 311. Computation of Interest..............................67
SECTION 312. CUSIP Numbers........................................67
ARTICLE FOUR Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture..............68
SECTION 402. Application of Trust Money...........................69
ARTICLE FIVE Remedies
SECTION 501. Events of Default....................................70
SECTION 502. Acceleration of Maturity; Rescission
and Annulment.........................................72
SECTION 503. Collection of Indebtedness and Suits
for Enforcement by Trustee............................74
SECTION 504. Trustee May File Proofs of Claim.....................74
SECTION 505. Trustee May Enforce Claims
Without Possession of Securities......................75
SECTION 506. Application of Money Collected.......................76
SECTION 507. Limitation on Suits..................................76
SECTION 508. Unconditional Right of Holders to
Receive Principal, Premium and
Interest..............................................77
SECTION 509. Restoration of Rights and Remedies...................77
SECTION 510. Rights and Remedies Cumulative.......................78
- ------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-v-
<PAGE> 7
SECTION 511. Delay or Omission Not Waiver.........................78
SECTION 512. Control by Holders...................................78
SECTION 513. Waiver of Past Defaults..............................79
SECTION 514. Undertaking for Costs................................79
SECTION 515. Waiver of Stay, Usury or Extension Laws..............80
ARTICLE SIX The Trustee
SECTION 601. Certain Duties and Responsibilities..................80
SECTION 602. Notice of Defaults...................................80
SECTION 603. Certain Rights of Trustee............................81
SECTION 604. Not Responsible for Recitals or
Issuance of Securities................................82
SECTION 605. May Hold Securities..................................83
SECTION 606. Money Held in Trust..................................83
SECTION 607. Compensation and Reimbursement.......................83
SECTION 608. Disqualification; Conflicting Interests..............84
SECTION 609. Corporate Trustee Required; Eligibility..............84
- ------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-vi-
<PAGE> 8
SECTION 610. Resignation and Removal; Appointment
of Successor..........................................85
SECTION 611. Acceptance of Appointment by Successor...............86
SECTION 612. Merger, Conversion, Consolidation or
Succession to Business................................87
SECTION 613. Preferential Collection of Claims
Against Company.......................................87
SECTION 614. Appointment of Authenticating Agent..................87
SECTION 615. Trustee's Application for Instructions
from the Company......................................90
ARTICLE SEVEN Holders' Lists and Reports by Trustee and
Company
SECTION 701. Company to Furnish Trustee Names and
Addresses of Holders..................................90
SECTION 702. Preservation of Information;
Communications to Holders.............................91
SECTION 703. Reports by Trustee...................................91
SECTION 704. Reports by the Company...............................92
SECTION 705. Officers' Certificate with Respect to
Change in Interest Rates..............................92
ARTICLE EIGHT Merger, Consolidation, Etc.
SECTION 801. Mergers, Consolidations and Certain
Transfers, Leases and Acquisitions
of Assets.............................................92
SECTION 802. Successor Substituted................................95
ARTICLE NINE Supplemental Indentures
SECTION 901. Supplemental Indentures Without
Consent of Holders....................................95
SECTION 902. Supplemental Indentures with Consent
of Holders............................................96
SECTION 903. Execution of Supplemental Indentures.................97
SECTION 904. Effect of Supplemental Indentures....................98
SECTION 905. Conformity with Trust Indenture Act..................98
SECTION 906. Reference in Securities to Supplemental
Indentures............................................98
SECTION 907. Changes Adverse to Holders of Senior Debt. 98
- ------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-vii-
<PAGE> 9
ARTICLE TEN Covenants
SECTION 1001. Payment of Principal, Premium and
Interest..............................................99
SECTION 1002. Maintenance of Office or Agency......................99
SECTION 1003. Money for Security Payments to Be
Held in Trust........................................100
SECTION 1004. Existence...........................................101
SECTION 1005. Maintenance of Properties...........................101
SECTION 1006. Payment of Taxes and Other Claims...................102
SECTION 1007. Maintenance of Insurance............................102
SECTION 1008. Limitation on Consolidated Debt........................102
SECTION 1009. Limitation on Debt and Preferred Stock
of Subsidiaries......................................106
SECTION 1010. Limitation on Layered Debt..........................107
SECTION 1011. Limitation on Issuance of Guarantees
of Subordinated Debt.................................107
SECTION 1012. Limitation on Restricted Payments...................107
SECTION 1013. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries..................110
SECTION 1014. Limitation on Liens.................................112
SECTION 1015. Limitation on Ownership of Capital
Stock of Subsidiaries................................112
SECTION 1016. Limitation on Transactions with
Affiliates and Related Persons.......................113
SECTION 1017. Limitation on Certain Asset
Dispositions.........................................114
SECTION 1018. Change of Control...................................118
SECTION 1019. Provision of Financial Information..................120
SECTION 1020. Unrestricted Subsidiaries...........................121
SECTION 1021. Statement by Officers as to Default;
Compliance Certificates..............................123
SECTION 1022. Waiver of Certain Covenants.........................124
ARTICLE ELEVEN Redemption of Securities
SECTION 1101. Redemption at the Election of the
Company.............................................124
SECTION 1102. Applicability of Article............................125
SECTION 1103. Election to Redeem; Notice to Trustee...............125
SECTION 1104. Selection by Trustee of Securities
to Be Redeemed......................................125
- ------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-viii-
<PAGE> 10
SECTION 1105. Notice of Redemption................................126
SECTION 1106. Deposit of Redemption Price.........................127
SECTION 1107. Securities Payable on Redemption Date...............127
SECTION 1108. Securities Redeemed in Part.........................127
ARTICLE TWELVE Defeasance and Covenant Defeasance
SECTION 1201. Company's Option to Effect Defeasance
or Covenant Defeasance...............................128
SECTION 1202. Defeasance and Discharge............................128
SECTION 1203. Covenant Defeasance.................................129
SECTION 1204. Conditions to Defeasance or Covenant
Defeasance...........................................129
SECTION 1205. Deposited Money and U.S. Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions.......................132
SECTION 1206. Reinstatement.......................................132
ARTICLE THIRTEEN Subordination of Securities
SECTION 1301. Securities Subordinate to Senior Debt...............133
SECTION 1302. Payment Over of Proceeds Upon
Dissolution, Etc.....................................133
SECTION 1303. No Payment When Senior Debt in Default..............135
SECTION 1304. Certain Payments Permitted..........................137
- ------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-ix-
<PAGE> 11
SECTION 1305. Subrogation to Rights of Holders
of Senior Debt.......................................137
SECTION 1306. Provisions Solely to Define Relative
Rights...............................................138
SECTION 1307. Trustee to Effectuate Subordination.................138
SECTION 1308. No Waiver of Subordination Provisions...............139
SECTION 1309. Notice to Trustee...................................140
SECTION 1310. Reliance on Judicial Order or
Certificate of Liquidation Agent.....................141
SECTION 1311. Trustee Not Fiduciary for Holders of
Senior Debt..........................................142
SECTION 1312. Rights of Trustee as Holder of Senior
Debt; Preservation of Trustee's
Rights...............................................142
SECTION 1313. Article Applicable to Paying Agents.................142
SECTION 1314. Defeasance of this Article Thirteen.................143
ARTICLE FOURTEEN Jurisdiction and Consent to Service of
Process
SECTION 1401. Jurisdiction and Consent to Service
of Process...........................................143
ANNEX A -- Form of Regulation S Certificate
ANNEX B -- Form of Restricted Securities Certificate
ANNEX C -- Form of Unrestricted Securities Certificate
- ------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-x-
<PAGE> 12
INSILCO CORPORATION
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Indenture
Act Section Section
Section 310(a)(1) ................................. 609
(a)(2) ................................. 609
(a)(3) ................................. Not Applicable
(a)(4) ................................. Not Applicable
(b) ................................. 608
................................. 610
Section 311(a) ................................. 613
(b) ................................. 613
Section 312(a) ................................. 701
................................. 702(a)
(b) ................................. 702(b)
(c) ................................. 702(c)
Section 313(a) ................................. 703(a)
(a)(4) ................................. 101
1004
(b) ................................. 703(a)
(c) ................................. 703(a)
(d) ................................. 703(b)
Section 314(a) ................................. 704
(b) ................................. Not Applicable
(c)(1) ................................. 102
(c)(2) ................................. 102
(c)(3) ................................. Not Applicable
(d) ................................. Not Applicable
(e) ................................. 102
Section 315(a) ................................. 601
(b) ................................. 602
(c) ................................. 601
(d) ................................. 601
(e) ................................. 514
Section 316(a) ................................. 101
(a)(1)(A) ................................. 502
................................. 512
(a)(1)(B) ................................. 513
(a)(2) ................................. Not Applicable
(b) ................................. 508
(c) ................................. 104
Section 317(a)(1) ................................. 503
(a)(2) ................................. 504
(b) ................................. 1003
Section 318(a) ................................. 107
INDENTURE, dated as of August 12, 1997, among INSILCO
CORPORATION, a corporation duly organized and existing under
the laws of the State of Delaware (herein called the
"Company"), having its principal office at 425 Metro Place
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- -----------------
Note: This reconciliation and tie shall not, for any
<PAGE> 13
N., Fifth Floor, Box 7196, Dublin, Ohio 43017, and THE BANK OF NEW YORK, a New
York banking corporation, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of
$150,000,000 aggregate principal amount of its 10.25% Senior Subordinated Notes
due 2007(herein called the "Securities") of substantially the tenor and amount
herein after set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture. The Securities may consist of
either or both of Original Securities or Exchange Securities, each as defined
herein. The Original Securities and the Exchange Securities shall rank pari
passu with one another.
All things necessary (i) to make the Securities, when executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company and (ii) to make this Indenture a
valid agreement of the Company, all in accordance with their respective terms,
have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
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<PAGE> 14
meanings assigned to them in this Article and include the plural as well
as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation;
(4) all references in this Indenture and the Securities to interest
in respect of any Security shall be deemed to include all Special
Interest, if any, in respect of such Security, unless the context
otherwise requires, and express mention of the payment of Special Interest
in any provision hereof or thereof shall not be construed as excluding
reference to Special Interest in those provisions hereof or thereof where
such express mention is not made; all references in this Indenture and the
Securities to principal in respect of any Security shall be deemed to
include any Redemption Price or Purchase Price payable in respect of such
Security pursuant to any redemption or Offer to Purchase hereunder (and
all such references to the Stated Maturity of the principal in respect of
any Security shall be deemed to include the Redemption Date with respect
to any such Redemption Price and the Purchase Date with respect to any
such Purchase Price), and express mention of the payment of any Redemption
Price or Purchase Price in any provision hereof or thereof shall not be
construed as excluding reference to any Redemption Price or Purchase Price
in those provisions hereof or thereof where such express reference is not
made;
(5) unless the context otherwise requires, any reference to
"Article", "Section" or "Annex" refers to an Article or Section of or
Annex to this Indenture;
(6) the words "herein", "hereof" and "hereunder"
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<PAGE> 15
and other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision; and
(7) all references to $, US$, dollars or United States dollars shall
refer to the lawful currency of the United States.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
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 to the foregoing.
"Agent Member" means any member of, or participant in, the
Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, Euroclear and Cedel,
in each case to the extent applicable to such transaction and as in effect at
the time of such transfer or transaction.
"Asset Disposition" means, with respect to the Company or any
Restricted Subsidiary, any transfer, conveyance, sale, lease or other
disposition by the Company or such Restricted Subsidiary (including a
consolidation or merger or other sale of such Restricted Subsidiary with, into
or to another Person in a transaction in which such Restricted Subsidiary ceases
to be a Restricted Subsidiary) of (i) shares of Capital Stock (other than
directors' qualifying shares) or other ownership interests of any Restricted
Subsidiary, (ii) substantially all of the assets of the Company or such
Restricted Subsidiary representing a division or line of business or (iii) other
assets or rights of the Company or any Restricted Subsidiary outside of the
ordinary course of business, but excluding, in each case of Clauses (i), (ii)
and (iii), (a) any disposition in the ordinary course of business of obsolete
equipment or other
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<PAGE> 16
property used in the business of the Company or any Restricted Subsidiary that
is no longer used or useful in such business, (b) any disposition by the Company
or any Restricted Subsidiary to the Company or any Wholly Owned Restricted
Subsidiary, (c) required payments with respect to any Debt pursuant to Section
1008, (d) any disposition that is permitted pursuant to Section 1012, and (e)
the disposition of all or substantially all of the assets of the Company
pursuant to Section 801.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities.
"Base Interest" means the interest that would otherwise accrue on
the Securities under the terms thereof and the Indenture, without giving effect
to any Special Interest.
"Board of Directors" means, with respect to the Company, the board
of directors of the Company or any duly authorized committee of that board.
Except as otherwise provided or unless the context otherwise requires, each
reference herein to the "Board of Directors" shall mean the Board of Directors
of the Company.
"Board Resolution" of the Company means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company to have been
duly adopted by its Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee. Except as otherwise
expressly provided or unless the context otherwise requires, each reference
herein to a "Board Resolution" shall mean a Board Resolution of the Company.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close.
"Capital Lease Obligation" of any Person means the obligation to pay rent or
other payment amounts under a lease of (or other Debt arrangements conveying the
right to use) real or personal property of such Person that is required to be
classified and accounted for as a capital lease or a liability on the face of a
balance sheet of such Person in accordance with generally accepted accounting
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<PAGE> 17
principles. The stated maturity of such obligation shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty. The principal amount of such obligation shall be the capitalized amount
thereof that would appear on the face of a balance sheet of such Person in
accordance with generally accepted accounting principles.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person.
"Cedel" means Cedel Bank, S.A. (or any successor securities clearing
agency).
"Change of Control" has the meaning specified in Section 1018(c).
"Claim" means any and all rights to payment under or in respect of
any of the Securities or this Indenture, all rights, remedies, demands, causes
of action and claims of every type and description at any time held or asserted
by, or arising in favor of, any holder of a Security against the Company or any
of its Subsidiaries or Affiliates or any of their assets, in each case on
account of any breach of any promise, obligation, agreement, indemnity,
representation, warranty or covenant in a Security or the Indenture or the
performance or nonperformance or payment or nonpayment thereof.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
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<PAGE> 18
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Order" or "Company Request" means a written request or
order signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Consolidated EBITDA" of any Person means for any period, on a
consolidated basis for such Person and its Consolidated Subsidiaries, the sum of
the amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense (but excluding any interest capitalized in accordance with
generally accepted accounting principles), (iii) Consolidated Income Tax
Expense, (iv) depreciation and amortization expense, (v) other non-cash charges
and (vi) other non-operating expenses that have been deducted in the
determination of Consolidated Net Income; provided, however, that for each such
Consolidated Subsidiary the items (i) through (vi) shall be included in such sum
only (x) to the extent and in the same proportion that the Consolidated Net
Income of such Consolidated Subsidiary was included in calculating the
Consolidated Net Income of such Person and (y) only to the extent that the
amount specified in Clause (x) is not restricted from the payment of dividends
or the making of distributions to such Person during such period.
"Consolidated EBITDA Coverage Ratio" of any Person means for any
period the ratio of (i) Consolidated EBITDA of such Person for such period to
(ii) the sum of (A) Consolidated Interest Expense of such Person for such
period, plus (B) the annual interest expense (including the amortization of debt
discount but excluding the fees and expenses incurred in connection with the
amortization of the Old Credit Facility) with respect to any Debt Incurred or
proposed to be Incurred by such Person or its Consolidated Subsidiaries since
the beginning of such period to the extent not included within Clause (ii)(A),
minus (C) Consolidated Interest Expense of such Person with respect to any Debt
that is no longer outstanding or that
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<PAGE> 19
will no longer be outstanding as a result of the transaction with respect to
which the Consolidated EBITDA Coverage Ratio is being calculated, to the extent
included within Clause (ii)(A); provided, however, that in making such
computation, the Consolidated Interest Expense of such Person attributable to
interest on any Debt bearing a floating interest rate shall be computed on a pro
forma basis as if the rate in effect on the date of computation had been the
applicable rate for the entire period; and provided, further, that, in the event
such Person or any of its Consolidated Subsidiaries has made acquisitions or
dispositions of assets not in the ordinary course of business (including by
merger, consolidation or purchase of Capital Stock) during or after such period,
the computation of the Consolidated EBITDA Coverage Ratio (and for the purpose
of such computation, the calculation of Consolidated Net Income, Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated EBITDA) shall
be made on a pro forma basis as if the acquisitions or dispositions had taken
place on the first day of such period.
"Consolidated Income Tax Expense" of any Person means for any period
the consolidated provision for income taxes of such Person and its Consolidated
Subsidiaries for such period determined in accordance with generally accepted
accounting principles.
"Consolidated Interest Expense" of any Person means for any period,
on a consolidated basis for such Person and its Consolidated Subsidiaries, all
of the following determined in accordance with generally accepted accounting
principles: (i) the consolidated interest expense included in a consolidated
income statement (net of interest income), (ii) the portion of any rental
obligation in respect of any Capital Lease Obligation allocable to interest
expense in accordance with generally accepted accounting principles; (iii) the
amortization of Debt discounts (but excluding the amortization of fees and
expenses Incurred in connection with the amortization of the Old Credit Facility
and the amount of financing costs and expenses that are capitalized and
amortized); (iv) to the extent not included in total interest expense, any net
payments made or received during such period under interest rate or currency
swaps, hedges or exchanges or similar derivative agreements, including any
amortized portion of such payments and (v) any interest capitalized in
accordance with generally accepted accounting principles.
-8-
<PAGE> 20
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person and its Consolidated
Subsidiaries for such period determined in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (i) the
net income (or loss) of any Person acquired by such Person or a Subsidiary of
such Person in a pooling-of-interests transaction for any period prior to the
date of such transaction (subject to the final proviso of the definition of
Consolidated EBITDA Coverage Ratio when Consolidated Net Income is being
computed for purposes of calculating the Consolidated EBITDA Coverage Ratio),
(ii) the net income (but not net loss) of any Consolidated Subsidiary of such
Person to the extent restricted from the payment of dividends or the making of
distributions to such Person during such period, (iii) the net income (or loss)
of any Person that is not a Consolidated Subsidiary of such Person except to the
extent of the amount of dividends or other distributions actually paid to such
Person by such other Person during such period, (iv) extraordinary gains and
losses (and any unusual gains and losses arising outside the ordinary course of
business not included in extraordinary gains and losses), (v) net gains and
losses in respect of dispositions of assets other than in the ordinary course of
business and (vi) the tax effect of any of the items described in Clauses (i)
through (v) above.
"Consolidated Net Worth" of any Person at any date means the
consolidated stockholders' equity of such Person and its Consolidated
Subsidiaries at such date, as determined on a consolidated basis in accordance
with generally accepted accounting principles, less amounts attributable to
Redeemable Interests of such Person; provided, however, that, with respect to
the Company and its Restricted Subsidiaries, adjustments following the date of
the Indenture to the accounting books and records of the Company and its
Restricted Subsidiaries in accordance with Accounting Principles Board Opinions
Nos. 16 and 17 (or successor opinions thereto) or otherwise resulting from the
acquisition of control of the Company by another Person shall not be given
effect to.
"Consolidated Subsidiaries" of any Person means all other Persons
that would be accounted for as consolidated Persons in such Person's financial
statements in accordance with generally accepted accounting principles;
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<PAGE> 21
provided, however, that, for any particular period during which any Subsidiary
of the Company was an Unrestricted Subsidiary, "Consolidated Subsidiaries" will
exclude such Subsidiary for such period (or portion thereof) during which it was
an Unrestricted Subsidiary.
"Corporate Trust Office" means the office of the Trustee maintained
in New York, New York, at which at any particular time its principal corporate
trust business shall be administered, which as of the date hereof, is located at
101 Barclay Street, Floor 21W, New York, NY 10286.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including payment obligations Incurred in connection with the acquisition of
property, assets or businesses, (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (iv) every obligation of such
Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business), (v) every Capital Lease Obligation of such Person,
(vi) the maximum fixed redemption or repurchase price of Redeemable Interests of
such Person at the time of determination, (vii) the market value of any
indebtedness, obligation or other liability of such Person in respect of any
interest rate or currency swap, hedge or exchange or similar derivative
agreement with any counterparty thereto, net of indebtedness, obligations or
other liabilities owed to such Person by such counterparty and (viii) every
obligation of the type referred to in Clauses (i) through (vii) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has Guaranteed or for which such Person is responsible or liable,
directly or indirectly, jointly or severally, as obligor, Guarantor or
otherwise, but excluding from Debt (a) any indebtedness, obligations or other
liabilities subject to the Plan of Reorganization and (b) any indebtedness or
other liabilities Incurred in connection with obligations Incurred to pay
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<PAGE> 22
premiums for corporate owned life insurance policies purchased by the Company in
an aggregate amount not to exceed the aggregate cash value of such policies.
"Defaulted Interest" has the meaning specified in Section 308.
"Defeasance" has the meaning specified in Section 1202.
"Depositary" means, with respect to any Securities, a clearing
agency that is registered as such under the Exchange Act and is designated by
the Company to act as Depositary for such Securities (or any successor
securities clearing agency so registered).
"Designated Senior Debt" means (i) all Obligations in respect of the
New Credit Facility and (ii) all Obligations in respect of any other Senior Debt
of the Company in each case in an outstanding principal amount not less than $10
million.
"DTC" means The Depository Trust Company, a New York corporation.
"Euroclear" means the Euroclear Clearance System (or any successor
securities clearing agency).
"Event of Default" has the meaning specified in Section 501.
"Excepted Disposition" means a transfer, conveyance, sale, lease or
other disposition by the Company or any Restricted Subsidiary of (i) the Capital
Stock or any or all of the assets of Taylor Publishing Company, (ii) certain
assets of a Restricted Subsidiary that may be required to be divested, in an
amount not to exceed $8 million, in connection with an action by the Federal
Trade Commission relating to the acquisition by the Company of certain assets of
Helima-Helvetion International, Inc. or (iii) any other asset of the Company or
any Restricted Subsidiary for which the Company or any Restricted Subsidiary
receives a mortgage or a purchase money security interest the principal amount
of which at any time outstanding does not exceed $8 million or, taken together
with all other mortgages and purchase money security interests in respect of any
other such assets, the aggregate
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<PAGE> 23
principal amount of which at any time outstanding does not exceed $15 million.
"Exchange Act" means the Securities Exchange Act of 1934 (or any
successor statute), as it may be amended from time to time.
"Exchange and Registration Rights Agreement" means the Exchange and
Registration Rights Agreement, dated as of August 12, 1997, by and between the
Company, and Goldman, Sachs & Co., McDonald & Company Securities, Inc. and
Citicorp Securities, Inc. as Initial Purchasers, and the Holders from time to
time as provided therein, as such agreement may be amended from time to time.
"Exchange Offer" means an offer made by the Company pursuant to the
Exchange and Registration Rights Agreement under an effective registration
statement under the Securities Act to exchange securities substantially
identical to Outstanding Securities (except for the differences provided for
herein) for Outstanding Securities.
"Exchange Registration Statement" means a registration statement of
the Company under the Securities Act registering Exchange Securities for
distribution pursuant to the Exchange Offer.
"Exchange Securities" means the Securities issued pursuant to the
Exchange Offer and their Successor Securities.
"Expiration Date" has the meaning specified in Section 104.
"Global Security" means a Security that is registered in the
Security Register in the name of a Depositary or a nominee thereof.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing any Debt, or dividends or distributions
on any equity security, of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt,
(ii) to purchase property, securities
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<PAGE> 24
or services for the purpose of assuring the holder of such Debt of the payment
of such Debt, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Debt (and "Guaranteed," "Guaranteeing"
and "Guarantor" shall have meanings correlative to the foregoing); provided,
however, that the Guarantee by any Person shall not include endorsements by such
Person for collection or deposit, in either case, in the ordinary course of
business.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
or the recording, as required pursuant to generally accepted accounting
principles or otherwise, of any such Debt or other obligation on the balance
sheet of such Person (and "Incurrence", "Incurred", "Incurrable" and "Incurring"
shall have meanings correlative to the foregoing); provided, however, that a
change in generally accepted accounting principles that results in an obligation
of such Person that exists at such time becoming Debt shall not be deemed an
Incurrence of such Debt.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchasers" means Goldman, Sachs & Co., McDonald & Company
Securities, Inc. and Citicorp Securities, Inc. , as purchasers of the Securities
from the Company pursuant to the Purchase Agreement.
"Insolvency Proceeding" has the meaning specified in Section 1302.
"Interest Payment Date" means the Stated Maturity
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<PAGE> 25
of an instalment of interest on the Securities.
"Interest Rate, Currency or Commodity Price Agreement" of any Person
means any forward contract, futures contract, swap, option or other financial
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreements) relating to, or the value of which is dependent upon,
interest rates, currency exchange rates or commodity prices or indices
(excluding contracts for the purchase or sale of goods in the ordinary course of
business).
"Investment" by any Person in any other Person means (i) any direct
or indirect loan, advance or other extension of credit or capital contribution
to or for the account of such other Person (by means of any transfer of cash or
other property to any Person or any payment for property or services for the
account or use of any Person, or otherwise), (ii) any direct or indirect
purchase or other acquisition of any Capital Stock, bond, note, debenture or
other debt or equity security or evidence of Debt, or any other ownership
interest, issued by such other Person, whether or not such acquisition is from
such or any other Person, (iii) any direct or indirect payment by such Person on
a Guarantee of any obligation of or for the account of such other Person or (iv)
any other investment of cash or other property by such Person in or for the
account of such other Person.
"Lien" means, with respect to any property or assets, any mortgage
or deed of trust, pledge, hypothecation, assignment, Receivables Sale, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Maturity", when used with respect to any Security, means the date
on which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
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<PAGE> 26
"Net Available Proceeds" means cash, readily marketable cash
equivalents, readily marketable fixed-income securities and equity securities
traded on a national securities exchange or NASDAQ (valued, in the case of
securities, at the market value thereof when received by the Company or such
Restricted Subsidiary) received (including by way of sale or discounting of a
note, installment receivable or other receivable, but excluding any other
consideration received in the form of an assumption by any transferee of Debt or
other obligations relating to the properties or assets transferred, or otherwise
received in any non-cash form) from an Asset Disposition by the Company or any
Restricted Subsidiary, net of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses Incurred and all federal, state,
provincial, foreign and local taxes required to be accrued as a liability as a
consequence of such Asset Disposition, (ii) all payments made by the Company or
any Restricted Subsidiary on any Debt which is secured by assets disposed of in
such Asset Disposition in accordance with the terms of any Lien upon or with
respect to such assets or which must by the terms of such Lien, or in order to
obtain a necessary consent to such Asset Disposition or by applicable law, be
repaid out of the proceeds from such Asset Disposition, (iii) amounts provided
as a reserve by the Company or any Restricted Subsidiary, in accordance with
generally accepted accounting principles, against liabilities under any
indemnification obligations to the buyer in such Asset Disposition (except to
the extent and at the time any such amounts are released from any such reserve,
such amounts shall constitute Net Available Proceeds) and (iv) all distributions
and other payments made to minority interest holders in Restricted Subsidiaries
or joint ventures as a result of such Asset Disposition.
"New Credit Facility" means, collectively, the Credit Agreement
dated as of July 3, 1997 among the Company, certain of its Subsidiaries, the
financial institutions from time to time party thereto as Lenders and Issuing
Banks, The First National Bank of Chicago and Goldman Sachs Credit Partners
L.P., as syndication agents, and Citicorp USA, Inc., in its separate capacity as
collateral and administrative agent for the Lenders and Issuing Banks, and the
Loan Documents (as defined therein) (or other analogous documents entered into
in connection with any refinancing thereof), in each case as the same may from
time to time be amended, renewed, supplemented or otherwise modified at the
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<PAGE> 27
option of the parties thereto; and any other agreement pursuant to which any of
the Debt, commitments, Obligations, costs, expenses, fees, reimbursements and
other indemnities payable or owing under the New Credit Facility may be
refinanced, restructured, renewed, extended, refunded or increased, as any such
other agreement may from time to time at the option of the parties thereto be
amended, supplemented, renewed or otherwise modified.
"Notice of Default" means a written notice of the kind specified in
Section 501(4).
"Obligations" mean any principal, interest, penalties, expenses,
fees, indemnities, reimbursements, damages and other liabilities payable under
the documentation governing any Debt.
"Offer Document" has the meaning specified in the definition of
"Offer to Purchase".
"Offer Expiration Date" has the meaning specified in the definition
of "Offer to Purchase".
"Offer to Purchase" means an offer, set forth in a writing (the
"Offer Document") sent by the Company by first class mail, postage prepaid, to
each Holder at its address appearing in the Security Register on the date of the
Offer Document, to purchase up to the principal amount of Securities specified
in such Offer Document at the purchase price specified in such Offer Document
(as determined pursuant to this Indenture). Unless otherwise required by
applicable law, the Offer Document shall specify an expiration date (the "Offer
Expiration Date") of the Offer to Purchase which shall be, subject to any
contrary requirements of applicable law, not less than 30 days or more than 60
days after the date of such Offer Document and a settlement date (the "Purchase
Date") for the purchase of Securities within five Business Days after the Offer
Expiration Date. The Company shall notify the Trustee in writing at least 15
Business Days (or such shorter period as is acceptable to the Trustee) prior to
the mailing of the Offer Document of the Company's obligation to make an Offer
to Purchase, and the Offer Document shall be mailed by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the Company.
The Offer Document shall contain information concerning the business of the
Company and its Subsidiaries which the Company in good faith
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<PAGE> 28
believes will enable such Holders to make an informed decision with respect to
the Offer to Purchase (which at a minimum will include (i) the most recent
annual and quarterly financial statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" required to be filed
with the Trustee pursuant to Section 1019 (which requirements may be satisfied
by delivery of such documents together with the Offer Document), (ii) a
description of material developments in the Company's business subsequent to the
date of the latest of such financial statements referred to in Clause (i)
(including a description of the events requiring the Company to make the Offer
to Purchase), (iii) if applicable, appropriate pro forma financial information
concerning the Offer to Purchase and the events requiring the Company to make
the Offer to Purchase and (iv) any other information required by applicable law
to be included therein. The Offer Document shall contain all instructions and
materials necessary to enable such Holder to tender Securities pursuant to the
Offer to Purchase. The Offer Document shall also state:
(1) the Section of this Indenture pursuant to which the Offer to
Purchase is being made;
(2) the Offer Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the Outstanding Securities
offered to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such amount has been
determined as required by this Indenture) (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000
aggregate principal amount of Securities accepted for payment (as
specified pursuant to this Indenture);
(5) that the Holder may tender all or any portion of the Securities
registered in the name of such Holder and that any portion of a Security
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Securities are to
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be surrendered for tender pursuant to the Offer to Purchase and a
description of the procedure which a Holder must follow to tender all or a
portion of the Securities;
(7) that interest on any Security not tendered or tendered but not
purchased by the Company pursuant to the Offer to Purchase will continue
to accrue;
(8) that on the Purchase Date the purchase price will become due and
payable upon each Security accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after the
Purchase Date;
(9) that each Holder electing to tender a Security pursuant to the
Offer to Purchase will be required to surrender such Security at the place
or places specified in the Offer Document prior to the close of business
on the Offer Expiration Date (such Security being duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing and bearing appropriate signature
guarantees);
(10) that Holders will be entitled to withdraw all or any portion of
Securities tendered if the Company (or its Paying Agent) receives, not
later than the close of business on the Offer Expiration Date, a telegram,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Security the Holder tendered, the certificate
number of the Security the Holder tendered and a statement that such
Holder is withdrawing all or a portion of its tender;
(11) that (a) if Securities in an aggregate principal amount less than
or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase all such
Securities and (b) if Securities in an aggregate principal amount in
excess of the Purchase Amount are tendered and not withdrawn pursuant to
the Offer to Purchase, the Company shall purchase Securities having an
aggregate principal amount equal to the Purchase Amount on a pro rata
basis (with such adjustments as may be deemed appropriate so that only
Securities in
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denominations of $1,000 or integral multiples thereof shall be purchased);
(12) that in the case of any Holder whose Security is purchased only
in part, the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by
such Holder, in an aggregate principal amount equal to and in exchange for
the unpurchased portion of the Security so tendered; and
(13) that each Holder electing to tender a Security pursuant to the
Offer to Purchase will be required to complete the Option of Holder to
Elect Purchase.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer Document for such Offer to Purchase.
"Officers' Certificate" of the Company means a certificate signed by
the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 1021 shall
be the principal executive, financial or accounting officer of the Company.
Unless the context otherwise requires, each reference herein to an "Officers'
Certificate" shall mean an Officers' Certificate of the Company. References
herein, or in any Security, to any officer of a Person that is a partnership
shall mean such officer of the partnership or, if none, of a general partner of
the partnership authorized thereby to act on its behalf.
"Old Credit Facility" means the revolving credit and term loan
facility to which the Company and certain of its Subsidiaries were parties that
was replaced by, and repaid in full by advances under, the New Credit Facility.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be reasonably acceptable to the Trustee.
An Opinion of Counsel may have qualifications customary for opinions of the type
required and counsel delivering such Opinion of Counsel may rely on certificates
of the Company or
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government or other officials customary for opinions of the type required,
including certificates testifying as to matters of fact.
"Original Securities" means all Securities other than Exchange
Securities.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as a Paying Agent) for
the Holders of such Securities; provided that, if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been
made;
(iii) Securities which have been defeased pursuant to Section 1202;
and
(iv) Securities which have been paid pursuant to Section 307 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be Out
standing, except that, in determining whether the Trustee shall be protected in
relying upon any such request, demand,
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authorization, direction, notice, consent or waiver, only Securities which the
Trustee actually knows to be so owned shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the Company
or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"payment in full," together with any correlative term such as "paid
in full" and "pay in full," means with respect to any Obligation payment in full
thereof in cash.
"Permitted Interest Rate, Currency or Commodity Price Agreement" of
any Person means any Interest Rate, Currency or Commodity Price Agreement
entered into with one or more financial institutions that is designed to protect
such Person against fluctuations in interest rates or currency exchange rates
with respect to Debt Incurred or, in the case of currency or commodity
protection agreements, against currency exchange rate or commodity price
fluctuations relating to then existing financial obligations or then existing or
sold production and, in any case, not for purposes of speculation.
"Permitted Investment" means (i) Investments in the Company or any
Person that is, or as a consequence of such Investment becomes, a Restricted
Subsidiary, (ii) securities either issued directly or fully guaranteed or
insured by the government of the United States of America or any agency or
instrumentality thereof having maturities of not more than one year, (iii) time
deposits and certificates of deposit, demand deposits and banker's acceptances
having maturities of not more than one year from the date of deposit, of any
domestic commercial bank having capital and surplus in excess of $500 million
and having a peer group rating of B or better (or the equivalent thereof) by
Thompson BankWatch, Inc. or outstanding long-term debt rated BBB or better (or
the equivalent thereof) by Standard & Poor's Ratings Group or Baa2 or better (or
the equivalent thereof) by Moody's Investors Service, Inc., (iv) demand deposits
made in the ordinary course of business and consistent with the Company's
customary cash management policy in
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<PAGE> 33
any domestic office of any commercial bank organized under the laws of the
United States of America or any state thereof, (v) insured deposits issued by
commercial banks of the type described in Clause (iv) above, (vi) mutual funds
whose investment guidelines restrict such funds' investments primarily to those
satisfying the provisions of any of Clauses (ii), (iii), (vii) and (viii) of
this definition, (vii) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in Clauses (ii) and (iii)
above entered into with any bank meeting the qualifications specified in Clause
(iii) above, (viii) commercial paper (other than commercial paper issued by an
Affiliate or Related Person) rated A-1 or the equivalent thereof by Standard &
Poor's Ratings Group or P-1 or the equivalent thereof by Moody's Investors
Service, Inc., and in each case maturing within 360 days, (ix) receivables owing
to the Company or a Restricted Subsidiary if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms, (x) any Investment consisting of loans and advances to employees of
the Company or any Restricted Subsidiary for travel, entertainment, relocation,
employee incentive plans or other expenses in the ordinary course of business,
(xi) any Investment consisting of a Permitted Interest Rate, Currency or
Commodity Price Agreement, (xii) any Investment acquired by the Company or any
of its Restricted Subsidiaries (A) in exchange for any other Investment or
accounts receivable held by the Company or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such other Investment or the obligor with
respect to such accounts receivable or (B) as a result of a foreclosure by the
Company or any of its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any secured Investment in
default, (xiii) any Investment that constitutes part of the consideration from
an Asset Disposition made pursuant to, and in compliance with, Section 1017,
(xiv) Investments the payment for which consists exclusively of Capital Stock
(exclusive of Redeemable Interests) of the Company and (xv) Investments existing
as of the date of the Indenture of the Company or any Subsidiary of the Company.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
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"Plan or Reorganization" means the Company's Amended and Restated
Plan of Reorganization dated November 23, 1992.
"Post-Petition Interest" means all interest accrued or accruing
after the commencement of any Insolvency Proceeding (and interest that would
accrue but for the commencement of any Insolvency Proceeding) in accordance with
and at the contract rate (including, without limitation, any rate applicable
upon default) specified in the agreement or instrument creating, evidencing or
governing any Senior Debt, whether or not, pursuant to applicable law or
otherwise, the claim for such interest is allowed as a claim in such Insolvency
Proceeding.
"Predecessor Security" of any particular Security means every
Security issued before, and evidencing all or a portion of the same debt as that
evidenced by, such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 307 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall
be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Preferred Stock" of any Person means Capital Stock of such Person
of any class or classes (however designated) that ranks prior, as to the payment
of dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Public Offering" means any underwritten public offering of Capital
Stock pursuant to a registration statement filed under the Securities Act.
"Purchase Agreement" means the Purchase Agreement, dated as of
August 7, 1997, between the Company and the Initial Purchasers, as such
agreement may be amended from time to time.
"Purchase Amount" has the meaning specified in the definition of
"Offer to Purchase".
"Purchase Date" has the meaning specified in the definition of
"Offer to Purchase".
"Purchase Price" has the meaning specified in the
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definition of "Offer to Purchase".
"Receivables" means receivables, chattel paper, instruments,
documents or intangibles evidencing or relating to the right to payment of
money.
"Receivables Sale" of any Person means any sale of Receivables of
such Person (pursuant to a purchase facility or otherwise), other than in
connection with a disposition of the business operations of such Person relating
thereto or a disposition of defaulted Receivables for purpose of collection and
not as a financing arrangement.
"Redeemable Interest" of any Person means any equity security of or
other ownership interest in such Person that by its terms (or by the terms of
any security into which it is convertible or for which it is exchange able) or
otherwise (including upon the occurrence of an event) matures or is required to
be redeemed (pursuant to any sinking fund obligation or otherwise) or is
convertible into or exchangeable for Debt or is redeemable at the option of the
holder thereof, in whole or in part, at any time prior to the final Stated
Maturity of the Securities.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Securities" means the Exchange Securities and all other
Securities sold or otherwise disposed of pursuant to an effective registration
statement under the Securities Act, together with their respective Successor
Securities.
"Registration Default" means the occurrence of any of the following
events: (i) the Company has not filed the Exchange Registration Statement or
Shelf Registration Statement on or before the date on which such registration
statement is required to be filed pursuant to the Exchange and Registration
Rights Agreement, (ii) the Exchange Registration Statement or Shelf Registration
Statement has not become effective or been declared effective by the Commission
on or before the date on which such registration statement is required to become
or be declared effective
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<PAGE> 36
under the requirements of the Exchange and Registration Rights Agreement, (iii)
the Exchange Offer has not been completed within 45 days after the initial
effective date of the Exchange Registration Statement relating to the Exchange
Offer (if the Exchange Offer is then required to be made under the Exchange and
Registration Rights Agreement) or (iv) any Exchange Registration Statement or
Shelf Registration Statement required to be filed pursuant the Exchange and
Registration Rights Agreement is filed and declared effective but shall
thereafter either be withdrawn by the Company or shall become subject to an
effective stop order issued pursuant to Section 8(d) of the Securities Act
suspending the effectiveness of such registration statement (except as
specifically permitted herein) without being succeeded immediately by an
additional registration statement filed and declared effective.
"Registration Default Period" means any period during which a
Registration Default has occurred and is continuing.
"Regular Record Date" for the interest payable on any Interest
Payment Date means February 1 and August 1 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Regulation S Certificate" means a certificate substantially in the
form set forth in Annex A.
"Regulation S Global Security" has the meaning specified in Section
201.
"Regulation S Legend" means a legend substantially in the form of
the legend required in the form of Security set forth in Section 202 to be
placed upon Regulation S Securities.
"Regulation S Securities" means all Securities required pursuant to
Section 306(c) to bear a Regulation S Legend. Such term includes the Regulation
S Global Security.
"Reinvested Amounts", with respect to any Asset Disposition, means
amounts invested, within one year from the later of the date of the related
Asset Disposition or
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the receipt of the Net Available Proceeds from such Asset Disposition, in assets
that will be used in the same or a substantially similar or related business of
the Company or any of its Wholly Owned Restricted Subsidiaries as conducted
prior to such Asset Disposition (determined by the Board of Directors in good
faith, as evidenced by a resolution of such Board of Directors).
"Related Person" of any Person means any other Person directly or
indirectly owning (a) 5% or more of the outstanding Common Stock of such Person
(or, in the case of a Person that is not a corporation, 5% or more of the equity
interest in such Person) or (b) 5% or more of the combined voting power of the
Voting Stock of such Person.
"Required Filing Dates" has the meaning specified in Section 1019.
"Restricted Global Security" has the meaning specified in Section
201.
"Restricted Payment" has the meaning specified in Section 1012.
"Restricted Period" means the period of 41 consecutive days
beginning on and including the later of (i) the day on which Securities are
first offered to persons other than distributors (as defined in Regulation S) in
reliance on Regulation S and (ii) the last original issue date of the
Securities.
"Restricted Securities" means all Securities required pursuant to
Section 306(c) to bear a Restricted Securities Legend. Such term includes the
Restricted Global Security.
"Restricted Securities Certificate" means a certificate
substantially in the form set forth in Annex B.
"Restricted Securities Legend" means a legend substantially in the
form of the legend required in the form of Security set forth in Section 202 to
be placed upon a Restricted Security.
"Restricted Subsidiary" means (i) at any date, a Subsidiary of the
Company that is not an Unrestricted Subsidiary as of such date and (ii) for any
period, a Subsidiary of the Company that for any portion of such period is not
an Unrestricted Subsidiary, provided that such
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term shall mean such Subsidiary only for such portion of such period.
"Rule 144A" means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Rule 144A Securities" means the Securities purchased by the Initial
Purchasers from the Company pursuant to the Purchase Agreement, other than the
Regulation S Securities.
"Securities" has the meaning specified in the first paragraph of the
recitals to this instrument and includes the Exchange Securities.
"Securities Act" means the Securities Act of 1933 (or any successor
statute), as it may be amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend or a
Regulation S Legend.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 306.
"Senior Debt" means with respect to the Company (i) all Debt and
other Obligations owing in respect of the New Credit Facility (including,
without limitation, all loans, letters of credit and other extensions of credit
thereunder and all expenses, fees, reimbursements, indemnities and other amounts
owing pursuant thereto), (ii) all Debt referred to in Clauses (i), (ii), (iii),
(v), (vii) or (viii) of the definition of Debt, whether Incurred on or prior to
the date of the Indenture or thereafter Incurred, and (iii) amendments,
modifications, renewals, extensions, refinancings and refundings of any such
Debt; provided, however, the following shall not constitute Senior Debt: (a) any
Debt owed to a Person when such Person is a Subsidiary of the Company, (b) any
Debt which by the terms of the instrument creating or evidencing the same is
pari passu with or subordinate in right of payment to the Securities, (c) any
Debt Incurred in violation of the Indenture or (d) any Debt which is subordinate
in right of payment in any respect to any other Debt of the Company. For
purposes of this definition, "Debt" includes any obligation to pay principal,
premium (if any), interest, penalties, reimbursement or indemnity amounts, fees
and
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<PAGE> 39
expenses (including Post-Petition Interest). To the extent any payment of
Senior Debt (whether by or on behalf of the Company, as proceeds of security or
enforcement or any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to a trustee, receiver or other
similar party under any bankruptcy, insolvency, receivership or similar law,
then if such payment is recovered by, or paid over to, such trustee, receiver or
other similar party, the Senior Debt or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred. All Senior Debt shall be and remain Senior Debt for all
purposes of the Indenture, whether or not subordinated in any Insolvency
Proceeding.
"Shares" means shares of the Company's Common Stock, $.001 par value
per share.
"Shelf Registration Statement" means a shelf registration statement
under the Securities Act filed by the Company, if required by, and meeting the
requirements of, the Exchange and Registration Rights Agreement (including
pursuant to Section 2(b) but excluding Section 2(c) thereof and the Market
Making Shelf Registration Statement (as defined therein), registering Original
Securities for resale.
"Special Interest" has the meaning specified in the form of the
Securities set forth in Section 202.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 308.
"Stated Maturity", when used with respect to any Security or any
instalment of interest thereon, means the date specified in such Security as the
fixed date on which the principal of such Security or such instalment of
interest, as the case may be, is due and payable.
"Subordinated Debt" means Debt of the Company as to which the
payment of principal of (and premium, if any) and interest and other payment
obligations in respect of such Debt shall be subordinate to the prior payment in
full of the Securities to at least the following extent: (i) no payments of
principal of (or premium, if any) or interest on or otherwise due in respect of
such Debt may be permitted for so long as any default in the payment of
principal (or premium, if any) or interest on the Securities exists; (ii)
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in the event that any other default exists with respect to the Securities that
with the passing of time or the giving of notice, or both, would constitute an
event of default, upon notice by Holders of 25% or more in principal amount of
the Securities to the Trustee, the Trustee shall have the right to give notice
to the Company and the holders of such Debt (or trustees or agents therefor) of
a payment blockage, and thereafter no payments of principal of (or premium, if
any) or interest on or otherwise due in respect of such Debt may be made for a
period of 179 days from the date of such notice; and (iii) such Debt may not (x)
provide for payments of principal of such Debt at the stated maturity thereof or
by way of a sinking fund applicable thereto or by way of any mandatory
redemption, defeasance, retirement or repurchase thereof by the Company
(including any redemption, retirement or repurchase which is contingent upon
events or circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon an event of default thereunder), in each case
prior to the final Stated Maturity of the Securities or (y) permit redemption or
other retirement (including pursuant to an offer to purchase made by the
Company) of such other Debt at the option of the holder thereof prior to the
final Stated Maturity of the Securities, other than a redemption or other
retirement at the option of the holder of such Debt (including pursuant to an
offer to purchase made by the Company) which is conditioned upon a change of
control of the Company pursuant to provisions substantially similar to those
described under "Change of Control" (and which shall provide that such Debt will
not be repurchased pursuant to such provisions prior to the Company's repurchase
of the Securities required to be repurchased by the Company pursuant to the
provisions described under "Change of Control").
"Subordinated Obligations" has the meaning specified in Section
1301.
"Subordinated Securities" mean securities distributed to the holders
of the Securities (i) in an Insolvency Proceeding, pursuant to a plan of
reorganization consented to by each class of Senior Debt or (ii) outside an
Insolvency Proceeding, but only if, in each case, all of the terms and
conditions of such securities (including, without limitation, term, tenor,
interest, amortization, subordination, covenants and defaults) are in all
material respects at least as favorable (and provide the same relative benefits)
to the holders of Senior Debt and, in the case of an Insolvency Proceeding, to
the holders of any
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security distributed in such Insolvency Proceeding on account of Senior Debt as
the terms and conditions of the Securities and the Indenture are and provide to
the holders of Senior Debt.
"Subsidiary" of any Person means (i) a corporation more than 50% of
the combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
"Successor Company" has the meaning specified in Section 801.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 307 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Tender Offer" means the Company's offer to purchase, commenced July
11, 1997, up to 2,857,142 Shares at a price of $38.50 per Share.
"Transactions" means (i) the Tender Offer, (ii) the repurchase by
the Company of Shares from Robert L. Smialek at $38.50 per Share pursuant to a
negotiated share purchase agreement entered into in July 1997, (iii) the
repurchase by the Company of Shares from Water Street at $38.50 per Share
pursuant to a negotiated share purchase agreement entered into in July 1997,
(iv) the entering into by the Company of the New Credit Facility and (v) the
offering of the Securities.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
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"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unpermitted Debt" has the meaning specified in Section 1020.
"Unrestricted Securities Certificate" means a certificate
substantially in the form set forth in Annex C.
"Unrestricted Subsidiary" means (i) at any date, a Subsidiary of the
Company that is an Unrestricted Subsidiary in accordance with the provisions of
Section 1020 and (ii) for any period, a Subsidiary of the Company that for any
portion of such period is an Unrestricted Subsidiary in accordance with the
provisions of Section 1020, provided that such term shall mean such Subsidiary
only for such portion of such period.
"U.S. Person" means (i) any individual resident in the United
States, (ii) any partnership or corporation organized or incorporated under the
laws of the United States, (iii) any estate of which an executor or
administrator is a U.S. Person (other than an estate governed by foreign law and
of which at least one executor or administrator is a non-U.S. Person who has
sole or shared investment discretion with respect to its assets), (iv) any trust
of which any trustee is a U.S. Person (other than a trust of which at least one
trustee is a non-U.S. Person who has sole or shared investment discretion with
respect to its assets and no beneficiary of the trust (and no settlor if the
trust is revocable) is a U.S. Person), (v) any agency or branch of a foreign
entity located in the United States, (vi) any non-discretionary or similar
account (other than an estate or trust) held by a dealer or other fiduciary for
the benefit or account of a U.S. Person, (vii) any discretionary or similar
account (other than an estate or trust) held by a dealer or other fiduciary
organized, incorporated or (if an individual) resident in the United States
(other than such an account held for the benefit or account of a non-U.S.
Person), (viii) any partnership or corporation organized or incorporated under
the laws of a foreign jurisdiction and
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formed by a U.S. Person principally for the purpose of investing in securities
not registered under the Securities Act (unless it is organized or incorporated,
and owned, by accredited investors within the meaning of Rule 501(a) under the
Securities Act who are not natural persons, estates or trusts); provided,
however, that the term "U.S. Person" does not include (A) a branch or agency of
a U.S. Person that is located and operating outside the United States for valid
business purposes as a locally regulated branch or agency engaged in the banking
or insurance business, (B) any employee benefit plan established and
administered in accordance with the law, customary practices and documentation
of a foreign country and (C) the international organizations set forth in
Section 902(o)(7) of Regulation S under the Securities Act and any other similar
international organizations, and their agencies, affiliates and pension plans.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president of such Person, whether or not designated by a
number or a word or words added before or after the title "vice president".
"Voting Stock" of any Person means Capital Stock of such Person
which ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
"Water Street" means Water Street Corporate Recovery Fund I, L.P.
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by the
Company or by one or more Wholly Owned Restricted Subsidiaries or by the Company
and one or more Wholly Owned Restricted Subsidiaries.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee such certificates and opinions as may be required under the Trust
Indenture Act or this Indenture. Each such certificate or
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opinion shall be given in the form of an Officers' Certificate, if to be given
by an officer of the Company, or an Opinion of Counsel, if to be given by
counsel, and shall comply with the requirements of the Trust Indenture Act and
any other requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to the
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matters upon which his certificate or opinion is based are erroneous. Any such
certificate or opinion of counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the
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authority of the Person executing the same, may also be proved in any other
manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security
Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities, provided that the Company may not set a record date for,
and the provisions of this paragraph shall not apply with respect to, the
giving or making of any notice, declaration, request or direction referred to in
the next paragraph. If any record date is set pursuant to this paragraph, the
Holders of Outstanding Securities on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities on such
record date. Nothing in this paragraph shall be construed to prevent the Company
from setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be cancelled
and of no effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Trustee in writing and to each
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Holder of Securities in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 502, (iii) any request to institute proceedings referred
to in Section 507(2) or (iv) any direction referred to in Section 512. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities on such
record date. Nothing in this paragraph shall be construed to prevent the Trustee
from setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be cancelled
and of no effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Trustee, at the Company's
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Company in writing and to
each Holder of Securities in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the
party hereto which sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities in the manner set forth in Section
106, on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwith-
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standing the foregoing, no Expiration Date shall be later than the 180th day
after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 105. Notices, Etc., to Trustee and the Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Trustee Administration, or at any other address previously furnished
in writing to the Holders or the Company by the Trustee, or, with respect
to notices by the Company, transmitted by facsimile transmission
(confirmed by guaranteed overnight courier) to the following facsimile
number: (212) 815-5915 or to any other facsimile number previously
furnished in writing to the Company by the Trustee, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to it addressed to
it at the address of the Company's principal office specified in the first
paragraph of this instrument or at any other address previously furnished
in writing to the Trustee by the Company or, with respect to notices by
the Trustee, transmitted by facsimile transmission (confirmed by
guaranteed overnight courier) to the following facsimile number: (614)
791-3197 or to any other facsimile number previously furnished in writing
to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to
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Holders of any event, such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to each Holder affected by such event, at its address as it appears in
the Security Register, not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be. Until such time as this Indenture shall be qualified under the Trust
Indenture Act, this Indenture, the Company and the Trustee shall be deemed for
all purposes hereof to be subject to and governed by the Trust Indenture Act to
the same extent as would be the case if this Indenture were so qualified on the
date hereof.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
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<PAGE> 50
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders of Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Purchase Date or Stated Maturity of any Security shall not be a Business Day,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the Interest Payment Date, Redemption Date
or Purchase Date or at the Stated Maturity, provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption
Date, Purchase Date or Stated Maturity, as the case may be.
ARTICLE TWO
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Security Forms
SECTION 201. Forms Generally; Initial Forms of Rule 144A
and Regulation S Securities.
The Securities and the Trustee's certificates of authentication
shall be in substantially the forms set forth in this Article, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution thereof.
The definitive Securities shall be printed, lithographed, engraved,
typewritten or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as determined by
the officers executing such Securities, as evidenced by their execution thereof.
Upon their original issuance, Rule 144A Securities shall be issued
in the form of one or more Global Securities registered in the name of DTC, as
Depositary, or its nominee and deposited with the Trustee, as custodian for DTC,
for credit by DTC to the respective accounts of beneficial owners of the
Securities represented thereby (or such other accounts as they may direct). Such
Global Securities, together with their Successor Securities which are Global
Securities other than the Regulation S Global Security are collectively herein
called the "Restricted Global Security".
Upon their original issuance, Regulation S Securities shall be
issued in the form of one or more Global Securities registered in the name of
DTC, as Depositary, or its nominee and deposited with the Trustee, as custodian
for DTC, for credit by DTC to the respective accounts of beneficial owners of
the Securities represented thereby (or such other accounts as they may direct),
provided that upon such deposit all such Securities shall be credited to or
through accounts maintained at DTC by or on behalf of Euroclear or Cedel. Such
Global Securities, together with their Successor Securities which are Global
Securities other than the Restricted Global Security are collectively herein
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<PAGE> 52
called the "Regulation S Global Security".
SECTION 202. Form of Face of Security.
[IF THE SECURITY IS A RESTRICTED SECURITY, THEN INSERT -- THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHO THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (2) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) (4) TO AN INSTITUTION THAT IS AN ACCREDITED INVESTOR WITHIN THE
MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (IF AVAILABLE), OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND, IN EACH CASE (1) THROUGH (5), IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER
JURISDICTIONS.]
[IF THE SECURITY IS A REGULATION S SECURITY, THEN INSERT -- THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD OR DELIVERED IN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON, UNLESS
THIS SECURITY IS REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS THEREOF IS AVAILABLE.]
[IF THE SECURITY IS A GLOBAL SECURITY, THEN INSERT -- THIS SECURITY
IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS
SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND
NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME
OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
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<PAGE> 53
[IF THE SECURITY IS A GLOBAL SECURITY AND THE DEPOSITORY TRUST
COMPANY IS TO BE THE DEPOSITARY THEREFOR, THEN INSERT -- UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
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<PAGE> 54
INSILCO CORPORATION
10.25% SENIOR SUBORDINATED NOTES DUE 2007
[If Restricted Global Security - CUSIP No. 457659AG5]
[If Regulation S Security - CUSIP No. U45755AA0]
[If Regulation S Global Security - ISIN No. USU45755AA03]
No. __________ $________
INSILCO CORPORATION, a corporation duly organized and existing under
the laws of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to __________________, or registered assigns,
the principal sum of ______________ Dollars (such amount the "principal amount"
of this Security) [IF THE SECURITY IS A GLOBAL SECURITY, THEN INSERT -- , or
such other principal amount (which, when taken together with the principal
amounts of all other Outstanding Securities, shall not exceed $150,000,000 in
the aggregate at any time) as may be set forth in the records of the Trustee
hereinafter referred to in accordance with the Indenture,] on August 15, 2007
and to pay interest thereon from August 12, 1997 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on February 15 and August 15 in each year, commencing February 15,
1998, at the rate of 10.25% per annum, until the principal hereof is paid or
made available for payment; provided that any amount of principal of (and
premium, if any) and interest on this Security which is overdue shall bear
interest (to the extent that payment thereof shall be legally enforceable) at
the rate of 12.25% per annum, from the date such amount is due to the day it is
paid or made available for payment, and such overdue interest shall be payable
on demand [IF THE SECURITY IS AN ORIGINAL SECURITY, THEN INSERT -- ; provided
further that, if any Registration Default occurs under the Exchange and
Registration Rights Agreement, as liquidated damages for such Registration
Default, special cash interest ("Special Interest"), in addition to the Base
Interest, shall accrue and be payable during the Registration Default Period for
such Registration Default at a per annum rate of 0.25% for the first 90 days of
such Registration Default Period, at a per annum rate of 0.50% for the second 90
days of such Registration Default Period, at a per annum rate of 0.75% for the
third 90 days of such Registration Default Period and at a per annum rate of
1.0% thereafter for the remaining portion of such
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<PAGE> 55
Registration Default Period].
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be February 1 or August 1 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date [IF THE SECURITY
IS AN ORIGINAL SECURITY, THEN INSERT --, provided that any accrued and unpaid
interest (including Special Interest) on this Security upon the issuance of an
Exchange Security in exchange for this Security shall cease to be payable to the
Holder hereof and shall be payable on the next Interest Payment Date for such
Exchange Security to the Holder thereof on the related Regular Record Date]. Any
such interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on the relevant Regular Record Date and may either
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture. Interest on this Security
shall be computed on the basis set forth in the Indenture.
Payment of the principal of (and premium, if any) and interest on
this Security will be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New York, New York and at
any other office or agency maintained by the Company for such purpose, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register; provided further that all payments of the principal (and
premium, if any) and interest on Securities, the Holders of which have given
wire transfer instructions
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<PAGE> 56
to the Company or its agent at least 10 Business Days prior to the applicable
payment date will be required to be made by wire transfer of immediately
available funds to the accounts specified by such Holders in such instructions.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
INSILCO CORPORATION
[SEAL]
By___________________________________
Attest:
______________________________
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities of the
Company designated as its 10.25% Senior Subordinated Notes Due 2007 (herein
called the "Securities"), limited in aggregate principal amount to $150,000,000,
issued and to be issued under an Indenture, dated as of August 12, 1997 (herein
called the "Indenture", which term shall have the meaning assigned to it in such
instrument), among the Company and The Bank of New York, as
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<PAGE> 57
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities, are, and
are to be, authenticated and delivered.
The Securities are subject to redemption upon not less than 30 nor
more than 60 days' notice by mail, to each Holder of Securities to be redeemed
at such Holder's address appearing in the Security Register, in amounts of
$1,000 or an integral multiple of $1,000 principal amount, at the following
Redemption Prices (expressed as percentages of principal amount) plus any
accrued but unpaid interest (including Special Interest) to but excluding the
Redemption Date if redeemed during the 12-month period beginning on August 15 of
each of the years indicated below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002 105.125%
2003 103.417%
2004 101.708%
2005 and thereafter 100.000%
</TABLE>
provided that interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Regular Record Dates referred to on the face hereof.
Except as described in the next paragraph, the Securities do not
have the benefit of any mandatory redemption or sinking fund obligations.
The Indenture provides that, subject to certain conditions, if (i)
certain Net Available Proceeds are available to the Company as a result of Asset
Dispositions or (ii) a Change of Control occurs, the Company shall be required
to make an Offer to Purchase for all or a specified portion of the Securities.
In the event of redemption or purchase pursuant to an Offer to
Purchase of this Security in part only, a new Security or Securities of like
tenor for the unredeemed or
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<PAGE> 58
unpurchased portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal
of all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (i)
the entire indebtedness of this Security or (ii) certain restrictive covenants
and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
The Securities shall be subordinated in right of payment to Senior
Debt of the Company as provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registra tion of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in principal amount of the
Securities at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect
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of such Event of Default as Trustee and offered the Trustee reasonable indemnity
and the Trustee shall not have received from the Holders of a majority in
principal amount of Securities at the time Outstanding a direction inconsistent
with such request and shall have failed to institute any such proceeding for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to certain suits described in the Indenture, including any suit
instituted by the Holder of this Security for the enforcement of any payment of
principal hereof or any premium or interest hereon on or after the respective
due dates expressed herein (or, in the case of redemption, on or after the
Redemption Date or, in the case of any purchase of this Security required to be
made pursuant to an Offer to Purchase, on the Purchase Date).
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons
in denominations of $1,000 principal amount and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may
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require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed
in accordance with the laws of the State of New York.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Company pursuant to Section 1017 or 1018 of the Indenture, check the box:
/ /
If you want to elect to have only a part of this Security purchased
by the Company pursuant to Section 1017 or 1018 of the Indenture, state the
principal amount of this Security you want to elect to have so purchased by the
Company: $___________
Dated: Your Signature:______________________
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee:________________________________________
Notice: Signature(s) must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Trustee, which requirements will include membership or
participation in STAMP or such other "signature
guarantee program" as may be determined by the Trustee
in
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addition to, or in substitution for
STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
SECTION 204. Form of Trustee's Certificate of
Authentication.
This is one of the Securities referred to in the within-mentioned
Indenture.
_______________________________,
as Trustee
Dated: By ___________________________
Authorized Signatory
ARTICLE THREE
The Securities
SECTION 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $150,000,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section 303,
304, 305, 306, 307, 906, 1108 or in connection with an Offer to Purchase
pursuant to Section 1017 or 1018. The Company may issue Exchange Securities from
time to time pursuant to an Exchange Offer, in each case pursuant to a Board
Resolution and subject to Section 303, in authorized denominations in exchange
for a like principal amount of Original Securities. Upon any such exchange the
Original Securities shall be cancelled in accordance with Section 310 and shall
no longer be deemed Outstanding for any purpose. In no event shall the aggregate
principal amount of Original Securities and Exchange Securities Outstanding
exceed $150,000,000.
The Securities shall be known and designated as the "10.25% Senior
Subordinated Notes due 2007" of the Company. Their Stated Maturity shall be
August 15, 2007 and they shall bear interest at the rate of 10.25% per annum
(the "Base Interest"), from August 12, 1997 or from the most recent Interest
Payment Date to which interest has been paid
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or duly provided for, as the case may be, payable semi-annually on February 15
and August 15, commencing February 15, 1998, until the principal thereof is paid
or made available for payment; provided that any amount of principal of (and
premium, if any) and interest on the Securities which is overdue shall bear
interest (to the extent that payment thereof shall be legally enforceable) at
the rate of 12.25% per annum, from the date such amount is due to the day it is
paid or made available for payment, and such overdue interest shall be payable
on demand; provided, further, with respect to Original Securities, that if a
Registration Default occurs, as liquidated damages for such Registration
Default, Special Interest, in addition to the Base Interest, shall accrue and be
payable during the Registration Default Period for such Registration Default at
a per annum rate of 0.25% for the first 90 days of such Registration Default
Period, at a per annum rate of 0.50% for the second 90 days of such Registration
Default Period, at a per annum rate of 0.75% for the third 90 days of such
Registration Default Period and at a per annum rate of 1.0% thereafter for the
remaining portion of such Registration Default Period. The Company shall provide
written notice to the Trustee of any Registration Default and of the end of the
Registration Default Period for such Registration Default. Accrued Special
Interest, if any, shall be paid in cash in arrears semi-annually on February 15
and August 15 in each year.
The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Company in the
Borough of Manhattan, The City of New York, New York, maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register; provided further
that all payments of the principal (and premium, if any) and interest on
Securities, the Holders of which have given wire transfer instructions to the
Company or its agent at least 10 Business Days prior to the applicable payment
date will be required to be made by wire transfer of immediately available funds
to the accounts specified by such Holders in such instructions.
The Securities shall be subject to redemption as provided in Article
Eleven.
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The Securities shall be subject to repurchase by the Company
pursuant to an Offer to Purchase as provided in Sections 1017 and 1018.
The Securities shall not have the benefit of any sinking fund
obligations.
The Securities shall be subject to defeasance at the option of the
Company as provided in Article Twelve.
Unless the context otherwise requires, the Original Securities and
the Exchange Securities shall constitute one series for all purposes under the
Indenture, including with respect to any amendment, waiver, acceleration or
other Act of Holders, redemption or Offer to Purchase.
SECTION 302. Denominations.
The Securities shall be issuable only in registered form without
coupons, and only in denominations of $1,000 principal amount and, any integral
multiple thereof.
SECTION 303. Execution, Authentication, Delivery
and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, Chief Executive Officer,
its President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwith standing that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture
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provided and not otherwise.
At any time and from time to time after the execution and delivery
of this Indenture and after the effectiveness of a registration statement under
the Securities Act with respect thereto, the Company may deliver Exchange
Securities executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such Exchange
Securities and a like principal amount of Original Securities for cancellation
in accordance with Section 310 of this Indenture, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. Prior to
authenticating such Exchange Securities, and accepting any additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, if requested, and (subject to Section 601)
shall be fully protected in relying upon, an Opinion of Counsel stating in
substance
(a) that all conditions hereunder precedent to the authentication
and delivery of such Exchange Securities have been complied with and that
such Exchange Securities, when such Securities have been duly
authenticated and delivered by the Trustee (and subject to any other
conditions specified in such Opinion of Counsel), have been duly issued
and delivered and will constitute valid and legally binding obligations
of the Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and
(b) that the issuance of the Exchange Securities in exchange for
Original Securities has been effected in compliance with the Securities
Act.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence,
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and the only evidence, that such Security has been duly authenticated and
delivered hereunder.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities, which Securities are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities, in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution thereof.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities, upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 305. Global Securities.
(a) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated by the Company for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (i) such Depositary (A) has notified the Company that it is
unwilling
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or unable to continue as Depositary for such Global Security or (B)
has ceased to be a clearing agency registered as such under the Exchange Act,
and in either case the Company fails to appoint a successor Depositary, (ii) the
Company, at its option, executes and delivers to the Trustee a Company Order
stating that it elects to cause the issuance of the Securities in certificated
form and that all Global Securities shall be exchanged in whole for Securities
that are not Global Securities (in which case such exchange shall be effected by
the Trustee) or (iii) there shall have occurred and be continuing an Event of
Default or any event which after notice or lapse of time or both would be an
Event of Default with respect to such Global Security.
(c) If any Global Security is to be exchanged for other Securities
or cancelled in whole, it shall be surrendered by or on behalf of the
Depositary or its nominee to the Trustee, as Security Registrar, for exchange or
cancellation as provided in this Article Three. If any Global Security is to be
exchanged for other Securities or cancelled in part, or if another Security is
to be exchanged in whole or in part for a beneficial interest in any Global
Security, then either (i) such Global Security shall be so surrendered for
exchange or cancellation as provided in this Article Three or (ii) the principal
amount thereof shall be reduced or increased by an amount equal to the portion
thereof to be so exchanged or cancelled, or equal to the principal amount of
such other Security to be so exchanged for a beneficial interest therein, as the
case may be, by means of an appropriate adjustment made on the records of the
Trustee, as Security Registrar, whereupon the Trustee, in accordance with the
Applicable Procedures, shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Security, the Trustee shall, subject to
Section 306(c) and as otherwise provided in this Article Three, authenticate and
deliver any Securities issuable in exchange for such Global Security (or any
portion thereof) to or upon the order of, and registered in such names as may be
directed by, the Depositary or its authorized representative. Upon the request
of the Trustee in connection with the occurrence of any of the events specified
in the preceding paragraph, the Company shall promptly make available to the
Trustee a reasonable supply of Securities that are not in the form of Global
Securities. The Trustee shall be entitled to rely upon any order, direction or
request of the Depositary or its authorized representative which is given or
made pursuant to this
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Article Three if such order, direction or request is given or made in accordance
with the Applicable Procedures.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article Three or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global Security,
unless such Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof.
(e) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under the
Indenture and the Securities, and owners of beneficial interests in a Global
Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security will be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Agent Members.
SECTION 306. Registration, Registration of Transfer and
Exchange Generally; Restrictions on Transfer
and Exchange; Securities Act Legends.
(a) Registration, Registration of Transfer and Exchange Generally.
The Company shall cause to be kept at the Corporate Trust Office of the Trustee
a register (the register maintained in such office and in any other office or
agency of the Company designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers and exchanges of Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers and exchanges of Securities as herein provided. Such
Security Register shall distinguish between Original Securities and Exchange
Securities.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations, of a
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like aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.
At the option of the Holder, and subject to the other provisions of
this Section 306, Securities may be exchanged for other Securities of any
authorized denominations, of a like aggregate principal amount, upon surrender
of the Securities to be exchanged at any such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the same
debt, and (except for the differences between Original Securities and Exchange
Securities provided for herein) entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 303, 304, 305, 306, 906, 1017, 1018 or 1108 not
involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 1104 and ending at the close of
business on the day of such mailing, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
(b) Certain Transfers and Exchanges. Notwithstanding any other
provision of this Indenture or the
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Securities, transfers and exchanges of Securities and beneficial interests in a
Global Security of the kinds specified in this Section 306(b) shall be made only
in accordance with this Section 306(b).
(i) Restricted Global Security to Regulation S Global Security.
If the owner of a beneficial interest in the Restricted Global Security
wishes at any time to transfer such interest to a Person who wishes to
acquire the same in the form of a beneficial interest in the Regulation S
Global Security, such transfer may be effected only in accordance with the
provisions of this Clause (b)(i) and Clause (b)(iv) below and subject to
the Applicable Procedures. Upon receipt by the Trustee, as Security
Registrar, of (A) an order given by the Depositary or its authorized
representative directing that a beneficial interest in the Regulation S
Global Security in a specified principal amount be credited to a specified
Agent Member's account and that a beneficial interest in the Restricted
Global Security in an equal principal amount be debited from another
specified Agent Member's account and (B) a Regulation S Certificate (in
the form attached hereto as Annex A), satisfactory to the Trustee and duly
executed by the owner of such beneficial interest in the Restricted Global
Security or his attorney duly authorized in writing, then the Trustee, as
Security Registrar but subject to Clause (b)(iv) below, shall reduce the
principal amount of the Restricted Global Security and increase the
principal amount of the Regulation S Global Security by such specified
principal amount as provided in Section 305(c).
(ii) Regulation S Global Security to Restricted Global Security.
If the owner of a beneficial interest in the Regulation S Global Security
wishes at any time to transfer such interest to a Person who wishes to
acquire the same in the form of a beneficial interest in the Restricted
Global Security, such transfer may be effected only in accordance with
this Clause (b)(ii) and subject to the Applicable Procedures. Upon receipt
by the Trustee, as Security Registrar, of (A) an order given by the
Depositary or its authorized representative directing that a beneficial
interest in the Restricted Global Security in a specified principal amount
be credited to a specified Agent Member's account and that a beneficial
interest in the
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Regulation S Global Security in an equal principal amount be debited from
another specified Agent Member's account and (B) if such transfer is to
occur during the Restricted Period, a Restricted Securities Certificate
(in the form attached hereto as Annex B), satisfactory to the Trustee and
duly executed by the owner of such beneficial interest in the Regulation S
Global Security or his attorney duly authorized in writing, then the
Trustee, as Security Registrar, shall reduce the principal amount of the
Regulation S Global Security and increase the principal amount of the
Restricted Global Security by such specified principal amount as provided
in Section 305(c).
(iii) Exchanges between Global Security and Non-Global Security.
A beneficial interest in a Global Security may be exchanged for a Security
that is not a Global Security as provided in Section 305, provided that,
if such interest is a beneficial interest in the Restricted Global
Security, or if such interest is a beneficial interest in the Regulation S
Global Security and such exchange is to occur during the Restricted
Period, then such interest shall be exchanged for a Restricted Security
(subject in each case to Section 306(c)).
(iv) Regulation S Global Security to be Held Through Euroclear or
Cedel during Restricted Period. The Company shall use its best efforts to
cause the Depositary to ensure that, until the expiration of the
Restricted Period, beneficial interests in the Regulation S Global
Security may be held only in or through accounts maintained at the
Depositary by Euroclear or Cedel (or by Agent Members acting for the
account thereof), and no person shall be entitled to effect any transfer
or exchange that would result in any such interest being held otherwise
than in or through such an account; provided that this Clause (b)(iv)
shall not prohibit any transfer or exchange of such an interest in
accordance with Clause (b)(ii) above.
(c) Securities Act Legends. Rule 144A Securities and their Successor
Securities shall bear a Restricted Securities Legend, and Regulation S
Securities and their Successor Securities shall bear a Regulation S Legend,
subject to the following:
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(i) subject to the following Clauses of this Section 306(c), a
Security or any portion thereof which is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear the
Securities Act Legend borne by such Global Security while represented
thereby;
(ii) subject to the following Clauses of this Section 306(c), a
new Security which is not a Global Security and is issued in exchange for
another Security (including a Global Security) or any portion thereof,
upon transfer or otherwise, shall bear the Securities Act Legend borne by
such other Security, provided that, if such new Security is required
pursuant to Section 306(b)(iii) to be issued in the form of a Restricted
Security, it shall bear a Restricted Securities Legend and, if such new
Security is so required to be issued in the form of a Regulation S
Security, it shall bear a Regulation S Legend;
(iii) Registered Securities shall not bear a Securities Act
Legend;
(iv) at any time after the Securities may be freely transferred
without registration under the Securities Act or without being subject to
transfer restrictions pursuant to the Securities Act, a new Security which
does not bear a Securities Act Legend may be issued in exchange for or in
lieu of a Security (other than a Global Security) or any portion thereof
which bears such a legend if the Trustee has received an Unrestricted
Securities Certificate, satisfactory to the Trustee and duly executed by
the Holder of such legended Security or his attorney duly authorized in
writing, and after such date and receipt of such certificate, the Trustee
shall authenticate and deliver such a new Security in exchange for or in
lieu of such other Security as provided in this Article Three;
(v) a new Security which does not bear a Securities Act Legend
may be issued in exchange for or in lieu of a Security (other than a
Global Security) or any portion thereof which bears such a legend if, in
the Company's judgment, placing such a legend upon such new Security is
not necessary to ensure compliance with the registration requirements of
the Securities Act, and the Trustee, at the direction of the Company,
shall authenticate and deliver such a new Security as
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provided in this Article Three; and
(vi) notwithstanding the foregoing provisions of this Section
306(c), a Successor Security of a Security that does not bear a particular
form of Securities Act Legend shall not bear such form of legend unless
the Company has reasonable cause to believe that such Successor Security
is a "restricted security" within the meaning of Rule 144, in which case
the Trustee, at the direction of the Company, shall authenticate and
deliver a new Security bearing a Restricted Securities Legend in exchange
for such Successor Security as provided in this Article Three.
The Trustee shall have no obligation or duty to monitor, determine
or inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Agent Members or
beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION 307. Mutilated, Destroyed, Lost and
Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by either of
them to save each of them and any agent of any of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies of any Holder with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 308. Payment of Interest; Interest
Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the
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Securities (or their respective Predecessor Securities) are registered at
the close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this Clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than
10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid, to
each Holder of Securities at such Holder's address as it appears in the
Security Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Securities (or
their respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon
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registration of transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to accrue, which were
carried by such other Security.
SECTION 309. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 308) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 310. Cancellation.
All Securities surrendered for payment, redemption, repurchase
pursuant to any Offer to Purchase, registration of transfer or exchange shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Securities held by the Trustee shall be
disposed of by the Trustee and the Trustee will certify as to such disposal to
the reasonable satisfaction of the Company; provided, however, that the Trustee
shall in no event be required to destroy any Securities. The Trustee shall
provide the Company a list of all Securities that have been cancelled from time
to time as requested by the Company.
SECTION 311. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months; provided, however, that any Special
Interest on Original Securities and any interest on overdue principal of (and
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premium, if any) and interest on any Securities, shall be computed on the basis
of a 365-day or 366-day year, as the case may be, and the number of days
actually elapsed during the relevant Registration Default Period or the period
of default in the payment of such overdue principal (and premium, if any) or
interest.
SECTION 312. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the "CUSIP" numbers.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 307 and
(ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust,
as provided in Section 1003) have been delivered to the Trustee for
cancellation; or
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(B) all such Securities not theretofore
delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at
their Stated Maturity within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
in trust for the purpose an amount sufficient to pay and discharge
the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal (and premium, if
any) and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of
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Section 1003, all money deposited with the Trustee pursuant to Section 401
shall be held in trust and applied by it, in accordance with the provisions of
the Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee.
ARTICLE FIVE
Remedies
SECTION 501. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of any interest upon any Security
when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security at its Maturity; or
(3) failure to perform or comply with the provisions of
Sections 801, 1017 and 1018; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with) or the Securities, and
continuance of such default or breach for a period of 60 days after
there has been given, in the manner provided in Section 106, to the
Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
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(5) a default or defaults under the terms of any bond(s),
debenture(s), note(s) or other evidence(s) of, or obligations
constituting, Debt by the Company or any Restricted Subsidiary, or
under any mortgage(s), indenture(s), agreement(s) or instrument(s)
under which there may be issued or existing or by which there may be
secured or evidenced, any Debt of the Company or any Restricted
Subsidiary, in each case with a principal or similar amount then
outstanding, individually or in the aggregate, in excess of $15
million, whether such Debt now exists or is hereafter Incurred, which
default or defaults constitute a failure to pay any portion of the
principal or similar amount of such Debt when due and payable after the
expiration of any applicable grace period with respect thereto or will
have resulted in such Debt becoming or being declared due and payable
prior to the date on which it would otherwise have become due and
payable; or
(6) a final judgment or final judgments (not subject to
appeal) for the payment of money are entered against the Company or any
Restricted Subsidiary in an aggregate amount in excess of $15 million
(in excess of applicable insurance coverage) by a court or courts of
competent jurisdiction, which judgments remain unstayed, undischarged
or unbonded for a period of 60 days after the entry of such judgment or
judgments; or
(7) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company or any
Restricted Subsidiary in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or (B) a decree or order adjudging the Company or any
Restricted Subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Restricted
Subsidiary under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or any Restricted Subsidiary or
of any substantial part of the property of the Company or any
Restricted Subsidiary, or ordering the winding up or liquidation of the
affairs of the Company or any Restricted Subsidiary, and the
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continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(8) the commencement by the Company or any Restricted
Subsidiary of a voluntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by the Company or any Restricted
Subsidiary to the entry of a decree or order for relief in respect of
the Company or any Restricted Subsidiary in an involuntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against the Company
or any Restricted Subsidiary or the filing by the Company or any
Restricted Subsidiary of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or
the consent by the Company or any Restricted Subsidiary to the filing
of such a petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
similar official of the Company or any Restricted Subsidiary or of any
sub stantial part of the property of the Company or any Restricted
Subsidiary, or the making by the Company or any Restricted Subsidiary
of an assignment for the benefit of creditors, or the admission by the
Company or any Restricted Subsidiary in writing of its inability to pay
its debts generally as they become due, or the taking of corporate
action by the Company or any Restricted Subsidiary in furtherance of
any such action.
SECTION 502. Acceleration of Maturity; Rescission
and Annulment.
If an Event of Default (other than an Event of Default
specified in Section 501(7) or (8)) occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities may declare the principal of all the Securities to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration such principal
and any accrued interest shall become immediately due and paya-
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ble. If an Event of Default specified in Section 501(7) or (8) occurs and is
continuing, the principal of and any accrued interest on the Securities then
Outstanding shall automatically, and without any declaration or other action on
the part of the Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
a majority in principal amount of the Outstanding Securities, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, on) any
Securities which have become due otherwise than by such
declaration of acceleration (including any Securities required
to have been purchased on the Purchase Date pursuant to an
Offer to Purchase made by the Company) and any interest
thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate provided
therefor in the Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel;
and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
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SECTION 503. Collection of Indebtedness and Suits
for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof or, with
respect to any Security required to have been purchased pursuant to an
Offer to Purchase made by the Company, at the Purchase Date thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
principal (and premium, if any) and interest that is overdue, at the rate
provided therefor in the Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company or
any other obligor upon the Securities or the property of the Company or its
creditors, the Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions, including participation as
a member, voting or otherwise, of
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any committee of creditors, authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Notwithstanding the foregoing, no provision of this Indenture
shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding; provided, however, that the Trustee may, on
behalf of such Holders, vote for the election of a trustee in bankruptcy or
similar official and be a member of a creditors' or other such committee.
SECTION 505. Trustee May Enforce Claims
Without Possession of Securities.
All rights of action and claims under this Inden ture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. Application of Money Collected.
Subject to Article 13 and applicable law, any money collected
by the Trustee pursuant to this Article
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shall be applied in the following order, at the date or dates fixed by the
Trustee upon prior written notice to the Company and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the
Trustee under Section 607;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest, respectively; and
THIRD: The balance, if any, to the Company.
SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
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(5) no direction inconsistent with such written request has
been given to the Trustee during such 60- day period by the Holders of
a majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to
Receive Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, but
subject to Article Thirteen hereof, the Holder of any Security shall have the
right, which is absolute and unconditional, to receive payment of the principal
of (and premium, if any) and (subject to Section 308) any interest on such
Security on the respective Stated Maturities expressed in such Security (or, in
the case of redemption or repurchase, on the Redemption Date or the Purchase
Date, as the case may be) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 307, no
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right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with
any rule of law or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount
of the Outstanding Securities may on behalf of the Holders of all the Securities
waive any past default hereunder and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to
have been purchased pursuant to an Offer to Purchase made by the
Company),
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or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, a court may require any party litigant in
such suit to file an undertaking to pay the costs of such suit, and may assess
costs against any such party litigant, in the manner and to the extent provided
in the Trust Indenture Act; provided, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the Company,
the Trustee or any Holder, or group of Holders, holding in the aggregate at
least 10% in principal amount of the Outstanding Securities or in any suit
instituted by any Holder for the enforcement of principal of (and premium, if
any) or interest on any Security on or after the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on or after the
Redemption Date or, in the case of any purchase required to be made pursuant to
an Offer to Purchase, on or after the Purchase Date).
SECTION 515. Waiver of Stay, Usury or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, usury or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Trustee,
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but will suffer and permit the execution of every such power as though no such
law had been enacted.
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder or thereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it. Whether or not herein or therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default
hereunder as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(4), no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time or both would become,
an Event of Default.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper
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party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the
advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or
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negligence on the part of any agent or attorney appointed with due care
by it hereunder; and
(h) the Trustee shall not be deemed to have notice or
knowledge of any matter unless an officer of the Trustee regularly
employed in its Corporate Trust Office has actual knowledge thereof or
unless written notice thereof is received by, or provided pursuant to
the provisions of Section 105 to, the Trustee at its Corporate Trust
Office and such notice refers to the Securities generally, the Company
or this Indenture.
SECTION 604. Not Responsible for Recitals
or Issuance of Securities.
The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, shall be taken as the statements
of the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or the Securities except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder. The Trustee shall not be accountable for
the use or application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company or the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and, subject to Sections 608 and 613, may otherwise deal with the Company and
any other obligor upon the Securities with the same rights it would have if it
were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
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The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee or any predecessor Trustees and
their agents for, and to hold it harmless against, any loss, liability
or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration
of this trust, including the costs and expenses, of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The Trustee shall have a lien prior to the Securities as to
all property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 607, except with respect to funds
held in trust for the benefit of the Holders of particular Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501, the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination
of this Indenture.
SECTION 608. Disqualification; Conflicting Interests.
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If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
a Person that is eligible pursuant to the Trust Indenture Act to act as such,
has a combined capital and surplus of at least $50 million and has its Corporate
Trust Office located in the Borough of Manhattan, The City of New York. If such
Person publishes reports of condition at least annually, pursuant to law or to
the requirements of its supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Person shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 610. Resignation and Removal;
Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 611.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with
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Section 608 after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
(2) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so appointed
by the Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bonafide Holder of a Security for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided
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in Section 106. Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. Merger, Conversion, Consolidation
or Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
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SECTION 613. Preferential Collection
of Claims Against Company.
If and when the Trustee shall be or become a creditor of the
Company or any other obligor upon the Securities, the Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company or any such other obligor.
SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents
which shall be authorized to act on behalf of the Trustee to authenticate
Securities issued upon original issue and upon exchange, registration of
transfer, partial redemption or partial purchase or pursuant to Section 307, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if such Securities had
been authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50 million and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be con-
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solidated, or any corporation resulting from any merger, conversion or
consolidation to which such Authenticating Agent shall be a party, or any
corporation succeeding to the corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating Agent, provided
such corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment first-class postage prepaid, to each Holder of Securities at
such Holder's address as it appears in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section, and
the Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities described in the
within-mentioned Indenture.
------------------------------,
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As Trustee
Dated: By___________________________,
As Authenticating Agent
By___________________________
Authorized Officer
SECTION 615. Trustee's Application for Instructions from
the Company.
Any application by the Trustee for written instructions from
the Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee
Names and Addresses of Holders.
The Company will furnish or cause to be furnished
to the Trustee
(a) semi-annually, not more than 15 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably
require, of the names and ad-
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dresses of the Holders as of such Regular Record Date; and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information;
Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of any of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 703. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto. The Trustee shall promptly deliver to the Company a copy of
any reports it delivers to Holders pursuant to Section 703.
(b) A copy of each such report shall, at the time
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of such transmission to Holders, be filed by the Trustee with each stock
exchange upon which the Securities are listed, with the Commission and with the
Company. The Company will notify the Trustee when the Securities are listed on
any stock exchange.
SECTION 704. Reports by the Company.
The Company shall file with the Trustee and the Commission,
and transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 705. Officers' Certificate with Respect to Change
in Interest Rates.
Within five Business Days after the day on which any Special
Interest begins accruing, and within five days after any Special Interest ceases
to accrue, the Company shall deliver an Officers' Certificate to the Trustee
stating the interest rate thereupon in effect for the Unregistered Securities
(if any are Outstanding) and the date on which such rate became effective.
ARTICLE EIGHT
Merger, Consolidation, Etc.
SECTION 801. Mergers, Consolidations and Certain
Transfers, Leases and Acquisitions of Assets.
The Company (a) shall not, and shall not permit
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any Restricted Subsidiary to, consolidate with or merge into any Person,
provided that this Clause (a) shall not prohibit any such consolidation or
merger by a Restricted Subsidiary if (i) such Restricted Subsidiary ceases to be
a Restricted Subsidiary in such consolidation or merger or (ii) such
consolidation or merger is with or into the Company or another Restricted
Subsidiary; (b) shall not permit any Person other than a Restricted Subsidiary
to consolidate with or merge into (i) the Company or (ii) any Restricted
Subsidiary, provided that this Clause (b) shall not prohibit any such
consolidation or merger with or into a Restricted Subsidiary if such Restricted
Subsidiary ceases to be a Restricted Subsidiary in such consolidation or merger;
and (c) shall not, directly or indirectly, in one transaction or a series of
related transactions, transfer, convey, sell, lease or otherwise dispose of all
or substantially all of the properties and assets of the Company and its
Subsidiaries on a consolidated basis, unless, in any such transaction (or
series) contemplated by Clause (a), (b) or (c) above:
(1) immediately before and after giving effect to such
transaction (or series of related transactions) and treating any Debt
Incurred by the Company or a Subsidiary of the Company as a result of
such transaction (or series of related transactions) as having been
Incurred by the Company or such Subsidiary at the time of such
transaction (or series of related transactions), no Event of Default,
and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have occurred and be continuing;
(2) in case the Company shall consolidate with or merge into
another Person or shall directly or indirectly, in one or a series of
related transactions, transfer, convey, sell, lease or otherwise
dispose of all or substantially all of its properties and assets as an
entirety, the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by transfer, conveyance,
sale, lease or other disposition all or substantially all of the
properties and assets of the Company and its Subsidiaries on a
consolidated basis (for purposes of this Article Eight, a "Successor
Company") shall be a corporation, partner ship, limited liability
company or trust, shall be organized and validly existing under the
laws of the United States of America, any State thereof or the
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District of Columbia and shall expressly assume by an indenture
supplemental hereto executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities
and the performance of every covenant of this Indenture on the part of
the Company to be performed or observed;
(3) either (x) the Company or, if applicable, the Successor
Company, as the case may be, would, at the time of such transaction (or
series of related transactions) and after giving proforma effect
thereto as if such transaction (or series of related transactions) had
occurred at the beginning of the most recently ended four full fiscal
quarter period for which annual or quarterly financial statements are
publicly available immediately preceding the date of such transaction
(or series of related transactions), have been permitted to Incur at
least $1.00 of additional Debt pursuant to the Consolidated EBITDA
Coverage Ratio test set forth in the first paragraph of Section 1008;
(4) if, as a result of any such transaction (or series of
related transactions), property and assets of the Company would become
subject to a Lien which would not be permitted by Section 1014, the
Company or, if applicable, the Successor Company, as the case may be,
will have taken such steps as necessary effectively to secure the
Securities equally and ratably with (or prior to, as provided in
Section 1014) Debt secured by such Lien; and
(5) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
transaction (or series of related transactions) and, if a supplemental
indenture is required in connection with such transaction (or series of
related transactions), such supplemental indenture complies with this
Article and that all conditions precedent herein provided for relating
to such transaction (or series of related transactions) have been
complied with, and, with respect to such Officers' Certificate, setting
forth in reasonable detail the calculations referred to in Clause (3),
if applicable, above.
SECTION 802. Successor Substituted.
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Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any transfer, conveyance, sale, lease or other
disposition of all or substantially all of the properties and assets of the
Company and its Subsidiaries on a consolidated basis, in each case in accordance
with Section 801, the Successor Company shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such Successor Company had been named as the Company
herein, and thereafter, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures
Without Consent of Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution of the Company, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company; or
(3) to secure the Securities pursuant to the requirements of
Section 1014 or otherwise; or
(4) to comply with any requirements of the Commission in order
to effect qualification of this Indenture under the Trust Indenture Act
in connection with the issuance of the Exchange Securities and
thereafter maintain the qualification of this Indenture under the Trust
Indenture Act; or
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(5) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with the provisions of this Indenture, provided that such action
pursuant to this Clause (5) shall not adversely affect the interests of
the Holders in any material respect; or
(6) to add to, change or eliminate any of the provisions of
this Indenture to permit or facilitate the issuance of Global
Securities and matters related thereto, provided that such action
pursuant to this Clause (6) shall not adversely affect the interests of
the Holders in any material respect.
SECTION 902. Supplemental Indentures
with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution of the Company, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest (including any Special Interest) on, any
Security, or reduce the principal thereof or the rate of interest
thereon (including any Special Interest) or any premium payable upon
the redemption thereof, or change the place of payment where, or the
coin or currency in which, the principal of (or premium, if any) or
interest (including any Special Interest) on any Security is payable,
or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date or, in the case of an Offer
to Purchase which has been made, on or after the applicable Purchase
Date), or
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(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513
or Section 1022 except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby, or
(4) modify any of the provisions of Article Thirteen of this
Indenture in a manner adverse to the Holders, or
(5) modify Sections 1017 and 1018 of this Indenture in a
manner adverse to the Holders in any material respect, or
(6) following the mailing to a Holder of an Offer Document
with respect to an Offer to Purchase, modify the provisions of this
Indenture with respect to such Offer to Purchase in a manner adverse to
such Holder in any material respect.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
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SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities
to Supplemental Indentures.
Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
SECTION 907. Changes Adverse to Holders of Senior Debt.
No amendment, waiver or modification of any subordination
provision adverse to the holders of Senior Debt will be effective against any
holder of Senior Debt unless expressly consented to in writing by or on behalf
of such holder (or by any specified percentage of holders of a class of Senior
Debt required to consent thereto) pursuant to the terms of the agreement or
instrument creating, evidencing or governing such Senior Debt.
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the
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principal of (and premium, if any) and interest on the Securities in accordance
with the terms of the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The
City of New York, an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside the Borough of Manhattan, The City of
New York) where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
SECTION 1003. Money for Security Payments
to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent,
it will, on or before each due date of the principal of (and premium, if any) or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
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Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of (and premium, if any) or
interest on any Securities, deposit with a Paying Agent a sum sufficient to pay
such amount, such sum to be held as provided by the Trust Indenture Act, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will (i) comply with the provisions of the Trust
Indenture Act applicable to it as a Paying Agent (or, until such time as this
Indenture shall be qualified under the Trust Indenture Act, which would be
applicable to it as Paying Agent if the Indenture were so qualified) and (ii)
during the continuance of any default by the Company (or any other obligor upon
the Securities) in the making of any payment in respect of the Securities, upon
the written request of the Trustee, forthwith pay to the Trustee all sums held
in trust by such Paying Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Subject to any applicable abandoned property laws, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any) or interest on
any Security and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security shall there after, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
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money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
SECTION 1004. Existence.
Subject to Article Eight, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
SECTION 1005. Maintenance of Properties.
The Company will cause all properties used or useful in the
conduct of its business or the business of any Restricted Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company or any
Restricted Subsidiary from discontinuing the operation or maintenance of any of
such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Restricted
Subsidiary and not disadvantageous in any material respect to the Holders.
SECTION 1006. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent,
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(1) all taxes, assessments and governmental charges levied or imposed upon the
Company or any of its Subsidiaries or upon the income, profits or property of
the Company or any of its Subsidiaries, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any of its Restricted Subsidiaries; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings or would not result in a material adverse effect on the Company.
SECTION 1007. Maintenance of Insurance.
The Company shall, and the Company shall cause its Restricted
Subsidiaries to, keep at all times all of their properties which are of an
insurable nature insured against loss or damage, and to maintain liability
insurance, with insurers believed by the Company to be responsible or in the
case of any insurance coverage, to self-insure, in each case to the extent, in
the judgment of the Company, to do so comports with good business practice.
SECTION 1008. Limitation on Consolidated Debt
The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur any Debt unless, immediately after giving effect to the
Incurrence of such Debt and the receipt and application of the proceeds thereof,
the Consolidated EBITDA Coverage Ratio of the Company and its Restricted
Subsidiaries for the four full fiscal quarters next preceding the Incurrence of
such Debt, calculated on a proforma basis as if such Debt had been Incurred and
the proceeds thereof had been received and so applied at the beginning of the
four full fiscal quarters, would be greater than 2.0 to 1.0.
Without regard to the foregoing limitations, the following
Debt may be Incurred:
(i) Debt Incurred by the Company or any Restricted Subsidiary
under the New Credit Facility in an aggregate principal amount at any
time outstanding not to exceed $200 million, less (A) $20 million at
each of the third, fourth and fifth anniversaries of the New Credit
Facility's effective date, plus (B) increased revolving credit
commitments thereunder
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in an aggregate amount not exceeding in the aggregate the amount of
Debt that is permitted to be Incurred, but has not been Incurred, under
Clauses (iv) and (viii) below, and plus (C) the amount of Debt Incurred
under the New Credit Facility on a term loan basis that is Incurred
pursuant to the immediately preceding paragraph, and, with respect to
all of the foregoing, any renewal, extension, refinancing or refunding
(a "refinancing") of such Debt in an amount that does not exceed the
sum of the amount of the revolving credit commitments and the amount of
the outstanding term Debt under the New Credit Facility immediately
prior to such renewal, extension, refinancing or refunding; provided
that no Debt Incurred on a term loan basis may be refinanced on a
revolving credit basis;
(ii) the original issuance by the Company of the Debt
evidenced by the Securities (including any Exchange Securities);
(iii) Debt (other than Debt described in another clause of
this paragraph) of the Company outstanding on the date of the Indenture
after giving effect to the application of the proceeds of the
Securities;
(iv) Debt in respect of Capital Lease Obligations, mortgage
financings or other purchase money obligations, in an aggregate
principal amount at any time outstanding not to exceed $15 million
(including Debt refinanced pursuant to Clause (vii) of this paragraph
and without duplication at such time of any portion of any revolving
credit commitment then in effect that represents an increase made under
the immediately preceding Clause (i)(B) in reliance on this Clause
(iv)), Incurred by the Company or any Restricted Subsidiary for the
purpose of financing all or any part of the acquisition or improvement
of any property used in the business of the Company or such Restricted
Subsidiary;
(v) Debt owed by the Company to any Wholly Owned Restricted
Subsidiary or Debt owed by any Restricted Subsidiary to the Company or
a Wholly Owned Restricted Subsidiary; provided, however, that (a) any
such Debt (not pledged as security for any Senior Debt) owing by the
Company to a Wholly Owned Restricted Subsidiary shall be Subordinated
Debt evidenced by an intercompany promissory note and (b) upon either
(1) the transfer or other disposition (excluding any pledge thereof as
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security for any Senior Debt) by such Wholly Owned Restricted
Subsidiary or the Company of any Debt so permitted to a Person other
than the Company or another Wholly Owned Restricted Subsidiary or (2)
the issuance (other than directors' qualifying shares), sale, lease,
transfer or other disposition (including by consolidation or merger)
of shares of Capital Stock (other than any pledge thereof as security
for any Senior Debt) of such Wholly Owned Restricted Subsidiary to a
Person other than the Company or another such Wholly Owned Restricted
Subsidiary, the provisions of this Clause (v) shall no longer be
applicable to such Debt and such Debt shall be deemed to have been
Incurred at the time of such issuance, sale, lease, transfer or other
disposition, as the case may be;
(vi) Debt Incurred by the Company or any Restricted Subsidiary
consisting of Permitted Interest Rate, Currency or Commodity Price
Agreements;
(vii) Debt which is exchanged for or the proceeds of which are
used to refinance or refund, or any extension or renewal of,
outstanding Debt Incurred pursuant to the preceding paragraph of this
Section 1008 or Clauses (ii), (iii) or (iv) above (each of the
foregoing, a "refinancing") in an aggregate principal amount not to
exceed the principal amount of the Debt so refinanced, plus the amount
of any premium required to be paid in connection with such refinancing
pursuant to the terms of the Debt so refinanced or the amount of any
premium reasonably determined by the Company as necessary to accomplish
such refinancing by means of a tender offer or privately negotiated
repurchase and plus the expenses of the Company or the Restricted
Subsidiary, as the case may be, Incurred in connection with such
refinancing; provided, however, that (a) Debt the proceeds of which are
used to refinance the Securities or Debt that is pari passu with or
subordinate in right of payment to the Securities shall only be
permitted if (1) in the case of any refinancing of the Securities or
Debt that is pari passu with the Securities, the refinancing Debt is
Incurred by the Company and made pari passu with the Securities or
subordinated in right of payment to the Securities, and (2) in the case
of any refinancing of Debt that is subordinate in right of payment to
the Securities, the refinancing Debt is Incurred by the Company and
constitutes Subordinated Debt; (b) the refinancing Debt
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by its terms, or by the terms of any agreement or instrument pursuant
to which such Debt is issued, (1) does not provide for payments of
principal of such Debt at the Stated Maturity thereof or by way of a
sinking fund applicable thereto or by way of any mandatory redemption,
defeasance, retirement or repurchase thereof (including any redemption,
defeasance, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon any event of default thereunder), in
each case prior to the final Stated Maturity of the Debt being
refinanced and (2) except as provided for by the terms of the Debt
being refinanced, does not permit redemption or other retirement
(including pursuant to an offer to purchase) of such Debt at the option
of the holder thereof prior to the final Stated Maturity of the Debt
being refinanced other than a redemption or other retirement at the
option of the holder of such Debt (including pursuant to an offer to
purchase) which is conditioned upon provisions substantially similar to
those described in Sections 1017 and 1018; and (c) in the case of any
refinancing of Debt Incurred by the Company, the refinancing Debt may
be Incurred only by the Company and, in the case of refinancing of Debt
Incurred by a Restricted Subsidiary, the refinancing Debt may be
Incurred only by the Company or such Restricted Subsidiary; provided,
further, that Debt Incurred pursuant to this Clause (vii) may not be
Incurred more than 90 days prior to the application of the proceeds to
repay the Debt to be refinanced; and
(viii) Debt not otherwise permitted to be Incurred by the
Company or any Restricted Subsidiary pursuant to Clauses (i) through
(vii) above, which, together with any other outstanding Debt Incurred
pursuant to this Clause (viii), has an aggregate principal amount at
any time outstanding not in excess of $15,000,000 (without duplication
at such time of any portion of any revolving credit commitment then in
effect that represents an increase made under the immediately preceding
Clause (i)(B) in reliance on this Clause (viii)).
SECTION 1009. Limitation on Debt and Preferred Stock
of Subsidiaries.
The Company shall not cause, and shall not permit,
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any Restricted Subsidiary to Incur any Debt or issue any Preferred Stock except:
(i) Debt Incurred by any Restricted Subsidiary that is expressly permitted in
the second paragraph of Section 1008; (ii) Debt or Preferred Stock outstanding
on the date of the Indenture after giving effect to the application of the
proceeds of the Securities; (iii) Debt or Preferred Stock issued to and held by
the Company or a Wholly Owned Restricted Subsidiary (provided that such Debt or
Preferred Stock is at all times held by the Company or a Wholly Owned Restricted
Subsidiary); or (iv) Debt or Preferred Stock Incurred or issued by a Person
prior to the time (A) such Person became a Restricted Subsidiary, (B) such
Person merges into or consolidates with a Restricted Subsidiary or (C) another
Restricted Subsidiary merges into or consolidates with such Person (in a
transaction in which such Person becomes a Restricted Subsidiary), which Debt or
Preferred Stock was not Incurred or issued in anticipation of such transaction
and was outstanding prior to such transaction.
SECTION 1010. Limitation on Layered Debt.
The Company shall not Incur any Debt which by its terms is
both (i) subordinated in right of payment to any Senior Debt and (ii) senior in
right of payment to the Securities.
SECTION 1011. Limitation on Issuance of Guarantees
of Subordinated Debt.
The Company shall not permit any Restricted Subsidiary,
directly or indirectly, to assume, guarantee or in any other manner become
liable with respect to any Debt of the Company that by its terms is pari passu
with or junior in right of payment to the Securities.
SECTION 1012. Limitation on Restricted Payments.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, (i) declare or pay any dividend, or make
any distribution, of any kind or character (whether in cash, property or
securities) in respect of the Capital Stock of the Company or any Restricted
Subsidiary or to the holders thereof in their capacity as such (excluding (u)
any dividends or distributions to the extent payable in shares of the Capital
Stock of the Company (other than Redeemable Interests) or in options, warrants
or other rights to acquire the Capital
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Stock of the Company (other than Redeemable Interests), (v) dividends or
distributions by a Restricted Subsidiary to the Company or another Restricted
Subsidiary and (w) the payment of pro rata dividends by a Restricted Subsidiary
to holders of both minority and majority interests in such Restricted
Subsidiary); (ii) purchase, redeem or otherwise acquire or retire for value (a)
any Capital Stock of the Company or any Capital Stock of or other ownership
interests in any Subsidiary or any Affiliate or Related Person of the Company or
(b) any options, warrants or other rights to purchase or acquire shares of
Capital Stock of the Company or any Capital Stock of or other ownership
interests in any Subsidiary or any Affiliate or Related Person of the Company
(excluding, in each case of (a) and (b), the purchase, redemption or other
acquisition or retirement by any Restricted Subsidiary of any of its Capital
Stock, other ownership interests or options, warrants or rights to purchase such
Capital Stock or other ownership interests (x) owned by the Company or any
Restricted Subsidiary, (y) owned by any other Person if effected on a pro rata
basis with respect to holders of both minority and majority interests in such
Restricted Subsidiary or (z) owned by any officer, director or employee of the
Company, but solely for the purpose of enabling such Person (or the Company on
his or her behalf) to satisfy tax obligations in respect of his or her exercise
of options, warrants or rights to purchase Capital Stock of the Company); (iii)
make, directly or indirectly, any Investment that is not a Permitted Investment;
or (iv) redeem, defease (whether legal, covenant or other defeasance),
repurchase, retire or otherwise acquire or retire for value, prior to any
scheduled maturity, repayment or sinking fund payment, Debt of the Company that
is subordinate in right of payment to the Securities (each of the transactions
described in Clauses (i) through (iv) being referred to herein as a "Restricted
Payment"), if at the time thereof:
(1) an Event of Default, or an event that with the lapse of
time or the giving of notice, or both, would constitute an Event of
Default, shall have occurred and be continuing,
(2) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the Company's most recently ended
four full fiscal quarter period for which annual or quarterly financial
statements are publicly available
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immediately preceding the date of such Restricted Payment, not have
been permitted to Incur at least $1.00 of additional Debt pursuant to
the Consolidated EBITDA Coverage Ratio test set forth in the first
paragraph of Section 1008, or
(3) upon giving effect to such Restricted Payment, the
aggregate of all Restricted Payments (excluding Restricted Payments
permitted by Clauses (ii), (iii) and (iv) of the next succeeding
paragraph) from the date of this Indenture (the amount so expended, if
other than in cash, determined in good faith by the Board of Directors)
exceeds the sum, without duplication, of:
(a) 50% of the Consolidated Net Income (or, in case
Consolidated Net Income shall be negative, less 100% of such
deficit) of the Company for the period (taken as one
accounting period) from June 30, 1997 through the end of the
Company's most recently ended fiscal quarter for which annual
or quarterly financial statements are publicly avail able at
the time of such Restricted Payment;
(b) 100% of the aggregate net cash proceeds from the
issuance and sale (other than to a Restricted Subsidiary) of
Capital Stock (other than Redeemable Interests) of the Company
and options, warrants or other rights to acquire Capital Stock
(other than Redeemable Interests and Debt convertible into
Capital Stock) of the Company and the principal amount of Debt
and Redeemable Interests of the Company that has been
converted into or exchanged for Capital Stock (other than
Redeemable Interests) of the Company after June 30, 1997;
provided that any such net proceeds received by the Company
from an employee stock ownership plan financed by loans from
the Company or a Subsidiary of the Company shall be included
only to the extent such loans have been repaid with cash on or
prior to the date of determination;
(c) the amount by which the total consideration paid
by the Company in the Tender Offer is less than $110 million;
and
(d) $25 million.
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The foregoing provisions of this Section 1012 shall not be violated by reason
of:
(i) the payment of any dividend within 60 days after
declaration thereof if at the declaration date such payment would have
complied with the foregoing provisions;
(ii) any payment made by the Company in connection with the
consummation of the Transactions;
(iii) any refinancing or refunding of Debt permitted pursuant
to Clause (i) or Clause (vii) of the second paragraph of Section 1008;
and
(iv) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company or any
options, warrants or rights to purchase or acquire shares of Capital
Stock of the Company in exchange for, or out of the net cash proceeds
of, the substantially concurrent issuance or sale (other than to a
Restricted Subsidiary) of Capital Stock (other than Redeemable
Interests) of the Company; provided that the amount of any such net
cash proceeds that are utilized for any such purchase, redemption or
other acquisition or retirement for value shall be excluded from Clause
(3)(b) in the foregoing paragraph.
Upon the designation of any Restricted Subsidiary as an
Unrestricted Subsidiary, an amount equal to the greater of the book value and
the fair market value of all assets of such Restricted Subsidiary at the end of
the Company's most recently ended fiscal quarter for which annual or quarterly
financial statements are publicly available prior to such designation will be
deemed to be a Restricted Payment at the time of such designation for purposes
of calculating the aggregate amount of Restricted Payments (including the
Restricted Payment resulting from such designation) permitted under the second
preceding paragraph.
SECTION 1013. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any
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encumbrance or restriction on the ability of any Restricted Subsidiary: (i) to
pay dividends (in cash or otherwise) or make any other distributions in respect
of its Capital Stock or other ownership interests or pay any Debt or other
obligation owed to the Company or any other Restricted Subsidiary; (ii) to make
loans or advances to the Company or any other Restricted Subsidiary; or (iii) to
sell, lease or transfer any of its property or assets to the Company or any
Restricted Subsidiary.
Notwithstanding the foregoing, the Company may, and may permit
any Restricted Subsidiary to, suffer to exist any such encumbrance or
restriction:
(a) pursuant to any agreement in effect on the date
of the Indenture (including the New Credit Facility, the
Indenture and the Securities);
(b) pursuant to an agreement relating to any Debt
Incurred by such Restricted Subsidiary prior to the date on
which such Restricted Subsidiary was acquired by the Company
and outstanding on such date and not Incurred in anticipation
of becoming a Restricted Subsidiary;
(c) pursuant to mortgages and other purchase money
obligations in connection with property acquired or improved
in the ordinary course of business or liens in connection
therewith permitted to be Incurred under Section 1014 that
impose restrictions of the nature described in Clause (iii)
above on the property so acquired or improved;
(d) pursuant to an agreement effecting a renewal,
refunding, refinancing or extension of Debt Incurred pursuant
to an agreement referred to in Clause (a), (b) or (c) above,
provided, however, that the provisions contained in such
renewal, refunding, refinancing or extension agreement
relating to such encumbrance or restriction are no more
restrictive in any material respect than the provisions
contained in the agreement the subject thereof (as determined
in good faith by the Board of Directors);
(e) pursuant to customary non-assignment
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provisions entered into in the ordinary course of business
consistent with past practices in leases, licenses or
contracts to the extent such provisions restrict the transfer,
subletting or other disposition of any such lease, license or
contract;
(f) pursuant to an agreement which has been entered
into for the sale or other disposition of all or substantially
all of the Capital Stock or assets of such Restricted
Subsidiary, provided that consummation of such transaction
would not result in an Event of Default or an event that, with
the passing of time or the giving of notice or both, would
constitute an Event of Default, that such restriction
terminates if such transaction is closed or abandoned and that
the closing or abandonment of such transaction occurs within
one year of the date such agreement was entered into; or
(g) arising under any applicable law, rule,
regulation or order.
SECTION 1014. Limitation on Liens.
The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur or suffer to exist any Lien on or with respect to any
property or assets now owned or hereafter acquired to secure any Debt of the
Company that is expressly by its terms subordinate or junior in right of payment
to any other Debt of the Company without making, or causing such Restricted
Subsidiary to make, effective provision for securing the Securities (a) equally
and ratably with such Debt as to such property or assets for so long as such
Debt will be so secured or (b) in the event such Debt is subordinate in right of
payment to the Securities, prior to such Debt as to such property or assets for
so long as such Debt will be secured.
SECTION 1015. Limitation on Ownership of Capital
Stock of Subsidiaries.
The Company shall not, and shall not permit any Restricted
Subsidiary to, issue, transfer, convey, lease or otherwise dispose of any shares
of Capital Stock (other than directors' qualifying shares and shares pledged as
security for any Senior Debt) of a Restricted Subsidiary or
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securities convertible or exchangeable into, or options, warrants, rights or any
other interest with respect to, Capital Stock of a Restricted Subsidiary to any
Person other than the Company or a Wholly Owned Restricted Subsidiary except in
a transaction consisting of a sale (including a public offering) of all or part
of the Capital Stock of such Restricted Subsidiary owned by the Company and any
Restricted Subsidiary and that complies with the provisions of Section 1017 to
the extent such provisions apply; provided that after any sale of less than all
of the Capital Stock of any Restricted Subsidiary, the Company directly or
indirectly maintains voting power to elect a majority of the board of directors
of such Restricted Subsidiary.
SECTION 1016. Limitation on Transactions with
Affiliates and Related Persons.
The Company shall not, and shall not permit any Restricted
Subsidiary of the Company to, after the date of this Indenture, enter into any
transaction (or series of related transactions) (including the purchase, sale,
lease or exchange of property, the rendering of any service or the making of any
loan or advance) with any Affiliate or Related Person of the Company (other than
the Company or any Restricted Subsidiary), including any Investment, either
directly or indirectly, that involves total consideration or asset transfers in
excess of $1,000,000 (i) unless such transaction is on terms no less favorable
to the Company or such Restricted Subsidiary than those that could be obtained
in a comparable arm's-length transaction with an entity that is not an Affiliate
or Related Person and is in the best interests of the Company or such Restricted
Subsidiary and (ii) except for the Transactions. For any transaction that
involves in excess of $1,000,000 but less than or equal to $5,000,000, the Chief
Executive Officer of the Company shall determine that the transaction satisfies
the above criteria and shall evidence such a determination by a certificate
filed with the Trustee. For any transaction that involves in excess of
$5,000,000, a majority of the disinterested members of the Board of Directors
shall determine that the transaction satisfies the above criteria and shall
evidence such a determination by a Board Resolution filed with the Trustee. For
any transaction that involves in excess of $10,000,000, the Company shall also
obtain an opinion from a nationally recognized expert with experience in
appraising the terms and conditions of the type of transaction (or series of
related transactions) for which the opinion is required stating that such
transaction (or series of related
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transactions) is on terms no less favorable to the Company or such Restricted
Subsidiary than those that could be obtained in a comparable arm's-length
transaction with an entity that is not an Affiliate or Related Person of the
Company, which opinion shall be filed with the Trustee; provided, however, that
the foregoing restrictions will not apply to: (a) reasonable employment,
compensation, bonus or benefit arrangements entered into in the ordinary course
of business (including the granting of stock acquisition rights and other
incentives other than Redeemable Interests); the payment of reasonable fees,
expense reimbursements and customary indemnification, advances and other similar
arrangements with respect to officers and directors; and reasonable loans and
advances to employees in the ordinary course of business; (b) required payments
with respect to any Debt permitted by Section 1008; (c) transactions permitted
by Section 1012; (d) any payments or other transactions pursuant to any tax
sharing agreement with any Person with which the Company or such Restricted
Subsidiary is required or permitted to file a consolidated tax return or with
which the Company or such Restricted Subsidiary is or could be part of a
consolidated group for tax purposes; and (e) any transaction with Goldman, Sachs
& Co., Water Street or any of their Affiliates to the extent that such
transaction is or was approved by a majority of the disinterested members of the
Board of Directors in good faith.
SECTION 1017. Limitation on Certain Asset Dispositions.
(a) The Company shall not make, and shall not permit any Restricted
Subsidiary to make, any Asset Disposition in one transaction (or series of
related transactions) unless:
(i) the Company (or such Restricted Subsidiary, as the case
may be) receives consideration at the time of such disposition at least
equal to the fair market value of the shares or other assets disposed
of (as determined in good faith by the Board of Directors of the
Company and evidenced by a Board Resolution) for any transaction (or
series of related transactions) involving in excess of $2 million;
(ii) at least 80% of the consideration received by the Company
(or such Restricted Subsidiary) for such disposition consists of (u)
cash, readily marketable cash equivalents, readily marketable
fixed-income
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securities or equity securities traded on a national securities
exchange or NASDAQ (valued, in the case of securities, at the market
value thereof when received by the Company or such Restricted
Subsidiary), (v) the assumption of Debt or other liabilities reflected
on the consolidated balance sheet of the Company and its Restricted
Subsidiaries in accordance with generally accepted accounting
principles (excluding Debt or any other liabilities subordinate in
right of payment to the Securities) and release of the Company and its
Restricted Subsidiaries from all liability in respect of the Debt or
other liabilities assumed, (w) assets used by, or stock or other
ownership interests in, a Person that upon the consummation of such
Asset Disposition becomes a Restricted Subsidiary and will be
principally engaged in the business of the Company or any of its Wholly
Owned Restricted Subsidiaries substantially as such business was
conducted immediately prior to such Asset Disposition (as determined by
the Board of Directors in good faith) or (x) any combination thereof;
and
(iii) 100% of the Net Available Proceeds from such Asset
Disposition (including from the sale of any marketable cash
equivalents, fixed-income or equity securities received therein), less
any Reinvested Amounts, are applied by the Company (or a Restricted
Subsidiary) within one year from the later of the date of such Asset
Disposition or the receipt of such Net Available Proceeds, (A) first,
to repayment of Senior Debt of the Company or Debt of its Restricted
Subsidiaries then outstanding under any agreements or instruments which
would require such application or which would prohibit payments
pursuant to Clause (B) following; (B) second, to the extent Net
Available Proceeds are not required to be applied to Senior Debt or
Debt of Restricted Subsidiaries as specified in Clause (A), to
purchases of Outstanding Securities pursuant to an Offer to Purchase at
a purchase price equal to 100% of their principal amount, plus accrued
interest (including any Special Interest) to the date of purchase
(subject to the rights of Holders of record on the relevant Regular
Record Date to receive interest due on an Interest Payment Date that is
on or prior to the Purchase Date), and, to the extent required by the
terms thereof, to purchases (on a pro rata basis with the Securities)
of any other Debt of the Company or its Restricted Subsidiaries that is
pari passu with the
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Securities at a price no greater than 100% of the principal amount
thereof, plus accrued interest to the date of purchase, in each case to
the extent such purchases are not prohibited by the terms of any Senior
Debt of the Company or of any Debt of Restricted Subsidiaries then
outstanding; (C) third, to the extent of any remaining Net Available
Proceeds following purchases pursuant to the foregoing Clause (b), to
the repayment of other Debt of the Company or Debt of a Restricted
Subsidiary, to the extent permitted under the terms thereof, and (D)
fourth, to the extent of any remaining Net Available Proceeds, to any
other use as determined by the Company which is not otherwise
prohibited by the Indenture.
Notwithstanding the foregoing, the Company shall not be
required to comply with the requirements of Clause (ii) or Clause (iii) of the
preceding paragraph for any Asset Disposition that is an Excepted Disposition,
and the Company shall not be required to comply with the requirements of Clause
(iii) of the preceding paragraph except at any time and from time to time that
the aggregate amount of Net Available Proceeds, less Reinvested Amounts,
required to be applied pursuant to Clause (iii) (and not theretofore so applied)
exceeds $10 million; provided, however, with respect to such Clause (iii), that
if any Restricted Subsidiary in which a Reinvested Amount is invested becomes an
Unrestricted Subsidiary thereafter, such change in status, except as otherwise
provided in clause (b) of the proviso to the penultimate paragraph of Section
1020, will be deemed an Asset Disposition with Net Available Proceeds of cash in
an amount equal to such Reinvested Amount (less any portion of such Reinvested
Amount theretofore distributed to the Company or any Restricted Subsidiary), and
such amount of cash will be applied pursuant to Clause (iii) above (subject to
this provison).
(b) The Company shall mail by first class mail the Offer
Document for an Offer to Purchase required pursuant to Section 1017(a) within 30
days after the date which is one year after the later of the date of
consummation of the Asset Disposition referred to in Section 1017(a) or the
receipt of the Net Available Proceeds from such Asset Disposition. The aggregate
principal amount of the Securities to be offered to be purchased pursuant to the
Offer to Purchase shall equal the Net Available Proceeds required to be made
available therefor pursuant to Clause (iii)(B) of Section 1017(a) (rounded down
to the next lowest
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integral multiple of $1,000). Each Holder shall be entitled to tender all or any
portion of the Securities owned by such Holder pursuant to the Offer to
Purchase, subject to the requirement that any portion of a Security tendered
must be tendered in an integral multiple of $1,000 principal amount.
The Company shall not be entitled to any credit against its
obligations under this Section 1017 for the principal amount of any Securities
acquired or redeemed by the Company otherwise than pursuant to the Offer to
Purchase pursuant to this Section 1017.
In the event the Company is required to make an Offer to
Purchase pursuant to this Section 1017, and the amount available for such Offer
to Purchase is not evenly divisible by $1,000, the Trustee shall promptly refund
to the Company, any remaining funds, which in no event will exceed $1,000.
(c) Not later than the date of the Offer Document with respect
to an Offer to Purchase pursuant to this Section 1017, the Company shall
deliver to the Trustee an Officers' Certificate as to (i) the Purchase Amount,
(ii) the allocation of the Net Available Proceeds from the Asset Disposition
pursuant to which such Offer to Purchase is being made, including, with respect
to Reinvested Amounts, the assets acquired and a statement that such assets will
be used in the same or substantially similar or related business of the Company
and any of its Wholly Owned Restricted Subsidiaries as conducted prior to such
Asset Disposition, and (iii) the compliance of such allocation with the
provisions of Section 1017(a).
The Company and the Trustee shall perform their respective
obligations specified in the Offer Document for the Offer to Purchase. On or
prior to the Purchase Date, the Company shall (i) accept for payment (on a pro
rata basis, if necessary) Securities or portions thereof tendered pursuant to
the Offer to Purchase, (ii) deposit with the Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 1003) money sufficient to pay the purchase price of all Securities or
portions thereof so accepted and (iii) deliver or cause to be delivered to the
Trustee all Securities so accepted together with an Officers' Certificate
stating the Securities or portions thereof accepted for payment by the Company.
The Paying Agent (or the Company, if so acting) shall promptly mail or deliver
to
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Holders of Securities so accepted payment in an amount equal to the Purchase
Price for each $1,000 principal amount of Securities so accepted, and the
Company shall promptly execute a new Security or Securities equal in principal
amount to any unpurchased portion of the Security surrendered, and thereafter
the Trustee shall promptly authenticate and mail or deliver to such Holders such
new Security or Securities. Any Security not accepted for payment shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Offer to Purchase on or as soon as
practicable after the Purchase Date.
(d) Notwithstanding the foregoing, this Section 1017 shall not
apply to any Asset Disposition which constitutes a transfer, conveyance, sale,
lease or other disposition of all or substantially all of the properties and
assets of the Company and its Restricted Subsidiaries subject to Section 801.
SECTION 1018. Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of
a Security shall have the right to have such Security repurchased by the Company
on the terms and conditions set forth in this Section 1018 and this Indenture.
The Company shall, within 30 days following consummation of a transaction that
results in a Change of Control, mail an Offer Document with respect to an Offer
to Purchase all Outstanding Securities at a Purchase Price equal to 101% of
their aggregate principal amount as of the Purchase Date plus any accrued
interest (including Special Interest) to the Purchase Date (provided, however,
that installments of interest whose Stated Maturity is on or prior to the
Purchase Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Regular Record Dates according to their terms and as set forth in
Section 308). Each Holder shall be entitled to tender all or any portion of the
Securities owned by such Holder pursuant to the Offer to Purchase, subject to
the requirement that any portion of a Security tendered must be tendered in an
integral multiple of $1,000 principal amount.
(b) The Company and the Trustee shall perform their respective
obligations specified in the Offer Document for the Offer to Purchase. Prior to
the Purchase Date, the Company shall (i) accept for payment Securities or
portions
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thereof tendered pursuant to the Offer to Purchase, (ii) deposit with the Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 1003) money sufficient to pay the Purchase Price
of all Securities or portions thereof so accepted and (iii) deliver or cause to
be delivered to the Trustee all Securities so accepted together with an
Officers' Certificate stating the Securities or portions thereof accepted for
payment by the Company. The Paying Agent (or the Company if so acting) shall
promptly mail or deliver to Holders of Securities so accepted payment in an
amount equal to the Purchase Price for each $1,000 of Securities so accepted,
and the Company shall promptly execute a new Security or Securities equal in
principal amount to any unpurchased portion of the Security surrendered as
requested by the Holder, and thereafter the Trustee shall promptly authenticate
and mail or deliver to such Holders such new Security or Securities. Any
Security not accepted for payment shall be promptly mailed or delivered by the
Company to the Holder thereof. The Company shall publicly announce the results
of the Offer to Purchase on or as soon as practicable after the Purchase Date.
(c) A "Change of Control" shall be deemed to have occurred in
the event that, after the date of this Indenture, the following occurs: (i)
replacement of a majority of the Board of Directors of the Company from the
directors who constituted the Board of Directors on the date of the Indenture
for any reason other than death, retirement or disability, and such replacement
shall not have been approved by the Board of Directors of the Company as
constituted on the date of the Indenture (or as changed over time with the
approval of the Board of Directors of the Company); or (ii) a Person or entity
or group of Persons or entities acting in concert, other than Water Street or
its Affiliates or any Person or entity or group of Persons or entities acting in
concert and controlled by Water Street or its Affiliates, shall, as a result of
a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, have become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of securities of the Company representing
more than 50% of the total voting power of all classes of the Voting Stock of
the Company.
SECTION 1019. Provision of Financial Information.
(a) So long as any of the Securities are
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Outstanding, and in addition to and without limitation of the Company's
obligations pursuant to Section 704, whether or not the Company is required to
be subject to Section 13(a) or 15(d) of the Exchange Act, or any successor
provisions, the Company (unless not permitted by the Commission to do so) shall
file with the Commission the annual reports, quarterly reports and other
documents which the Company would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) or any successor provisions thereto if
the Company were so required, such documents to be filed with the Commission on
or prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required so to file such documents if the Company were
so required. The Company shall also in any event (a) within 15 days of each
Required Filing Date (i) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, without cost to such Holders, and
(ii) file with the Trustee, copies of the annual reports, quarterly reports and
other documents which the Company files with the Commission pursuant to such
Section 13(a) or 15(d) or any successor provisions thereto or would have been
required to file with the Commission pursuant to such Section 13(a) or 15(d) or
any successor provisions thereto if the Company were required to comply with
such Sections or successor provisions and (b) if filing such documents by the
Company with the Commission is not permitted under the Exchange Act, promptly
upon written request supply copies of such documents to any prospective holder
of securities. Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
(b) If the Company at any time is not subject to the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act (or any
successor provisions) while any Securities constitute Restricted Securities, it
will furnish to any holder of such a security (or a beneficial interest
therein), or to any prospective purchaser designated by such holder, upon the
request of such holder, such financial and other information as may be required
to satisfy the requirements of Paragraph (d)(4) of Rule 144A to permit such
resales and that information that would be required if the
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Company were subject to the informational requirements of Sections 13 or 15(d)
of the Exchange Act.
SECTION 1020. Unrestricted Subsidiaries.
The Company at any time may designate any Person that is a
Subsidiary, or after the date of this Indenture becomes a Subsidiary, of the
Company as an "Unrestricted Subsidiary", whereupon (and until such Person ceases
to be an Unrestricted Subsidiary) such Person and each other Person that is then
or thereafter becomes a Subsidiary of such Person shall be deemed to be an
Unrestricted Subsidiary for all purposes of this Indenture. In addition, the
Company may at any time terminate the status of any Subsidiary as an
Unrestricted Subsidiary, whereupon such Subsidiary and each other Subsidiary of
the Company (if any) of which such Subsidiary is a Subsidiary shall be a
Restricted Subsidiary for all purposes of this Indenture. Each such designation
or termination shall be evidenced by a Board Resolution and shall be effective
upon the later of (i) the date specified therein and (ii) the delivery by the
Company to the Trustee of such Board Resolution and an Officer's Certificate
stating that the requirements of this Section 1020 will have been satisfied upon
effectiveness of such designation or termination.
Notwithstanding the foregoing, no change in the status of a
Subsidiary of the Company from a Restricted Subsidiary to an Unrestricted
Subsidiary or from an Unrestricted Subsidiary to a Restricted Subsidiary shall
be effective, and no Person may otherwise become a Restricted Subsidiary, if:
(a) the Consolidated EBITDA Coverage Ratio of the Company and
its Restricted Subsidiaries for the four full fiscal quarters of the
Company next preceding the effective date of such purported change or
other event, calculated on a pro forma basis as if such change or other
event had been effective at the beginning of such period, would not
exceed 2.0 to 1.0;
(b) in the case of any change in status of such a Subsidiary
from a Restricted Subsidiary to an Unrestricted Subsidiary, the
Restricted Payment resulting from such change would violate Clause (3)
of the first paragraph of Section 1012, or
(c) such change or other event would otherwise result (after
the giving of notice or the lapse of
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time, or both) in an Event of Default.
In addition and notwithstanding the foregoing, no Restricted
Subsidiary may become an Unrestricted Subsidiary, and the status of any
Unrestricted Subsidiary as an Unrestricted Subsidiary shall be deemed to have
been immediately terminated (whereupon such Subsidiary and each other Subsidiary
of the Company (if any) of which such Subsidiary is a Subsidiary will be a
Restricted Subsidiary) at any time when:
(i) such Subsidiary (A) has outstanding Debt that is
Unpermitted Debt or (B) owns or holds any Capital Stock of or other
ownership interests in, or a Lien on any property or other assets of,
the Company or any of its Restricted Subsidiaries; or
(ii) the Company or any other Restricted Subsidiary (A)
provides credit support for, or a Guarantee of, any Debt of such
Subsidiary (including any undertaking, agreement or instrument
evidencing such Debt) or (B) is directly or indirectly liable for any
Debt of such Subsidiary.
Any termination of the status of an Unrestricted Subsidiary as an Unrestricted
Subsidiary pursuant to the preceding sentence shall be deemed to result in a
breach of this Section 1020 in any circumstance in which the Company would not
have been permitted to change the status of such Unrestricted Subsidiary to the
status of a Restricted Subsidiary pursuant to the provisions of the preceding
paragraph, provided, however, that (a) so long as the aggregate principal amount
outstanding of Unpermitted Debt does not exceed $5 million, no such breach will
be deemed to have occurred with respect to any Unpermitted Debt until 15 days
after the Company has become aware of such Unpermitted Debt and such Unpermitted
Debt remains outstanding or Unpermitted Debt, and (b) notwithstanding Sections
1012 and 1017 of this Indenture, any change of status of an Unrestricted
Subsidiary to a Restricted Subsidiary as aforesaid followed within one year by a
change of status of such Restricted Subsidiary to an Unrestricted Subsidiary
will not be deemed an Asset Disposition or cause any Reinvested Amount invested
therein to be deemed Net Available Proceeds or the book value or fair market
value of the assets thereof to be deemed a Restricted Payment. "Unpermitted
Debt" means any Debt of a Subsidiary of the Company if (x) a default thereunder
(or under any instrument
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or agreement pursuant to or by which such Debt is issued, secured or evidenced),
or any right that the holders thereof may have to take enforcement action
against such Subsidiary or its property or other assets, would permit (whether
or not after the giving of notice or the lapse of time or both) the holders of
any Debt of the Company or any other Restricted Subsidiary to declare the same
due and payable prior to the date on which it otherwise would have become due
and payable or otherwise to take any enforcement action against the Company or
such other Restricted Subsidiary or (y) such Debt is secured by a Lien on any
property or other assets of the Company and any of its other Restricted
Subsidiaries.
Each Person that is or becomes a Subsidiary of the Company
shall be deemed to be a Restricted Subsidiary for all purposes of this Indenture
at all times when it is a Subsidiary of the Company that is not an Unrestricted
Subsidiary. Each Person that is or becomes a Wholly Owned Subsidiary of the
Company shall be deemed to be a Wholly Owned Restricted Subsidiary at all times
when it is a Wholly Owned Subsidiary of the Company that is not an Unrestricted
Subsidiary.
SECTION 1021. Statement by Officers as to
Default; Compliance Certificates.
(a) The Company will deliver to the Trustee, within 90 days
after the end of each fiscal year of the Company ending after the date of this
Indenture an Officers' Certificate, stating whether or not to the knowledge of
the signers thereof the Company is in default in the performance and observance
of any of the terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
(b) The Company shall deliver to the Trustee, as soon as
possible and in any event within 30 days after the Company becomes aware of the
occurrence of an Event of Default or an event which, with notice or the lapse of
time or both, would constitute an Event of Default, an Officers' Certificate
setting forth the details of such Event of Default or default, and the action
which the Company proposes to take with respect thereto.
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SECTION 1022. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Section 801 and Sections 1004 through
1021, inclusive, if before the time for such compliance the Holders of at least
a majority in principal amount of the Outstanding Securities shall, by Act of
such Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Company
and the duties of the Trustee in respect of any such covenant or condition shall
remain in full force and effect; provided, however, with respect to an Offer to
Purchase as to which an Offer Document has been mailed, no such waiver may be
made or shall be effective against any Holder tendering Securities pursuant to
such Offer to Purchase, and the Company may not omit to comply with the terms of
such Offer Document as to such Holder, unless such Holder shall have waived such
requirement.
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Redemption at the Election of the Company.
The Securities may be redeemed at the election of the Company,
at the times and the Redemption Prices and subject to the conditions and other
requirements specified in the form of Security hereinbefore set forth.
SECTION 1102. Applicability of Article.
Redemption of Securities at the election of the Company, as
permitted or required by any provision of the Securities and this Indenture,
shall be made in accordance with such provision and the applicable provisions of
this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant
to Section 1101 shall be evidenced by a Board Resolution. In case of any
redemption at the election
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of the Company of less than all the Securities, the Company shall, at least 60
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount of Securities to be redeemed.
SECTION 1104. Selection by Trustee of Securities
to Be Redeemed.
If less than all the Securities are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities not
previously called for redemption, by such method as the Trustee shall deem fair
and appropriate and which may provide for the selection for redemption of
portions (equal to $1,000 or any integral multiple thereof) of the principal
amount of Securities of a denomination larger than $1,000.
The Trustee shall promptly notify the Company and each
Security Registrar in writing of the Securities selected for redemption and, in
the case of any Securities selected for partial redemption, the principal amount
thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of such Securities which has been or is to be redeemed.
SECTION 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register.
All notices of redemption provide the CUSIP numbers of the
Securities to be redeemed and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
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(3) if less than all the Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption of
any Securities, the principal amounts) of the particular Securities to
be redeemed,
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and that
interest thereon will cease to accrue on and after said date,
(5) the place or places where such Securities are
to be surrendered for payment of the Redemption Price,
and
(6) that in the case that a Security is only redeemed in part,
the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new
Security or Securities in an aggregate amount equal to the unredeemed
portion of the Security.
Notice of redemption of Securities to be redeemed pursuant to
this Article Eleven shall be given by the Company or, at the Company's request,
by the Trustee in the name and at the expense of the Company.
SECTION 1106. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an amount
of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) any accrued interest on, all
the Securities which are to be redeemed on that date.
SECTION 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with said notice, such
Security
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shall be paid by the Company or Paying Agent at the Redemption Price, together
with any accrued interest to the Redemption Date; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Regular Record Dates according to their terms and the provisions of
Section 308.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal of (and premium, if any)
and interest on such Security shall be deemed overdue and shall, until paid,
bear interest from the Redemption Date at the rate provided by the Security.
SECTION 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at an office or agency of the Company designated for that purpose
pursuant to Section 1002 (with due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal
amount of the Security so surrendered.
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 1201. Company's Option to Effect Defeasance
or Covenant Defeasance.
The Company may at its option by Board Resolution, at any time
after the Exchange Offer has been consummated (or, if applicable, the Shelf
Registration Statement has been declared or otherwise become effective) in
accordance with the Exchange and Registration Rights Agreement, elect to have
either Section 1202 or Section 1203 applied to the Outstanding Securities upon
compliance with the conditions set forth below in this Article Twelve.
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SECTION 1202. Defeasance and Discharge.
Upon the Company's exercise of the option provided in Section
1201 applicable to this Section, the Company shall be deemed to have been
discharged from its obligations with respect to the Outstanding Securities, on
and after the date the conditions set forth below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
Outstanding Securities and to have satisfied all its other obligations under
such Securities and this Indenture insofar as such Securities are concerned (and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of such
Securities to receive, solely from the trust fund described in Section 1204 and
as more fully set forth in such Section, payments in respect of the principal of
(and premium, if any) and interest on such Securities when such payments are
due, (B) the Company's obligations with respect to such Securities under
Sections 304, 305, 306, 307, 1002, 1003 and 1019, (C) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (D) this Article
Twelve. Subject to compliance with this Article Twelve the Company may exercise
its option under this Section 1202 notwithstanding the prior exercise of its
option under Section 1203.
SECTION 1203. Covenant Defeasance.
Upon the Company's exercise of the option provided
in Section 1201 applicable to this Section, (i) the Company
shall be released from its obligations under Sections 1005 through 1018,
inclusive, and Section 1020 and Clauses (3) and (4) of Section 801, and (ii) the
occurrence of an event specified in Section 501(3) (with respect to Section 801,
only Clauses (1), (3) and (4) thereof), 501(4) (with respect to any of Sections
1005 through 1018, inclusive, and Section 1020), 501(5) and 501(6) shall not be
deemed to be an Event of Default on and after the date the conditions set forth
below are satisfied (hereinafter, "covenant defeasance"). For this purpose, such
covenant defeasance means that the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such Section, Clause or Article, whether directly or indirectly by reason of
any reference elsewhere herein to
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any such Section, Clause or Article or by reason of any reference in any such
Section, Clause or Article to any other provision herein or in any other
document; but the remainder of this Indenture and such Securities shall be
unaffected thereby.
SECTION 1204. Conditions to Defeasance or
Covenant Defeasance.
The following shall be the conditions to application of either
Section 1202 or Section 1203 to the then Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the
requirements of Section 609 who shall agree to comply with the
provisions of this Article Twelve applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Securities, (A) money in an amount, or (B) U.S.
Government Obligations which through the scheduled payment of principal
and interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment,
money in an amount, or (C) a combination thereof, in an amount
sufficient in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written opinion
with respect thereto delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or other qualifying trustee)
to pay and discharge, the principal of (premium, if any) and each
installment of interest, if any, on the Outstanding Securities on the
Stated Maturity of such principal or installment of interest in
accordance with the terms of this Indenture and of such Securities.
(2) In the case of an election under Section 1202, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of the Outstanding Securities will not
recognize gain or loss for Federal income tax
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purposes as a result of such deposit, defeasance and discharge and will
be subject to Federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred.
(3) In the case of an election under Section 1203, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the Outstanding Securities will not recognize gain
or loss for Federal income tax purposes as a result of such deposit and
covenant defeasance and will be subject to Federal income tax on the
same amount, in the same manner and at the same times as would have
been the case if such deposit and covenant defeasance had not occurred.
(4) The Company shall have delivered to the Trustee an
Officer's Certificate to the effect that the Securities, if then listed
on any securities exchange or approved for trading in any automated
quotation system, will not be delisted or disapproved for such trading
as a result of such deposit.
(5) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default shall have occurred and
be continuing on the date of such deposit or, insofar as subsections
501(7) and (8) are concerned, at any time during the period ending on
the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of
such period).
(6) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the
meaning of such Act).
(7) Such defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which it
is bound.
(8) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance
under Section 1202 or the covenant defeasance under
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Section 1203 (as the case may be) have been complied with.
(9) Such defeasance or covenant defeasance shall not result in
the trust arising from such deposit constituting an investment company
as defined in the Investment Company Act of 1940, as amended from time
to time, or such trust shall be qualified under such act or exempt from
regulation thereunder.
SECTION 1205. Deposited Money and U.S. Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section
1003, all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee -- collectively, for
purposes of this Section 1205, the "Trustee") pursuant to Section 1204 in
respect of the Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities, of all sums due and to become due thereon in respect of
principal (and premium, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1204 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the Out standing Securities.
Anything in this Article Twelve to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon Company Request and be relieved of all liability with respect to any
money or U.S. Government Obligations held by it as provided in Section 1204
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written opinion with respect thereto delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or cove-
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nant defeasance.
SECTION 1206. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any
money in accordance with Section 1202 or 1203 by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article Twelve until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 1202 or 1203; provided, however, that if the Company makes any payment
of principal of (and premium, if any) or interest on any Security following the
reinstatement of its obligations, the Trustee or Paying Agent shall promptly pay
any such amount to the Holder of the Securities and the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money held by the Trustee or the Paying Agent.
ARTICLE THIRTEEN
Subordination of Securities
SECTION 1301. Securities Subordinate to Senior Debt.
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and agrees, that, to the
extent and in the manner hereinafter set forth in this Article (subject to the
provisions of Article Four and Article Twelve), the payment of the principal of
(and premium, if any) and interest (including any Special Interest) on the
Securities and all other Obligations in respect of the Securities or on account
of any Claim (collectively, the "Subordinated Obligations") are hereby expressly
made subordinate and subject in right of payment to the prior payment in full of
all Senior Debt of the Company.
SECTION 1302. Payment Over of Proceeds Upon
Dissolution, Etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or to its
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creditors, as such, or to its assets, or (b) any liquidation, dissolution or
other winding up of the Company, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the Company,
then and in any such event specified in (a), (b) or (c) above (each such event,
if any, herein sometimes referred to as an "Insolvency Proceeding") the holders
of all Senior Debt of the Company shall first be entitled to receive payment in
full of the principal of (and premium, if any), interest on and all other
Obligations in respect of such Senior Debt, including all amounts due or to
become due on all such Senior Debt, or provision shall be made for such payment
in cash or cash equivalents or otherwise in a manner satisfactory to the holders
of such Senior Debt, before the Holders of the Securities are entitled to
receive any payment or distribution of any kind or character from the Company,
whether in cash, property or securities (including any payment or distribution
which may be payable or deliverable by reason of the payment of any other Debt
of the Company subordinated to the payment of the Securities) on account of the
Subordinated Obligations or on account of any purchase, redemption or other
acquisition of Securities by the Company or any Subsidiary of the Company (all
such payments, distributions, purchases and acquisitions herein referred to,
individually and collectively, as a "Securities Payment"), and to that end the
holders of Senior Debt of the Company shall be entitled to receive, for
application to the payment thereof, any Securities Payment which may be payable
or deliverable in respect of the Securities in any such Insolvency Proceeding.
If notwithstanding the foregoing provisions of this Section,
the Trustee or the Holder of any Security shall have received during the
pendency of any Insolvency Proceeding any Securities Payment before all Senior
Debt of the Company is paid in full or payment thereof provided for in cash or
cash equivalents or otherwise in a manner satisfactory to the holders of such
Senior Debt, then in such event such Securities Payment shall be paid over or
delivered forthwith to the holders of Senior Debt for application to the payment
of such Senior Debt remaining unpaid, to the extent necessary to pay such Senior
Debt in full, after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Debt. Notwithstanding the foregoing, Holders
of the Securities may receive Subordinated Securities.
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The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the Company
following the conveyance or transfer of all or substantially all of its
properties and assets as an entirety to another Person upon the terms and
conditions set forth in Article Eight shall not be deemed an Insolvency
Proceeding for the purposes of this Section if the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer such properties and assets as an entirety, as the case
may be, shall, as a part of such consolidation, merger, conveyance or transfer,
comply with the conditions set forth in Article Eight.
SECTION 1303. No Payment When Senior Debt in Default.
In the event that any Senior Payment Default (as defined
below) shall have occurred and be continuing, then no Securities Payment (except
for Subordinated Securities) shall be made unless and until such Senior Payment
Default shall have been cured or waived in writing in accordance with the
instruments governing such Designated Senior Debt or shall have ceased to exist
or all amounts then due and payable in respect of Senior Debt of the Company
shall have been paid in full, or provision shall have been made for such payment
in cash or otherwise in a manner satisfactory to the holders of such Senior
Debt. "Senior Payment Default" means (i) any default in the payment of principal
of (or premium, if any) or interest on or any other payment Obligation owing in
respect of any Designated Senior Debt of the Company and (ii) any event of
default with respect to Designated Senior Debt of the Company which has resulted
in such Designated Senior Debt becoming or being declared due and payable prior
to the date on which it would otherwise have become due and payable.
In the event that any Senior Nonmonetary Default (as defined
below) shall have occurred and be continuing, then, upon the receipt by the
Company and the Trustee of written notice of such Senior Nonmonetary Default
from the administrative agent under the New Credit Facility or the trustee or
other authorized representative of the holders of any Designated Senior Debt (in
any case, a "Senior Representative"), no Securities Payment (except for
Subordinated Securities) shall be made during the period (the "Blockage Period")
commencing on the date of such receipt of such written notice and ending on the
earliest of
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(i) 179 days after such date, (ii) the date, if any, on which the Designated
Senior Debt to which such default relates is paid in full or such default is
waived in writing in accordance with the instruments governing such Designated
Senior Debt or otherwise cured and (iii) the date on which the Company and the
Trustee receive written notice from such Senior Representative terminating the
Blockage Period. If notwithstanding the foregoing the Trustee or the Holder of
any Security receives during the pendency of any Blockage Period any Securities
Payment before such Designated Senior Debt is paid in full or payment thereof is
provided for in cash or cash equivalents or otherwise in a manner satisfactory
to the holders of such Designated Senior Debt, then in such event such
Securities Payment will be required to be paid over or delivered forthwith to
the holders of such Designated Senior Debt for application to the payment
thereof, to the extent necessary to pay such Designated Senior Debt in full.
Notwithstanding the foregoing, Holders of the Securities may receive
Subordinated Securities. "Senior Nonmonetary Default" means the occurrence or
existence and continuance of any event of default, or of any event which, after
notice or lapse of time (or both), would become an event of default, under the
terms of any instrument pursuant to which any Designated Senior Debt of the
Company is outstanding, permitting (after notice or lapse of time or both) one
or more holders of such Designated Senior Debt (or a trustee or agent on behalf
of the holders thereof) to declare such Designated Senior Debt due and payable
prior to the date on which it would otherwise become due and payable, other than
a Senior Payment Default.
During any 360-day period, the aggregate of all Blockage
Periods shall not exceed 179 days and there shall be a period of at least 181
consecutive days in each consecutive 360-day period when no Blockage Period is
in effect. When no Blockage Period is in effect, the Company may make all
required payments (including any such payments not made during any Blockage
Period) in respect of the Securities not prohibited by the terms of these
subordination provisions. No Senior Payment Default or Senior Nonmonetary
Default that existed or was continuing on the date of commencement of any
Blockage Period will be, or can be, made the basis for the commencement of a
subsequent Blockage Period, unless such default has been cured or waived for a
period of not less than 90 consecutive days.
The provisions of this Section shall not apply to
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any Securities Payment with respect to which Section 1302 would be applicable.
If a payment of the Securities is accelerated because of an
Event of Default, the Company shall promptly notify holders of Senior Debt of
the acceleration.
In the event that the Trustee or any Holder receives any
payment of any Obligations with respect to the Securities at the time when such
payment is prohibited by this Article Thirteen, such payment shall be held by
the Trustee or such Holder, in trust for the benefit of, and shall be paid
forthwith over and delivered to, the holders of Senior Debt as their interest
may appear or their Senior Representative, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent necessary
to pay such obligations in full in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
SECTION 1304. Certain Payments Permitted.
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent the Company, at any time
except during the pendency of any Insolvency Proceeding referred to in Section
1302 or under the conditions described in Section 1303, from making Securities
Payments.
SECTION 1305. Subrogation to Rights of Holders of Senior
Debt.
Subject to the payment in full in cash of all amounts due or
to become due on or in respect of Senior Debt of the Company, or the provision
for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of such Senior Debt, the Holders of the Securities
shall be subrogated to the rights of the holders of such Senior Debt to receive
payments and distributions of cash, property and securities applicable to such
Senior Debt until the principal of (and premium, if any) and interest on the
Securities shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Debt of the Company of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and no payments
over pursuant to the provisions of
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this Article to the holders of Senior Debt of the Company, as the case may be,
by Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Debt and the Holders of the Securities,
be deemed to be a payment or distribution by the Company to or on account of the
Senior Debt of the Company.
SECTION 1306. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for
the purpose of defining the relative rights of the Holders on the one hand and
the holders of Senior Debt on the other hand. Nothing contained in this Article
or elsewhere in this Indenture or in the Securities is intended to or shall (a)
impair, as among the Company, its creditors other than holders of Senior Debt
and the Holders of the Securities, the obligation of the Company, which is
absolute and unconditional (and which, subject to the rights under this Article
of the holders of Senior Debt, is intended to rank equally with all other
general obligations of the Company), to pay to the Holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms; or (b)
affect the relative rights against the Company of the Holders of the Securities
and creditors of the Company other than the holders of Senior Debt; or (c)
prevent the Trustee or the Holder of any Security from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article of the holders of Senior Debt to
receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder.
SECTION 1307. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes
including, without limitation, the timely filing of a claim for the unpaid
balance of the Security held by such Holder in the form required in any
Insolvency Proceeding and causing such claim to be approved. If a proper claim
or proof of debt in the form required in such proceeding is not filed prior to
30 days before the expiration of the time to file such claims or proofs, then,
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so long as any Senior Debt is committed or outstanding under the New Credit
Facility, the Senior Representative for the New Credit Facility is hereby
authorized, and shall have the right (without any duty), to file an appropriate
claim for and on behalf of such Holders of the Securities.
SECTION 1308. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Debt, even if any right of reimbursement or subrogation or other right or
remedy of any Holder is affected, impaired or extinguished thereby, do any one
or more of the following:
(1) change the manner, place or terms of payment or change or
extend the time of payment of, or renew, exchange, amend, increase or
alter, the terms of any Senior Debt, any security therefor or guaranty
thereof or any liability of any obligor thereon (including any
guarantor) to such holder, or any liability incurred directly or
indirectly in respect thereof or otherwise amend, renew, exchange,
extend, modify, increase or supplement in any manner any Senior Debt or
any instrument evidencing or guaranteeing or securing the same or any
agreement under which Senior Debt is outstanding
(2) sell, exchange, release, surrender, realize upon, enforce
or otherwise deal with in any manner and in any order any property
pledged, mortgaged or otherwise securing Senior Debt or any liability
of any obligor thereon, to such holder, or any liability incurred
directly or indirectly in respect thereof;
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(3) settle or compromise any Senior Debt or any other
liability of any obligor of the Senior Debt to such holder or any
security therefor or any liability incurred directly or indirectly in
respect thereof and apply any sums by whomsoever paid and however
realized to any liability (including without limitation, Senior Debt)
in any manner or order; and
(4) fail to take or to record or otherwise perfect, for any
reason or for no reason, any lien or security interest securing Senior
Debt by whomsoever granted, exercise or delay in or refrain from
exercising any right or remedy against any obligor or any guarantor or
any other person, elect any remedy and otherwise deal freely with any
obligor and any security for the Senior Debt or any liability of any
obligor to such holder of any liability incurred directly or indirectly
in respect thereof.
SECTION 1309. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Securities. Notwithstanding the provisions
of this Article or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 601, shall be entitled in all respects to assume that no such facts
exist, provided that nothing in this Section 1309 shall impair the subordination
provisions of this Article Thirteen.
Subject to the provisions of Section 601, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Debt (or a trustee, representative
or agent therefor) to establish that such notice has been given by a holder of
Senior Debt (or a trustee, representative or agent therefor). In the event that
the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of Senior Debt to
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participate in any payment or distribution pursuant to this Article, the Trustee
may request such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Debt held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under this Article, and
if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.
SECTION 1310. Reliance on Judicial Order or Certificate of
Liquidation Agent.
Upon any payment or distribution of assets or securities of
the Company referred to in this Article, the Trustee, subject to the provisions
of Section 601, and the Holders of the Securities shall be entitled to rely upon
any order or decree entered by any court of competent jurisdiction in which any
proceeding is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or to
the Holders of Securities, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior Debt
and other indebtedness of the Company, as the case may be, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article.
SECTION 1311. Trustee Not Fiduciary for Holders of Senior
Debt.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Debt and shall not be liable (except for its gross
negligence or willful misconduct) to any such holders if it shall in good faith
mistakenly pay over or distribute to Holders of Securities or to the Company or
to any other Person cash, property or securities to which any holders of Senior
Debt shall be entitled by virtue of this Article or otherwise. The Trustee shall
not be charged with knowledge of the existence of Senior Debt or of any facts
that would prohibit any payment hereunder unless the Trustee shall have received
notice to that effect at the address of the Trustee set forth in Section 105.
With respect to the holders of Senior Debt, the Trustee undertakes to perform or
to observe only
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such of its covenants or obligations as are specifically set forth in this
Article and no implied covenants or obligations with respect to holders of
Senior Debt shall be read into this Indenture against the Trustee.
SECTION 1312. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article with respect to any Senior Debt which
may at any time be held by it, to the same extent as any other holder of Senior
Debt, and nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder.
Nothing in this Article shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 607.
SECTION 1313. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; provided,
however, that this Section 1313 shall not apply to the Company or any Affiliate
of the Company if it or such Affiliate acts as Paying Agent.
SECTION 1314. Defeasance of this Article Thirteen.
The subordination of the Securities provided by this Article
Thirteen is expressly made subject to the provisions for defeasance or covenant
defeasance in Articles Four and Twelve and, anything herein to the contrary
notwithstanding, upon the effectiveness of any such defeasance or covenant
defeasance, the Securities then Outstanding shall thereupon cease to be
subordinated pursuant to this Article Thirteen.
ARTICLE FOURTEEN
Jurisdiction and Consent to Service of Process
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SECTION 1401. Jurisdiction and Consent to Service of
Process.
(a) The Company hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to the Securities or this Indenture, or
for recognition or enforcement of any judgment, and the Company hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. The Company agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Article Fourteen shall affect any right that
any Holder or the Trustee may otherwise have to bring any action or proceeding
relating to the Securities or this Indenture against the Company or its
properties in the courts of any jurisdiction.
(b) The Company hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to the Securities or this Indenture in any
New York State or Federal court. The Company hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) The Company irrevocably consents to service of process in
the manner provided for notices in Section 105. Nothing in this Agreement will
affect the right of any Holder or the Trustee to serve process in any other
manner permitted by law.
--------------------
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
Insilco Corporation,
By: /s/ David A. Kauer
---------------------------
Name: David A. Kauer
Title: Vice President and
Treasurer
By: /s/ Kenneth H. Koch
---------------------------
Name:
Title:
THE BANK OF NEW YORK,
As Trustee
By: /s/ Mary Jane Morrissey
---------------------------
Name: Mary Jane Morrissey
Title: Vice President
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STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK)
On the 12th day of August, 1997, before me personally came
David A. Kauer, to me known, who, being by me duly sworn, did depose and say
that he is the Vice President and Treasurer of Insilco Corporation, the
corporation described in and which executed the foregoing instrument, and that
he signed his name thereto by authority of the Board of Directors of said
corporation.
/s/ Diane M. Carbone
--------------------
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STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK)
On the 12th day of August, 1997, before me personally came
Kenneth H. Koch, to me known, who, being by me duly sworn, did depose and say
that he is the Vice President, General Counsel and Secretary of Insilco
Corporation, the corporation described in and which executed the foregoing
instrument, and that he signed his name thereto by authority of the Board of
Directors of said corporation.
/s/ Diane M. Carbone
--------------------
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ANNEX A -- Form of
Regulation S Certificate
REGULATION S CERTIFICATE
(For transfers pursuant to Section 306(b)(i) of the Indenture)
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Re: 10.25% Senior Subordinated Notes due 2007
of Insilco Corporation
(the "Securities")
Reference is made to the Indenture, dated as of August 12,
1997 (the "Indenture"), from Insilco Corporation (the "Company") to The Bank of
New York, as Trustee. Terms used herein and defined in the Indenture or in
Regulation S or Rule 144 under the U.S. Securities Act of 1933 (the "Securities
Act") are used herein as so defined.
This certificate relates to U.S. $____________ principal
amount of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
The Specified Securities are represented by a Global Security and are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner.
The Owner has requested that the Specified Securities be
transferred to a person (the "Transferee") who will take delivery in the form of
a beneficial interest in a Regulation S Global Security. In connection with such
transfer, the Owner hereby certifies that, unless such
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transfer is being effected pursuant to an effective registration statement under
the Securities Act, it is being effected in accordance with Rule 904 or Rule 144
under the Securities Act and with all applicable securities laws of the states
of the United States and other jurisdictions. Accordingly, the Owner hereby
further certifies as follows:
(1) Rule 904 Transfers. If the transfer is being effected in
accordance with Rule 904:
(A) the Owner is not a distributor of the Securities,
an affiliate of the Company or any such distributor or a
person acting on behalf of any of the foregoing;
(B) the offer of the Specified Securities was not
made to a person in the United States;
(C) either:
(i) at the time the buy order was
originated, the Transferee was outside the United
States or the Owner and any person acting on its
behalf reasonably believed that the Transferee was
outside the United States, or
(ii) the transaction is being executed in,
on or through the facilities of the Eurobond market,
as regulated by the Association of International Bond
Dealers, or another designated offshore securities
market and neither the Owner nor any person acting on
its behalf knows that the transaction has been
prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the
United States by or on behalf of the Owner or any affiliate
thereof;
(E) if the Owner is a dealer in securities or has
received a selling concession, fee or other remuneration in
respect of the Specified Securities, and the transfer is to
occur during the Restricted Period, then the requirements of
Rule 904(c)(1) have been satisfied; and
(F) the transaction is not part of a plan or
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scheme to evade the registration requirements of the
Securities Act.
(2) Rule 144 Transfers. If the transfer is being effected
pursuant to Rule 144:
(A) the transfer is occurring after a holding period
of at least one year (computed in accordance with paragraph
(d) of Rule 144) has elapsed since the Specified Securities
were last acquired from the Company or from an affiliate of
the Company, whichever is later, and is being effected in
accordance with the applicable amount, manner of sale and
notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period
of at least two years (computed in accordance with paragraph
(d) of Rule 144) has elapsed since the Specified Securities
were last acquired from the Company or from an affiliate of
the Company, whichever is later, and the Owner is not, and
during the preceding three months has not been, an affiliate
of the Company.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Initial Purchasers.
Dated: ___________________________________
(Print the name of the Undersigned,
as such term is defined in the
second paragraph of this
certificate.)
By:_______________________________
Name:
Title:
(If the Undersigned is a
corporation, partnership or
fiduciary, the title of the person
signing on behalf of the
Undersigned must be stated.)
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<PAGE> 155
ANNEX B -- Form of Restricted
Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 306(b)(ii) of the Indenture)
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Re: 10.25% Senior Subordinated Notes due 2007
of Insilco Corporation
(the "Securities")
Reference is made to the Indenture, dated as of August 12,
1997 (the "Indenture"), from Insilco Corporation (the "Company") to The Bank of
New York, as Trustee. Terms used herein and defined in the Indenture or in Rule
144A or Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act")
are used herein as so defined.
This certificate relates to U.S. $_____________ principal
amount of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No(s). ___________________________
ISIN No(s). If any. ____________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
The Specified Securities are represented by a Global Security and are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner.
The Owner has requested that the Specified Securities be
transferred to a person (the "Transferee") who will take delivery in the form of
a beneficial interest in a Restricted Global Security. In connection with such
transfer, the Owner hereby certifies that, unless such transfer is being
effected pursuant to an effective registration statement under the Securities
Act, (i) the Owner is not a U.S. Person (as defined in the Indenture) and (ii)
such transfer is being effected in accordance with Rule
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<PAGE> 156
144A or Rule 144 under the Securities Act and all applicable securities laws of
the states of the United States and other jurisdictions. Accordingly, the Owner
hereby further certifies as follows:
(1) Rule 144A Transfers. If the transfer is
being effected in accordance with Rule 144A:
(A) the Specified Securities are being transferred to
a person that the Owner and any person acting on its behalf
reasonably believe is a "qualified institutional buyer" within
the meaning of Rule 144A, acquiring for its own account or for
the account of a qualified institutional buyer; and
(B) the Owner and any person acting on its behalf
have taken reasonable steps to ensure that the Transferee is
aware that the Owner may be relying on Rule 144A in connection
with the transfer; and
(2) Rule 144 Transfers. If the transfer is being
effected pursuant to Rule 144:
(A) the transfer is occurring after a holding period
of at least one year (computed in accordance with paragraph
(d) of Rule 144) has elapsed since the Specified Securities
were last acquired from the Company or from an affiliate of
the Company, whichever is later, and is being effected in
accordance with the applicable amount, manner of sale and
notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period
of at least two years (computed in accordance with paragraph
(d) of Rule 144) has elapsed since the Specified Securities
were last acquired from the Company or from an affiliate of
the Company, whichever is later, and the Owner is not, and
during the preceding three months has not been, an affiliate
of the Company.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Initial Purchasers.
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<PAGE> 157
Dated: ____________________________________
(Print the name of the Undersigned,
as such term is defined in the
second paragraph of this
certificate.)
By:_________________________________
Name:
Title:
(If the Undersigned is a
corporation, partnership or
fiduciary, the title of the person
signing on behalf of the
Undersigned must be stated.)
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<PAGE> 158
ANNEX C -- Form of Unrestricted
Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to Section 306(c))
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Re: 10.25% Senior Subordinated Notes due 2007
of Insilco Corporation
(the "Securities")
Reference is made to the Indenture, dated as of August 12,
1997 (the "Indenture"), from Insilco Corporation (the "Company") to The Bank of
New York, as Trustee. Terms used herein and defined in the Indenture or in Rule
144 under the U.S. Securities Act of 1933 (the "Securities Act")
are used herein as so defined.
This certificate relates to U.S. $_____________ principal
amount of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be
exchanged for Securities bearing no Securities Act Legend pursuant to Section
306(c) of the Indenture. In connection with such exchange, the Owner hereby
certifies
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<PAGE> 159
that the exchange is occurring after a holding period of at least two years
(computed in accordance with paragraph (d) of Rule 144) has elapsed since the
Specified Securities were last acquired from the Company or from an affiliate of
the Company, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company. The Owner also
acknowledges that any future transfers of the Specified Securities must comply
with all applicable securities laws of the states of the United States and other
jurisdictions.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Initial Purchasers.
Dated: ___________________________________
(Print the name of the Undersigned,
as such term is defined in the
second paragraph of this
certificate.)
By:________________________________
Name:
Title:
(If the Undersigned is a
corporation, partnership or
fiduciary, the title of the person
signing on behalf of the
Undersigned must be stated.)
C-2
<PAGE> 1
Exhibit 4(l)
INSILCO CORPORATION
10.25% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
August 7, 1997
Goldman, Sachs & Co.,
McDonald & Company Securities, Inc.,
Citicorp Securities, Inc.,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
Insilco Corporation, a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$150,000,000 principal amount of the 10.25% Senior Subordinated Notes due 2007
specified above (the "Notes" or the "Securities"). The net proceeds from the
issuance of the Notes will be used (i) to fund the purchase of up to 2,857,142
shares of the Company's common stock, par value $0.001 per share (the "Common
Stock") at a price of $38.50 per share from shareholders of the Company by way
of a tender offer by the Company which commenced on July 11, 1997, (ii) to repay
loans under the New Credit Facility (as such term is defined in the Offering
Circular (as defined below)), (iii) to pay fees and expenses of the Transactions
(as such term is defined in the Offering Circular) and (iv) for general
corporate purposes.
1. The Company represents and warrants to, and agrees with, each of
the Purchasers that:
(a) A preliminary offering circular, dated July 28, 1997 (the
"Preliminary Offering Circular") and an offering circular, dated August 7,
1997 (the "Offering Circular") have been prepared in connection with the
offering of the Securities. The Exchange Act Reports (as defined below),
when they were or are filed with the United States Securities and Exchange
Commission (the "Commission"), conformed or will conform in all material
respects to the applicable requirements of the United States Securities
Exchange Act of 1934 (the "Exchange Act") and the applicable
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<PAGE> 2
rules and regulations of the Commission thereunder. The Preliminary
Offering Circular, the Offering Circular and any amendments or supplements
thereto did not and will not, as of their respective dates, and the
Exchange Act Reports did not and will not, as of their respective filing
dates, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the
Company by a Purchaser through Goldman, Sachs & Co. expressly for use
therein. "Exchange Act Reports" means the Company's Annual Report on Form
10-K for its most recently ended fiscal year and all subsequent documents
filed by the Company with the Commission pursuant to Section 13(a), 13(c),
13(e) or 15(d) of the Exchange Act;
(b) Other than as set forth or contemplated in the Offering
Circular, neither the Company nor any of its Subsidiaries (as such term is
defined in the Offering Circular under "Description of the Notes") has
sustained since the date of the latest audited financial statements
included in the Offering Circular any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, in each case which would have a material adverse
effect on the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
Subsidiaries taken as a whole (a "Material Adverse Effect"); and, since
the respective dates as of which information is given in the Offering
Circular, there has not been any change in the consolidated capital stock
or long-term debt (other than pursuant to the New Credit Facility) of the
Company or any of its Subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
Subsidiaries taken as a whole, otherwise than as set forth or contemplated
in the Offering Circular;
(c) The Company and its Subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except such liens as have been incurred pursuant
to the New Credit Facility and with such exceptions as are described in
the Offering Circular or as would not have a Material Adverse Effect; and
any real property and buildings held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as would not have a Material Adverse Effect;
(d) The Company and each of its Subsidiaries has been duly
incorporated and is validly existing as a corporation, in good standing
under the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Offering Circular, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it
owns or leases
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<PAGE> 3
properties or conducts any business in each case so as to require such
qualification, except where the failure to be so qualified in any such
jurisdiction would not have a Material Adverse Effect;
(e) The Company had at June 30, 1997 an authorized capitalization as
set forth in the Offering Circular, and all of the issued shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable; all of the issued shares of
capital stock of each Subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and (except for
directors' qualifying shares and except as otherwise set forth in the
Offering Circular) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims except such liens
as have been incurred pursuant to the New Credit Facility; and, on the
date of the Indenture (as defined below), each Subsidiary of the Company
other than Thermal Components, Inc. will be a "Restricted Subsidiary"
within the meaning of the Indenture;
(f) The Notes have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed,
authenticated (assuming due execution by a duly authorized officer of the
Trustee), issued and delivered by the Company and will constitute valid
and legally binding obligations of the Company entitled to the benefits
provided by the indenture to be dated as of August 12, 1997 (the
"Indenture") between the Company and The Bank of New York, as trustee (the
"Trustee"), under which they are to be issued, which will be substantially
in the form previously delivered to you; the Indenture has been duly
authorized by the Company and, when executed and delivered by the Company
and the Trustee, the Indenture will constitute a valid and legally binding
instrument, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; the Indenture, when executed and delivered by
the Company and the Trustee, will be in a form which meets the
requirements for qualification under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"); and the Securities and the Indenture
will conform in all material respects to the descriptions thereof in the
Offering Circular and will be in substantially the form previously
delivered to you;
(g) The Exchange and Registration Rights Agreement between the
Company and the Purchasers to be dated as of August 12, 1997 (the
"Registration Rights Agreement"), which shall be substantially in the form
previously delivered to you, has been duly authorized by the Company, and,
when executed and delivered by the Company (assuming due authorization,
execution and delivery by the Purchasers), will constitute a valid and
legally binding agreement of the Company enforceable in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles, and will
conform in all material respects to the description thereof in the
Offering Circular;
(h) Prior to the date hereof, neither the Company nor any of its
affiliates
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<PAGE> 4
has taken any action which is designed to or which has constituted or
which might have been expected to cause or result in stabilization or
manipulation of the price of any security of the Company in connection
with the offering of the Securities;
(i) The issue and sale of the Securities, the execution and delivery
of this Agreement, the Indenture, the Securities and the Registration
Rights Agreement and the compliance by the Company with all of the
provisions of the Securities, the Indenture, this Agreement and the
Registration Rights Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, sale/leaseback
agreement, loan agreement, lease or other agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound or to which any of the property or
assets of the Company or any of its Subsidiaries is subject, except for
any such conflicts, breaches, violations or defaults as would not have a
Material Adverse Effect, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or By-laws of the
Company or any statute or any order, rule or regulation of any United
States court or governmental agency or body having jurisdiction over the
Company or any of its Subsidiaries or any of its or their properties,
except for any violation of any such statute, order, rule or regulation as
would not have a Material Adverse Effect; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of
the Securities or the consummation by the Company of the transactions
contemplated by this Agreement, the Indenture or the Registration Rights
Agreement, except in connection with registration statements to be filed
by the Company with the Commission pursuant to the United States
Securities Act of 1933, as amended (the "Act"), pursuant to Section 5(l)
hereof, any related qualification of the Indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), the filing
of a notice on Form D by the Company with the Commission pursuant to
Section 5(h) hereof, the filing by the Company with the Commission of
reports under the Exchange Act and such consents, approvals,
authorizations, registrations, notifications or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Purchasers;
(j) Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation or By-laws or in default in the
performance or observance of any obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound, except for any such default as would
not have a Material Adverse Effect;
(k) The statements set forth in the Offering Circular under the
caption "Description of the Notes", insofar as they purport to constitute
a summary of the terms of the Securities, and in the Offering Circular
under the captions "Summary", "Risk Factors", "Management's Discussion and
Analysis of Financial Condition and Results of Operations", "Business and
Properties" and "Offer and Resale", insofar as
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<PAGE> 5
they purport to describe the provisions of the laws and documents referred
to therein, are accurate and complete in all material respects;
(l) Other than as set forth in the Offering Circular, there are no
legal or governmental proceedings pending to which the Company or any of
its Subsidiaries is a party or of which any property of the Company or any
of its Subsidiaries is the subject which, if determined adversely to the
Company or any of its Subsidiaries, would individually or in the aggregate
have a Material Adverse Effect; and, to the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(m) When the Securities are issued and delivered pursuant to this
Agreement, none of the Securities will be of the same class (within the
meaning of Rule 144A under the Act) as securities which are listed on a
national securities exchange registered under Section 6 of the Exchange
Act or quoted in a U.S. automated inter-dealer quotation system;
(n) The Company is subject to Section 13 or 15(d) of the Exchange
Act;
(o) The Company is not, and after giving effect to the offering and
sale of the Securities, will not be, an "investment company" as such term
is defined in the United States Investment Company Act of 1940, as amended
(the "Investment Company Act");
(p) Neither the Company nor any person acting on its behalf (other
than the Purchasers and their respective affiliates (except for the
Company, its Subsidiaries and its joint ventures), as to which the Company
makes no representation, warranty or agreement) has offered or sold the
Securities by means of any general solicitation or general advertising
within the meaning of Rule 502(c) under the Act or, with respect to
Securities sold outside the United States to non-U.S. persons (as defined
in Rule 902 under the Act), by means of any directed selling efforts
within the meaning of Rule 902 under the Act and the Company and any
person acting on its behalf (other than the Purchasers and their
respective affiliates (except for the Company, its Subsidiaries and its
joint ventures), as to which the Company makes no representation, warranty
or agreement) has complied with and will implement the "offering
restriction" within the meaning of such Rule 902;
(q) Within the preceding six months, neither the Company nor any
other person acting on its behalf has offered or sold to any person any
Securities, or any securities of the same or a similar class as the
Securities, other than Securities offered or sold to the Purchasers
hereunder. The Company will take reasonable precautions designed to insure
that any offer or sale, direct or indirect, in the United States or to any
U.S. person (as defined in Rule 902 under the Act) of any Securities or
any substantially similar security issued by the Company, within six
months subsequent to the date on which the distribution of the Securities
has been completed (as notified to the Company by Goldman, Sachs & Co.),
is made under restrictions and other circumstances reasonably designed not
to affect the status of
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<PAGE> 6
the offer and sale of the Securities in the United States and to U.S.
persons contemplated by this Agreement as transactions exempt from the
registration provisions of the Act;
(r) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company and its Subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(s) The Company on behalf of itself and its Subsidiaries maintains
insurance (or self-insurance) of the types and in the amounts reasonably
believed by the Company to be adequate for its and its Subsidiaries'
respective businesses and to be consistent with the insurance coverage
customarily maintained by other businesses in its industry, including
insurance covering real and personal property owned or leased by the
Company or its Subsidiaries against theft, damage, destruction and all
other risks customarily insured against, all of which insurance is in full
force and effect except as would not have a Material Adverse Effect; and
(t) No holder of any security of the Company has or will have any
right to require the registration of such security by virtue of any
transactions contemplated by this Agreement or the Registration Rights
Agreement other than any such right hereunder or under the Registration
Rights Agreement or any such right that has been expressly waived in
writing.
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Purchasers, and each of the Purchasers
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 97% of the principal amount thereof, plus accrued interest, if any,
from August 12, 1997 to the Time of Delivery hereunder, the principal amount of
Notes set forth opposite the name of such Purchaser in Schedule I hereto, plus
any additional principal amount of Notes that such Purchaser may become
obligated to purchase pursuant to Section 9 hereof.
3. Upon the authorization by you of the release of the Securities, the
several Purchasers propose to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company as set
forth in Annex I to this Agreement and as follows:
(a) It will offer and sell the Securities only to: (i) persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within the
meaning of Rule 144A under the Act in transactions meeting the requirements of
Rule 144A or (ii) upon the terms and conditions set forth in Annex I to this
Agreement;
(b) It is an "accredited investor" within the meaning of Rule 501 under
the Act; and
(c) It will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to the methods
described in Rule 502(c) under the Act.
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<PAGE> 7
4. (a) The Securities to be purchased by each Purchaser hereunder will be
represented by one or more definitive global Securities in book-entry form,
which will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Goldman, Sachs & Co., for the account of each Purchaser, against
payment by or on behalf of such Purchaser of the purchase price therefor by wire
transfer to an account specified by the Company of Federal (same day) funds, by
causing DTC to credit the Securities to the account of Goldman, Sachs & Co. at
DTC. The Company will cause the certificates representing the global Securities
to be made available to Goldman, Sachs & Co. for checking at least twenty-four
hours prior to the Time of Delivery (as defined below) at the office of DTC or
its designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be 9:30 a.m., New York City time, on August 12, 1997
(unless postponed pursuant to Section 9 hereof) or such other time and date as
Goldman, Sachs & Co. and the Company may agree upon in writing. Such time and
date are herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Purchasers
pursuant to Section 7(j) hereof, will be delivered at such time and date at the
offices of Sullivan & Cromwell, 125 Broad Street, New York, New York 10004 (the
"Closing Location"), and the Securities will be delivered at the Designated
Office, all at the Time of Delivery. A meeting will be held at the Closing
Location at 10:00 a.m., New York City time, on the New York Business Day next
preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to make no
amendment or any supplement to the Offering Circular which shall be disapproved
by you promptly after reasonable notice thereof; and to furnish you with copies
thereof;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as you may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business Day
next succeeding the date of this Agreement, to furnish the Purchasers with
copies of the Offering Circular, and from time to time, to furnish the
Purchasers with additional copies
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<PAGE> 8
thereof and of each amendment or supplement thereto in such quantities as you
may from time to time reasonably request; and if, at any time prior to the
expiration of nine months after the date of the Offering Circular, any event
shall have occurred as a result of which the Offering Circular as then amended
or supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Offering
Circular is delivered, not misleading, or, if for any other reason it shall be
necessary or desirable during such same period to amend or supplement the
Offering Circular, to notify you and upon your request to prepare and furnish
without charge to each Purchaser and to any dealer in securities as many copies
as you may from time to time reasonably request of an amended Offering Circular
or a supplement to the Offering Circular which will correct such statement or
omission or effect such compliance;
(d) During the period beginning from the date hereof and continuing until
the date 180 days after the Time of Delivery, not to offer, sell, contract to
sell or otherwise dispose of, except as provided hereunder, any securities of
the Company that are substantially similar to the Notes or that are convertible
into or exchangeable for, or otherwise represent a right to acquire, any such
securities, except as provided hereunder or with the prior written consent of
Goldman, Sachs & Co.;
(e) Not to be or become, at any time prior to the expiration of two years
after the Time of Delivery, an open-end investment company, unit investment
trust, closed-end investment company or face-amount certificate company that is
or is required to be registered under Section 8 of the Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or 15(d) of
the Exchange Act, for the benefit of holders from time to time of Securities, to
furnish at its expense, upon request, to holders of Securities and prospective
purchasers of Securities, information (the "Additional Issuer Information")
satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Act
with respect to the Securities;
(g) If requested by you at any time when any of the Securities are
outstanding, to use its best efforts to cause such Securities to be eligible for
the PORTAL trading system of the National Association of Securities Dealers,
Inc.;
(h) To file with the Commission, not later than 15 days after the Time of
Delivery, five copies of a notice on Form D under the Act (one of which will be
manually signed by a person duly authorized by the Company); to otherwise comply
with the requirements of Rule 503 under the Act; and to furnish promptly to you
evidence of each such required timely filing (including a copy thereof);
(i) To furnish to the holders of the Securities within 90 days after the
end of each fiscal year (or such other period as is prescribed by the Commission
for the filing of Annual Reports on Form 10-K, whether or not the Company is
required to file such reports) an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company and its
consolidated Subsidiaries certified by independent public accountants) and,
within 45 days after the end of each of the first three quarters of each fiscal
year (or such other period as is prescribed by the Commission for the filing of
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Quarterly Reports on Form 10-Q, whether or not the Company is required to file
such reports) (beginning with the fiscal quarter ending after the date of the
Offering Circular), consolidated summary financial information of the Company
and its Subsidiaries for such quarter in reasonable detail, which reports and
information, so long as the Company is filing with the Commission Annual Reports
on Form 10-K and Quarterly Reports on Form 10-Q, will consist of such Annual
Reports and Quarterly Reports;
(j) During a period of five years from the date of the Offering Circular,
to furnish to you copies of all reports or other communications (financial or
other) furnished to stockholders of the Company, and to deliver to you (i) as
soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any securities exchange on which
the Securities or any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its Subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
(k) During the period of two years after the Time of Delivery, the Company
will not, and will not permit any of its "affiliates" (as defined in Rule 144
under the Act), other than Goldman, Sachs & Co., to, resell any of the
Securities that have been reacquired by any of them except pursuant to an
effective registration statement under the Act;
(l) To execute and deliver the Registration Rights Agreement prior to the
Time of Delivery and, pursuant thereto, (A)(i) to file with the Commission
within 60 days after the Time of Delivery a registration statement under the Act
relating to an offer to exchange (such offer, the "Exchange Offer") any and all
of the Securities for a like aggregate principal amount of debt securities
issued by the Company, with terms substantially identical to the Securities
except that such debt securities shall have been registered pursuant to an
effective registration statement under the Act and shall not contain certain
provisions for additional interest (the "Exchange Securities"), and to use its
best efforts to cause such registration statement to be declared or become
effective as soon as practicable, but in no case later than 115 days after the
Time of Delivery, all in a manner which will permit persons who acquire the
Exchange Securities to resell the Exchange Securities pursuant to Section 4(1)
of the Act, or (ii) if prior to consummation of such Exchange Offer certain
existing Commission interpretations are changed such that the Exchange
Securities received by holders of Securities other than certain restricted
holders are not or would not be, upon receipt, transferable by each such holder
without restriction under the Act, in lieu thereof, to file and use its best
efforts to cause to be declared or become effective under the Act, no later than
100 days after such registration statement is filed, a "shelf" registration
statement relating to the resale of the Securities and (B)(i) on the date that
the registration statement filed pursuant to Clause A(i) or Clause A(ii) above
is filed with the Commission, to file a "shelf" registration statement (which
may be the registration statement filed pursuant to either Clause A(i) or Clause
A(ii) above if permitted by the rules and regulations of the Commission)
providing for the registration of, and the sale on a continuous or delayed basis
in secondary transactions by Goldman, Sachs & Co. of, Securities (in the event
of the filing of a "shelf" registration statement pursuant to Clause A(ii)
above) or Exchange Securities (in the event of an Exchange Offer pursuant to
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Clause A(i) above) and (ii) to use its best efforts to cause the registration
statement filed pursuant to Clause B(i) above to become or be declared effective
on or prior to the date (w) the Exchange Offer is completed pursuant to Section
2(a) of the Registration Rights Agreement or (x) the registration statement
filed pursuant to Clause A(ii) above becomes or is declared effective; and
(m) To use the net proceeds received by the Company from the sale of the
Securities pursuant to this Agreement in the manner specified in the Offering
Circular under the caption "The Transactions and Use of Proceeds".
6. The Company covenants and agrees with the several Purchasers that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
issue of the Securities and all other expenses in connection with the
preparation, printing and filing of the Preliminary Offering Circular and the
Offering Circular and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchasers and dealers; (ii) the cost of
printing, word processing or otherwise producing any Agreement among Purchasers,
this Agreement, the Indenture, the Registration Rights Agreement, the Blue Sky
and Legal Investment Memoranda, closing documents (including any compilations
thereof) and any other documents in connection with the offering, purchase, sale
and delivery of the Securities; (iii) all expenses in connection with the
qualification of the Securities for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the Purchasers in connection with such qualification and in
connection with the Blue Sky and legal investment surveys; (iv) any fees charged
by securities rating services for rating the Securities; (v) the cost of
preparing the Securities; (vi) the fees and expenses of the Trustee and any
agent of the Trustee and the fees and disbursements of counsel for the Trustee
in connection with the Indenture and the Securities; (vii) any cost incurred in
connection with the designation of the Securities for trading in PORTAL; and
(viii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section; provided, however, that the Purchasers agree to pay the Company
$375,000 as reimbursement for a portion of the costs and expenses incurred by
the Company pursuant to this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Purchasers will pay
all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of the Time of Delivery, true
and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) Sullivan & Cromwell, counsel for the Purchasers, shall have furnished
to you such opinion or opinions, dated the Time of Delivery, with respect to the
incorporation of the Company, the validity of the Indenture, the Securities and
the Registration Rights Agreement, the Offering Circular and such other related
matters as you may reasonably
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<PAGE> 11
request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters;
(b) Kenneth H. Koch, Vice President, General Counsel and Secretary of the
Company, shall have furnished to you his written opinion, dated the Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the state of Delaware,
with corporate power and authority to own its properties and conduct its
business as described in the Offering Circular;
(ii) Each Subsidiary of the Company listed on Schedule II hereto
(collectively, the "Significant Subsidiaries") is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with corporate power and authority to own its properties
and conduct its business as described in the Offering Circular;
(iii) At June 30, 1997 the Company had an authorized capitalization
as set forth in the Offering Circular, and all of the issued shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable;
(iv) To the knowledge of such counsel, the Company and each of its
Significant Subsidiaries has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties or conducts
any business in each case so as to require such qualification, except
where the failure to be so qualified in any such jurisdiction would not
have a Material Adverse Effect;
(v) All of the issued shares of capital stock of each Significant
Subsidiary and, to the knowledge of such counsel, each other Subsidiary of
the Company incorporated under the laws of any state of the United States
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims except such liens as have been
incurred pursuant to the New Credit Facility;
(vi) To such counsel's knowledge and other than as set forth in the
Offering Circular, there are no legal or governmental proceedings pending
to which the Company or any of its Subsidiaries is a party or of which any
property of the Company or any of its Subsidiaries is the subject which,
if determined adversely to the Company or any of its Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect; and, to
such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(vii) The issue and sale of the Securities, the execution and
delivery of this Agreement, the Indenture, the Securities and the
Registration Rights Agreement and the compliance by the Company with all
of the provisions of the Securities, the Indenture, this Agreement and the
Registration Rights Agreement and the consummation of the transactions
herein and therein contemplated will not conflict
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<PAGE> 12
with or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust,
sale/leaseback agreement, loan agreement, lease or other agreement or
instrument known to such counsel to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound or to which any of the property or assets of the Company or any
of its Subsidiaries is subject, except for any such conflicts, breaches,
violations or defaults as would not have a Material Adverse Effect nor
will such actions result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or, to the
knowledge of such counsel, any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its Subsidiaries or any of its or their properties,
except for any violation of any such statute, order, rule or regulation as
would not have a Material Adverse Effect;
(viii) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
having jurisdiction over the Company or any of its Significant
Subsidiaries or any of its or their properties is required for the issue
and sale of the Securities or the consummation by the Company of the
transactions contemplated by this Agreement, the Indenture or the
Registration Rights Agreement, except in connection with registration
statements to be filed by the Company with the Commission pursuant to
Section 5(l) hereof, any related qualification of the Indenture under the
Trust Indenture Act, the filing of a notice on Form D by the Company with
the Commission pursuant to Section 5(h) hereof, the filing by the Company
with the Commission of reports under the Exchange Act and such consents,
approvals, authorizations, registrations, notifications or qualifications
as may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Securities by the Purchasers;
(ix) Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation or By-laws or in default in the
performance or observance of any obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound, except for any such default as would
not have a Material Adverse Effect; and
(x) The Exchange Act Reports (other than the financial statements
and related schedules therein, as to which such counsel need express no
opinion), when they were filed with the Commission, complied as to form in
all material respects with the requirements of the Exchange Act, and the
rules and regulations of the Commission thereunder; and such counsel has
no reason to believe that any of such documents, when they were so filed,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made when such documents were so filed, not misleading.
(c) Fried, Frank, Harris, Shriver & Jacobson, counsel for the Company,
shall have furnished to you their written opinion or opinions, dated the Time of
Delivery,
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<PAGE> 13
substantially in the form of Annex III hereto;
(d) On the date of the Offering Circular, prior to the execution of this
Agreement, and also at the Time of Delivery, KPMG Peat Marwick LLP shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set forth in
Annex II hereto (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex II(a) hereto and a draft of the
form of letter to be delivered as of the Time of Delivery is attached as Annex
II(b) hereto);
(e) (i) Neither the Company nor any of its Subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Offering Circular any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Circular, and (ii) since the
respective dates as of which information is given in the Offering Circular there
shall not have been any change in the capital stock or long-term debt (other
than pursuant to the New Credit Facility) of the Company or any of its
Subsidiaries or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
Subsidiaries, otherwise than as set forth or contemplated in the Offering
Circular, the effect of which, in any such case described in Clause (i) or (ii),
is in the judgment of the Purchasers so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or the delivery of the
Securities on the terms and in the manner contemplated in this Agreement and in
the Offering Circular;
(f) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities;
(g) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on the National Association of
Securities Dealers Automated Quotations National Market ("NASDAQ"); (ii) a
suspension or material limitation in trading in the Company's securities on
NASDAQ; (iii) a general moratorium on commercial banking activities declared by
either Federal or New York State authorities; (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war, if the effect of any such event specified in
this Clause (iv) in the judgment of the Purchasers makes it impracticable or
inadvisable to proceed with the offering or the delivery of the Securities on
the terms and in the manner contemplated in the Offering Circular; or (v) the
occurrence of any material adverse change in the existing, financial, political
or economic conditions in the United States or elsewhere which, in the judgment
of the Purchasers, would materially and adversely affect the financial markets
or the markets for the Securities and other debt securities;
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<PAGE> 14
(h) The Securities have been designated for trading on PORTAL;
(i) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of offering circulars on the New York
Business Day next succeeding the date of this Agreement;
(j) Prior to the Time of Delivery, the Company shall have received from
the Lenders (as such term is defined in the New Credit Facility) the approvals
relating to the terms of the Notes and the Indenture required pursuant to
Section 9.01(xi)(C) of the New Credit Facility; and
(k) The Company shall have furnished or caused to be furnished to you at
the Time of Delivery certificates of officers of the Company satisfactory to you
as to the accuracy of the representations and warranties of the Company herein
at and as of such Time of Delivery, as to the performance by the Company of all
of its obligations hereunder to be performed at or prior to such Time of
Delivery, as to the matters set forth in subsection (e) of this Section and as
to such other matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless each Purchaser against
any losses, claims, damages or liabilities, joint or several, to which such
Purchaser may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Circular or the Offering
Circular, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact necessary
to make the statements therein not misleading, and will reimburse each Purchaser
for any legal or other expenses reasonably incurred by such Purchaser in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Offering Circular or the
Offering Circular or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Purchaser
through Goldman, Sachs & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Offering Circular, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Offering Circular or the Offering Circular
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Purchaser through Goldman,
Sachs & Co. expressly for use therein; and will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in
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<PAGE> 15
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchasers on the other from the offering
of the Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Purchasers on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Purchasers on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Purchasers, in each case
as set forth in the Offering Circular. The relative fault shall be determined by
reference to, among other
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<PAGE> 16
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Purchasers on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Purchasers
agree that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the Purchasers
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Purchaser shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities purchased by it and distributed to investors were
offered to investors exceeds the amount of any damages which such Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. The Purchasers' obligations in this
subsection (d) to contribute are several in proportion to their respective
purchase obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Purchaser within the meaning of the Act; and the obligations of the Purchasers
under this Section 8 shall be in addition to any liability which the respective
Purchasers may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, the non-defaulting
Purchasers may in their discretion arrange for the non-defaulting Purchasers or
another party or other parties to purchase such Securities on the terms
contained herein. If within thirty-six hours after such default by any Purchaser
the non-defaulting Purchasers do not arrange for the purchase of such
Securities, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to the
non-defaulting Purchasers to purchase such Securities on such terms. In the
event that, within the respective prescribed periods, the non-defaulting
Purchasers notify the Company that the non-defaulting Purchasers have so
arranged for the purchase of such Securities, or the Company notifies the
non-defaulting Purchasers that it has so arranged for the purchase of such
Securities, the non-defaulting Purchasers or the Company shall have the right to
postpone the Time of Delivery for a period of not more than seven days, in order
to effect whatever changes may thereby be made necessary in the Offering
Circular, or in any other documents or arrangements, and the Company agrees to
prepare promptly any amendments to the Offering Circular which in the opinion of
the non-defaulting Purchasers may thereby be made necessary. The term
"Purchaser" as used in this Agreement shall include any person substituted under
this Section with like effect as if such person had originally been a party to
this Agreement with respect to such Securities.
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(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by the non-defaulting
Purchasers and the Company as provided in subsection (a) above, the aggregate
principal amount of such Securities which remains unpurchased does not exceed
one-eleventh of the aggregate principal amount of all the Securities, then the
Company shall have the right to require each non-defaulting Purchaser to
purchase the principal amount of Securities which such Purchaser agreed to
purchase hereunder and, in addition, to require each non-defaulting Purchaser to
purchase its pro rata share (based on the principal amount of Securities which
such Purchaser agreed to purchase hereunder) of the Securities of such
defaulting Purchaser for which such arrangements have not been made; but nothing
herein shall relieve a defaulting Purchaser from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by the non-defaulting
Purchasers and the Company as provided in subsection (a) above, the aggregate
principal amount of Securities which remains unpurchased exceeds one-eleventh of
the aggregate principal amount of all the Securities, or if the Company shall
not exercise the right described in subsection (b) above to require
non-defaulting Purchasers to purchase Securities of a defaulting Purchaser, then
this Agreement shall thereupon terminate, without liability on the part of any
non-defaulting Purchaser or the Company, except for the expenses to be borne by
the Company and the Purchasers as provided in Section 6 hereof and the indemnity
and contribution agreements in Section 8 hereof; but nothing herein shall
relieve a defaulting Purchaser from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Purchasers, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Purchasers for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Purchasers in making preparations for the purchase,
sale and delivery of the Securities, but the Company shall then be under no
further liability to any Purchaser except as provided in Sections 6 and 8
hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you jointly or by Goldman, Sachs & Co. on behalf of you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to any of the Purchasers shall be delivered or sent by mail,
telex or facsimile transmission
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to you in care of Goldman, Sachs & Co., 85 Broad Street, New York, New York
10004, Attention: Registration Department; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Offering Circular, Attention: Secretary; provided,
however, that any notice to a Purchaser pursuant to Section 8(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Purchaser at
its address set forth in its Purchasers' Questionnaire, or telex constituting
such Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchasers, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
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<PAGE> 19
If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
Very truly yours,
INSILCO CORPORATION
By: /s/ Kenneth H. Koch
-----------------------------------------
Name: Kenneth H. Koch
Title: Vice President and General Counsel
Accepted as of the date hereof:
Goldman, Sachs & Co.
Citicorp Securities, Inc.
McDonald & Company
By: /s/ Goldman, Sachs & Co.
-----------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
-19-
<PAGE> 20
SCHEDULE I
<TABLE>
<CAPTION>
PURCHASER PRINCIPAL
AMOUNT OF
SECURITIES
TO BE
PURCHASED
---------
<S> <C>
Goldman, Sachs & Co....................................... $ 112,500,000
McDonald & Company Securities, Inc........................ $ 22,500,000
Citicorp Securities, Inc.................................. $ 15,000,000
Total............................................... $ 150,000,000
=============
</TABLE>
-20-
<PAGE> 21
SCHEDULE II
Stewart Connector Systems, Inc.
Stewart Stamping Corporation
Signal Transformer Co., Inc.
Taylor Publishing Company
Steel Parts Corporation
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<PAGE> 22
ANNEX I
(1) The Securities have not been and will not be registered under the Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the Act or pursuant to an exemption from the registration requirements of the
Act. Each Purchaser represents that it has offered and sold the Securities, and
will offer and sell the Securities (i) as part of their distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering and the Time of Delivery, only in accordance with Rule 903 of
Regulation S under the Act or pursuant to Paragraph 2 of this Annex I.
Accordingly, each Purchaser agrees that neither it, its affiliates nor any
persons acting on its or their behalf has engaged or will engage in any directed
selling efforts with respect to the Securities, and it and they have complied
and will comply with the offering restrictions requirement of Regulation S. Each
Purchaser agrees that, at or prior to confirmation of sale of Securities (other
than a sale pursuant to Rule 144A or pursuant to Paragraph 2 of this Annex I),
it will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Securities from it during
the restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be offered
and sold within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the
offering and the closing date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the Securities Act. Terms
used above have the meaning given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not enter
into any contractual arrangement with respect to the distribution or delivery of
the Securities, except with its affiliates or with the prior written consent of
the Company.
(2) Notwithstanding the foregoing, Securities in registered form may be
offered, sold and delivered by the Purchasers in the United States and to U.S.
persons pursuant to Section 3 of this Agreement without delivery of the written
statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
Securities will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (ii) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (iii) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the
AI-1
<PAGE> 23
issuance of the Securities to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 of Great Britain or is a person to whom the document may
otherwise be lawfully issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver any of
the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with Goldman, Sachs & Co.'s express written consent and then only at its own
risk and expense.
AI-2
<PAGE> 24
ANNEX II
Pursuant to Section 7(d) of the Purchase Agreement, KPMG Peat Marwick LLP
shall furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with respect to the
Company and its Subsidiaries within the meaning of the Securities Exchange Act
of 1934 (the "Exchange Act") and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the consolidated financial statements and financial
statement schedules audited by them and included in the Offering Circular comply
as to form in all material respects with the requirements of the Exchange Act
and the related published rules and regulations thereunder;
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company and its
Subsidiaries for the five most recent fiscal years included in the Offering
Circular agrees with the corresponding amounts (after restatements where
applicable) in the audited consolidated financial statements for such five
fiscal years;
(iv) On the basis of limited procedures not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below, a
reading of the latest available interim financial statements of the Company and
its Subsidiaries, inspection of the minute books of the Company and its
Subsidiaries since the date of the latest audited financial statements included
in the Offering Circular, inquiries of officials of the Company and its
Subsidiaries responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Offering Circular are not in conformity with generally accepted accounting
principles applied on the basis substantially consistent with the basis
for the audited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Offering Circular;
(B) any other unaudited income statement data and balance sheet
items included in the Offering Circular do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited data
and items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited
AII-1
<PAGE> 25
consolidated financial statements included in the Offering Circular;
(C) any unaudited financial statements which were not included in
the Offering Circular but from which were derived any unaudited condensed
financial statements referred to in Clause (A) and any unaudited income
statement data and balance sheet items included in the Offering Circular
and referred to in Clause (B) were not determined on a basis substantially
consistent with the basis for the audited consolidated financial
statements included in the Offering Circular;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Offering Circular do not comply as to form in
all material respects with the accounting requirements of the Exchange Act
and the related published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical amounts
in the compilation of those statements;
(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated capital
stock (other than issuances of capital stock upon exercise of options and
stock appreciation rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were outstanding
on the date of the latest consolidated financial statements included in
the Offering Circular) or any increase in the consolidated long-term debt
of the Company and its Subsidiaries, or any decreases in consolidated net
current assets or stockholders' equity or other items specified by the
Purchasers, or any increases in any items specified by the Purchasers, in
each case as compared with amounts shown in the latest consolidated
balance sheet included in the Offering Circular except in each case for
changes, increases or decreases which the Offering Circular discloses have
occurred or may occur or which are described in such letter; and
(F) for the period from the date of the latest consolidated
financial statements included in the Offering Circular to the specified
date referred to in Clause (E) there were any decreases in consolidated
net revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the Purchasers, or any
increases in any items specified by the Purchasers, in each case as
compared with the comparable period of the preceding year and with any
other period of corresponding length specified by the Purchasers, except
in each case for decreases or increases which the Offering Circular
discloses have occurred or may occur or which are described in such
letter; and
(v) In addition to the examination referred to in their report(s) included
in the Offering Circular and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraphs (iii) and (iv) above,
they have carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information
AII-2
<PAGE> 26
specified by the Purchasers, which are derived from the general accounting
records of the Company and its Subsidiaries, and which appear in the Offering
Circular, and have compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its Subsidiaries and
have found them to be in agreement.
AII-3
<PAGE> 1
EXHIBIT 4(m)
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, dated as of August 12,
1997, by and between Insilco Corporation, a Delaware corporation (the
"Company"), and Goldman, Sachs & Co., McDonald & Company Securities, Inc., and
Citicorp Securities, Inc., as purchasers (collectively, the "Purchasers") of
the 10.25% Senior Subordinated Notes due 2007 of the Company.
The Company proposes to issue and sell to the Purchasers, upon the
terms set forth in the Purchase Agreement (as defined herein), the Securities
(as defined herein). As an inducement to the Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Purchasers thereunder, the Company agrees with the Purchasers for the benefit
of holders (as defined herein) from time to time of the Registrable Securities
(as defined herein) as follows:
1. Certain Definitions.
For purposes of this Exchange and Registration Rights Agreement, the
following terms shall have the following respective meanings:
"Base Interest" shall mean the interest that would otherwise
accrue on the Securities under the terms thereof and the Indenture,
without giving effect to the provisions of this Agreement.
The term "broker-dealer" shall mean any broker or dealer
registered with the Commission under the Exchange Act.
"Closing" shall mean the date of the closing of the issuance
and sale of Securities pursuant to the Purchase Agreement.
"Commission" shall mean the United States Securities and
Exchange Commission, or any other federal agency at the time
administering the Exchange Act or the Securities Act, whichever is the
relevant statute for the particular purpose.
"Effective Time" in the case of (i) an Exchange Registration,
shall mean the time and date as of which the Commission declares the
Exchange Offer Registration Statement effective or as of which the
Exchange Offer Registration Statement otherwise becomes effective;
(ii) a Shelf Registration, shall mean the time and date as of which the
Commission declares the Shelf Registration Statement effective or as
of which the Shelf Registration Statement otherwise becomes effective;
and (iii) a Market Making Shelf Registration, shall mean the time and
date as of which Commission declares the Market Making Shelf
Registration Statement effective or as of which time the Market Making
Shelf Registration otherwise becomes effective.
"Electing Holder" shall mean any holder of Registrable
Securities that has returned a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(d)(ii) or
3(d)(iii) hereof.
- 1 -
<PAGE> 2
"Exchange Act" shall mean the Securities Exchange Act of 1934,
or any successor thereto, as the same shall be amended from time to
time.
"Exchange Offer" shall have the meaning assigned thereto in
Section 2(a) hereof.
"Exchange Registration" shall have the meaning assigned thereto
in Section 3(c) hereof.
"Exchange Offer Registration Statement" shall have the meaning
assigned thereto in Section 2(a) hereof.
"Exchange Securities" shall have the meaning assigned thereto
in Section 2(a) hereof.
The term "holder" shall mean each of the Purchasers and other
persons who acquire Registrable Securities from time to time (including
any successors or assigns), in each case for so long as such person owns
any Registrable Securities.
"Indenture" shall mean the Indenture, dated as of August 12,
1997, between the Company and The Bank of New York, a New York banking
corporation, as Trustee, as the same shall be amended from time to time.
"Market Making Shelf Registration" shall have the meaning
assigned thereto in Section 2(c) hereof.
"Market Making Shelf Registration Statement" shall have the
meaning assigned thereto in Section 2(c) hereof.
"Notice and Questionnaire" means a Notice of Registration
Statement and Selling Securityholder Questionnaire substantially in
the form of Exhibit A hereto.
The term "person" shall mean a corporation, association,
partnership, limited liability company, trust, organization, business,
individual, government or political subdivision thereof or governmental
agency.
"Purchase Agreement" shall mean the Purchase Agreement dated as
of August 7, 1997, between the Purchasers and the Company relating to
the Securities.
"Registrable Securities" shall mean the Securities; provided,
however, that a Security shall cease to be a Registrable Security when
(i) in the circumstances contemplated by Section 2(a) hereof, the
Security has been exchanged for an Exchange Security in an Exchange
Offer as contemplated in Section 2(a) hereof; provided that if prior to
the completion of the Exchange Offer, existing Commission
interpretations have been changed such that the Exchange Securities
received by holders in the Exchange Offer would not be transferable by
such holders (other than Restricted Holders) without restriction under
the Securities Act, then such Exchange Securities shall be Registrable
Securities; provided, further, that any Exchange Security received by a
broker-dealer in an Exchange Offer in exchange for a Registrable
Security that was not acquired by the broker-dealer directly from
- 2 -
<PAGE> 3
the Company will also be a Registrable Security through and including
the earlier of the 180th day after the Exchange Offer is completed or
such time as such broker-dealer no longer owns such Security; provided,
further, however, that any such Securities that, pursuant to the last
two sentences of Section 2(a) hereof, are included in a prospectus for
use in connection with resales by broker-dealers shall be deemed to
be Registrable Securities with respect to Section 5, 6 and 9 until
resale of such Exchange Securities has been effected within the
180-day period referred to in Section 2(a) hereof, (ii) in the
circumstances contemplated by Section 2(b) hereof, a Shelf
Registration Statement registering such Security under the Securities
Act has been declared or becomes effective and such Security has been
sold or otherwise transferred by the holder thereof pursuant to and
in a manner contemplated by such effective Shelf Registration
Statement; (iii) such Security is sold pursuant to Rule 144 under
circumstances in which any legend borne by such Security relating to
restrictions on transferability thereof, under the Securities Act or
otherwise, is removed by the Company or pursuant to the Indenture;
(iv) such Security is eligible to be sold pursuant to paragraph (k)
of Rule 144; or (v) such Security shall cease to be outstanding.
"Registration Default" shall have the meaning assigned thereto
in Section 2(d) hereof.
"Registration Default period" shall have the meaning assigned
thereto in Section 2(d) hereof.
"Registration Expenses" shall have the meaning assigned thereto
in Section 4 hereof.
"Resale Period" shall have the meaning assigned thereto in
Section 2(a) hereof.
"Restricted Holder" shall mean (i) a holder that is an
affiliate of the Company within the meaning of Rule 405, (ii) a holder
who acquires Exchange Securities outside the ordinary course of such
holder's business, (iii) a holder who has arrangements or understandings
with any person to participate in the Exchange offer for the purpose of
distributing Exchange Securities and (iv) a holder that is a
broker-dealer, but only with respect to Exchange Securities received by
such broker-dealer pursuant to an Exchange Offer in exchange for
Registrable Securities acquired by the broker-dealer directly from the
Company.
"Rule 144," "Rule 405," and "Rule 415" shall mean, in each
case, such rule promulgated under the Securities Act (or any successor
provision), as the same shall be amended from time to time.
"Securities" shall mean, collectively, the 10.25% Senior
Subordinated Notes due 2007 of the Company to be issued and sold to the
Purchasers, and securities issued in exchange therefor or in lieu
thereof pursuant to the Indenture, other than Exchange Securities.
"Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
The term "Secondary Offer Registration Statement" shall mean
(i) the Shelf Registration Statement required to be filed by the Company
pursuant to Section 2(b) hereof and/or (ii) the Market Making Shelf
Registration Statement required to be filed by the Company pursuant
- 3 -
<PAGE> 4
to Section 2(c) hereof, in each case, as applicable. As used herein,
references to a Secondary Offer Registration Statement in the singular
shall, if applicable, be deemed to be in the plural.
"Shelf Registration" shall have the meaning assigned thereto in
Section 2(b) hereof.
"Shelf Registration Statement" shall have the meaning assigned
thereto in Section 2(b) hereof.
"Special Interest" shall have the meaning assigned thereto in
Section 2(d) hereof.
"Trust Indenture Act" shall mean the Trust Indenture Act of
1939, or any successor thereto, and the rules, regulations and forms
promulgated thereunder, all as the same shall be amended from time to
time.
Unless the context otherwise requires, any reference herein in a
"Section" or "clause" refers to a Section or clause, as the case may be, of
this Exchange and Registration Rights Agreement, and the words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Exchange and Registration Rights Agreement as a whole and not to any particular
Section or other subdivision.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company agrees to
file under the Securities Act, as soon as practicable, but no later than 60
days after the Closing, a registration statement relating to an offer to
exchange (such registration statement, the "Exchange Offer Registration
Statement", and such offer, the "Exchange Offer") any and all of the Securities
for a like aggregate principal amount of debt securities issued by the Company,
which debt securities are substantially identical to the Securities (and are
entitled to the benefits of a trust indenture which is substantially identical
to the Indenture or is the Indenture and which has been qualified under the
Trust Indenture Act), except that they have been registered pursuant to an
effective registration statement under the Securities Act and do not contain
provisions for the additional interest contemplated in Section 2(d) below (such
new debt securities hereinafter called "Exchange Securities"). The Company
agrees to use its best efforts to cause the Exchange Offer Registration
Statement to become effective under the Securities Act as soon as practicable,
but no later than 115 days after the Closing. The Exchange Offer will be
registered under the Securities Act on the appropriate form and will comply
with all applicable tender offer rules and regulations under the Exchange Act.
The Company further agrees to use its best efforts to commence and complete
the Exchange Offer promptly, but no later than 45 days after such registration
statement has become effective, hold the Exchange Offer open for at least 30
days and issue Exchange Securities for all Registrable Securities that have
been properly tendered and not withdrawn on or prior to the expiration of the
Exchange Offer. The Exchange Offer will be deemed to have been "completed" only
if the debt securities received by holders other than Restricted Holders in the
Exchange Offer for Registrable Securities are, upon receipt, transferable by
each such holder without need for further compliance with Section 5 of the
Securities Act and the Exchange Act (except for the requirement to deliver a
prospectus included in the Exchange Offer Registration Statement applicable to
resales by any broker-dealer of Exchange Securities received by such
broker-dealer pursuant to an Exchange Offer in exchange
- 4 -
<PAGE> 5
for Registrable Securities other than those acquired by the broker-dealer
directly from the Company) and without material restrictions under the blue sky
or securities laws of a substantial majority of the States of the United States
of America. The Exchange Offer shall be deemed to have been completed upon the
earlier to occur of (i) the Company having exchanged the Exchange Securities for
all outstanding Registrable Securities pursuant to the Exchange Offer and (ii)
the Company having exchanged, pursuant to the Exchange Offer, Exchange
Securities for all Registrable Securities that have been properly tendered and
not withdrawn before the expiration of the Exchange Offer, which shall be on a
date that is at least 30 days following the commencement of the Exchange Offer.
The Company agrees (x) to include in the Exchange Offer Registration Statement a
prospectus for use in connection with any resales of Exchange Securities by a
broker-dealer, other than resales of Exchange Securities received by a
broker-dealer pursuant to an Exchange Offer in exchange for Registrable
Securities acquired by the broker-dealer directly from the Company, and (y) to
keep such Exchange Offer Registration Statement effective for a period (the
"Resale Period") beginning when Exchange Securities are first issued in the
Exchange Offer and ending upon the earlier of the expiration of the 180th day
after the Exchange Offer has been completed or such time as such broker-dealers
no longer own any Registrable Securities. With respect to such Exchange Offer
Registration Statement, each broker-dealer that holds Exchange Securities
received in an Exchange Offer in exchange for Registrable Securities not
acquired by it directly from the Company shall have the benefit of the rights of
indemnification and contribution set forth in Sections 6(a), (d), (e) and (f)
hereof.
(b) If prior to the time the Exchange Offer is completed existing Commission
interpretations are changed such that the Exchange Securities received by
holders other than Restricted Holders in the Exchange Offer for Registrable
Securities are not or would not be, upon receipt, transferable by each such
holder without need for further compliance with Section 5 of the Securities Act
(except for the requirement to deliver a prospectus included in the Exchange
Offer Registration Statement applicable to resales by any broker-dealer of
Exchange Securities received by such broker-dealer pursuant to an Exchange
Offer in exchange for Registrable Securities other than those acquired by the
broker-dealer directly from the Company), in lieu of conducting the Exchange
Offer contemplated by Section 2(a) the Company shall file under the Securities
Act as soon as practicable, but no later than 60 days after the Closing, a
"shelf" registration statement providing for the registration of, and the sale
on a continuous or delayed basis by the holders of, all of the Registrable
Securities, pursuant to Rule 415 or any similar rule that may be adopted by
the Commission (such filing, the "Shelf Registration" and such registration
statement, the "Shelf Registration Statement"). In addition, in the event that
the Purchasers shall not have resold all of the Securities initially purchased
by them from the Company pursuant to the Purchase Agreement prior to the
consummation of the Exchange Offer, the Company shall file under the Securities
Act as soon as practicable a Shelf Registration Statement. The Company agrees
to use its best efforts (i) to cause the Shelf Registration Statement to become
or be declared effective no later than 100 days after such Shelf Registration
Statement is filed and to keep such Shelf Registration Statement continuously
effective in order to permit the prospectus forming a part thereof to be
usable by holders for resales of Registrable Securities for a period ending on
the earlier of the second anniversary of the Effective Time or such time as
there are no longer any Registrable Securities outstanding, provided, however,
that no holder shall be entitled to be named as a selling securityholder in the
Shelf Registration Statement or to use the prospectus forming a part thereof
for resales of Registrable Securities unless such holder is an Electing
Holder, and (ii) after the Effective Time of the Shelf Registration Statement,
promptly upon the request of any holder of Registrable Securities that is
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<PAGE> 6
not then an Electing Holder, to take any action reasonably necessary to enable
such holder to use the prospectus forming a part thereof for resales of
Registrable Securities, including, without limitation, any action necessary to
identify such holder as a selling securityholder in the Shelf Registration
Statement, provided, however, that nothing in this clause (ii) shall relieve any
such holder of the obligation to return a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(d)(iii) hereof. The
Company further agrees to supplement or make amendments to the Shelf
Registration Statement, as and when required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or rules and regulations
thereunder for shelf registration, and the Company agrees to furnish to each
Electing Holder copies of any such supplement or amendment prior to its being
used or promptly following its filing with the Commission.
(c) The Company shall file under the Securities Act, on the date that the
Exchange Offer Registration Statement (or in lieu thereof, the Shelf
Registration Statement) is filed with the Commission, a "shelf" registration
statement (which may be the Exchange Offer Registration Statement or the Shelf
Registration Statement if permitted by the rules an regulations of the
Commission) pursuant to Rule 415 under the Securities Act or any similar rule
that may be adopted by the Commission providing for the registration of, and
the sale on a continuous or delayed basis in secondary transactions by Goldman,
Sachs & Co. of, Securities (in the event of a Shelf Registration) or Exchange
Securities (in the event of an Exchange Offer)(such filing, the "Market Making
Shelf Registration", and such registration statement, the "Market Making Shelf
Registration Statement"). The Company agrees to use its best efforts to cause
the Market Making Shelf Registration to become or be declared effective on or
prior to (i) the date the Exchange Offer is completed pursuant to Section 2(a)
above or (ii) the date the Shelf Registration becomes or is declared
effective pursuant to Section 2(b) above, and to keep such Market Making
Shelf Registration continuously effective for so long as Goldman, Sachs & Co.
may be required to deliver a prospectus in connection with transactions in the
Securities or the Exchange Securities, as the case may be. In the event that
Goldman, Sachs & Co. holds Securities at the time an Exchange Offer is to be
conducted under Section 2(a) above, the Company agrees that the Market Making
Shelf Registration shall provide for the resale by Goldman, Sachs & Co. of such
Securities and shall be kept continuously effective for so long as Goldman,
Sachs & Co. may be required to deliver a prospectus in connection with the sale
of such Securities. The Company further agrees to supplement or make amendments
to the Market Making Shelf Registration, as and when required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Market Making Shelf Registration or by the Securities Act or
rules and regulations thereunder for shelf registration, and the Company agrees
to furnish to Goldman, Sachs & Co., copies of any such supplement or amendment
prior to its being used or promptly following its filing with the Commission.
Notwithstanding the foregoing, the Company may suspend the offering and sale
under the Market Making Shelf Registration Statement for a period or periods
the Board of Directors of the Company reasonably determines to be necessary,
but in any event not to exceed 90 days in each year during which the Market
Making Shelf Registration Statement is required to be effective and usable
hereunder (measured from the Effective Time of the Market Making Shelf
Registration Statement to successive anniversaries thereof) if (A)(i) the
Company shall be engaged in a material acquisition, disposition or other
transaction and (ii)(x) such transaction is required to be disclosed in the
Market Making Shelf Registration Statement, the related
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<PAGE> 7
prospectus or any amendment or supplement thereto, or the failure by the Company
to disclose such transaction in the Market Making Shelf Registration Statement
or related prospectus, or any amendment or supplement thereto, as then amended
or supplemented, would cause the Market Making Shelf Registration Statement,
prospectus or amendment or supplement thereto, to contain an untrue statement of
material fact or omit to state a material fact necessary in order to make the
statement therein not misleading in light of the circumstances under which they
were made, (y) information regarding the existence of such transaction has not
then been publicly disclosed by or on behalf of the Company and (z) the Board of
Directors of the Company determines in good faith that disclosure of such
transaction would not be in the best interest of the Company or would have a
material adverse effect on the consummation of such transaction, and (R) the
Company notifies Goldman, Sachs & Co. within five days after such Board of
Directors makes the relevant determination set forth in clause (A).
(d) In the event that (i) the Company has not filed the Exchange Offer
Registration Statement or Shelf Registration Statement on or before the date on
which such registration statement is required to be filed pursuant to Section
2(a) or 2(b), respectively, or (ii) such Exchange Offer Registration Statement
or Shelf Registration Statement has not become effective or been declared
effective by the Commission on or before the date on which such registration
statement is required to become or be declared effective pursuant to Section
2(a) or 2(b), respectively, or (iii) the Exchange Offer has not been completed
within 45 days after the initial effective date of the Exchange Offer
Registration related to the Exchange Offer (if the Exchange Offer is then
required to be made) or (iv) any Exchange Offer Registration Statement or Shelf
Registration Statement required by Section 2(a) or 2(b) hereof is filed and
declared effective but shall thereafter either be withdrawn by the Company or
shall become subject to an effective stop order issued pursuant to Section 8(d)
of the Securities Act suspending the effectiveness of such registration
statement (except as specifically permitted herein) without being succeeded
immediately by an additional registration statement filed and declared effective
(each such event referred to in clause (i) through (iv), a "Registration
Default" and each period during which a Registration Default has occurred and is
continuing, a "Registration Default Period''), then, as liquidated damages for
such Registration Default, subject to the provisions of Section 9(b), special
interest ("Special Interest"), in addition to the Base Interest, shall accrue at
a per annum rate of 0.25% for the first 90 days of the Registration Default
Period, at a per annum rate of 0.50% for the second 90 days of the Registration
Default Period, at a per annum rate of 0.75% for the third 90 days of the
Registration Default Period and at a per annum rate of 1.0% thereafter for the
remaining portion of the Registration Default Period.
(e) The Company shall take all action to be taken by it to ensure that
the transactions contemplated herein are effected as so contemplated.
(f) Any reference herein to a registration statement as of any time
shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time and any reference herein to
any post-effective amendment to a registration statement as of any time shall be
deemed to include any document incorporated, or deemed to be incorporated,
therein by reference as of such time.
3. Registration Procedures.
If the Company files a registration statement pursuant to Section 2(a),
Section 2(b) or
<PAGE> 8
Section 2(e), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Offer, the Shelf
Registration or the Market Making Shelf Registration, whichever may be first,
the Company shall qualify the Indenture under the Trust Indenture Act of 1939.
(b) In the event that such qualification would require the appointment
of a new trustee under the Indenture, the Company shall appoint a new trustee
thereunder pursuant to the applicable provisions of the Indenture.
(c) In connection with the Company's obligations with respect to the
registration of Exchange Securities as contemplated by Section 2(a) (the
"Exchange Registration"), if applicable, the Company shall, as soon as
reasonably possible (or as otherwise specified):
(i) prepare and file with the Commission, as soon as practicable but
no later than 60 days after the Closing, an Exchange Offer Registration
Statement on any form which may be utilized by the Company and which
shall permit the Exchange Offer and resales of Exchange Securities by
broker-dealers during the Resale Period to be effected as contemplated
by Section 2(a), and use its best efforts to cause such Exchange Offer
Registration Statement to become effective as soon as practicable
thereafter, but not later than 115 days after the Closing;
(ii) as soon as practicable prepare and file with the Commission such
amendments and supplements to such Exchange Offer Registration Statement
and the prospectus included therein as may be necessary to effect and
maintain the effectiveness of such Exchange Offer Registration Statement
for the periods and purposes contemplated in Section 2(a) hereof and as
may be required by the applicable rules and regulations of the
Commission and the instructions applicable to the form of such Exchange
Offer Registration Statement, and promptly provide each broker-dealer
holding Exchange Securities with such number of copies of the prospectus
included therein (as then amended or supplemented), in conformity in all
material respects with the requirements of the Securities Act and the
Trust Indenture Act and the rules and regulations of the Commission
thereunder, as such broker-dealer reasonably may request prior to the
expiration of the Resale Period, for use in connection with resales of
Exchange Securities;
(iii) promptly notify each broker-dealer that has requested or
received copies of the prospectus included in such registration
statement, and confirm such advice in writing, (A) when such Exchange
Offer Registration Statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has been
filed and, with respect to such Exchange Offer Registration Statement or
any post-effective amendment, when the same has become effective, (B) of
any comments by the Commission and by the blue sky or securities
commissioner or regulator of any state with respect thereto or any
request by the Commission for amendments or supplements to such Exchange
Offer Registration Statement or prospectus or for additional
information, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of such Exchange Offer Registration
Statement or the initiation or threatening of any proceedings for that
purpose, (D) if at any time during the Resale Period the representations
and warranties of the Company contemplated by Section 5 cease to be true
and correct in all material respects, (E)
<PAGE> 9
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Exchange Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose, or (F) if at any time during the Resale Period when a
prospectus is required to be delivered under the Securities Act, such
Exchange Offer Registration Statement, prospectus, prospectus amendment
or supplement or post-effective amendment, or any document incorporated
by reference in any of the foregoing, does not conform in all material
respects to the applicable requirements of the Securities Act and the
Trust Indenture Act and the rules and regulations of the Commission
thereunder or contains an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
then existing;
(iv) in the event that the Company would be required to provide notice
pursuant to Section 3(c)(iii)(F) above to any broker-dealers holding
Exchange Securities, without delay prepare and furnish to each such
holder a reasonable number of copies of a prospectus supplemented or
amended so that, as thereafter delivered to purchasers of such Exchange
Securities during the Resale Period, such prospectus shall conform in
all material respects to the applicable requirements of the Securities
Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(v) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such Exchange Offer Registration
Statement or any post-effective amendment thereto at the earliest
practicable date;
(vi) use its best efforts to (A) register or qualify the Exchange
Securities under the securities laws or blue sky laws of such
jurisdictions as are contemplated by Section 2(a), if such registration
or qualification is required by such laws, no later than the
commencement of the Exchange Offer, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions
until the expiration of the Resale Period and (C) take any and all other
actions as may be reasonably necessary or advisable to enable each
broker-dealer holding Exchange Securities to consummate the disposition
thereof in such jurisdictions; provided, however, that the Company shall
not be required for any such purpose to (1) qualify as a foreign
corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section
3(c)(vi), (2) consent to general service of process in any such
jurisdiction or (3) make any changes to its certificate of incorporation
or by-laws or any agreement between it and its stockholders;
(vii) use its best efforts to obtain the consent or approval of each
governmental agency or authority, whether federal, state or local, which
may be required to effect the Exchange Registration, the Exchange Offer
and the offering and sale of Exchange Securities by broker-dealers
during the Resale Period;
(viii) provide a CUSIP number for all Exchange Securities, not later
than the applicable Effective Time of the Exchange Offer Registration
Statement;
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<PAGE> 10
(ix) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as soon
as practicable but no later than eighteen months after the effective
date of such Exchange Offer Registration Statement, an earning statement
of the Company and its subsidiaries complying with Section 11(a) of the
Securities Act (including, at the option of the Company, Rule 158
thereunder).
(d) In connection with the Company's obligations with respect to the
Shelf Registration and the Market Making Shelf Registration, as
applicable, the Company shall use its best efforts to cause the
applicable Secondary Offer Registration Statement to permit the
disposition of Registrable Securities by the holders thereof, in the
case of the Shelf Registration, and of Securities or Exchange Securities
by Goldman, Sachs & Co., in the case of a Market Making Shelf
Registration (subject to the second paragraph of Section 2(c) hereof),
in accordance with the intended method or methods of disposition thereof
provided for in the applicable Secondary Offer Registration Statement.
In connection therewith, the Company shall, as soon as reasonably
possible (or as otherwise specified):
(i) (A) prepare and file with the Commission, as soon as practicable,
but in any case within the time periods specified in Section 2(b) or
Section 2(c) hereof, as applicable, a Secondary Offer Registration
Statement on any form which may be utilized by the Company, which shall
(x) register all of the Registrable Securities, in the case of a Shelf
Registration, and the Securities and Exchange Securities, in the case of
a Market Making Shelf Registration, for resale by the holders thereof in
accordance with such method or methods of disposition as may be
specified by the holders of the Registrable Securities as, from time to
time may be Electing Holders, in the case of a Shelf Registration, or
Goldman, Sachs & Co., in the case of a Market Making Shelf Registration
and (y) be, in the case of a Market Making Shelf Registration, in a form
approved by Goldman, Sachs & Co., and (B) use its best efforts to cause
such Secondary Offer Registration Statement to become effective as soon
as practicable after such filing, but in any case within the time
periods specified in Section 2(b) or Section 2(c) hereof, as applicable;
(ii) not less than 30 calendar days prior to the Effective Time of the
Shelf Registration Statement, mail the Notice and Questionnaire to the
holders of Registrable Securities; no holder shall be entitled to be
named as a selling securityholder in the Shelf Registration Statement as
of the Effective Time, and no holder shall be entitled to use the
prospectus forming a part thereof for resales of Registrable Securities
at any time, unless such holder has returned a completed and signed
Notice and Questionnaire to the Company by the deadline for response set
forth therein; provided, however, holders of Registrable Securities
shall have at least 28 calendar days from the date on which the Notice
and Questionnaire is first mailed to such holders to return a completed
and signed Notice and Questionnaire to the Company;
(iii) after the Effective Time of the Shelf Registration Statement,
upon the request of any holder of Registrable Securities that is not
then an Electing Holder, promptly send a Notice and Questionnaire to
such holder, provided that the Company shall not be required to take any
action to name such holder; provided that the Company shall not be
required to take any action to name such holder as a selling
securityholder in the Shelf Registration Statement or to enable such
holder to use the prospectus forming a part thereof for resales of
Registrable Securities until such holder has returned a completed and
signed Notice and Questionnaire to the Company;
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<PAGE> 11
(iv) as soon as practicable (A) prepare and file with the Commission
such amendments and supplements to the Secondary Offer Registration
Statement and the prospectus included therein as may be necessary to
effect and maintain the effectiveness of such Secondary Offer
Registration Statement for the period specified in Section 2(b) or
Section 2(c) hereof, as applicable, and as may be required by the
applicable rules and regulations of the Commission and the instructions
applicable to the form of such Secondary Offer Registration Statement,
and, in the case of an amendment to or supplement of the Market Making
Shelf Registration Statement, each in a form approved by Goldman, Sachs
& Co. and (B) furnish to the Electing Holders, in the case of a Shelf
Registration, and Goldman, Sachs & Co., in the case of a Market Making
Shelf Registration, copies of any such supplement or amendment
simultaneously with or prior to its being used or filed with the
Commission;
(v) comply with the provisions of the Securities Act with respect to
the disposition of all of the Registrable Securities, Securities or
Exchange Securities, as applicable, covered by such Secondary Offer
Registration Statement in accordance with the intended methods of
disposition provided for therein by the Electing Holders, in the case of
a Shelf Registration, or Goldman, Sachs & Co., in the case of a Market
Making Shelf Registration;
(vi) provide (A) with respect to a Shelf Registration, the Electing
Holders and not more than one counsel for all the Electing Holders; (B)
with respect to a Market Making Shelf Registration, Goldman, Sachs & Co.
and its counsel; and (C) in either case, the underwriters (which term,
for purposes of this Exchange and Registration Rights Agreement shall
include a person deemed to be an underwriter within the meaning of
Section 2(11) of the Securities Act), if any, thereof, the sales or
placement agent, if any, therefor, and counsel for such underwriters or
agent, the opportunity to participate in the preparation of such
Secondary Offer Registration Statement, each prospectus included therein
or filed with the Commission and each amendment or supplement thereto;
(vii) for a reasonable period prior to the filing of such Secondary
Offer Registration Statement, and throughout the period specified in
Section 2(b) or Section 2(c) hereof, as applicable, make available at
reasonable times at the Company's principal place of business or such
other reasonable place for inspection by the persons referred to in
Section 3(d)(vi) who shall certify to the Company that they have a
current intention to sell the Registrable Securities pursuant to the
Shelf Registration, or the Securities or Exchange Securities pursuant to
the Market Making Shelf Registration, as applicable, such financial and
other information and books and records of the Company, and cause the
officers, employees, counsel and independent certified public
accountants of the Company to respond to such inquiries, as shall be
reasonably necessary, in the judgment of the respective counsel referred
to in such Section 3(d)(vi), to conduct a reasonable investigation
within the meaning of Section 11 of the Securities Act; provided;
however, that each such party shall be required to maintain in
confidence and not to disclose to any other person any information or
records reasonably designated by the Company as being confidential,
until such time as (A) such information becomes a matter of public
record (whether by virtue of its inclusion in such registration
statement or otherwise), or (B) such person shall be required so to
disclose such information pursuant to a subpoena or order of any court
or other governmental agency or body having jurisdiction over the matter
(subject to the requirements of such order, and only
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<PAGE> 12
after such person shall have given the Company prompt prior written
notice of such requirement), or (C) such information is required to be
set forth in such Secondary Offer Registration Statement or the
prospectus included therein or in an amendment to such Secondary Offer
Registration Statement or an amendment of supplement to such prospectus
in order that such Secondary Offer Registration Statement, prospectus,
amendment or supplement, as the case may be, complies with applicable
requirements of the federal securities laws and the rules and
regulations of the Commission and does not contain an untrue statement
of a material fact or omit to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;
(viii) promptly notify each of the Electing Holders or Goldman, Sachs
& Co., as applicable, any sales or placement agent therefor and any
underwriter thereof (which notification may be made through any managing
underwriter that is a representative of such underwriter for such
purpose) and confirm such advice in writing, (A) when such Secondary
Offer Registration Statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has been
filed, and, with respect to such Secondary Offer Registration Statement
or any post-effective amendment, when the same has become effective, (B)
of any comments by the Commission and by the blue sky or securities
commissioner or regulator of any state with respect thereto or any
request by the Commission for amendments or supplements to such
Secondary Offer Registration Statement or prospectus or for additional
information, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of such Secondary Offer Registration
Statement or the initiation or threatening of any proceedings for that
purpose, (D) if at any time during which such Secondary Offer
Registration Statement is effective the representations and warranties
of the Company contemplated by Section 3(d)(xvii) or Section 5 cease to
be true and correct in all material respects, (F) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Registrable Securities or the Securities or
Exchange Securities, as applicable, for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, or (F) if
at any time when a prospectus is required to be delivered under the
Securities Act, such Secondary Offer Registration Statement, prospectus,
prospectus amendment or supplement or post-effective amendment, or any
document incorporated by reference in any of the foregoing, does not
conform in all material respects to the applicable requirements of the
foregoing, does not conform in all material respects to the applicable
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder or contains an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(ix) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such Secondary Offer Registration
Statement or any post-effective amendment thereto at the earliest
practicable date;
(x) if requested by any managing underwriter or underwriters, any
placement or sales agent, any Electing Holder or Goldman, Sachs & Co.,
promptly incorporate in a prospectus supplement or post-effective
amendment such information as is required by the applicable rules and
regulations of the Commission and as such managing underwriter or
underwriters, such agent, such Electing Holder or Goldman, Sachs & Co.
specify should be
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<PAGE> 13
included therein relating to the terms of the sale of such Registrable
Securities, Securities or Exchange Securities, as applicable, including
information with respect to the principal amount thereof being sold by
Goldman, Sachs & Co., such Electing Holder or agent or to any
underwriters, a description of Goldman, Sachs & Co., such Electing
Holder or agent or to any underwriters, a description of Goldman, Sachs
& Co. and the name and description of such Electing Holder, agent or
underwriter, the offering price of such Registrable Securities,
Securities or Exchange Securities, as applicable, and any discount,
commission or other compensation payable in respect thereof and the
purchase price being paid therefor by such underwriters, and with
respect to any other terms of the offering of the Registrable
Securities, Securities or Exchange Securities, as applicable, to be sold
by Goldman, Sachs & Co., such Electing Holder or agent or to such
underwriters, as applicable; and to make all required filings of such
prospectus supplement or post-effective amendment promptly after
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment;
(xi) furnish to Goldman, Sachs & Co., each Electing Holder, each
placement or sales agent, if any, therefor, each underwriter, if any,
thereof and the respective counsel referred to in Section 3(d)(vi) an
executed copy (or, in the case of an Electing Holder, a conformed copy)
of such Secondary Offer Registration Statement, each such amendment and
supplement thereto (in each case including all exhibits thereto (in the
case of an Electing Holder of Registrable Securities, upon request) and
documents incorporated by reference therein) and such number of copies
of such Secondary Offer Registration Statement (excluding exhibits
thereto and documents incorporated by reference therein unless
specifically so requested by Goldman, Sachs & Co., such Electing Holder,
agent or underwriter, as the case may be) and of the prospectus included
in such Secondary Offer Registration Statement (including each
preliminary prospectus and any summary prospectus), in conformity in all
material respects with the applicable requirements of the Securities Act
and the Trust Indenture Act and the rules and regulations of the
Commission thereunder, and such other documents, as Goldman, Sachs &
Co., such Electing Holder, agent, if any, and underwriter, if any, may
reasonably request in order to facilitate the offering and disposition
of the Registrable Securities owned by such Electing Holder, the
Securities or Exchange Securities owned by Goldman, Sachs & Co., such
Electing Holder, agent and underwriter to satisfy the prospectus
delivery requirements of the Securities Act; and the Company hereby
consents to the use of such prospectus (including such preliminary and
summary prospectus) and any amendment or supplement thereto by Goldman,
Sachs & Co. (subject to the second paragraph of Section 2(c) hereof),
each such Electing Holder and any such agent and underwriter, in each
case in the form most recently provided to such party by the Company, in
connection with the offering and sale of the Registrable Securities,
Securities or Exchange Securities covered by the prospectus (including
such preliminary and summary prospectus) or any supplement or amendment
thereto;
(xii) use its best efforts to (A) register or qualify the Registrable
Securities, Securities or Exchange Securities, as applicable, to be
included in such Secondary Offer Registration Statement under such
securities laws or blue sky laws of such jurisdictions as any Electing
Holder, Goldman, Sachs & Co. and each placement or sales agent, if any,
therefor and each underwriter, if any, thereof shall reasonably request,
(B) keep such registrations or qualifications in effect and comply with
such laws so as to permit the continuance of offers,
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<PAGE> 14
sales and dealings therein in such jurisdictions during the period the
Shelf Registration is required to remain effective under Section 2(b)
above or the period the Market Making Shelf Registration is required to
remain effective under Section 2(c) above, as applicable, and for so
long as may be necessary to enable Goldman, Sachs & Co., any such
Electing Holder, agent or underwriter to complete its distribution of
Registrable Securities, Securities or Exchange Securities, as
applicable, pursuant to such Secondary Offer Registration Statement and
(C) take any and all other actions as may be reasonable necessary or
advisable to enable each such Electing Holder and Goldman, Sachs & Co.,
as applicable, such agent, if any, and such underwriter, if any, to
consummate the disposition in such jurisdictions of such Registrable
Securities, Securities or Exchange Securities, as applicable; provided,
however, that the Company shall not be required for any such purpose to
(1) qualify as a foreign corporation in any jurisdiction wherein it
would not otherwise be required to qualify but for the requirements of
this Section 3(d)(xii), (2) consent to general service of process in any
such jurisdiction or (3) make any changes to its certificate of
incorporation or by-laws or any agreement between it and its
stockholders;
(xiii) use its best efforts to obtain the consent or approval of each
governmental agency or authority, whether federal, state or local, which
may be required of the Company or, with respect to the Registrable
Securities, Securities or Exchange Securities, as applicable, to effect
the Shelf Registration or the Market Making Shelf Registration or the
offering or sale in connection therewith or to enable the selling holder
or holders or Goldman, Sachs & Co. to offer, or to consummate the
disposition of, their Registrable Securities, Securities or Exchange
Securities, as applicable;
(xiv) cooperate with the Electing Holders or Goldman, Sachs & Co. and
the managing underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Securities,
Securities or Exchange Securities, as applicable, to be sold, which
certificates shall be printed, lithographed or engraved, or otherwise
produced, and which shall not bear any restrictive legends; and, in the
case of an underwritten offering, enable such Registrable Securities,
Securities or Exchange Securities, as applicable, to be in such
denominations and registered in such names as the managing underwriters
may request at least two business days prior to any sale of the
Registrable Securities, Securities or Exchange Securities, as
applicable;
(xv) provide a CUSIP number for all Registrable Securities,
Securities or Exchange Securities, as applicable, not later than the
applicable Effective Time;
(xvi) enter into one or more underwriting agreements, engagement
letters, agency agreements, "best efforts" underwriting agreements or
similar agreements, as appropriate, including customary provisions
relating to indemnification and contribution, and take such other
actions in connection therewith as, in the case of a Shelf Registration,
any Electing Holders aggregating at least 20% in aggregate principal
amount of the Registrable Securities at the time outstanding or, in the
case of a Market Making Shelf Registration, Goldman, Sachs & Co., shall
request in order to expedite, or facilitate the disposition of such
Registrable Securities, Securities or Exchange Securities, as
applicable;
(xvii) whether or not an agreement of the type referred to in Section
3(d)(xvi) hereof is entered into and whether or not any portion of the
offering contemplated by such Secondary
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<PAGE> 15
Offer Registration Statement is an underwritten offering or is made
through a placement or sales agent or any other entity, (A) make such
representations and warranties to the Electing Holders, Goldman, Sachs &
Co. and the placement or sales agent, if any, therefor and the
underwriters, if any, thereof in form, substance and scope as are
customarily made in connection with an offering of debt securities
pursuant to any appropriate agreement or to a registration statement
filed on the form applicable to the Shelf Registration or the Market
Making Shelf Registration, as applicable; (B) obtain an opinion of
counsel to the Company in customary form and covering such matters, of
the type customarily covered by such an opinion, as the managing
underwriters, if any; and in the case of a Shelf Registration, as any
Electing Holders of at least 20% in aggregate principal amount of the
Registrable Securities at the time outstanding or, in the case of a
Market Making Shelf Registration, as Goldman, Sachs & Co. may reasonably
request, addressed to such Electing Holder or Electing Holders, Goldman,
Sachs & Co. and the placement or sales agent, if any, therefor and the
underwriters, if any, thereof and dated the effective date of such
Secondary Offer Registration Statement (and if such Secondary Offer
Registration Statement contemplates an underwritten offering of a part
or all of the Registrable Securities, Securities or Exchange Securities,
as applicable, dated the date of the closing under the underwriting
agreement relating thereto) and the date of filing of an amendment or
supplement to such Secondary Offer Registration Statement or any other
document that is incorporated in such Secondary Offer Registration
Statement by reference and includes financial data with respect to a
fiscal quarter or year, as the case may be, (it being agreed that the
matters to be covered by such opinion shall include the due
incorporation and good standing of the Company and its subsidiaries; the
qualification of the Company and its subsidiaries to transact business
as foreign corporations; the due authorization, execution and delivery
of the relevant agreement of the type referred to in Section 3(d)(xvi)
hereof; the due authorization, execution, authentication and issuance,
and the validity and enforceability, of the Registrable Securities,
Securities or Exchange Securities, as applicable; the absence of
material legal or governmental proceedings involving the Company; the
absence of a breach by the Company or any of its subsidiaries of, or a
default under, material agreements binding upon the Company or any
subsidiary of the Company; the absence of governmental approvals
required to be obtained by the Company in connection with the Shelf
Registration or the Market Making Shelf Registration, as applicable, the
offering and sale of the Registrable Securities, Securities or Exchange
Securities, as applicable, this Exchange and Registration Rights
Agreement or any agreement of the type referred to in Section 3(d)(xvi)
hereof, except such approvals as may be required under state securities
or blue sky laws; the material compliance as to form of such Secondary
Offer Registration Statement and any documents incorporated by reference
therein and of the Indenture with the requirements of the Securities Act
and the Trust Indenture Act and the rules and regulations of the
Commission thereunder, respectively; and, as of the date of the opinion
and of the Secondary Offer Registration Statement or most recent post
effective amendment thereto, as the case may be, the absence from such
Secondary Offer Registration Statement and the prospectus included
therein, as then amended or supplemented, and from the documents
incorporated by reference therein (in each case other than the financial
statements and other financial information contained therein) of an
untrue statement of a material fact or the omission to state therein a
material fact necessary to make the statements therein not misleading
(in the case of such documents, in the light of the circumstances
existing at the time that such documents were filed with the Commission
under the Exchange Act)); (C) obtain a "cold comfort" letter or letters
from the independent certified public accountants of the Company
addressed to the selling Electing Holders, Goldman, Sachs &
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<PAGE> 16
Co., the placement or sales agent, if any, therefor or the underwriters,
if any, thereof, dated (i) the effective date of such Secondary Offer
Registration Statement and (ii) the effective date of any prospectus
supplement to the prospectus included in such Secondary Offer
Registration Statement or amendment or supplement to such Secondary
Offer Registration Statement or any other document that is incorporated
in such Secondary Offer Registration Statement by reference and includes
unaudited or audited financial statements as of a date or for a period
subsequent to that of the latest such statements included in such
prospectus (and, if such Secondary Offer Registration Statement
contemplates an underwritten offering pursuant to any prospectus
supplement to the prospectus included in such Secondary Offer
Registration Statement or post-effective amendment to such Secondary
Offer Registration Statement which includes unaudited or audited
financial statements as of a date or for a period subsequent to that of
the latest such statements included in such prospectus, dated the date
of the closing under the underwriting agreement relating thereto), such
letter or letters to be in customary form and covering such matters of
the type customarily covered by letters of such type; (D) deliver such
documents and certificates, including officers' certificates, as may be
reasonably requested, in the case of a Shelf Registration, by any
Electing Holders of at least 20% in aggregate principal amount of the
Registrable Securities at the time outstanding or, in the case of a
Market Making Shelf Registration, by Goldman, Sachs & Co., and, in
either case, the placement or sales agent, if any, therefor and the
managing underwriters, if any, thereof, dated the effective date of such
Secondary Offer Registration Statement (and if such Secondary Offer
Registration Statement contemplates an underwritten offering of a part
or all of the Registrable Securities, Securities or Exchange Securities,
as applicable, dated the date of the closing under the underwriting
agreement relating thereto) and the date of filing of an amendment or
supplement to such Secondary Offer Registration Statement or any other
document that is incorporated in such Secondary Offer Registration
Statement by reference and includes financial data with respect to a
fiscal quarter or year, as the case may be, to evidence the accuracy of
the representations and warranties made pursuant to clause (A) above or
those contained in Section 5(a) hereof and the compliance with or
satisfaction of any agreements or conditions contained in the
underwriting agreement or other agreement entered into by the Company;
and (E) undertake such obligations relating to expense reimbursement,
indemnification and contribution as are provided in Section 6 hereof;
(xviii) notify in writing each holder of Registrable Securities
affected thereby and Goldman, Sachs & Co., of any proposal by the
Company to amend or waive any provision of this Exchange and
Registration Rights Agreement pursuant to Section 9(h) hereof and of any
amendment or waiver effected pursuant thereto, each of which notices
shall contain the text of the amendment or waiver proposed or effected,
as the case may be;
(xix) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities, Securities or
Exchange Securities or participate as a member of an underwriting
syndicate or selling group or "assist in the distribution" (within the
meaning of the Rules of Fair Practice and the By-Laws of the National
Association of Securities Dealers, Inc. ("NASD") or any successor
thereto, as amended from time to time) thereof, whether as a holder of
such Registrable Securities, Securities or Exchange Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, assist such broker dealer in complying with the
requirements of such Rules and By-Laws, including by (A) if such Rules
or By-Laws shall so require, engaging a "qualified
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<PAGE> 17
independent underwriter" (as defined in Rule 2720 (or any successor
thereto)) to participate in the preparation of the Secondary Offer
Registration Statement relating to such Registrable Securities,
Securities or Exchange Securities, as applicable, to exercise usual
standards of due diligence in respect thereto and, if any portion of the
offering contemplated by such Secondary Offer Registration Statement is
an underwritten offering or is made through a placement or sales agent,
to recommend the yield of such Registrable Securities, Securities or
Exchange Securities, (B) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters
provided in Section 6 hereof (or to such other customary extent as may
be requested by such underwriter), and (C) providing such information to
such broker-dealer as may be required in order for such broker-dealer to
comply with the requirements of the Rules of Fair Practice of the NASD:
(xx) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as soon
as practicable but in any event not later than eighteen months after the
effective date of such Secondary Offer Registration Statement, an
earning statement of the Company and its subsidiaries complying with
Section 11(a) of the Securities Act (including, at the option of the
Company, Rule 158 thereunder); and
(xxi) for so long as Goldman, Sachs & Co. may be required to
deliver a prospectus in connection with the offer and sale of Securities
or Exchange Securities in secondary transactions, to furnish to Goldman,
Sachs & Co. copies of all reports or other communications (financial or
other) furnished to stockholders of the Company, and deliver to Goldman,
Sachs & Co. (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange or interdealer automated quotation system
on which the Securities or Exchange Securities or any other securities
of the Company are listed or quoted and the documents specified in
Section 1019 of the Indenture, as in effect on the date of Closing; and
(ii) such additional information concerning the business and financial
condition of the Company as Goldman, Sachs & Co. may from time to time
reasonably request (such financial statements to be on a consolidated
basis to the extent the accounts of the Company are consolidated in
reports furnished to its stockholders generally or to the Commission).
(e) In the event that the Company would be required to provide notice
pursuant to Section 3(d)(viii)(F) above to the Electing Holders, Goldman, Sachs
& Co., the placement or sales agent, if any, therefor and the managing
underwriters, if any, thereof, the Company shall without delay prepare and
furnish to each such person a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to purchasers of
Registrable Securities, Securities or Exchange Securities, as applicable, such
prospectus shall conform in all material respects to the applicable requirements
of the Securities Act and the Trust Indenture Act and the rules and regulations
of the Commission thereunder and shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing. Each Electing Holder and Goldman, Sachs & Co.
agrees, that upon receipt of any notice from the Company pursuant to Section
3(d)(viii)(F) hereof, such Electing Holder and Goldman, Sachs & Co. shall
forthwith discontinue the disposition of Registrable Securities, Securities or
Exchange Securities, as applicable, pursuant to the Secondary Offer Registration
Statement applicable to such Registrable Securities, Securities or Exchange
Securities until such Electing Holder or Goldman, Sachs & Co., as applicable,
shall have received copies of such amended or
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<PAGE> 18
supplemented prospectus, and if so directed by the Company, such Electing
Holder or Goldman, Sachs & Co. shall deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Electing
Holder's or Goldman, Sachs & Co.'s possession of the prospectus covering such
Registrable Securities, Securities or Exchange Securities at the time of
receipt of such notice.
(f) In addition to the information required to be provided in a Notice
and Questionnaire by each Electing Holder as to which any Shelf Registration
pursuant to Section 2(b) is being effected or to be provided by Goldman, Sachs
& Co. in connection with the Market Making Shelf Registration pursuant to
Section 2(c), the Company may require an Electing Holder or Goldman Sachs &
Co., as applicable, to furnish to the Company such additional information
regarding such Electing Holder or Goldman, Sachs & Co. and such Electing
Holder's or Goldman, Sachs & Co.'s intended method of distribution of the
applicable Registrable Securities, Securities or Exchange Securities as the
Company may from time to time reasonably request in writing, but only to the
extent that such information is required in order to comply with the Securities
Act. Each such Electing Holder and Goldman, Sachs & Co. agrees to notify the
Company as promptly as practicable of any inaccuracy or change in information
previously furnished by such Electing Holder or Goldman, Sachs & Co., as the
case may be, to the Company or of the occurrence of any event in either case as
a result of which any prospectus relating to such Shelf Registration or Market
Making Shelf Registration, as applicable, contains or would contain an untrue
statement of a material fact regarding such Electing Holder or Goldman, Sachs &
Co. or such Electing Holder's or Goldman, Sachs & Co.'s intended method of
disposition of the applicable Registrable Securities, Securities or Exchange
Securities or omits to state any material fact regarding such Electing Holder
or Goldman, Sachs & Co. or such Electing Holder's or Goldman, Sachs & Co.'s
intended method of disposition of the applicable Registrable Securities,
Securities or Exchange Securities required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, and promptly to furnish to the Company any additional information
required to correct and update any previously furnished information or required
so that such prospectus shall not contain, with respect to such Electing Holder
or Goldman, Sachs & Co. or the disposition of the applicable Registrable
Securities, Securities or Exchange Securities, an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and
any NASD registration, filing and review fees and expenses including fees and
disbursements of counsel for the placement or sales agent or underwriters in
connection with such registration, filing and review, (b) all fees and expenses
in connection with the qualification of the Registrable Securities, Securities
or Exchange Securities, as applicable, for offering and sale under the State
securities and blue sky laws referred to in Section 3(d)(xii) hereof and
determination of their eligibility for investment under the laws of such
jurisdictions as any managing underwriters or the Electing Holders or Goldman,
Sachs & Co. may designate, including any fees and disbursements of counsel for
the Electing Holders, Goldman, Sachs & Co. or the underwriters in connection
with such qualification and determination, (c) all expenses relating to the
preparation, printing, production, distribution and
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<PAGE> 19
reproduction of each registration statement required to be filed hereunder, each
prospectus included therein or prepared for distribution pursuant hereto, each
amendment or supplement to the foregoing, the expenses of preparing the
Securities or Exchange Securities for delivery and the expenses of printing or
producing any underwriting agreements, agreements among underwriters, selling
agreements and blue sky or legal investment memoranda and all other documents in
connection with the offering, sale or delivery of Securities or Exchange
Securities to be disposed of (including certificates representing the Securities
or Exchange Securities), (d) messenger, telephone and delivery expenses relating
to the offering, sale or delivery of Securities or Exchange Securities and the
preparation of documents referred in clause (c) above, (e) fees and expenses of
the Trustee under the Indenture, any agent of the Trustee and any counsel for
the Trustee and of any collateral agent or custodian, (f) internal expenses
(including all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), (g) fees, disbursements and expenses of
counsel and independent certified public accountants of the Company (including
the expenses of any opinions or "cold comfort" letters required by or incident
to such performance and compliance), (h) fees, disbursements and expenses of any
"qualified independent underwriter" engaged pursuant to Section 3(d)(xix)
hereof, (i) fees, disbursements and expenses of one counsel for the Electing
Holders retained in connection with a Shelf Registration, as selected by the
Electing Holders of at least a majority in aggregate principal amount of the
Registrable Securities held by Electing Holders, and one counsel for Goldman,
Sachs & Co. retained in connection with a Market Making Shelf Registration, as
selected by Goldman, Sachs & Co., (j) any fees charged by securities rating
services for rating the Securities or Exchange Securities, and (k) fees,
expenses and disbursements of any other persons, including special experts,
retained by the Company in connection with such registration (collectively, the
"Registration Expenses"). To the extent that any Registration Expenses are
incurred, assumed or paid by any holder of Registrable Securities, Goldman,
Sachs & Co. or any placement or sales agent therefor or underwriter thereof, the
Company shall reimburse such person for the full amount of the Registration
Expenses so incurred, assumed or paid promptly after receipt of a request
therefor. Notwithstanding the foregoing, the holders of the Registrable
Securities being registered or Goldman, Sachs & Co., as applicable, shall pay
all agency fees and commissions and underwriting discounts and commissions
attributable to the sale of the applicable Registrable Securities, Securities or
Exchange Securities and the fees and disbursements of any counsel or other
advisors or experts retained by such holders (severally or jointly), other than
the counsel and experts specifically referred to above.
5. Representations and Warranties.
The Company represents and warrants to, and agrees with, each Purchaser
and each of the holders from time to time of Registrable Securities that:
(a) Each registration statement covering Registrable Securities,
Securities or Exchange Securities and each prospectus (including any
preliminary or summary prospectus) contained therein or furnished
pursuant to Section 3(d) or Section 3(c) hereof and any further
amendments or supplements to any such registration statement or
prospectus, when it becomes effective or is filed with the Commission,
as the case may be, and, in the case of an underwritten offering of
Registrable Securities, Securities or Exchange Securities, at the time
of the closing under the underwriting agreement relating thereto, will
conform in all material respects to the applicable requirements of the
Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder and will not contain an untrue
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<PAGE> 20
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and at all times subsequent to the Effective Time when a
prospectus would be required to be delivered under the Securities Act,
other than (A) from (i) such time as a notice has been given to holders
of Registrable Securities or Goldman, Sachs & Co., as applicable,
pursuant to Section 3(d)(viii)(F) or Section 3(c)(iii)(F) hereof until
(ii) such time as the Company furnishes an amended or supplemented
prospectus pursuant to Section 3(e) or Section 3(c)(iv) hereof, or (B)
during any suspension of offering and sale pursuant to the second
paragraph of Section 2(c) hereof, each such registration statement, and
each prospectus (including any summary prospectus) contained therein or
furnished pursuant to Section 3(d) or Section 3(c) hereof, as then
amended or supplemented, will conform in all material respects to the
applicable requirements of the Securities Act and the Trust Indenture
Act and the rules and regulations of the Commission thereunder and will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by a
holder of Registrable Securities or Goldman, Sachs & Co., as applicable,
expressly for use therein.
(b) Any documents incorporated by reference in any prospectus
referred to in Section 5(a) hereof, when they become or became effective
or are or were filed with the Commission, as the case may be, will
conform or conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and none of such
documents will contain or contained an untrue statement of a material
fact or will omit or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by a
holder of Registrable Securities or Goldman, Sachs & Co., as applicable,
expressly for use therein.
(c) The compliance by the Company with all of the provisions of
this Exchange and Registration Rights Agreement and the consummation of
the transactions herein contemplated will not conflict with or result in
a breach of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any subsidiary of the
Company is a party or by which the Company or any subsidiary of the
Company is bound or to which any of the property or assets of the
Company or any subsidiary of the Company is subject, nor create or give
rise to a right in any other party to or beneficiary of any such
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to take security in assets of the Company or any subsidiary
of the Company, nor will such action result in any violation of the
provisions of the certificate of incorporation, as amended, or the
by-laws of the Company or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the
Company or any subsidiary of the Company or any of their properties; and
no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the consummation by the Company of the transactions
contemplated by this Exchange and Registration Rights Agreement, except
in connection with the registration under the Securities Act of the
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<PAGE> 21
Registrable Securities, Securities or Exchange Securities, qualification
of the Indenture under the Trust Indenture Act, filings of reports by
the Company under the Exchange Act and such consents, approvals,
authorizations, registrations or qualifications a may be required under
State securities or blue sky laws in connection with the offering and
distribution of Registrable Securities, Securities or Exchange
Securities.
(d) This Exchange and Registration Rights Agreement has been
duly authorized, executed and delivered by the Company.
6. Indemnification.
(a) Indemnification by the Company. The Company shall indemnify and
hold harmless each of the holders of Registrable Securities included in an
Exchange Offer Registration Statement, each of the Electing Holders of
Registrable Securities included in a Shelf Registration Statement and Goldman,
Sachs & Co. as holder of Securities or Exchange Securities included in a Market
Making Shelf Registration Statement and each person who participates as a
placement or sales agent or as an underwriter in any offering or sale of such
Registrable Securities, Securities or Exchange Securities against any losses,
claims, damages or liabilities, joint or several, to which Goldman, Sachs & Co.
or such holder, Electing Holder, agent or underwriter may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any Exchange Offer Registration Statement or Secondary Offer Registration
Statement, as the case may be, under which Registrable Securities, Securities
or Exchange Securities were registered under the Securities Act, or any
preliminary, final or summary prospectus contained therein or furnished by the
Company to Goldman, Sachs & Co., any such holder, Electing Holder, agent or
underwriter, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the Company shall, and it hereby agrees to, reimburse Goldman,
Sachs & Co., any such holder, such Electing Holder, such agent and such
underwriter for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable
to any such person in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, or preliminary, final or summary prospectus, or
amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by such person expressly for use
therein;
(b) Indemnification by the Holders and any Agents and Underwriters in
Connection with any Shelf Registration. The Company may require, as a condition
to including any Registrable Securities in any Shelf Registration Statement
filed pursuant to Section 2(b) hereof and to entering into any underwriting
agreement with respect thereto, that the Company shall have received an
undertaking reasonably satisfactory to it from the Electing Holder of such
Registrable Securities and from each underwriter named in any such underwriting
agreement, severally and not jointly, to (i) indemnify and hold harmless the
Company, and all other holders of Registrable Securities, against any losses,
claims, damages or liabilities to which the Company or such other holders of
Registrable Securities may become subject, under the Securi-
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<PAGE> 22
ties Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, or any preliminary, final or summary prospectus
contained therein or furnished by the Company to any such Electing Holder, agent
or underwriter, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company by such Electing Holder or underwriter expressly for use
therein, and (ii) reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that no such Electing Holder shall be required to undertake liability
to any person under this Section 6(b) for any amounts in excess of the dollar
amount of the proceeds to be received by such Electing Holder from the sale of
such Electing Holder's Registrable Securities pursuant to such Shelf
Registration.
(c) Indemnification by Goldman, Sachs & Co. and any Agents and
Underwriters in Connection with the Market Making Shelf Registration. The
Company may require, as a condition to including any Securities or Exchange
Securities in the Market Making Shelf Registration Statement filed pursuant to
Section 2(c) hereof and to entering into any underwriting agreement with
respect thereto, that the Company shall have received an undertaking reasonably
satisfactory to it from each underwriter named in any such underwriting
agreement, severally and not jointly, to, and Goldman, Sachs & Co. shall, and
hereby agrees to, (i) indemnify and hold harmless the Company, against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Market Making Shelf Registration Statement, or any preliminary, final or
summary prospectus contained therein or furnished by the Company to Goldman,
Sachs & Co. or to any such agent or underwriter, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by Goldman, Sachs & Co. or such
underwriter expressly for use therein, and (ii) reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that, in the case of Securities held by Goldman,
Sachs & Co. at the time of the Exchange Offer, Goldman, Sachs & Co. shall not
be required to undertake liability to any person under this Section 6(c) for any
amounts in excess of the dollar amount of the proceeds to be received by
Goldman, Sachs & Co. from the sale of such Securities by Goldman, Sachs & Co.
pursuant to the Market Making Shelf Registration.
(d) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a), (b) or (c) above of written notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party pursuant to the
indemnification provisions of or contemplated by this Section 6, notify such
indemnifying
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<PAGE> 23
party in writing of the commencement of such action; but the omission so to
notify the indemnifying party shall not relieve it from any liability which it
may have to any indemnified party other than under the indemnification
provisions of or contemplated by Section 6(a) or Section 6(b) or Section 6(c)
hereof. In case any such action shall be brought against any indemnified party
and it shall notify an indemnifying party of the commencement thereof, such
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, such indemnifying party shall not be liable to such
indemnified party for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(e) Contribution. If for any reason the indemnification provisions
contemplated by Section 6(a) or Section 6(b) or Section 6(c) are unavailable to
or insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and the indemnified
party in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this
Section 6(e) were determined by pro rata allocation (even if the holders or any
agents or underwriters or all to them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 6(e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages, or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 6(e), neither any
holder nor, in the case of a Market Making Shelf Registration relating to the
sale by Goldman, Sachs & Co. of Securities held by it at the time of the
Exchange Offer, Goldman, Sachs & Co. shall be required to contribute any amount
in excess of the amount by which the dollar amount of the proceeds received by
such holder from the sale of any Registrable Securities or Goldman, Sachs & Co.
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<PAGE> 24
from the sale of any such Securities (after deducting any fees, discounts and
commissions applicable thereto) exceeds the amount of any damages which such
holder or Goldman, Sachs & Co., as applicable, have otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission, and no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities, Securities or Exchange Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The holders', Goldman, Sachs &
Co.'s and any underwriters' obligations in this Section 6(e) to contribute shall
be several and not joint.
(f) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and partner of
Goldman, Sachs & Co. and each holder, agent and underwriter and each person, if
any, who controls Goldman, Sachs & Co. and any holder, agent or underwriter
within the meaning of the Securities Act; and the obligations of Goldman, Sachs
& Co., the holders and any agents or underwriters contemplated by this Section 6
shall be in addition to any liability which Goldman, Sachs & Co. or the
respective holder, agent or underwriter may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of the Company
(including any person who, with his consent, is named in any registration
statement as about to become a director of the Company) and to each person, if
any, who controls the Company within the meaning of the Securities Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities covered
by the Shelf Registration are to be sold pursuant to an underwritten offering,
the managing underwriter or underwriters thereof shall be designated by Electing
Holders holding at least a majority in aggregate principal amount of the
Registrable Securities to be included in such offering, provided that such
designated managing underwriter or underwriters is or are reasonably acceptable
to the Company.
(b) Participation by Holders. Each holder of Registrable Securities hereby
agrees with each other such holder that no such holder may participate in any
underwritten offering hereunder unless such holder (i) agrees to sell such
holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Rule 144.
The Company covenants to the holders of Registrable Securities and Goldman,
Sachs & Co. that to the extent it shall be required to do so under the Exchange
Act, the Company shall timely file the reports required to be filed by it under
the Exchange Act or the Securities Act (including the reports under Sections 13
and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of
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<PAGE> 25
Rule 144 adopted by the Commission under the Securities Act) and the rules and
regulations adopted by the Commission thereunder, and shall take such further
action as any holder of Registrable Securities or Goldman, Sachs & Co. may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Securities or Goldman, Sachs & Co. to sell Securities
or Exchange Securities without registration under the Securities Act within the
limitations of the exemption provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar or successor rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities or Goldman, Sachs & Co. in connection with that
holder's or Goldman, Sachs & Co.'s sale pursuant to Rule 144, the Company shall
deliver to such holder or Goldman, Sachs & Co. a written statement as to whether
it has complied with such requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents, warrants,
covenants and agrees that it has not granted, and shall not grant, registration
rights with respect to Registrable Securities, Securities or Exchange Securities
or any other securities which would be inconsistent with the terms contained in
this Exchange and Registration Rights Agreement.
(b) Specific Performance. The parties hereto acknowledge that there
would be no adequate remedy at law if the Company fails to perform any of its
obligations hereunder and that the Purchasers and the holders from time to time
of the Registrable Securities may be irreparably harmed by any such failure, and
accordingly agree that the Purchasers and such holders, in addition to any other
remedy to which they may be entitled at law or in equity, shall be entitled to
compel specific performance of the respective obligations of the Company under
this Exchange and Registration Rights Agreement in accordance with the terms and
conditions of this Exchange and Registration Rights Agreement, in any court of
the United States or any State thereof having jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, if delivered personally or by courier, or
three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested) as follows: If to the Company, to it
at 425 Metro Place N., Fifth Floor, Box 7196, Dublin, Ohio 43017, Attention:
General Counsel; if to Goldman, Sach & Co., to it at 85 Broad Street, New York,
NY 10004, Attention: David J. Greenwald; and if to a holder, to the address of
such holder set forth in the security register or other records of the Company;
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of this Exchange
and Registration Rights Agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by the parties hereto and the holders from
time to time of the Registrable Securities and the respective successors and
assigns of the parties hereto and such holders. In the event that any transferee
of any holder of Registrable Securities shall acquire Registrable Securities, in
any manner, whether by gift, bequest, purchase, operation of law or otherwise,
such transferee shall, without any further writing or action of any kind, be
deemed a beneficiary hereof for all purposes and such Registrable Securities
shall be held subject to all of the terms of, this Exchange and
-25-
<PAGE> 26
Registration Rights Agreement, and by taking and holding such Registrable
Securities such transferee shall be entitled to receive the benefits of, and be
conclusively deemed to have agreed to be bound by all of the applicable terms
and provisions of this Exchange and Registration Rights Agreement. If the
Company shall so request, any such successor, assign or transferee shall agree
in writing to acquire and hold the Registrable Securities subject to all of the
applicable terms hereof.
(e) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Exchange and Registration
Rights Agreement or made pursuant hereto shall remain in full force and effect
regardless of any investigation (or statement as to the results thereof) made by
or on behalf of Goldman, Sachs & Co. or any holder of Registrable Securities,
any director, officer or partner of Goldman, Sachs & Co. or such holder, any
agent or underwriter or any director, officer or partner thereof, or any
controlling person of any of the foregoing, and shall survive delivery of and
payment for the Securities pursuant to the Purchase Agreement and the transfer
and registration of Securities by such holder or Goldman, Sachs & Co. and the
consummation of an Exchange Offer.
Anything herein to the contrary notwithstanding, the indemnity agreement
of the Company in Section 6(a) hereof, the representations and warranties in
Section 5(a) and Section 5(b) hereof and any representation or warranty as to
the accuracy of the Secondary Offer Registration Statement (or any preliminary,
final or summary prospectus contained therein) contained in any certificate
furnished by the Company pursuant to Section 3(d)(xvii) hereof, insofar as they
may constitute a basis for indemnification for liabilities (other than payment
by the Company of expenses incurred or paid in the successful defense of any
action, suit or proceeding) arising under the Securities Act, shall not extend
to the extent of any interest therein of a controlling person or partner of
Goldman, Sachs & Co. who is a director, officer or controlling person of the
Company when the Exchange Offer Registration Statement or the Secondary Offer
Registration Statement has become effective, except in each case to the extent
that an interest of such character shall have been determined by a court of
appropriate jurisdiction as not against public policy as expressed in the
Securities Act. Unless in the opinion of counsel for the Company the matter has
been settled by controlling precedent, the Company will, if a claim for such
indemnification is asserted, submit to a court of appropriate jurisdiction the
question whether such interest is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(f) LAW GOVERNING THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Exchange and Registration Rights Agreement are inserted for
convenience only, do not constitute a part of this Exchange and Registration
Rights Agreement and shall not affect in any way the meaning or interpretation
of this Exchange and Registration Rights Agreement.
(h) Entire Agreement; Amendments. This Exchange and Registration Rights
Agreement and the other writings referred to herein (including the Indenture and
the form of Securities) or delivered pursuant hereto which form a part hereof
contain the entire understanding of the parties with respect to its subject
matter. This Exchange and Registration Rights Agreement supersedes
-26-
<PAGE> 27
all prior agreements and understandings between the parties with respect to its
subject matter. This Exchange and Registration Rights Agreement may be amended
and the observance of any term of this Exchange and Registration Rights
Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) only by a written instrument duly
executed by the Company and the holders of at least a majority in aggregate
principal amount of the Registrable Securities at the time outstanding and
Goldman, Sachs & Co., provided, however, that any such amendment or waiver
affecting solely provisions of this Exchange and Registration Rights Agreement
relating to the Market Making Registration may be effected by a written
instrument duly executed solely by the Company and Goldman, Sachs & Co. Each
holder of any Registrable Securities at the time or thereafter outstanding
shall be bound by any amendment or waiver effected pursuant to this Section
9(h), whether or not any notice, writing or marking indicating such amendment
or waiver appears on such Registrable Securities or is delivered to such
holder.
(i) Inspection. For so long as this Exchange and Registration Rights
Agreement shall be in effect, this Exchange and Registration Rights Agreement
and a complete list of the names and addresses of all the holders of
Registrable Securities and the address of Goldman, Sachs & Co. shall be made
available for inspection and copying on any business day by Goldman, Sachs & Co.
or any holder of Registrable Securities for proper purposes only (which shall
include any purpose related to the rights of the holders of Registrable
Securities under the Securities, the Indenture and this Agreement) at the
offices of the Company at the address thereof set forth in Section 9(c) above or
at the office of the Trustee under the Indenture.
(j) Counterparts. This agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
Agreed to and accepted as of the date referred to above.
INSILCO CORPORATION
By: /s/ Kenneth H. Koch
---------------------------
Name: Kenneth H. Koch
Title: Vice President and General Counsel
GOLDMAN, SACHS & CO.
MCDONALD & COMPANY SECURITIES, INC.
CITICORP SECURITIES, INC.
By: /s/ Goldman, Sachs & Co.
---------------------------
(Goldman, Sachs & Co.)
On behalf of itself and each of the Purchasers
-27-
<PAGE> 1
Exhibit 5
(212) 859-8711
September 26, 1997 (FAX: 212-859-4000)
Insilco Corporation
425 Metro Place N.
Fifth Floor
Dublin, Ohio 43017
Ladies and Gentlemen:
We have acted as special counsel for Insilco Corporation, a Delaware
corporation (the "Company") in connection with the preparation of a registration
statement on Form S-4 (as amended the "Registration Statement") filed with the
United States Securities and Exchange Commission under the Securities Act of
1933, as amended (the Securities Act"), relating to the proposed exchange of up
to U.S. $ 150,000,000 aggregate principal amount of 10-1/4 Senior Subordinated
Notes due 2007 of the Company (the "New Notes") for a like principal amount of
the Company's issued and outstanding 10-1/4 Senior Subordinated Notes due 2007
(the "Old Notes"). All capitalized terms used herein that are defined in, or by
reference in, the Registration Statement have the meanings assigned to such
terms therein or by reference therein, unless otherwise defined herein. With
your permission, all assumptions and statements of reliance herein have been
made without any independent investigation or verification on our part except to
the extent otherwise expressly stated, and we express no opinion with respect to
the subject matter or accuracy of such assumptions or items relied upon.
In connection with this opinion, we have (i) investigated such
questions of law, (ii) examined originals or certified, conformed or
reproduction copies of such agreements, instruments (including the Letter of
Transmittal), documents and records of the Company, such certificates of public
officials and such other documents (collectively, the "Documents"), and (iii)
received such information from officers and representatives of the Company as we
have deemed necessary or appropriate for the purposes of this opinion.
In all such examinations, we have assumed the legal capacity of all
natural persons executing Documents, the genuineness of all signatures, the
authenticity of original and certified documents and the conformity to original
or certified documents of all copies submitted to us as conformed or
reproduction copies. As to various questions of fact relevant to the opinions
expressed herein, we have relied upon, and assume the accuracy of,
representations and
<PAGE> 2
Insilco Corporation -2- September 26, 1997
warranties contained in the Documents and certificates and oral or written
statements and other information of or from representatives of the Company and
others and assume compliance on the part of all parties to the Documents with
their covenants and agreements contained therein.
To the extent it may be relevant to the opinions expressed herein,
we have assumed that the parties to the Documents other than the Company have
the power and authority to enter into and perform such documents and to
consummate the transactions contemplated thereby, that the Documents have been
duly authorized, executed and delivered by, and constitute legal, valid and
binding obligations of such parties enforceable against such parties in
accordance with their terms, and that such parties will comply with all of their
obligations under the Documents and all laws applicable thereto.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, we are of the opinion that,
when the Registration Statement has become effective under the Securities Act,
the New Notes have been duly authorized and executed by the Company and duly
authenticated by the Trustee in accordance with the terms of the Indenture and
delivered in exchange for the Old Notes in accordance with the terms of the
Indenture, the New Notes will constitute valid and binding obligations of the
Company, entitled to the benefits of the Indenture.
The opinions set forth above are subject to the following
qualifications:
(A) We express no opinion as to the validity, binding effect or
enforceability of any provision of the New Notes, or the Indenture:
(i) relating to indemnification, contribution or exculpation
(I) in connection with violations of any applicable laws, statutory
duties or public policy, or (II) in connection with willful,
reckless or unlawful acts or gross negligence of the indemnified or
exculpated party or the party receiving contribution, or (III) under
circumstances involving the negligence of the indemnified or
exculpated party or the party receiving contribution in which a
court might determine the provision to be unfair or insufficiently
explicit;
(ii) relating to (I) forum selection or submission to
jurisdiction (including, without limitation, any waiver of any
objection to venue in any court or of any objection that a court is
an inconvenient forum) to the extent that the validity, binding
effect or enforceability of any such provision is to be determined
by any court other than a court of the State of New York, or (II)
choice of governing law to the extent that the validity, binding
effect or enforceability of any such provision is to be determined
by any court other than a court of the State of New York applying
the choice of law principles of the State of New York;
<PAGE> 3
Insilco Corporation -3- September 26, 1997
(iii) specifying that provisions thereof may be waived only in
writing, to the extent that an oral agreement or an implied
agreement by trade practice or course of conduct has been created
that modifies such any provision;
(iv) requiring or relating to payment of interest (or discount
or equivalent amounts) or any premium or payment at a rate or in an
amount, after the maturity or after or upon acceleration of the
respective liabilities evidenced thereby, or upon prepayment, that a
court would determine in the circumstances under applicable law to
be commercially unreasonable or a penalty or a forfeiture;
(v) providing for the indemnity by one party to any other
party thereto against any loss in obtaining the currency due such
party under any such agreement from a court judgment in another
country;
(vi) relating to any purported waiver, release, variation,
disclaimer, consent or other agreement to similar effect (all of the
foregoing, collectively, a "Waiver") by the Company under any of the
New Notes, or the Indenture to the extent limited by section
1-102(3) of the UCC or other provisions of applicable law (including
judicial decisions), or to the extent that such a Waiver applies to
a right, claim, duty, defense or ground for discharge otherwise
existing or occurring as a matter of law (including judicial
decisions), except to the extent that such a Waiver is effective
under, and is not prohibited by or void or invalid under provisions
of applicable law (including judicial decisions); and
(vii) purporting to give any person or entity the power to
accelerate obligations without any notice to the obligor.
(B) Our opinions are subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance
and other similar laws affecting creditors' rights and remedies
generally, and (ii) general principles of equity including,
without limitation, standards of materiality, good faith, fair
dealing and reasonableness, equitable defenses and limits as
the availability of equitable remedies, whether such principles
are considered in a proceeding at law or in equity.
The opinions expressed herein are limited to the laws of the United
States of America and the laws of the State of New York, as currently in effect.
The opinions expressed herein are given as of the date hereof, and we undertake
no obligation to supplement this letter if any applicable laws change after the
date hereof or if we become aware of any facts that might change the opinions
expressed herein after the date hereof or for any other reason.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to this firm under the caption
"Validity of the New Securities" in
<PAGE> 4
Insilco Corporation -4- September 26, 1997
the Prospectus that is included in the Registration Statement. In giving these
consents, we do not hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act.
The opinions expressed herein are solely for your benefit in
connection with the Registration Statement and may not be relied on in any
manner or for any purpose by any other person or entity without our prior
written consent.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ T.J. Anthony
----------------------------
T.J. Anthony
<PAGE> 1
Exhibit 10(k)
INSILCO CORPORATION
425 Metro Place N.
Fifth Floor
Dublin, Ohio 43017
August 11, 1997
Water Street Corporate Recovery Fund I, L.P.
c/o Goldman Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: David J. Greenwald
Ladies and Gentlemen:
Reference is hereby made to the Stock Purchase Agreement (the "Stock
Purchase Agreement"), dated as of July 10, 1997, by and between Insilco
Corporation, a Delaware corporation ("Insilco"), and Water Street Corporate
Recovery Fund I, L.P., a Delaware limited partnership ("Water Street"). Terms
used but not defined herein shall have the respective meanings ascribed to them
in the Stock Purchase Agreement.
At the time that the Stock Purchase Agreement was entered into, it was
contemplated that at least 2,857,142 Shares (including 960,577 Shares to be
tendered by Water Street) would be tendered in the Offer. However, as of the
date hereof, only 2,610,058 Shares have been tendered in the Offer. Accordingly,
Insilco agrees that, notwithstanding anything else to the contrary in the Stock
Purchase Agreement, Water Street may tender into the Offer (i) 960,577 Shares
(which have been tendered in the Offer as of the date hereof) plus (ii)
2,857,142 Shares minus that number of Shares that are tendered and not withdrawn
immediately prior to the expiration of the Offer without giving effect to the
number of Shares Water Street tenders pursuant to this clause (ii).
INSILCO CORPORATION
By: /s/ Kenneth H. Koch
--------------------------
Name: Kenneth H. Koch
Title: Vice President and
General Counsel
<PAGE> 1
EXHIBIT 12
INSILCO CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIO DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
PREDECESSOR
-----------------
1993 SIX MONTHS ENDED
---------------- JUNE 30,
TO FROM --------------------
12/31/92 3/31 4/1 12/31/94 12/31/95 12/31/96 1996 1997
-------- ------ ------- -------- --------- -------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing
operations before income taxes
and extraordinary item per
consolidated statements of
operations.................... $(14,456) 19,725 (46,516) (34,307) 18,774 51,863 27,049 121,900
Add:
Portion of rents
representative of the
interest factor............. 826 236 723 1,089 1,187 1,364 721 682
Interest on indebtedness...... 26,147 9,234 26,302 28,427 18,557 17,538 8,976 7,410
Amortization of debt
expense..................... 5,348 375 603 686 989 848 424 352
-------- ------ ------- ------- ------ ------ ------ -------
Income (loss) as adjusted... $17,865 29,570 (18,888) (4,105) 39,507 71,613 37,170 130,344
======== ====== ======= ======= ====== ====== ====== =======
Fixed charges:
Interest on indebtedness...... (1) 26,367 9,312 26,535 28,957 18,955 17,747 9,102 7,412
-------- ------ ------- ------- ------ ------ ------ -------
Amortization of debt
expense..................... (2) 5,348 375 603 686 989 848 424 352
-------- ------ ------- ------- ------ ------ ------ -------
Capitalized interest.......... (3) -- 30 91 20 173 202 -- 62
-------- ------ ------- ------- ------ ------ ------ -------
Rents......................... 2,478 708 2,168 3,266 3,561 4,092 2,163 2,045
Portion of rents
representative of the
interest factor............. (4) 826 236 723 1,089 1,187 1,364 721 682
-------- ------ ------- ------- ------ ------ ------ -------
Fixed charges
(1)+(2)+(3)+(4)........... $32,541 9,953 27,952 30,752 21,304 20,161 10,247 8,508
======== ====== ======= ======= ====== ====== ====== =======
Ratio of earnings to fixed
charges....................... 0.55x 2.97x (0.68)x (0.13)x 1.85x 3.55x 3.63x 15.32x
======== ====== ======= ======= ====== ====== ====== =======
</TABLE>
<PAGE> 1
Exhibit 23(a)
The Board of Directors
Insilco Corporation:
The audits referred to in our report dated January 31, 1997, except
as to Notes 3, 18(c) and 20 to the consolidated financial statements,
which are as of March 5, 1997, included the related financial
statement schedules as of December 31, 1996, and for each of the
years in the three-year period ended December 31, 1996, included in
the registration statement. These financial statement schedules are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statement schedules based on
our audits. In our opinion, such financial statement schedules, when
considered in relation to the basic consolidated financial statements
taken as a whole, present fairly in all material respects the
information set forth therein.
We consent to the use of our report included herein, which is based
partially on the report of other auditors, and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Columbus, Ohio
September 26, 1997
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the persons whose signatures
appear below, constitute and appoint Robert L. Smialek, David A. Kauer, Kenneth
H. Koch, and Philip K. Woodlief, and each of them as their true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for them and in their names, places, and steads, in any and all
capacities, to sign the Registration Statement to be filed in connection with
the exchange offer with respect to the Insilco Corporation 10-1/4 Senior
Subordinated Notes due 2007 and any and all amendments (including post-effective
amendments) to the Registration Statement, under the Securities Act of 1933, as
amended, and to file the same, with all exhibits thereto, and the other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, or their or his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Dated: September 26, 1997
-------------
/s/ Robert L. Smialek /s/ Philip K. Woodlief
- ------------------------- -------------------------
Robert L. Smialek Philip K. Woodlief
/s/ James J. Gaffney
- -------------------------
James J. Gaffney
/s/ Terence M. O'Toole
- -------------------------
Terence M. O'Toole
/s/ Thomas E. Petry
- -------------------------
Thomas E. Petry
/s/ Barry S. Volpert
- -------------------------
Barry S. Volpert
-1-
<PAGE> 1
EXHIBIT 25
CONFORMED COPY
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [ ]
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
INSILCO CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 06-0635844
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
425 Metro Place N.
Fifth Floor
Dublin, Ohio 43017
(Address of principal executive offices) (Zip code)
10 1/4% Senior Subordinated Notes Due 2007
(Title of the indenture securities)
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit
1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
<PAGE> 3
CONFORMED COPY
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 8th day of September, 1997.
THE BANK OF NEW YORK
By: /s/THOMAS E. TABOR
------------------------------
Name: THOMAS E. TABOR
Title: ASSISTANT TREASURER
<PAGE> 1
EXHIBIT 99(a)
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON [ ], 1997 (THE "EXPIRATION DATE"),
UNLESS EXTENDED BY INSILCO CORPORATION
INSILCO CORPORATION
LETTER OF TRANSMITTAL
FOR
TENDER OF ALL OUTSTANDING
10-1/4% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
10-1/4% SENIOR SUBORDINATED NOTES DUE 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON [ ], 1997, UNLESS EXTENDED.
AS DESCRIBED HEREIN, WITHDRAWAL RIGHTS WITH RESPECT TO THE EXCHANGE OFFER
ARE EXPECTED TO EXPIRE AT THE EXPIRATION OF THE EXCHANGE OFFER
EXCHANGE AGENT:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Hand or Overnight Courier: By Registered or Certified Mail: By Facsimile:
The Bank of New York The Bank of New York [ ]
101 Barclay Street 101 Barclay Street
New York, New York 10286 New York, New York 10286
Attention: Securities Processing Window Attention: [ ] Confirm by telephone to:
Ground Level Reorganization, 7E [ ]
[ ]
[ ]
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA A FACSIMILE
TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus, dated [ ], 1997
(the "Prospectus"), of Insilco Corporation (the "Company") which, together with
this Letter of Transmittal (the "Letter of Transmittal"), constitute the
Company's offer (the "Exchange Offer) to exchange U.S. $1,000 principal amount
of a new series of 10-1/4% Senior Subordinated Notes Due 2007 (the "New Notes")
of the Company for each U.S. $1,000 principal amount of outstanding 10-1/4%
Senior Subordinated Notes Due 2007 (the "Old Notes") of the Company. The terms
of the New Notes are identical in all material respects (including principal
amount, interest rate and maturity) to the terms of the Old Notes for which they
may be exchanged pursuant to the Exchange Offer, except that (i) the New Notes
will have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and, therefore, will not bear legends restricting the
transfer thereof and (ii) holders of the New Notes will not be entitled to
certain rights of holders of the Old Notes under a registration rights agreement
which will terminate upon consummation of the Exchange Offer. Following the
consummation of the Exchange Offer, neither the Old Notes nor the New Notes will
be entitled to the contingent increase in interest rate provided pursuant to the
Indenture and the Old Notes. Following the consummation of the Exchange Offer,
holders of Old Notes and New Notes will not have any further registration
rights, and the Old Notes will continue to be subject to certain restrictions on
transfer.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
<PAGE> 2
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
2
<PAGE> 3
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE
FOLLOWED, QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE
PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, the Certificate Numbers and Principal
Amounts should be listed on a separate signed schedule affixed hereto.
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED HEREWITH
- --------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF AGGREGATE PRINCIPAL
REGISTERED HOLDER(S) CERTIFICATE AMOUNT REPRESENTED BY PRINCIPAL AMOUNT
(PLEASE FILL IN) NUMBER(S) OLD NOTES TENDERED*
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL
- --------------------------------------------------------------------------------
* Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by the Old Notes. See
Instruction 2.
- --------------------------------------------------------------------------------
This Letter of Transmittal is to be used if certificates for Old Notes are
to be forwarded herewith.
Unless the context requires otherwise, the term "Holder" for purposes of
this Letter of Transmittal means any person in whose name Old Notes are
registered or any other person who has obtained a properly completed bond power
from the registered holder.
Holders whose Old Notes are not immediately available or who cannot
deliver their Old Notes and all other documents required hereby to the Exchange
Agent on or prior to the Expiration Date may tender their Old Notes according to
the guaranteed delivery procedure set forth in the Prospectus under the caption
"The Exchange Offer -- Terms of the Exchange Offer -- Guaranteed Delivery
Procedures."
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s):
---------------------------------------------
Name of Eligible Institution that Guaranteed Delivery:
--------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
---------------------------------------------------------------------
Address:
------------------------------------------------------------------
3
<PAGE> 4
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the above-described principal amount
of Old Notes. Subject to, and effective upon, the acceptance for exchange of the
Old Notes tendered herewith, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such Old Notes. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent as the true and lawful agent and attorney-in-fact of
the undersigned (with full knowledge that said Exchange Agent acts as the agent
of the undersigned in connection with the Exchange Offer) to cause the Old Notes
to be assigned, transferred and exchanged. The undersigned represents and
warrants that it has full power and authority to tender, exchange, assign and
transfer the Old Notes and to acquire New Notes issuable upon the exchange of
such tendered Old Notes, and that, when the same are accepted for exchange, the
Company will acquire good and unencumbered title to the tendered Old Notes, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim. The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Old Notes or to transfer ownership of such Old Notes on the
account books maintained by The Depository Trust Company (the "DTC").
The undersigned acknowledges that this Offer is being made in reliance
on an interpretation by the staff of the Securities and Exchange Commission (the
"SEC") that the New Notes issued pursuant to the Exchange Offer in exchange for
the Old Notes may be offered for resale, resold and otherwise transferred by
holders thereof (other than broker-dealers, as set forth below, and any such
holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders have no arrangement or understanding with any person to participate in
the distribution of such New Notes.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions of the Exchange
Offer." The undersigned recognizes that as a result of these conditions (which
may be waived, in whole or in part, by the Company) as more particularly set
forth in the Prospectus, the Company may not be required to exchange any of the
Old Notes tendered hereby and, in such event, the Old Notes not exchanged will
be returned to the undersigned at the address shown below the signature of the
undersigned.
By tendering, each Holder of Old Notes represents to the Company that
(i) the New Notes acquired pursuant to the Exchange Offer are being obtained in
the ordinary course of business of the person receiving such New Notes, whether
or not such person is such Holder, (ii) neither the Holder of Old Notes nor any
such other person is participating in, intends to participate in or has an
arrangement or understanding with any person to participate in, the distribution
of such New Notes, (iii) if the Holder is not a broker-dealer or is a
broker-dealer but will not receive New Notes for its own account in exchange for
Old Notes, neither the Holder nor any such other person is engaged in or intends
to participate in a distribution of the New Notes and (iv) neither the Holder
nor any such other person is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act. If the tendering Holder tenders Old Notes
with the intention of participating, or for the purpose of participating, in the
distribution of the New Notes, it acknowledges that it may not rely upon certain
interpretations by the staff of the SEC described in the Exchange Offer, and
that, in the absence of an exemption therefrom, it must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction, and any such secondary resale
transaction must be covered by an effective registration statement containing
the selling securityholder information required by Item 507 of Regulation S-K
under the Securities Act. If the tendering Holder is a broker-dealer (whether or
not it is also an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) that will receive New Notes for its own account in
exchange for Old Notes, it represents that the Old Notes to be exchanged for the
New Notes were acquired by it as a result of market-making activities or other
trading activities, and acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Notes. By acknowledging that it will deliver and by delivering a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Notes, the undersigned is not deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
All authority herein conferred or agreed to be conferred shall survive
the death, bankruptcy or incapacity of the undersigned and every obligation of
the undersigned hereunder shall be binding upon the heirs, personal
representatives, executors, administrators, successors, assigns, trustees in
bankruptcy and other legal representatives of the undersigned. Tendered Old
Notes may be withdrawn at any time prior to 5:00 p.m., New York City time on the
Expiration Date (the "Expiration Date").
Certificates for all New Notes delivered in exchange for tendered Old
Notes and any Old Notes delivered herewith but not exchanged, in each case
registered in the name of the undersigned, shall be delivered to the undersigned
at the address shown below the signature of the undersigned.
4
<PAGE> 5
TENDERING HOLDER(S) SIGN HERE
________________________________________________________________________________
________________________________________________________________________________
SIGNATURE(S) OF HOLDER(S)
Dated: _______________, 199_
(Must be signed by registered Holder(s) exactly as name(s) appear(s) on
certificate(s) for Old Notes or by any person(s) authorized to become registered
Holder(s) by endorsements and documents transmitted herewith. If signature by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
please set forth the full title of such person.) See Instruction 3.
Name(s):________________________________________________________________________
(PLEASE PRINT)
Capacity (full title):__________________________________________________________
Address:________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.:____________________________________________________
TAX IDENTIFICATION NO.
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED - SEE INSTRUCTION 3)
Authorized Signature:___________________________________________________________
Name:___________________________________________________________________________
Title:__________________________________________________________________________
Address:________________________________________________________________________
Name of Firm:___________________________________________________________________
Area Code and Telephone No.:____________________________________________________
Dated:_____________, 199_
BOX 3
TO BE COMPLETED BY ALL TENDERING HOLDERS
PAYOR'S NAME: INSILCO CORPORATION
<TABLE>
<S> <C>
Part I - PLEASE PROVIDE YOUR TIN IN THE _______________________
BOX AT RIGHT AND CERTIFY BY SIGNING SOCIAL SECURITY NUMBER OR
AND DATING BELOW EMPLOYER IDENTIFICATION
NUMBER
SUBSTITUTE
FORM W-9
DEPARTMENT OF THE TREASURY Part 2 - Check the box if you are NOT subject to back-up withholding under
INTERNAL REVENUE SERVICE the provisions of Section 3406 (a) (1) (C) of the Internal Revenue Code
because (1) you have not been notified that you are subject to back-up
withholding as a result of failure to report all interest or dividends, (2)
the Internal Revenue Service has notified you that you are no longer
subject to back-up withholding or (3) you are exempt.
[ ]
PAYOR'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
CERTIFICATE -- UNDER THE PENALTIES OF PART 3
PERJURY, I CERTIFY THAT THE INFORMATION CHECK IF
PROVIDED ON THIS FORM IS TRUE, CORRECT AWAITING TIN
AND COMPLETE.
SIGNATURE_______________ DATE __________ [ ]
</TABLE>
5
<PAGE> 6
BOX 4
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered, or New Notes are to be issued in the name of someone other than the
person whose signature appears in Box 2.
Issue and deliver:
(check appropriate boxes)
[ ] Old Notes not tendered
[ ] New Notes, to:
Name__________________________________
(PLEASE TYPE OR PRINT)
Please complete the Substitute form W-9 at Box 3
Tax I.D. or Social Security Number:__________
BOX 5
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered, or New Notes, are to be delivered to someone other than the person
whose signature appears in Box 2 or to an address other than that shown in Box
1.
Deliver:
(check appropriate boxes)
[ ] Old Notes not tendered
[ ] New Notes, to:
Name__________________________________
(PLEASE TYPE OR PRINT)
Address_______________________________
______________________________________
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL
SECURITY NUMBER OF --
1. An individual's account The individual
2. Two or more individuals The actual owner of the account or, if
(joint account) combined funds, any one of the
individuals (1)
3. Husband and wife The actual owner of the account or, if
(joint account) joint funds, either person (1)
4. Custodian account of a minor The minor (2)
(Uniform Gift to Minors Act)
5. Adult and minor The adult or, if the minor is the only
(joint account) contributor, the minor (1)
6. Account in the name of The ward, minor, or incompetent person (3)
guardian or committee for a
designated ward, minor, or
incompetent person
7. a. The usual revocable The grantor-trustee (1)
savings trust account
(grantor is also trustee)
b. So-called trust account The actual owner (1)
that is not a legal or
valid trust under State
law
8. Sole proprietorship The owner (4)
account
9. A valid trust, estate, or The legal entity (Do not furnish the
pension trust identifying number of the personal
representative or trustee unless the legal
entity itself is not designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a State or local government,
school district, or prison)
that receives agricultural
program payments
- ----------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
6
<PAGE> 7
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup with-holding on ALL payments include
the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an
individual retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described
in section 4947(a)(I).
- An entity registered at all times under the Investment Company Act
of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section
1441.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid
in money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You
may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payee. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE
INTERNAL REVENUE SERVICE.
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. Certificates
for all physically delivered Old Notes, as well as a properly completed and duly
executed copy of this Letter of Transmittal or facsimile thereof, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at any of its addresses set forth herein on or prior to the
Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OLD NOTES AND
ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER AND,
EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL IT IS
RECOMMENDED THAT REGISTERED MAIL PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSUME
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. THIS LETTER OF
TRANSMITTAL AND THE OLD NOTES SHOULD NOT BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Holders whose Old Notes are not immediately available or who cannot
deliver their Old Notes and all other required documents to the Exchange Agent
on or prior to the Expiration Date may tender their Old Notes pursuant to the
guaranteed delivery procedure set forth in the Prospectus under the caption "The
Exchange Offer -- Terms of the Exchange Offer -- Guaranteed Delivery
Procedures." Pursuant to such procedure: (i) such tender must be made by or
through an Eligible Institution (as defined in the Prospectus); (ii) on or prior
to the Expiration Date, the Exchange Agent must have received from such Eligible
Institution a letter, telegram or facsimile transmission setting forth the name
and address of the tendering Holder, the name(s) in which such Old Notes are
registered, and the certificate numbers of the Old Notes to be tendered; and
(iii) all tendered Old Notes as well as this Letter of Transmittal and all other
documents required by this Letter of Transmittal must be received by the
Exchange Agent within three business days after the date of execution of such
letter, telex, telegram or facsimile transmissions, all as provided in the
Prospectus under the caption "The Exchange Offer -- Terms of the Exchange Offer
- -- Guaranteed Delivery Procedures."
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Old Notes for exchange.
2. PARTIAL TENDERS; WITHDRAWALS. Tenders of Old Notes will be accepted in
denominations of U.S. $1,000 and integral multiples in excess thereof. If less
than the entire principal amount of Old Notes evidenced by a submitted
certificate is tendered; the tendering Holder must fill in the principal amount
tendered in the box entitled "Principal Amount Tendered." A newly issued
certificate for the principal amount of Old Notes submitted but not tendered
will be sent to such Holder as soon as practicable after the Expiration Date.
All Old Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Tenders of Old Notes pursuant to the Exchange Offer are irrevocable,
except that Old Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date. To
be effective, a written, telegraphic, telex or facsimile transmission notice of
withdrawal must be timely received by the Exchange Agent. Any such notice of
withdrawal must specify the person named in the Letter of Transmittal as having
tendered Old Notes to be withdrawn, the certificate numbers and designation of
the Old Notes to be withdrawn, the principal amount of Old Notes delivered for
exchange, a statement that such a Holder is withdrawing its election to have
such Old Notes exchanged, and the name of the registered Holder of such Old
Notes, and must be signed by the Holder in the same manner as the original
signature on the Letter of Transmittal (including any required signature
guarantees) or be accompanied by evidence satisfactory to the Company that the
person withdrawing the tender has succeeded to the beneficial ownership of the
Old Notes being withdrawn. If Old Notes have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, whose determination shall be
final and binding on all parties. Any Old Notes so withdrawn will be deemed not
to have been validly tendered for purposes of the Exchange Offer and no New
Notes will be issued with respect thereto unless the Old Notes so withdrawn are
validly retendered. The Exchange Agent will return the properly withdrawn Old
Notes promptly following receipt of notice of withdrawal. Properly withdrawn Old
Notes may be retendered
8
<PAGE> 9
by following one of the procedures described in the Prospectus under the caption
"The Exchange Offer -- Procedures for Tendering Old Notes" at any time prior to
the Expiration Date.
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered Holder(s) of the Old Notes tendered hereby, the Signature must
correspond with the name(s) as written on the face of certificates without
alteration, enlargement or change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Old Notes registered in different names are tendered, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations of Old Notes.
When this Letter of Transmittal is signed by the registered Holder or
Holders of Old Notes listed and tendered hereby, no endorsements of certificates
or separate written instruments of transfer or exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered Holder or Holders of the Old Notes listed, such Old Notes must be
endorsed or accompanied by separate written instruments of transfer or exchange
in form satisfactory to the Company and duly executed by the registered Holder
or Holders, in either case signed exactly as the name or names of the registered
Holder or Holders appear(s) on the Old Notes.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written instruments
of transfer or exchange required by this Instruction 3 must be guaranteed by an
Eligible Institution.
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Old Notes are tendered: (i) by a registered
Holder of such Old Notes; or (ii) for the account of any Eligible Institution.
4. TRANSFER TAXES. The Company shall pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes, or Old Notes for principal amounts
not tendered or accepted for exchange, are to be delivered to, or are to be
issued in the name of, any person other than the registered Holder of the Old
Notes tendered hereby, or if a transfer tax is imposed for any reason other than
the exchange of Old Notes pursuant to the Exchange Offer, then the amount of any
such transfer taxes (whether imposed on the registered Holder or any other
person) will be payable by the tendering Holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering Holder.
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
5. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive,
in whole or in part, any of the conditions to the Exchange Offer set forth in
the Prospectus.
6. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any Holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
7. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the address and telephone number set forth above. In addition, all questions
relating to the Exchange Offer, as well as requests for assistance or additional
copies of the Prospectus and this Letter of Transmittal, may be directed to the
Exchange Agent at the address specified in the Prospectus.
9
<PAGE> 10
8. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or Old
Notes will be resolved by the Company, whose determination will be final and
binding. The Company reserves the absolute right to reject any or all Letters of
Transmittal or tenders that are not in proper form or the acceptance of which
would, in the opinion of the Company's counsel, be unlawful. The Company also
reserves the absolute right to waive any irregularities or conditions of tender
as to the particular Old Notes covered by any Letter of Transmittal or tendered
pursuant to such Letter of Transmittal. None of the Company, the Exchange Agent
or any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any such
notification. The Company's interpretation of the terms and conditions of the
Exchange Offer shall be final and binding.
9. DEFINITIONS. Capitalized terms used in this Letter of Transmittal and
not otherwise defined have the meanings given in the Prospectus.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER
WITH CERTIFICATES FOR OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO 5:00
P.M., NEW YORK CITY TIME ON THE EXPIRATION DATE.
10
<PAGE> 1
EXHIBIT 99(b)
INSILCO CORPORATION
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER FOR ALL OUTSTANDING
10-1/4% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
10-1/4% SENIOR SUBORDINATED NOTES DUE 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON [ ], 1997, UNLESS EXTENDED.
AS DESCRIBED HEREIN, WITHDRAWAL RIGHTS WITH RESPECT TO THE EXCHANGE OFFER
ARE EXPECTED TO EXPIRE AT THE EXPIRATION OF THE EXCHANGE OFFER
Registered holders of outstanding 10-1/4% Senior Subordinated Notes Due
2007 (the "Old Notes") of Insilco Corporation (the "Company") who wish to tender
their Old Notes in exchange for a like principal amount of 10-1/4% Senior
Subordinated Notes Due 2007 (the "New Notes") of the Company and whose Old Notes
are not immediately available or who cannot deliver their Old Notes and Letter
of Transmittal (the "Letter of Transmittal") (and any other documents required
by the Letter of Transmittal) to The Bank of New York (the "Exchange Agent"), on
or prior to 5:00 p.m., New York City time on the Expiration Date (the
"Expiration Date"), may use this Notice of Guaranteed Delivery or one
substantially equivalent hereto. This Notice of Guaranteed Delivery may be
delivered by hand or sent by facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight delivery) or mail to
the Exchange Agent. See "The Exchange Offer -- Terms of the Exchange Offer --
Guaranteed Delivery Procedures" in the Prospectus (the "Prospectus").
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
By Hand or Overnight By Registered or Certified By Facsimile:
Courier: Mail:
The Bank of New York The Bank of New York [ ]
101 Barclay Street 101 Barclay Street
New York, New York 10286 New York, New York 10286
Attention: Securities Attention: [ ] Confirm by telephone
Processing Window to:
Ground Level [ ]
Reorganization, 7E
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Delivery of this Notice of Guaranteed Delivery to an address other than as set
forth above or transmission of instructions via a facsimile transmission to a
number other than as set forth above will not constitute a valid delivery.
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This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If
a signature on a Letter of Transmittal is required to be guaranteed by an
Eligible Institution, such signature guarantee must appear in the applicable
space provided on the Letter of Transmittal for Guarantee of Signatures.
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Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and
subject to the conditions set forth in the Exchange Offer and the Letter of
Transmittal, receipt of which is hereby acknowledged, the aggregate principal
amount of Old Notes set forth below pursuant to the guaranteed delivery
procedures set forth in the Prospectus.
The undersigned understands that tenders of Old Notes will be accepted
only in principal amounts equal to U.S. $1,000 or integral multiples thereof.
The undersigned understands that tenders of Old Notes pursuant to the Exchange
Offer may not be withdrawn after 5:00 p.m., New York City time on the Expiration
Date. Tenders of Old Notes may also be withdrawn if the Exchange Offer is
terminated without any such Old Notes being purchased thereunder or as otherwise
provided in the Prospectus.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
PLEASE SIGN AND COMPLETE
Name(s) of Registered Holder(s):
Signature(s) of Registered Owner(s) or
Authorized Signatory:_________________ _______________________________________
______________________________________ _______________________________________
______________________________________ _______________________________________
Principal Amount of Old Notes Address:_______________________________
Tendered:_____________________________ _______________________________________
Certificate No.(s) of Old Notes Area Code and Telephone No.:___________
(if available):_______________________
______________________________________ Date:__________________________________
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This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Old Notes exactly as its (their) name(s) appear on certificates for
Old Notes or on a security position listing as the owner of Old Notes, or by
person(s) authorized to become registered Holder(s) by endorsements and
documents transmitted with this Notice of Guaranteed Delivery. If a signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or such representative capacity, such person
must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s): ____________________________________________________________________
____________________________________________________________________
Capacity: ____________________________________________________________________
Address(es):____________________________________________________________________
____________________________________________________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or a correspondent in the
United States or an "eligible guarantor institution" as defined by Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
hereby (a) represents that each holder of Old Notes on whose behalf this tender
is being made "own(s)" the Old Notes covered hereby within the meaning of Rule
14e-4 under the Exchange Act, (b) represents that such tender of Old Notes
complies with such Rule 14e-4, and (c) guarantees that, within three business
days from the date of this Notice of Guaranteed Delivery, a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof), together with
certificates representing the Old Notes covered hereby in proper form for
transfer and required documents, will be deposited by the undersigned with the
Exchange Agent.
THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF
TRANSMITTAL AND OLD NOTES TENDERED HEREBY TO THE EXCHANGE AGENT WITHIN THE TIME
SET FORTH ABOVE AND THAT FAILURE TO DO SO COULD RESULT IN FINANCIAL LOSS TO THE
UNDERSIGNED.
Name of Firm:________________________ Authorized Signature:___________________
Address:_____________________________
_____________________________________ Name:___________________________________
Area Code and Telephone No.:_________ Title:__________________________________
_____________________________________ Date:___________________________________
DO NOT SEND OLD NOTES WITH THIS FORM. OLD NOTES SHOULD BE SENT TO THE
EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL.
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