<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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VENTURE HOLDINGS TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MICHIGAN 38-6530870
3714
(Primary standard industrial classification code number)
VEMCO, INC.
MICHIGAN 38-2737797
VENTURE INDUSTRIES CORPORATION
MICHIGAN 38-2034680
VENTURE MOLD & ENGINEERING CORPORATION
MICHIGAN 38-2556799
VENTURE LEASING COMPANY
MICHIGAN 38-2777356
VEMCO LEASING, INC.
MICHIGAN 38-2777324
VENTURE HOLDINGS CORPORATION
MICHIGAN 38-2793543
VENTURE SERVICE COMPANY
MICHIGAN 38-3024165
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(State or other (I.R.S.
jurisdiction of Employer
incorporation or Identification
organization) Number)
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33662 James J. Pompo Drive
Fraser, Michigan 48026
(810) 294-1500
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
MICHAEL G. TORAKIS
PRESIDENT AND CHIEF FINANCIAL OFFICER
C/O VENTURE HOLDINGS TRUST
33662 JAMES J. POMPO DRIVE
FRASER, MICHIGAN 48026
(810) 294-1500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
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FREDRICK M. MILLER, ESQ. PAUL LIEBERMAN, ESQ.
Dykema Gossett PLLC Paul Lieberman, P.C.
400 Renaissance Center 1471 S. Woodward, Suite 250
Detroit, Michigan 48243 Bloomfield Hills, Michigan 48302
(313) 568-6975 (248) 335-4000
</TABLE>
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APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC: As soon as practicable after
this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED UNIT PRICE(1) REGISTRATION FEE
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Series B 9 1/2% Senior Notes due 2005....... $205,000,000 100% $205,000,000 $62,121.21
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(1) Estimated pursuant to Rule 457(f)(2) solely for the purpose of calculating
the registration fee.
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The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
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, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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CROSS-REFERENCE SHEET
FOR REGISTRATION STATE ON FORM S-4
AND PROSPECTUS
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S-4 ITEM LOCATION IN PROSPECTUS
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A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus.... Facing Page of Registration Statement;
Cross-Reference Sheet; Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................. Inside Front Cover Page of Prospectus;
Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............. Summary; Risk Factors; Summary Financial
and Operating Data
4. Terms of the Transaction.................. Summary; Exchange Offer; Description of
Notes; Plan of Distribution
5. Pro Forma Financial Information........... Unaudited Pro Forma Condensed Consolidated
Statement of Income and Operating Data
6. Material Contacts with the Company Being
Acquired.................................. Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters........................ Not Applicable
8. Interests of Named Experts and Counsel.... Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants............................... Not Applicable
11. Incorporation of Certain Information by
Reference................................. Not Applicable
12. Information with Respect to S-2 or S-3
Registrants............................... Not Applicable
13. Incorporation of Certain Information by
Reference................................. Not Applicable
14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants......... Summary; Risk Factors; Capitalization;
Selected Consolidated Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management; Certain
Transactions; Description of Certain
Indebtedness; Legal Matters; Consolidated
Financial Statements
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3
Companies................................. Not Applicable
16. Information with Respect to S-3 or S-2
Companies................................. Not Applicable
17. Information with Respect to Companies
Other than S-3 or S-2 Companies........... Not Applicable
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<CAPTION>
S-4 ITEM LOCATION IN PROSPECTUS
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D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited........ Not Applicable
19. Information if Proxies, Consents, or
Authorizations are not to be Solicited, or
in an Exchange Offer...................... Exchange Offer; Management; Stock
Ownership; Certain Transactions; The
Trust; Description of Certain
Indebtedness; Description of Notes
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<PAGE> 4
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 AUGUST 27, 1997
PROSPECTUS
VENTURE HOLDINGS TRUST [VENTURE LOGO]
OFFER TO EXCHANGE
SERIES B 9 1/2% SENIOR NOTES DUE 2005
FOR ALL OF ITS OUTSTANDING
9 1/2% SENIOR NOTES DUE 2005
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED.
Venture Holdings Trust (the "Trust") and each of its wholly owned
subsidiaries, other than Venture Industries Canada Ltd. ("Venture Canada"),
(each an "Issuer" and, together with the Trust, the "Issuers") hereby offer upon
the terms and subject to conditions set forth in this Prospectus (the
"Prospectus") and the accompanying Letter of Transmittal (the "Letter of
Transmittal," together with the Prospectus, the "Exchange Offer"), to exchange
up to an aggregate principal amount of $205,000,000 of Series B 9 1/2% Senior
Notes due 2005 (the "Series B Notes") for up to an aggregate principal amount of
$205,000,000 of outstanding 9 1/2% Senior Notes due 2005 (the "Original Notes").
When used herein, the Company refers to the Issuers and Venture Canada, taken as
a whole.
The terms of the Series B Notes are substantially identical in all material
respects to those of the Original Notes, except for certain transfer
restrictions, registration rights and liquidated damages relating to the
Original Notes. The Series B Notes will be issued pursuant to, and entitled to
the benefit of, the Indenture (as defined herein) governing the Original Notes.
In the event that the Exchange Offer is consummated, any Original Notes which
remain outstanding after the Exchange Offer and all outstanding Series B Notes
will vote together as a single class for purposes of taking action under the
Indenture. The Series B Notes and the Original Notes are sometimes referred to
collectively as the "Notes".
Interest on the Series B Notes will accrue from the date of issuance
thereof and will be payable semi-annually on January 1 and July 1 of each year,
commencing January 1, 1998. Original Notes that are exchanged for Series B Notes
will accrue interest until the date of issuance of the Series B Notes. Original
Notes that are exchanged for Series B Notes will cease to accrue interest as of
the date of issuance of the Series B Notes. The Series B Notes will be
redeemable at the option of the Issuers, in whole or in part, at any time on or
after July 1, 2001 at the redemption prices set forth herein, plus accrued and
unpaid interest and Liquidated Damages (as defined), if any, to the date of
redemption. In addition, on or prior to July 1, 2000, the Issuers may redeem up
to 35% of the aggregate principal amount of Series B Notes originally issued at
a redemption price of 109.500% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, to the date of redemption, with
the net cash proceeds of a Public Equity Offering (as defined); provided that at
least 65% of the originally issued principal amount of Series B Notes remain
outstanding immediately after the occurrence of such redemption.
The Series B Notes will be senior unsecured, joint and several obligations
of the Issuers, ranking pari passu in right of payment to all senior
indebtedness of the Issuers. However, the Series B Notes will be effectively
subordinated to all future and existing secured indebtedness of the Issuers and
to all future and existing indebtedness of the Company's subsidiaries that are
not Issuers of the Series B Notes. The Senior Credit Facility (as defined) is
secured by substantially all of the assets of the Issuers, including all of the
capital stock of the Issuers (other than the Trust) and 65% of the stock of
Venture Canada. As of June 30, 1997, on a pro forma basis after giving effect to
the sale of the Original Notes and the application of the net proceeds
therefrom, the Company had $4.0 million of borrowings under the Senior Credit
Facility, a maximum of $193.2 million of availability for borrowings thereunder
and $9.0 million of additional senior Indebtedness (as defined) outstanding. See
"Description of Certain Indebtedness -- Senior Credit Facility" and "Description
of Notes."
Upon the occurrence of a Change of Control (as defined), the Issuers will
be required, subject to certain conditions, to make an offer to purchase the
Series B Notes at a price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase. In addition, the Issuers will be obligated to repurchase the Series B
Notes at 100% of their principal amount plus accrued interest to the date of
repurchase in the event of certain asset sales. See "Capitalization" and
"Description of Notes."
-------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN DECIDING WHETHER TO EXCHANGE ORIGINAL NOTES IN THE
EXCHANGE OFFER.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
(Continued on next page)
The date of this Prospectus is , 1997
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(Continued from previous page)
The Issuers will accept for exchange any and all Original Notes which are
properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time,
on , 1997, unless extended by the Issuers in their sole discretion
(the "Expiration Date"). Tenders of Original Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date. In the event the
Issuers terminate the Exchange Offer and do not accept for exchange any Original
Notes with respect to the Exchange Offer, the Issuers will promptly return the
Original Notes to the holders thereof. The Exchange Offer is not conditioned
upon any minimum principal amount of Original Notes being tendered for exchange,
but is otherwise subject to certain customary conditions. The Original Notes may
be tendered only in integral multiples of $1,000.
The Series B Notes are being offered hereunder in order to satisfy certain
obligations of the Issuers contained in the Registration Rights Agreement dated
as of July 9, 1997 (the "Registration Rights Agreement") among the Issuers and
First Chicago Capital Markets, Inc., as the initial purchaser (the "Initial
Purchaser"), with respect to the initial sale of the Original Notes. Based on
interpretations by the staff of the Securities and Exchange Commission (the
"Commission") contained in certain no-action requests from third parties
unrelated to the Issuers, the Series B Notes issued pursuant to the Exchange
Offer in exchange for Original Notes may be offered for resale, resold and
otherwise transferred by the respective holders thereof (other than any such
holder which is an "affiliate" of the Issuers within the meaning of Rule 405
under the Securities Act), without compliance with the registration and
prospectus delivery provisions of the Securities Act of 1933, as amended (the
"Securities Act"), provided that the Series B Notes are acquired in the ordinary
course of such holder's business and such holder has no arrangement with any
person to participate in the distribution of such Series B Notes and is not
engaged in and does not intend to engage in a distribution of the Series B
Notes. However, any holder of Original Notes who is an "affiliate" of the
Issuers or who intends to participate in the Exchange Offer for the purpose of
distributing Series B Notes, or any broker-dealer who purchased Original Notes
from the Issuers to resell pursuant to Rule 144A under the Securities Act ("Rule
144A") or any other available exemption under the Securities Act, (a) will not
be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to tender such
Original Notes in the Exchange Offer and (c) must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any sale or other transfer of such Original Notes unless such sale is made
pursuant to an exemption from such requirements. In addition, as described
below, if any broker-dealer holds Original Notes acquired for its own account as
a result of market-making or other trading activities and exchanges such
Original Notes for Series B Notes, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such Series B Notes.
Each holder of Original Notes who wishes to exchange Original Notes for
Series B Notes in the Exchange Offer will be required to represent that (i) it
is not an "affiliate" of the Issuers, (ii) any Series B Notes to be received by
it are being acquired in the ordinary course of its business, (iii) it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such Series B Notes, and (iv) if
such holder is not a broker-dealer, such holder is not engaged in, and does not
intend to engage in, a distribution (within the meaning of the Securities Act)
of such Series B Notes. In addition, the Issuers may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer, to
furnish to the Issuers (or an agent thereof) in writing information as to the
number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) on behalf of
whom such holder holds the Original Notes to be exchanged in the Exchange Offer.
Each broker-dealer that receives Series B Notes for its own account pursuant to
the Exchange Offer must acknowledge that it acquired the Original Notes for its
own account as the result of market-making activities or other trading
activities and must agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such Series
B Notes. Any broker-dealer that resells Series B Notes that were received by it
for its own account in connection with the Exchange Offer and any broker or
dealer that participates in a distribution of such Series B Notes may be deemed
to be an "underwriter" within the meaning of the Securities Act, and any profit
on any such resale of Series B Notes
(Continued on next page)
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(Continued from previous page)
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 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. Based on the position taken by the staff of the Division of
Corporation Finance of the Commission in the interpretive letters referred to
above, the Issuers believe that broker-dealers who acquired Original Notes for
their own accounts, as a result of market-making activities or other trading
activities ("Participating Broker-Dealers"), may fulfill their prospectus
delivery requirements with respect to the Series B Notes received upon exchange
of such Original Notes with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for the Exchange Offer so
long as it contains a description of the plan of distribution with respect to
the resale of such Series B Notes.
Accordingly, this Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer during the period
referred to below in connection with resales of Series B Notes received in
exchange for Original Notes where such Original Notes were acquired by such
Participating Broker-Dealer for its own account as a result of market-making or
other trading activities. Subject to certain provisions set forth in the
Registration Rights Agreement, the Issuers have agreed that this Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of Series B Notes for a
period ending 180 days after the Expiration Date (as defined herein) (subject to
extension under certain limited circumstances described below) or, if earlier,
when all such Series B Notes have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution -- Exchange Offer." However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of Series B Notes received in exchange for Original Notes
pursuant to the Exchange Offer must notify the Issuers, or cause the Issuers to
be notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at one of
the addresses set forth herein under "The Exchange Offer -- Exchange Agent." Any
Participating Broker-Dealer who is an "affiliate" of the Issuers may not rely on
such interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. See "The Exchange Offer -- Resales of Series B Notes."
Each Participating Broker-Dealer who surrenders Original Notes pursuant to
the Exchange Offer will be deemed to have agreed, by execution of the Letter of
Transmittal, that, upon receipt of notice from the Issuers of the occurrence of
any event or the discovery of any fact which makes any statement contained or
incorporated by reference in this Prospectus untrue in any material respect or
which causes this Prospectus to omit to state a material fact necessary in order
to make the statements contained or incorporated by reference herein, in light
of the circumstances under which they were made, not misleading or of the
occurrence of certain other events specified in the Registration Rights
Agreement, such Participating Broker-Dealer will suspend the sale of Series B
Notes pursuant to this Prospectus until the Issuers have amended or supplemented
this Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Issuers have given notice that the sale of the Series B
Notes may be resumed, as the case may be. If the Issuers give such notice to
suspend the sale of the Series B Notes they shall extend the 180 day period
referred to above during which Participating Broker-Dealers are entitled to use
this Prospectus in connection with the resale of Series B Notes by the number of
days during the period from and including the date of the giving of such notice
to and including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales of
the Series B Notes or to and including the date on which the Issuers have given
notice that the sale of Series B Notes may be resumed, as the case may be.
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF ORIGINAL NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE
(Continued on next page)
<PAGE> 7
(Continued from previous page)
DECIDING WHETHER TO TENDER THEIR ORIGINAL NOTES PURSUANT TO THE EXCHANGE OFFER.
Prior to the Exchange Offer, there has been no public market for the Series
B Notes. The Original Notes are not, and the Series B Notes are not expected to
be, listed on any securities exchange or authorized for trading on The Nasdaq
Stock Market. There can be no assurances as to the liquidity of any markets that
may develop for the Series B Notes, the ability of holders to sell the Series B
Notes, or the price at which holders would be able to sell the Series B Notes.
Future trading prices of the Series B Notes will depend on many factors,
including among other things, prevailing interest rates, the Company's operating
results and the market for similar securities. Historically, the market for
securities similar to the Series B Notes, including non-investment grade debt,
has been subject to disruptions that have caused substantial volatility in the
prices of such securities. There can be no assurance that any market for the
Series B Notes, if such market develops, will not be subject to similar
disruptions. The Initial Purchaser has advised the Issuer that it currently
intends to make a market in the Series B Notes offered hereby. However, the
Initial Purchaser is not obligated to do so and any market making may be
discontinued at any time without notice.
The Original Notes were initially purchased by accredited investors and
"qualified institutional buyers" (as such term is defined in Rule 144A under the
Securities Act). The Original Notes purchased by qualified institutional buyers
were initially represented by global notes in fully registered form (the "Global
Original Notes"), registered in the name of a nominee of The Depository Trust
Company ("DTC"), as depositary. The Series B Notes exchanged for Original Notes
represented by the Global Original Notes will be represented by global notes in
fully registered form (the "Global Series B Notes") registered in the name of a
nominee of DTC. The Global Series B Notes will be exchangeable for Series B
Notes in registered form, in denominations of $1,000 and integral multiples
thereof as set forth in the Indenture.
The Issuer will not receive any proceeds from the Exchange Offer. See "Use
of Proceeds." The Issuer has agreed to pay the expenses incident to the Exchange
Offer.
<PAGE> 8
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this
Prospectus, including, without limitation, statements containing the words
"believes," "anticipates," "expects" and words of similar import, constitute
"forward-looking statements" within the meaning of the Private Securities Reform
Act of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: international, national and local general economic and market
conditions; demographic changes; the size and growth of the automobile market or
the plastic automobile component market; the ability of the Company to sustain,
manage or forecast its growth; the size, timing and mix of purchases of the
Company's products; new product development and introduction; existing
government regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; dependence upon original equipment
manufacturers; liability and other claims asserted against the Company;
competition; the loss of significant customers or suppliers; fluctuations and
difficulty in forecasting operating results; changes in business strategy or
development plans; business disruptions; product recalls; warranty costs; the
ability to attract and retain qualified personnel; the ability to protect
technology; the use of proceeds from the sale of the Notes; retention of
earnings; control and the level of affiliated transactions; and other factors
referenced in this Prospectus. Certain of these factors are discussed in more
detail elsewhere in this Prospectus, including, without limitation, under the
captions "Risk Factors," "Use of Proceeds," "Capitalization," "Selected
Consolidated Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business" and "Certain Transactions."
Given these uncertainties, prospective investors are cautioned not to place
undue reliance on such forward-looking statements. The Company disclaims any
obligation to update any such factors or to publicly announce the result of any
revisions to any of the forward-looking statements contained or incorporated by
reference herein to reflect future events or developments.
<PAGE> 9
ADDITIONAL INFORMATION
The Issuers have filed with the Securities and Exchange Commission (the
"Commission") a registration statement (together with any amendments thereto,
the "Registration Statement") under the Securities Act with respect to the
Series B Notes being offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
For further information with respect to the Company and the Exchange Offer,
reference is made to the Registration Statement, including the exhibits and
schedules thereto, copies of which may be obtained upon payment of the
prescribed fees or examined without charge at the public reference facilities of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the Commission at 7 World Trade Center, 13th Floor, New
York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. The Registration Statement may also be obtained through the Commission's
electronic data gathering, analysis and retrieval system via electronic means,
including the Commission's web site on the Internet (http://wwv.sec. gov).
Statements contained in the Prospectus as to the contents of any contract or
other document referred to herein 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.
As a result of the Exchange Offer, the Issuers will become subject to the
informational requirements of the Exchange Act, and in accordance therewith will
be required to file periodic reports with the Commission. In addition, pursuant
to the terms of the Indenture, the Trust shall deliver to the Trustee and, to
each holder of the Notes within 15 days after it is or would have been (if it
were subject to such reporting obligations) required to file such with the
Commission, annual and quarterly financial statements substantially equivalent
to financial statements that would have been included in reports filed with the
Commission, if the Trust were subject to the requirements of Section 13 or 15(d)
of the Exchange Act, including, with respect to annual information only, a
report thereon by the Trust's certified independent public accountants as such
would be required in such reports to the Commission, and, in each case, a
management's discussion and analysis of financial condition and results of
operations which would be so required. The Issuers have also agreed that, for so
long as any Series B Notes remain outstanding, from and after the time the Trust
files a registration statement with the Commission with respect to the Series B
Notes, they will file such reports with the Commission, provided that the
Commission will accept such filings.
<PAGE> 10
SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Prospective investors should carefully consider
the information set forth under the heading "Risk Factors" and elsewhere in this
Prospectus. This Prospectus contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including those set forth under "Risk Factors" and elsewhere in
this Prospectus.
THE COMPANY
The Company is a leading systems integrator, designer and manufacturer of
high quality molded and painted parts for automotive original equipment
manufacturers ("OEMs") and other direct, or "Tier 1," suppliers to the OEMs. The
Company's products include both exterior and interior plastic components.
Exterior components include such items as front and rear bumper fascias, body
side moldings, claddings, fenders, grille opening panels and reinforcements,
farings, wheel lips, spoilers, and large body panels such as hoods, sunroofs,
doors and lift gates. Interior components include instrument panel systems,
airbag covers, side wall trim, garnishment molding systems, door panels and
consoles. The Company's principal customers include various divisions of General
Motors Corporation ("General Motors" or "GM"), Ford Motor Company ("Ford"),
Chrysler Corporation ("Chrysler") and a number of their various Tier 1
suppliers, such as Autoliv S.A., TRW Automotive Company, Textron Automotive
division of Textron Corporation and Lear Corporation. For the twelve months
ended June 30, 1997, the Company's net sales and EBITDA were $546.1 million and
$67.5 million, respectively.
The Company is a full-service supplier and an industry leader in providing
plastic components and in applying new design and engineering technology to
reduce product development time. The Company has purchase orders to supply an
aggregate of over 1,000 components to be included on approximately 100 models of
cars, minivans, light trucks and sport utility vehicles for the 1997 model year
and currently expects to manufacture over 1,100 components to be included on a
similar number of models to be produced for the 1998 model year, as compared to
supplying 399 components on 47 models for the 1994 model year. In recent years,
the Company has placed particular emphasis on designing and manufacturing airbag
covers and supplying components for higher growth sport utility, light truck,
minivan and high volume car segments of the market, which the Company believes
are less subject to the automotive industry's historical cyclicality. As a
result of this emphasis, the Company supplies certain components on a number of
models, such as the Buick LeSabre; Cadillac Seville, S5S and STS; Chrysler "LH"
cars (Chrysler LHS and Concorde, Dodge Intrepid and Eagle Vision), Dakota trucks
and "JA" cars (Cirrus, Stratus and Breeze); Ford F-series truck, Explorer,
Expedition, Mustang, Escort and Windstar; Oldsmobile Bravada, Intrigue and
Eighty-Eight; and Chevrolet Corvette, General Motors "M" vans (Astro and
Safari), Yukon, Tahoe, Suburban, GMX 130 and redesigned GMC and Chevrolet full
size vans (Express and Savana). In addition, the Company has been selected as a
sole-source supplier for certain components on the General Motors GMC Yukon
sport utility truck; Honda Accord and Civic; Jaguar; and Isuzu Rodeo. The
Company was awarded the engineering and design for the 1998 Chrysler "LH"
interior components, Chrysler "B" vans, the new "JR" program and the 2001 Jeep
Cherokee. The Company is also on the development team for the 1998 Chevrolet
"CK" full size truck, 2000 Ford Explorer and 2001 GM small truck sport utility
vehicle.
The Company believes that it is enhancing its competitive position to the
OEMs and other Tier 1 suppliers by moving away from positioning itself
exclusively as a component supplier to being a provider of complete interior and
exterior systems, consisting of rapid design, engineering, prototyping,
manufacturing and assembly expertise. The Company continuously strives to
maintain what it believes to be an industry leading position, applying
state-of-the-art design and engineering technology, including computer-aided
design/computer-aided manufacturing ("CAD/CAM") and optical-based design
techniques. The Company believes that early involvement in the design and
engineering of new components affords the Company a competitive advantage in
securing new business and provides its customers with innovative cost reduction
opportunities through the Company's involvement in the coordination of the
design, development and
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<PAGE> 11
just-in-time manufacturing processes. The Company believes this competitive
advantage is further enhanced by the Company's adoption of "lean manufacturing"
and "Kaizen" philosophies that seek continuous improvement by identifying and
eliminating waste, not only in the Company's operations, but also in those of
its customers and suppliers.
The Company has benefited from many of the changes occurring in the
automotive industry. As OEMs continue to consolidate suppliers, the Company is
well-positioned to remain a leader since the OEMs favor large, multi-dimensional
suppliers with global strategic relationships. In recent years, Ford and
Chrysler have increasingly transferred primary responsibility for design and
engineering of automotive components to full-service suppliers. The automotive
industry has increased the use of plastics in both interior and exterior
components of a vehicle to (i) reduce vehicle weight and cost; (ii) enhance
design flexibility; and (iii) shorten development time and improve quality. As
molding and painting technologies continue to improve, the use of plastics for
exterior trim is expected to increase.
In 1996, the Company expanded its customer base and technology capabilities
through strategic acquisitions. The acquisition of Bailey Corporation ("Bailey")
allowed the Company to expand its relationship into a Tier 1 supplier to Ford in
North America. The acquisition of certain assets from AutoStyle Plastics, Inc.
("AutoStyle" or "Venture Grand Rapids") enhanced the Company's relationship with
General Motors. Moreover, these acquisitions (the "Bailey and Venture Grand
Rapids Acquisitions") offered the Company the ability to expand into compression
molding technologies and to enhance its reaction injection molding ("RIM")
capabilities, as well as the ability to leverage and provide new outlets for the
Company's existing design, engineering and tooling capabilities.
Venture Industries Corporation, the initial business which became part of
the Company, was founded in 1973 by a group of individuals including Larry J.
Winget ("Mr. Winget"). Mr. Winget is the only founder still involved with the
Company and is the sole beneficiary of the Trust. Since its inception, the
Company has experienced significant growth. The Company's net sales and EBITDA
have increased from $174.8 million and $26.2 million, respectively, for the year
ended December 31, 1992 to $351.8 million and $44.9 million, respectively, for
the year ended December 31, 1996. This represents compound annual growth rates
of 19% and 14%, respectively.
The Company's principal executive offices are located at 33662 James J.
Pompo Drive, Fraser, Michigan 48026, and its telephone number is (810) 294-1500.
BUSINESS STRATEGY
The Company's business strategy is to capitalize on current conditions and
anticipate future automotive industry trends in order to supply an increasing
number of components to its existing OEM and Tier 1 supplier customers, as well
as to expand its customer base. The Company believes that the principal sources
for continued growth and increased market share lie in (i) capitalizing on its
engineering and design capabilities; (ii) expanding its capabilities to provide
integrated interior and exterior systems; and (iii) emphasizing its status as a
manufacturer of high quality components for North American OEMs. The Company
believes the key elements of achieving this strategy are the following:
Provide Full-Service Program Capability. In response to the evolving
purchasing and manufacturing policies of its OEM customers, the Company has
developed comprehensive full-service capabilities, including component research,
design and engineering, prototype production, tooling, manufacturing and
assembly. As the OEMs have focused increasingly on shortening vehicle design and
production cycles and reducing design and production costs, suppliers who have
the ability to take an idea or design from concept to mass production ("art to
part") are being involved earlier in the process and are being selected as
sole-source suppliers for vehicle components. This evolution of the OEM
relationship into strategic partnerships provides a significant advantage to
strong existing suppliers, such as the Company, in retaining existing contracts
as well as participating during the design phase for new vehicles, which is
integral to becoming a supplier to such new platforms.
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<PAGE> 12
In the past several years, the Company has made a substantial commitment to
product technology and product design, including establishing an Advanced
Engineering Center, integrating the use of CAD/CAM, and utilizing the latest
optical design technology to rapidly and cost-effectively replicate and modify
existing designs (using a proprietary reverse engineering process, licensed from
Mr. Winget, called reverse engineering automated process for rapid prototyping
("REAP")) as well as to design new prototypes. The Company believes its
participation with customers in the early phases of product design has enabled
it to provide better product quality at a lower cost in a shortened development
period.
Supply Highly Engineered, High Value-Added Components. The Company has,
over the past several years, changed its marketing emphasis to include its
advanced engineering capabilities to supply more highly engineered components.
These components are more difficult for a customer to produce in-house and are
difficult for a competitor to replicate due to the substantial up-front
investment and the specialized design and engineering required. The Company
believes that the number of companies that have the ability to participate in
the concept and design of a component and have efficient manufacturing
operations to competitively manufacture complex components, such as instrument
and door panel assemblies, is limited. This affords the Company the opportunity
to supply an increasing number of components to existing customers and to expand
its customer base.
Enhance Position as a Full Service Provider of Exterior and Interior
Plastic Trim. The Company believes that it is one of only a small number of
companies that can provide its customers with not only a full-service program
capability (as described above) but also a wide array of alternative plastic
molding technologies. The Company possesses the latest technologies associated
with thermoplastic injection molding, compression molding and RIM. With the
purchase of Bailey, the Company further completed its line of exterior
technologies by obtaining expertise pertaining to sheet molding compounds, which
are being increasingly utilized as a substitute for steel. By possessing a wide
range of plastic design and manufacturing technologies, the Company is able to
distinguish itself from its competition by offering the process that will best
meet the customers' needs, while often lowering design and production costs and
shortening the product development cycle.
Develop and Manufacture High Quality Products. The Company believes it
maintains an excellent reputation with the OEMs for providing world class
quality and customer service at competitive prices. The Company's reputation as
a high-quality, full-service supplier is exemplified by its receipt of major
quality awards from its OEM customers. Both the Company's Harper and Groesbeck
facilities are recipients of General Motors' highest quality award, the Mark of
Excellence. The Groesbeck facility has received the Chrysler Pentastar quality
award and several of the Company's facilities have also obtained Ford's Q-1
status. Quality levels are currently being standardized across OEMs through the
QS-9000 program which is expected to lower the cost of maintaining separate
quality programs. As of the date hereof, the Company's Harper, Groesbeck,
Hillsdale, Grand Blanc, Canada and Malyn facilities have received or have been
recommended for QS-9000 certification. The Company is in the process of
obtaining QS-9000 certification for the remainder of the facilities and expects
certification to be completed by the end of 1997.
Emphasize Continuous Improvement. The Company follows "lean manufacturing"
and "Kaizen" philosophies that seek continuous improvement by identifying and
eliminating waste in its own operations and in those of its customers and
suppliers. These philosophies emphasize employee involvement in all phases of
the Company's operations by (i) empowering employees at all levels with
responsibility for their work, which leads to the identification of
opportunities for improvement and cost reduction; (ii) forming cross-functional
teams to investigate opportunities for process improvements; and (iii) rewarding
employee participation and involvement through financial incentives.
Provide Just-in-Time Delivery/Sequential Shipping. As OEMs have moved to
just-in-time inventory management, the timeliness and reliability of shipments
by their suppliers have become increasingly important. To service its customers
more effectively, the Company utilizes just-in-time manufacturing and sourcing
systems, which enable it to meet its customers' requirements for on-time
deliveries while minimizing the carrying levels of inventory. The Company is
connected to General Motors, Ford, Chrysler and other Tier 1 suppliers through
computer-linked electronic data interchange, which facilitates communication of
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<PAGE> 13
customer demand and delivery requirements. The Company also offers its customers
sequential shipping, in which components are sent to automotive OEMs in the
specific order in which the vehicles are assembled, based on as little as two
hours' lead time. The Company believes it has established a reputation as a
highly reliable and timely supplier able to meet its customers' demanding
delivery requirements.
Increase its Global Presence. The Company and affiliated companies have
established a presence in Canada, Australia, Asia, Africa and Europe in order to
serve customers on a global basis. Although the affiliated companies are outside
of the Trust, they are owned by Mr. Winget and use the Venture name. This global
presence has allowed the Company to leverage the Venture name as General Motors,
Chrysler, Ford and other Tier 1 suppliers make sourcing decisions to award
purchase orders to companies with world-wide capabilities. Through these
relationships, the Company has also established relationships with new
customers, such as BMW and Mercedes. The affiliated companies, in turn, have
provided and are expected to continue to provide, significant new outlets for
the Company's existing design, engineering and tooling capabilities. The Company
intends to continue to expand in foreign markets to meet the OEMs' evolving
global needs, either directly or as a supplier of design services and molds to
its affiliated companies.
Make Strategic Acquisitions. In recent years, OEMs have instituted tighter
quality, manufacturing, delivery and systems requirements which have resulted in
consolidation of the automotive supplier industry. Through strategic
acquisitions, the Company believes it can further leverage its capabilities and
relationships with existing customers by adding complementary products and
manufacturing processes. The Company also intends to pursue acquisitions which
offer an entree to new customers and to expand or enhance its customer base.
Consistent with this strategy, the recent Bailey acquisition in August 1996 has
provided the Company with new opportunities to win business with Ford while
expanding into new technologies such as compression molding. The Company
believes that the continuing supplier consolidation may provide attractive
opportunities to acquire companies which can be improved economically through
cost cutting, lean manufacturing techniques and use of existing tooling and
design capabilities. The Company believes that, as of the date hereof, it has
improved profitability at the Bailey facilities through labor rationalization,
raw materials savings and the elimination of administrative redundancies.
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<PAGE> 14
THE EXCHANGE OFFER
The Exchange Offer applies to up to $205 million aggregate principal amount
of the Issuers' Series B Notes. The Series B Notes will be obligations of the
Issuers evidencing the same debt as the Original Notes and will be entitled to
the benefits of the same Indenture. To the extent that any Original Notes remain
outstanding after the Exchange Offer, the Original Notes will rank pari passu in
right of payment with the Series B Notes. See "Description of Notes." The form
and terms of the Series B Notes are substantially identical to the form and
terms of the Original Notes in all material respects except that the
distribution of the Series B Notes has been registered under the Securities Act
and, hence, the Series B Notes do not include certain rights to registration
thereunder and do not contain transfer restrictions or terms with respect to
liquidated damages applicable to the Original Notes. See "Description of Notes."
THE SERIES B NOTES............ The form and terms of the Series B Notes are
substantially identical in all material
respects to the form and terms of the Original
Notes for which they may be exchanged pursuant
to the Exchange Offer, except for certain
transfer restrictions and registration rights
relating to the Original Notes and except for
certain liquidated damages provisions relating
to the Original Notes described below under
"The Series B Notes."
THE EXCHANGE OFFER............ The Issuers are offering to exchange up to
$205,000,000 aggregate principal amount of
Series B Notes for up to $205,000,000 aggregate
principal amount of outstanding Original Notes.
Original Notes may be exchanged only in
integral multiples of $1,000.
EXPIRATION DATE; WITHDRAWAL OF
TENDER........................ The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1997 or
such later date and time to which it is
extended by the Issuers. The tender of Original
Notes pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration
Date. Any Original Notes not accepted for
exchange for any reason will be returned
without expense to the tendering holder thereof
as promptly as practicable after the expiration
or termination of the Exchange Offer.
EXCHANGE OFFER, REGISTRATION
RIGHTS,
LIQUIDATED DAMAGES............ Pursuant to a Registration Rights Agreement
(the "Registration Rights Agreement") among the
Issuers and the Initial Purchaser, the Issuers
agreed to file a registration statement (the
"Exchange Offer Registration Statement") with
respect to an offer to exchange the Original
Notes for Series B Notes, registered under the
Securities Act with terms substantially
identical to those of the Original Notes. In
the event that applicable interpretations of
the staff of the Commission do not permit the
Issuers to effect the Exchange Offer, or if for
any other reason the Exchange Offer is not
consummated within 165 days after July 9, 1997
(the "Closing Date"), the Issuers will be
required to provide a shelf registration
statement (the "Shelf Registration Statement"),
to cover resales of the Series B Notes by the
holders thereof. If the Issuers fail to satisfy
these registration obligations, they may be
required to pay Liquidated Damages ("Liquidated
Damages") to the holders of the Original Notes
under certain circumstances. See "Description
of Notes -- Registration Rights; Liquidated
Damages."
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<PAGE> 15
CONDITIONS TO THE EXCHANGE
OFFER......................... The Exchange Offer is subject to certain
customary conditions, including the institution
of any action or proceeding which might
materially impair the ability of the Issuers to
proceed with the Exchange Offer, changes in
statutory or other law which could impair the
Issuer's ability to proceed with the Exchange
Offer or the failure to obtain a governmental
approval which the Issuers may deem necessary
to consummate the Exchange Offer. Such
conditions may be waived by the Issuers. See
"The Exchange Offer -- Certain Conditions to
the Exchange Offer."
PROCEDURES FOR TENDERING
ORIGINAL NOTES................ Brokers, dealers, commercial banks, trust
companies and other nominees who hold Original
Notes through DTC (as defined herein) may
effect tenders by book-entry transfer in
accordance with DTC's Automated Tender Offer
Program ("ATOP"). Holders of such Original
Notes registered in the name of a broker,
dealer, commercial bank, trust company or other
nominee are urged to contact such person
promptly if they wish to tender Original Notes.
In order for Original Notes to be tendered by a
means other than by book-entry transfer, a
Letter of Transmittal must be completed and
signed in accordance with the instructions
contained herein. The Letter of Transmittal and
any other documents required by the Letter of
Transmittal must be delivered to the Exchange
Agent by mail, facsimile, hand delivery or
overnight courier and either such Original
Notes must be delivered to the Exchange Agent
or specified procedures for guaranteed delivery
must be complied with. See "The Exchange Offer
-- Procedures for Tendering Original Notes."
Letters of Transmittal and certificates
representing Original Notes should not be sent
to the Issuers. Such documents should only be
sent to the Exchange Agent. See "The Exchange
Offer -- Exchange Agent."
RESALES OF SERIES B NOTES..... Based on interpretations by the staff of the
Commission contained in certain no-action
requests from third parties unrelated to the
Issuers, the Series B Notes issued pursuant to
the Exchange Offer in exchange for Original
Notes may be offered for resale, resold and
otherwise transferred by respective holders
thereof (other than any such holder which is an
"affiliate" of the Issuers within the meaning
of Rule 405 under the Securities Act), without
compliance with the registration and prospectus
delivery provisions of the Securities Act,
provided that the Series B Notes are acquired
in the ordinary course of such holder's
business and such holder has no arrangement
with any person to participate in the
distribution of such Series B Notes and is not
engaged in and does not intend to engage in a
distribution of the Series B Notes. However,
any holder of Original Notes who is an
"affiliate" of the Issuers or who intends to
participate in the Exchange Offer for the
purpose of distributing Series B Notes, or any
broker-dealer who purchased Original Notes from
the Issuers to resell pursuant to Rule 144A or
any other available exemption under the
Securities Act, (a) will not be able to rely on
the interpretations of the staff of the
Division of Corporation Finance of the
Commission set forth in the
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<PAGE> 16
above-mentioned interpretive letters, (b) will
not be permitted or entitled to tender such
Original Notes in the Exchange Offer and (c)
must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any sale or
other transfer of such Original Notes unless
such sale is made pursuant to an exemption from
such requirements. In addition, as described
below, if any broker-dealer holds Original
Notes acquired for its own account as a result
of market-making or other trading activities
and exchanges such Original Notes for Series B
Notes, then such broker-dealer must deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resales
of such Series B Notes. Each holder of Original
Notes who wishes to exchange Original Notes for
Series B Notes in the Exchange Offer will be
required to represent that (i) it is not an
"affiliate" of the Issuers, (ii) any Series B
Notes to be received by it are being acquired
in the ordinary course of its business, (iii)
it has no arrangement or understanding with any
person to participate in a distribution (within
the meaning of the Securities Act) of such
Series B Notes, and (iv) if such holder is not
a broker-dealer, such holder is not engaged in,
and does not intend to engage in, a
distribution (within the meaning of the
Securities Act) of such Series B Notes. In
addition, the Issuers may require such holder,
as a condition to such holder's eligibility to
participate in the Exchange Offer, to furnish
to the Issuers (or an agent thereof) in writing
information as to the number of "beneficial
owners" (within the meaning of Rule 13d-3 under
the Exchange Act) on behalf of whom such holder
holds the Original Notes to be exchanged in the
Exchange Offer. Each broker-dealer that
receives Series B Notes for its own account
pursuant to the Exchange Offer must acknowledge
that it acquired the Original Notes for its own
account as the result of market-making
activities or other trading activities and must
agree that it will deliver a prospectus meeting
the requirements of the Securities Act in
connection with any resale of such Series B
Notes. Any broker-dealer that resells Series B
Notes that were received by it for its own
account in connection with the Exchange Offer
and any broker or dealer that participates in a
distribution of such Series B Notes may be
deemed to be an "underwriter" within the
meaning of the Securities Act, and any profit
of any such resale of Series B 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 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. Based on the position taken
by the staff of the Division of Corporation
Finance of the Commission in the interpretive
letters referred to above, the Issuers believe
that broker-dealers who acquired Original Notes
for their own accounts, as a result of
market-making activities or other trading
activities ("Participating Broker-Dealers"),
may fulfill their prospectus delivery
requirements with respect to the Series B Notes
received upon exchange of such Original Notes
with a prospectus meeting the requirements of
the Securities Act, which may be the
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<PAGE> 17
prospectus prepared for an exchange offer so
long as it contains a description of the plan
of distribution with respect to the resale of
such Series B Notes. Accordingly, this
Prospectus, as it may be amended or
supplemented from time to time, may be used by
a Participating Broker-Dealer during the period
referred to below in connection with resales of
Series B Notes received in exchange for
Original Notes where such Original Notes were
acquired by such Participating Broker-Dealer
for its own account as a result of
market-making or other trading activities.
Subject to certain provisions set forth in the
Registration Rights Agreement, the Issuers have
agreed that this Prospectus, as it may be
amended or supplemented from time to time, may
be used by a Participating Broker-Dealer in
connection with resales of Series B Notes for a
period ending 180 days after the Expiration
Date (subject to extension under certain
limited circumstances described below) or, if
earlier, when all such Series B Notes have been
disposed of by such Participating
Broker-Dealer. See "Plan of Distribution --
Exchange Offer." However, a Participating
Broker-Dealer who intends to use this
Prospectus in connection with the resale of
Series B Notes received in exchange for
Original Notes pursuant to the Exchange Offer
must notify the Issuers, or cause the Issuers
to be notified, on or prior to the Expiration
Date, that it is a Participating Broker-Dealer.
Such notice may be given in the space provided
for that purpose in the Letter of Transmittal
or may be delivered to the Exchange Agent at
one of the addresses set forth herein under
"The Exchange Offer -- Exchange Agent." Any
Participating Broker-Dealer who is an
"affiliate" of the Issuers may not rely on such
interpretive letters and must comply with the
registration and prospectus delivery
requirements of the Securities Act in
connection with any resale transaction. See
"The Exchange Offer -- Resales of Series B
Notes." Each Participating Broker-Dealer who
surrenders Original Notes pursuant to the
Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal,
that, upon receipt of notice from the Issuers
of the occurrence of any event or the discovery
of any fact which makes any statement contained
or incorporated by reference in this Prospectus
untrue in any material respect or which causes
this Prospectus to omit to state a material
fact necessary in order to make the statements
contained or incorporated by reference herein,
in light of the circumstances under which they
were made, not misleading or of the occurrence
of certain other events specified in the
Registration Rights Agreement, such
Participating Broker-Dealer will suspend the
sale of Series B Notes pursuant to this
Prospectus until the Issuers have amended or
supplemented this Prospectus to correct such
misstatement or omission and has furnished
copies of the amended or supplemented
Prospectus to such Participating Broker-Dealer
or the Issuers have given notice that the sale
of the Series B Notes may be resumed, as the
case may be. If the Issuers give such notice to
suspend the sale of the Series B Notes they
shall extend the 180 day period referred to
above during which Participating Broker-Dealers
are entitled to use this Prospectus in
connection with the resale of Series B Notes by
the number of days during the period from and
including the
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<PAGE> 18
date of the giving of such notice to and
including the date when Participating
Broker-Dealers shall have received copies of
the amended or supplemented Prospectus
necessary to permit resales of the Series B
Notes or to and including the date on which the
Issuers have given notice that the sale of
Series B Notes may be resumed, as the case may
be.
GUARANTEED DELIVERY
PROCEDURES.................... Holders of Original Notes who wish to tender
their Original Notes and whose Original Notes
are not immediately available or who cannot
deliver their Original Notes, the Letter of
Transmittal or any other documents required by
the Letter of Transmittal to the Exchange
Agent, prior to the Expiration Date, must
tender their Original Notes according to the
guaranteed delivery procedures set forth in
"The Exchange Offer -- Guaranteed Delivery
Procedures."
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS................ For a discussion of certain federal income tax
considerations relating to the exchange of the
Series B Notes for the Original Notes, see
"Certain Federal Income Tax Considerations."
EXCHANGE AGENT................ The Huntington National Bank is the Exchange
Agent. The address and telephone number of the
Exchange Agent are set forth in "The Exchange
Offer -- Exchange Agent."
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<PAGE> 19
THE SERIES B NOTES
SECURITIES OFFERED............ $205,000,000 aggregate principal amount of
Series B 9 1/2% Senior Notes due 2005.
ISSUERS....................... Venture Holdings Trust and each of the
following wholly owned subsidiaries of the
Trust: Vemco, Inc.; Vemco Leasing, Inc.;
Venture Industries Corporation; Venture
Holdings Corporation; Venture Leasing Company;
Venture Mold & Engineering Corporation; and
Venture Service Company.
INTEREST RATE; PAYMENT
DATES......................... Interest on the Series B Notes will accrue at
the rate of 9 1/2% per annum, payable
semiannually in arrears on January 1 and July 1
of each year, commencing January 1, 1998.
MATURITY DATE................. July 1, 2005.
OPTIONAL REDEMPTION........... The Series B Notes are redeemable, in whole or
in part, at the option of the Issuers at any
time on or after July 1, 2001, at the declining
redemption prices set forth herein, plus
accrued and unpaid interest, if any, thereon,
plus Liquidated Damages, if any, to the date of
redemption. In addition, notwithstanding the
foregoing, on or prior to July 1, 2000, the
Issuers may redeem up to 35% of the aggregate
principal amount of the Series B Notes
originally issued at a redemption price of
109.500% of the principal amount thereof, plus
accrued and unpaid interest, if any, thereon,
plus Liquidated Damages, if any, to the date of
redemption, with the net cash proceeds of a
Public Equity Offering; provided, that at least
65% in aggregate principal amount of the Series
B Notes remain outstanding following such
redemption. See "Description of Notes --
Optional Redemption."
CHANGE OF CONTROL............. In the event of a Change of Control, Holders of
the Series B Notes will have the right to
require that the Issuers repurchase the Series
B Notes in whole or in part at a redemption
price of 101% of the principal amount thereof
plus accrued and unpaid interest, if any,
thereon, plus Liquidated Damages, if any, to
the date of repurchase. See "Description of
Notes -- Certain Covenants -- Repurchase of
Notes at the Option of the Holder Upon a Change
of Control."
RANKING....................... The Series B Notes will constitute senior
unsecured, joint and several obligations of the
Issuers and will be pari passu in right of
payment to all future and existing senior
indebtedness of the Issuers. However, the
Series B Notes will be effectively subordinated
to all future and existing senior secured
indebtedness of the Issuers and to all future
and existing indebtedness of subsidiaries that
are not Issuers. As of June 30, 1997, on a pro
forma basis after giving effect to the sale of
the Original Notes and the application of the
net proceeds therefrom, the Company had $4.0
million of borrowings under the Senior Credit
Facility, a maximum of $193.2 million of
availability for borrowings thereunder and $9.0
million of additional senior Indebtedness
outstanding. See "Capitalization," "Description
of Certain Indebtedness -- Senior Credit
Facility" and "Description of Notes."
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<PAGE> 20
FUTURE SUBSIDIARY
GUARANTEES.................... Future subsidiaries of the Issuers may, and
under certain circumstances shall, guarantee (a
"Guarantee"), on a senior unsecured basis, the
Notes (each such future subsidiary, a
"Guarantor"). See "Description of Notes --
Certain Covenants -- Future Subsidiary
Guarantors."
CERTAIN COVENANTS............. The Indenture contains certain covenants,
including limitations on the ability of the
Issuers to: (i) incur additional Indebtedness;
(ii) incur certain liens; (iii) engage in
certain transactions with affiliates; (iv) make
certain restricted payments; (v) agree to
payment restrictions affecting Subsidiaries;
(vi) engage in unrelated lines of business; or
(vii) engage in mergers, consolidations or the
transfer of all or substantially all of the
assets of the Issuers to another person. In
addition, in the event of certain Asset Sales
(as defined herein), the Issuers will be
required to use the proceeds to reinvest in the
Issuers' business, to repay certain debt or to
offer to purchase Series B Notes at 100% of the
principal amount thereof, plus accrued and
unpaid interest, if any, thereon, plus
Liquidated Damages, if any, to the date of
purchase. See "Description of Notes -- Certain
Covenants."
USE OF PROCEEDS............... The Issuers will receive no cash proceeds from
the issuance of the Series B Notes. Proceeds to
the Issuers from the sale of the Original Notes
were used to repay certain amounts outstanding
under the Senior Credit Facility. See "Use of
Proceeds."
RISK FACTORS
For a discussion of certain factors that should be considered in deciding
whether to exchange Original Notes for Series B Notes in the Exchange Offer, see
"Risk Factors."
11
<PAGE> 21
SUMMARY FINANCIAL AND OPERATING DATA
The following table sets forth summary financial and operating data of the
Company for the five years ended December 31, 1996, the six months ended June
30, 1996 and the six and twelve months ended June 30, 1997. The summary
historical financial data for the five years ended December 31, 1996 have been
derived from the audited consolidated financial statements of the Company. The
summary historical financial data for the six months ended June 30, 1996, and
for the six and twelve months ended June 30, 1997, have been derived from the
Company's unaudited condensed consolidated financial statements. The following
table should be read in conjunction with "Selected Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the consolidated financial statements of the Company and of Bailey,
including the notes thereto, and the "Unaudited Pro Forma Condensed Statement of
Income and Operations" presented elsewhere in this Offering Memorandum.
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30, TWELVE MONTHS
---------------------------------------------------- ------------------- ENDED JUNE 30,
1992 1993 1994 1995 1996 1996 1997 1997
---- ---- ---- ---- ---- ---- ---- --------------
(DOLLARS IN THOUSANDS) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA(1)(2):
Net sales........................... $174,771 $205,567 $244,112 $251,142 $351,777 $125,795 $320,115 $546,097
Cost of products sold............... 146,157 163,521 199,717 211,262 302,940 102,131 262,160 462,969
Gross profit...................... 28,614 42,046 44,395 39,880 48,837 23,664 57,955 83,128
Selling, general and administrative
expense........................... 13,180 15,523 19,200 20,130 26,588 9,725 28,563 45,426
Payments to beneficiary in lieu of
taxes(3).......................... -- 1,177 3,405 576 666 666 472 472
Income from operations............ 15,434 25,346 21,790 19,174 21,583 13,273 28,920 37,230
Interest expense.................... 10,390 11,158 14,345 15,032 19,248 7,409 14,208 26,047
Net income before extraordinary
items and taxes................. 5,044 14,188 7,445 4,142 2,335 5,864 14,712 11,183
Net extraordinary loss on early
retirement of debt................ -- 4,066 -- -- 2,738 -- -- 2,738
Net income after extraordinary
items........................... 5,044 10,122 7,445 4,142 (403) 5,864 14,712 8,445
Tax provision(4).................... -- -- -- -- 336 -- 1,413 1,749
Net income (loss)................. 5,044 10,122 7,445 4,142 (739) 5,864 13,299 6,696
OTHER FINANCIAL DATA:
EBITDA(5)........................... $ 26,154 $ 38,611 $ 39,265 $ 35,818 $ 44,877 $ 23,302 $ 45,942 $ 67,517
Depreciation and amortization....... 10,720 12,088 14,070 16,068 22,628 9,363 16,550 29,815
Capital expenditures................ 12,769 19,413 22,798 20,339 67,533 23,311 18,777 62,999
BALANCE SHEET DATA
(AT END OF PERIOD):
Working capital..................... $ 29,556 $ 32,291 $ 85,258 $ 74,354 $ 83,404 $ 57,455 $ 88,166 $ 88,166
Property, plant and equipment --
net............................... 94,501 102,277 111,472 116,299 203,975 130,534 208,016 208,016
Total assets........................ 148,618 166,578 234,435 231,602 498,067 256,696 483,803 483,803
Total debt.......................... 94,064 94,957 153,118 152,463 299,996 157,414 290,710 290,710
Warrants............................ 2,673 -- -- -- -- -- -- --
Trust principal(3).................. 31,789 41,911 49,356 53,498 52,759 59,362 66,058 66,058
</TABLE>
<TABLE>
<CAPTION>
AS OF
JUNE 30, 1997
-------------
(UNAUDITED)
<S> <C>
ADJUSTED EBITDA AND CREDIT RATIOS:
Adjusted EBITDA(5)(6)....................................... $79,557
Cash interest expense(7).................................... 28,020
Ratio of adjusted EBITDA to cash interest expense........... 2.8x
Ratio of net debt to adjusted EBITDA(8)..................... 3.7x
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
--------------------------
ACTUAL AS ADJUSTED(9)
------ --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 348 $ 304
Total assets................................................ 483,803 490,028
Total debt.................................................. 290,710 296,935
Trust principal............................................. 66,058 66,058
</TABLE>
(see footnotes on following page)
12
<PAGE> 22
- ------------
(1) The Trust operates as a holding company and has no independent operations of
its own. Separate financial statements of the Issuers have not been
presented because the Issuers do not believe that such information would be
material to a decision to invest in the Notes.
(2) The results for 1996 include the operations of Bailey from August 26, 1996,
and of Venture Grand Rapids from June 3, 1996.
(3) The Company made distributions to the beneficiary of the Trust in amounts
generally equal to taxes incurred by the beneficiary as a result of the
activities of the Trust's subsidiaries that have elected "S" corporation
status under the Internal Revenue Code of 1986, as amended (the "Code"), of
approximately $0.9 million, for the year ended December 31, 1992. For the
years ended December 31, 1993, 1994, 1995 and 1996, and in the six months
ended June 30, 1996 and 1997, the Company paid the beneficiary compensation
in lieu of a distribution of Trust principal for such purposes. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
(4) This provision relates solely to Bailey and its subsidiaries (see Note 2
above). Other significant subsidiaries of the Trust have elected "S"
corporation status under the Code and, consequently, the Company does not
incur liability for federal and certain state income taxes for these
subsidiaries. Upon termination of the Trust, the S elections may terminate
and the corporation succeeding the Trust according to the terms of the Trust
may be subject to income tax.
(5) EBITDA represents income from operations before deducting taxes,
depreciation, amortization, interest and Trust Tax Distributions (as defined
in the Indenture). EBITDA is not presented as an alternative to net income,
as a measure of operating results or as an indicator of the Company's
performance, nor is it presented as an alternative to cash flow or as a
measure of liquidity, but rather to provide additional information related
to debt service capacity. EBITDA should not be considered in isolation or as
a substitute for net income or cash flow data prepared in accordance with
generally accepted accounting principles or as a measure of a company's
profitability. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for a discussion of liquidity and
operating results.
(6) Adjusted EBITDA is calculated by multiplying actual EBITDA for the nine
months ended June 30, 1997 by 1.33x, in order to give full effect, on an
annualized basis, to the Bailey and Venture Grand Rapids Acquisitions.
(7) Cash interest expense represents total interest expense, less amortization
of deferred financing costs and other non-cash interest charges, for the
twelve months ended June 30, 1997 on a pro forma basis giving effect to the
sale of the Original Notes and the application of the net proceeds therefrom
as if the same had occurred on July 1, 1996.
(8) Net debt represents total debt less cash and cash equivalents and was
calculated based on the pro forma net debt as of June 30, 1997 of $296.6
million.
(9) Gives effect to the application of the net proceeds of the sale of the
Original Notes. See "Use of Proceeds" and "Capitalization."
13
<PAGE> 23
RISK FACTORS
An investment in the Series B Notes offered hereby involves a high degree
of risk. In addition to the other information contained in this Prospectus, the
following factors should be carefully considered by prospective investors in
connection with the Exchange Offer and the Series B Notes. This Prospectus
contains forward-looking statements which involve known and unknown risks,
uncertainties and other factors including, without limitation, those set forth
in the following Risk Factors and elsewhere in this Prospectus that may cause
the actual results of the Company to be materially different from the results
expressed or implied in such forward-looking statements.
SIGNIFICANT LEVERAGE AND ABILITY TO SERVICE OUTSTANDING DEBT
The Company has indebtedness which is substantial in relation to trust
principal, as well as interest and debt service requirements which are
significant compared to its cash flow from operations. As of June 30, 1997, on a
pro forma basis after giving effect to the sale of the Original Notes and the
application of net proceeds therefrom, the Company had approximately $296.9
million of debt outstanding, including the Notes, and a maximum availability
under the Company's bank credit facility as amended contemporaneously with the
closing of the sale of the Original Notes (the "Senior Credit Facility") of
$193.2 million. For the twelve months ended June 30, 1997, the Company's ratio
of EBITDA to cash interest expense and ratio of earnings to fixed charges were
approximately 2.4x and 1.4x, respectively, on a pro forma basis after giving
effect to the sale of the Original Notes and the application of the net proceeds
therefrom.
The level and terms of the Company's indebtedness could have important
consequences to holders of the Series B Notes, including, but not limited to,
the following: (i) a substantial portion of the Company's cash flow from
operations must be dedicated to debt service and will not be available for other
purposes; (ii) the Company's ability to obtain additional debt financing in the
future for working capital, capital expenditures, acquisitions and general
corporate or other purposes may be limited; (iii) certain of the Company's
borrowings may be at variable rates of interest, which could result in higher
interest expense in the event of increases in interest rates; and (iv) the
Company is and will be subject to a variety of restrictive covenants, the
failure to comply with which could result in events of default that, if not
cured or waived, could restrict the Company's ability to make payments of
principal, interest and Liquidated Damages, if any, on the Notes. See
"Description of the Notes."
The Company's ability to pay interest on the Series B Notes and to satisfy
its other obligations will depend upon its future operating performance, which
will be affected by prevailing economic conditions and financial, business and
other factors, many of which are beyond its control. The Company anticipates
that its operating cash flow, together with available borrowings under the
Senior Credit Facility, will be sufficient to meet its operating expenses, to
service interest requirements on its debt obligations as they become due and to
implement its business strategy. There can be no assurance, however, that the
Company's business will generate sufficient cash flow from operations or that
future borrowings will be available in an amount sufficient to enable the
Company to service its indebtedness, including the Series B Notes, to make
anticipated capital expenditures or to implement its business strategy. The
Company may be required to refinance the Series B Notes at or prior to maturity.
Further, the Company's 9 3/4% Senior Subordinated Notes due 2004 (the "Senior
Subordinated Notes") will mature on April 1, 2004, and the Senior Credit
Facility will require refinancing before the Series B Notes mature. It is the
Company's intention to refinance the Senior Subordinated Notes and the Senior
Credit Facility prior to maturity. No assurance can be given that, if required,
the Company will be able to refinance the Senior Subordinated Notes, the Senior
Credit Facility or the Series B Notes on terms acceptable to it, if at all. If
the Company is unable to service its indebtedness, it will be forced to adopt an
alternative strategy that may include actions such as reducing or delaying
capital expenditures, selling assets, restructuring or refinancing its
indebtedness or seeking additional equity capital. There can be no assurance
that any of these strategies could be effected on terms acceptable to the
Company, if at all. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
14
<PAGE> 24
RANKING
The Series B Notes are senior unsecured, joint and several obligations of
the Issuers, ranking senior in right of payment to all existing and future
subordinated indebtedness of the Issuers. The Series B Notes rank pari passu in
right of payment with all other existing and future senior indebtedness of the
Issuers. However, the Series B Notes will be effectively subordinated to all
future and existing secured indebtedness of the Issuers, including the Senior
Credit Facility, and to all existing and future indebtedness of the Issuers'
subsidiaries that are not Issuers of the Notes. On a pro forma basis as of June
30, 1997, after giving effect to the sale of the Original Notes and the
application of the net proceeds therefrom, the Company had $4.0 million of
borrowings under the Senior Credit Facility and a maximum of $193.2 million
remained available for borrowings thereunder. As of June 30, 1997, Venture
Canada, the only subsidiary which is not an Issuer, had no debt, other than
trade payables. See "Description of Notes" and "Description of Certain
Indebtedness -- Senior Credit Facility." The Senior Credit Facility is secured
by liens on substantially all of the assets of the Company, including all of the
capital stock of the Issuers and 65% of the stock of Venture Canada. In the
event of the bankruptcy, liquidation or reorganization of the Issuers, the
assets of the Issuers will be available to pay obligations on the Series B Notes
only after all secured indebtedness has been paid in full and sufficient assets
may not remain to pay amounts due on any or all of the Series B Notes then
outstanding. Subject to certain limitations, the Issuers, from time to time, may
incur additional secured indebtedness, which secured indebtedness will
effectively rank senior to the Series B Notes to the extent of the value of the
assets securing such indebtedness. See "Description of Notes -- Certain
Covenants -- Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock."
RELIANCE ON MAJOR CUSTOMERS; THE OEM SUPPLIER INDUSTRY
The Company competes in the global OEM supplier industry, which is
characterized by a small number of OEMs which are able to exert considerable
pressure on OEM suppliers. The Company's sales to major OEM customers, General
Motors, Ford and Chrysler, were approximately 41%, 16% and 12% of the Company's
net sales, respectively, for the year ended December 31, 1996, and 45%, 27% and
8%, respectively, for the six months ended June 30, 1997 (which give full effect
to the Bailey and Venture Grand Rapids Acquisitions). Sales to these customers
consist of a large number of different parts, tooling and other services, which
are sold to separate divisions and operating groups within each customer's
organization. Although the Company has purchase orders from such customers, such
purchase orders generally provide for supplying the customer's requirements for
a particular model or model year rather than for manufacturing a specific
quantity of products. The loss of any one of such customers or purchase orders,
or a significant decrease in demand for certain models or a group of related
models sold by any of its major customers could have a material adverse effect
on the Company. The failure of the Company to obtain new business for new models
or to retain or increase business on redesigned existing models could adversely
affect the Company. OEM customers are also able to exert considerable pressure
on component and system suppliers to reduce costs, finance tooling, improve
quality and provide additional design and engineering capabilities. There can be
no assurance that the additional costs of increased quality standards, price
reductions or additional engineering capabilities required by OEMs will not have
a material adverse effect on the financial condition or results of operations of
the Company.
Further, many of the Company's OEM and other Tier 1 supplier customers, and
other suppliers to the Company's customers, are unionized, and work stoppages,
slow-downs or other labor disputes experienced by, and the labor relations
policies of, OEMs and other Tier 1 suppliers, could have an adverse effect on
the Company's results of operations.
The OEM supplier industry is highly cyclical and, in large part, dependent
upon the overall strength of consumer demand for light trucks and passenger
cars. There can be no assurance that the automotive industry, for which the
Company supplies components and systems, will not experience downturns in the
future. An economic recession typically impacts substantially leveraged
companies such as the Company more than similarly situated companies with less
leverage. A decrease in overall consumer demand for motor vehicles, in general,
or specific segments, could have a material adverse effect on the Company's
financial condition and results of operations.
15
<PAGE> 25
COMPETITION
The industry in which the Company competes is highly competitive. A large
number of actual or potential competitors exist, including the internal
component operations of the OEMs as well as independent suppliers, many of which
are larger than the Company. In addition, the Company's business is increasingly
competitive due to supplier consolidations resulting from OEM supplier
optimization policies and the spin-off by OEMs of formerly in-house plastics
manufacturing facilities. The Company competes on the basis of quality, cost,
timely delivery and customer service and, increasingly, on the basis of design
and engineering capability, painting capability, new product innovation, broad
product offerings, product testing capability and its ability to reduce the time
from concept to mass production. The Company believes that as OEMs continue to
strive to reduce new model development cost and timing, innovation and design
and engineering capabilities will become more important as a basis for
distinguishing competitors, and the Company believes that it is well positioned
to compete in these areas. There can be no assurance, however, that the Company
will be able to continue to compete successfully in this environment. See
"Business -- Competition."
RAW MATERIALS
The principal raw materials used by the Company are engineered plastic
resins such as nylon, polypropylene (including thermoplastics), polycarbonate,
acrylonitrile-butadiene-styrene, fiberglass reinforced polyester, polyethylene
terephthalate ("PET") and thermoplastic polyurethane ("TPU"); a variety of
ingredients used in compounding materials used in the compression molding
process; paint related products; and steel for production molds. Although all of
these materials are available from one or more suppliers, the Company's
customers generally specify materials and suppliers to be used by the Company in
connection with a specific program. The Company procures most of its raw
materials by issuing purchase orders against one-year supply agreements under
which the Company's annual needs for such materials are estimated. Releases
against such purchase orders are made only upon the Company's receipt of
corresponding orders from its customers. The Company has not experienced raw
material shortages, although there can be no assurance the Company will not
experience raw material shortages in the future.
CONTROL; AFFILIATED TRANSACTIONS
The Trust, directly or indirectly, owns all of the capital stock of the
other Issuers and Venture Canada. Mr. Winget is the Trustee and sole beneficiary
of the Trust. As such, Mr. Winget has control of the Company. As a result of
such control, Mr. Winget is able to elect or remove the directors of each Issuer
and to exercise control over the Company's affairs, subject only to limitations
contained in certain agreements related to indebtedness of the Company. See
"Description of Certain Indebtedness." In addition to making distributions to
Mr. Winget as sole beneficiary of the Trust and compensating him in his capacity
as an Executive Manager of the Company, the Company has entered into numerous
transactions with Mr. Winget personally and with entities he owns or controls,
as more fully described under "Certain Transactions." The Company also relies
upon these entities to provide facilities, machinery, equipment, technology and
services to the Company which are necessary for it to provide full service to
its customers and to allow the Company to promote a global presence. Since the
Company operates for the benefit of Mr. Winget as sole beneficiary of the Trust,
the terms of these transactions are not the result of arms'-length bargaining;
however, the Company believes that such transactions are on terms no less
favorable to the Company than would be obtained if such transactions or
arrangements were arms'-length transactions with non-affiliated persons.
Pursuant to the Indenture and the indenture relating to the Senior Subordinated
Notes, the Trust and each other Issuer is required to maintain a Fairness
Committee (as defined), at least one of whose members is independent, which will
approve the terms and conditions of certain transactions between the Company and
its affiliates and which participates in decisions concerning whether certain
corporate opportunities will be pursued by the Company. The Company has complied
with such requirement since the date of the issuance of the Senior Subordinated
Notes for transactions initiated after such date. The indentures also contain
other restrictions on transactions with affiliates, including the Corporate
Opportunity Agreement (as defined), and distributions to Mr. Winget. The
Corporate Opportunity Agreement, entered into in connection with the issuance of
the Senior Subordinated Notes, requires Mr. Winget to offer to the Company
certain corporate opportunities which relate to the
16
<PAGE> 26
Company's business before he may pursue such opportunities outside the Company.
See "Description of Notes."
RISKS ASSOCIATED WITH ACQUISITIONS
To expand its markets and take advantage of the consolidation trend in the
automotive supplier industry, the Company's business strategy includes growth
through selected acquisitions. The ability of the Company to successfully
implement its acquisition strategy depends on a number of factors, some of which
are beyond the Company's control. There can be no assurance that the Company
will be able to consummate acquisitions in the future on terms acceptable to it.
Also, there can be no assurance that the acquisitions will perform as expected,
will be successfully integrated into the Company's operations, or that
identified cost savings from operations can be achieved. The full benefits of a
business combination require integration of each company's administrative,
finance, sales and marketing organizations, coordination of each company's sales
efforts and the implementation of appropriate operations, financial and
management systems and controls in order to capture the efficiencies that are
expected to result from the acquisition.
In certain instances, a consummated acquisition may adversely affect the
Company's financial condition and reporting results, including capital
requirements and the accounting treatment of such acquisitions. Furthermore,
there can be no assurances that acquisitions will not result in significant
unexpected liabilities after the consummation of such acquisition.
CHANGE OF CONTROL
The Indenture provides that, upon the occurrence of a Change of Control,
the Company will be required to make an offer to purchase all of the Notes then
outstanding at a purchase price equal to 101% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase. If a Change of Control were to occur, provisions contained in the
Senior Credit Facility could prohibit the Company from satisfying its obligation
to repurchase the Notes until all electing indebtedness under the Senior Credit
Facility is repaid. The indenture governing the Senior Subordinated Notes
contains provisions similar to those of the Series B Notes, and each of the
instruments defining the referenced indebtedness provides for events of default
to occur upon the default of certain other indebtedness. There can be no
assurance that the Company would have adequate financial resources to repay all
of its obligations under the Series B Notes upon the occurrence of a Change of
Control. See "Description of Notes -- Certain Covenants -- Repurchase of Notes
at the Option of the Holders upon a Change of Control."
FRAUDULENT CONVEYANCE
The Series B Notes are joint and several obligations of the Issuers. Under
federal or state fraudulent conveyance statutes or other legal principles, the
Series B Notes might be subordinated to existing or future indebtedness of the
Issuers, voided or found not to be enforceable in accordance with their terms.
Accordingly, under such fraudulent conveyance statutes, if a court in a lawsuit
on behalf of an unpaid creditor of any Issuer or a representative of creditors,
such as a trustee in bankruptcy, were to find that any of the Issuers incurred
the indebtedness represented by the Series B Notes with actual intent to hinder,
delay or defraud creditors, or received less than a reasonably equivalent value
or fair consideration for any of such indebtedness and at the time of such
incurrence (i) was insolvent; (ii) was rendered insolvent by reason of such
incurrence; (iii) was engaged or about to engage in a business or transaction
for which its remaining assets constituted unreasonably small capital to carry
on its business; (iv) intended to incur, or believed that it would incur, debts
(including contingent obligations) beyond its ability to pay such debts as they
matured; or (v) was a defendant in an action for money damages, or had a
judgment for money damages docketed against it, if, in either case, after final
judgment, the judgment was unsatisfied, such court might permit such
indebtedness, and prior payments thereon, to be voided by such creditor or
representative and permit such prior payments to be recovered from the holders
of such indebtedness (including holders of the Series B Notes), as the case may
be. Similar tests could be applied to the issuance of Guarantees, if hereafter
issued.
17
<PAGE> 27
The measure of insolvency for purposes of the foregoing will vary depending
upon the law of the jurisdiction which is being applied. Generally, however, any
Issuer or any Guarantor would be considered insolvent if, at the time it
incurred such indebtedness or issued the Guarantees, either the fair market
value (or fair saleable value) of its assets was less than the amount required
to pay its total debts and liabilities (including the Series B Notes and
contingent liabilities) as they become absolute and mature or it had incurred
debts (including the Series B Notes and contingent obligations) beyond its
ability to repay such debts as they mature. Among other things, a legal
challenge to the issuance of the Series B Notes with respect to any particular
Issuer on fraudulent conveyance grounds may focus on the benefits, if any,
realized by such Issuer as a result of the issuance of the Series B Notes and
the fact that each Issuer (other than the Trust itself) is potentially liable
for amounts in excess of its individual assets. To the extent the issuance of
the Series B Notes by a particular Issuer is voided as a fraudulent conveyance
or held unenforceable for any reason, the holders of the Series B Notes would
cease to have any claim in respect of such Issuer and would be solely creditors
of the other Issuers and the Guarantors, and may be required to return all
amounts received from such Issuer. Similarly, a legal challenge to any
Guarantees, if hereafter issued, on fraudulent conveyance grounds may focus on
the benefits, if any, realized by a Guarantor as a result of the issuance of the
Series B Notes by the Issuers. To the extent any Guarantee is voided as a
fraudulent conveyance or held unenforceable for any reason, the holders of the
Series B Notes would cease to have any claim in respect of such Guarantee and
would be solely creditors of the Issuers, and may be required to return all
amounts received pursuant to such Guarantee. Each of the Issuers believe that
the indebtedness represented by the Series B Notes is being incurred for proper
purposes and in good faith, and that neither the issuance of the Series B Notes
nor the Guarantees, if hereafter issued, involve a fraudulent conveyance. There
can be no assurance, however, that a court would reach the same conclusions.
ENVIRONMENTAL
The Company's operations are subject to numerous federal, state and local
laws and regulations pertaining to the generation and discharge of materials
into the environment. The Company has taken steps related to such matters in
order to minimize the risks of potentially harmful aspects of its operations on
the environment. However, from time to time, the Company has been subject to
claims asserted against it by regulatory agencies for environmental matters
relating to the generation and disposal of hazardous substances and wastes. Some
of these claims relate to properties or business lines acquired by the Company
after a release had occurred. In each known instance, however, the Company
believes that the claims asserted against it, or obligations incurred by it,
will not result in a material adverse effect upon the Company's financial
position or results of operations. Nonetheless, there can be no assurance that
activities at these facilities or facilities acquired in the future, or changes
in environmental laws and regulations, will not result in additional
environmental claims being asserted against the Company or additional
investigations or remedial actions being required.
Estimates of the costs of future compliance with such environmental laws
are necessarily imprecise due to numerous uncertainties, including the enactment
of new laws and regulations, the development and application of new
technologies, the identification of new sites for which the Company may have
remediation responsibility and the apportionment and collectibility of
remediation costs among responsible parties. The Company establishes reserves
for these environmental matters when the loss is probable and reasonably
estimable. At June 30, 1997, the Company had a reserve of approximately $1.0
million to address the known issues described under "Business -- Environmental
Matters," and for known compliance monitoring activities that may be incurred.
It is possible that final resolution of some of these matters may require the
Company to make expenditures in excess of established reserves, over an extended
period of time and in a range of amounts that cannot be reasonably estimated.
Although the final resolution of any such matters could have a material effect
on the Company's consolidated operating results for the particular reporting
period in which an adjustment of the reserve is recorded, the Company believes
that any resulting adjustment should not materially affect its consolidated
financial position. See "Business -- Environmental Matters."
18
<PAGE> 28
CONSEQUENCES OF FAILURE TO EXCHANGE; POSSIBLE ADVERSE EFFECT ON TRADING MARKET
FOR ORIGINAL NOTES
Holders of Original Notes who do not exchange their Original Notes for
Series B Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Original Notes as set forth in the legend
thereon as a consequence of the issuance of the Original Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Original Notes may not be offered or sold unless registered under
the Securities Act and applicable state laws, or pursuant to an exemption
therefrom. Subject to the obligation of the Issuers to file a shelf registration
statement covering resales of Original Notes in certain limited circumstances,
the Issuers do not intend to register the Original Notes under the Securities
Act and, after consummation of the Exchange Offer, will not be obligated to do
so. In addition, any holder of Original Notes who tenders in the Exchange Offer
for the purpose of participating in a distribution of the Series B Notes may be
deemed to have received restricted securities and, if so, will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Additionally, as a
result of the Exchange Offer, it is expected that a substantial decrease in the
aggregate principal amount of Original Notes outstanding will occur. As a
result, it is unlikely that a liquid trading market will exist for the Original
Notes at any time. This lack of liquidity will make transactions more difficult
and may reduce the trading price of the Original Notes. See "The Exchange Offer"
and "Description of Notes -- Registration Rights; Liquidated Damages."
ABSENCE OF PUBLIC MARKET
The Series B Notes will constitute a new class of securities with no
established trading market. The Issuers do not intend to list the Series B Notes
on any national securities exchange or to seek the admission thereof to trading
in The Nasdaq Stock Market's National Market. The Issuers have been advised by
the Initial Purchaser that the Initial Purchaser currently intends to make a
market in the Series B Notes. It is not obligated to do so, however, and any
market-making activities with respect to the Notes may be 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, and may be
limited during the Exchange Offer and the pendency of any Shelf Registration
Statement. See "Description of Notes -- Registration Rights; Liquidated
Damages." Accordingly, no assurance can be given that an active public or other
market will develop for the Series B Notes or as to the liquidity of the trading
market for the Series B Notes.
If the trading market does not develop or is not maintained, holders of the
Series B Notes may experience difficulty in reselling the Series B Notes or may
be unable to sell them at all. If a market for the Series B Notes does develop,
any such market may be discontinued at any time. If a public trading market
develops for the Notes, future trading prices of such Series B Notes will depend
upon many factors, including, among other things, prevailing interest rates, the
Company's financial condition and results of operations, and the market for
similar notes. Depending upon those and other factors, the Series B Notes may
trade at a discount from their principal amount. Historically, the market for
non-investment grade debt has been subject to disruptions that have caused
substantial volatility in the prices of such securities. There can be no
assurance that the market for the Series B Notes will not be subject to similar
disruptions. Any such disruptions may have an adverse effect on holders of the
Series B Notes.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
Pursuant to the Registration Rights Agreement, the Issuers agreed (i) to
file a registration statement with respect to a registered offer to exchange the
Original Notes for the Series B Notes, which will have terms substantially
identical in all material respects to the Original Notes (except that the Series
B Notes will not contain terms with respect to transfer restrictions), within 60
days after the date of original issuance of the Original Notes and (ii) to use
reasonable best efforts to cause such registration statement to become effective
under the Securities Act at the earliest possible time but in any event no later
than 120 days after the date of
19
<PAGE> 29
original issuance of the Original Notes. In the event that applicable
interpretations of the staff of the Commission do not permit the Issuers to file
the registration statement to effect the Exchange Offer, or if for any other
reason the Exchange Offer is not consummated within 165 days of the Closing
Date, the Company will use its reasonable best efforts to cause to become
effective a shelf registration statement with respect to the resale of the
Original Notes and to keep the shelf registration statement effective until the
earlier of two years following the date of original issue and such time as all
the Original Notes have been sold thereunder or are otherwise not restricted
securities. See "Description of Notes -- Registration Rights, Liquidated
Damages."
Each holder of the Original Notes who wishes to exchange such Original
Notes for Series B Notes in the Exchange Offer will be required to make certain
representations, including representations that (i) any Series B Notes to be
received by it will be acquired in the ordinary course of its business, (ii) it
has no arrangement with any person to participate in the distribution of the
Series B Notes, and (iii) it is not an "affiliate," as defined in Rule 405 of
the Securities Act, of the Issuers. See "Description of Notes -- Registration
Rights."
RESALE OF SERIES B NOTES
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Issuers believe that, except as
described below, Series B Notes issued pursuant to the Exchange Offer in
exchange for Original Notes may be offered for resale, resold and otherwise
transferred by any holder thereof (other than a holder which is an "affiliate"
of the Issuers 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 Series B Notes are acquired in the ordinary
course of such holder's business and such holder does not intend to participate
and has no arrangement or understanding with any person to participate in the
distribution of such Series B Notes. Any holder who tenders in the Exchange
Offer with the intention or for the purpose of participating in a distribution
of the Series B Notes cannot rely on such interpretation by the staff of the
Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. Unless an exemption from registration is otherwise available, any
such resale transaction should be covered by an effective registration statement
containing the information required by the Securities Act. This Prospectus may
be used for an offer to resell, resale or other retransfer of Series B Notes
only as specifically set forth herein. Each broker-dealer that receives Series B
Notes for its own account in exchange for Original Notes, where such Original
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Series B Notes. See "Plan of
Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Issuers will accept for exchange any and
all Original Notes properly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date. The Issuers will issue $1,000 principal
amount of Series B Notes in exchange for each $1,000 principal amount of
outstanding Original Notes surrendered pursuant to the Exchange Offer. Original
Notes may be tendered only in integral multiples of $1,000.
The form and terms of the Series B Notes will be the substantially
identical in all material respects to the form and terms of the Original Notes
except the distribution of the Series B Notes will be registered under the
Securities Act and hence the Series B Notes will not bear legends restricting
the transfer thereof. The Series B Notes will evidence the same debt as the
Original Notes. The Series B Notes will be issued under and entitled to the
benefits of the Indenture, which also authorized the issuance of the Original
Notes, such that both the Original Notes and the Series B Notes will be treated
as a single class of debt securities under the Indenture.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Original Notes being tendered for exchange.
20
<PAGE> 30
As of the date of this Prospectus, $205,000,000 aggregate principal amount
of the Original Notes are outstanding. This Prospectus, together with the Letter
of Transmittal, is being sent to all registered holders of Original Notes. There
will be no fixed record date for determining registered holders of Original
Notes entitled to participate in the Exchange Offer.
The Issuers intend 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.
Original Notes which are not tendered for exchange in the Exchange Offer will
remain outstanding and continue to accrue interest and will be entitled to the
rights and benefits such holders have under the Indenture and the Registration
Rights Agreement.
The Issuers shall be deemed to have accepted for exchange properly tendered
Original Notes when, as and if, the Issuers shall have given written notice
thereof to the Exchange Agent and complied with the provisions of the
Registration Rights Agreement. The Exchange Agent will act as agent for the
tendering holders for the purpose of receiving the Series B Notes from the
Issuers. The Issuers expressly reserve the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Original Notes not
theretofore accepted for exchange, upon the occurrence of any of the conditions
specified below under "The Exchange Offer -- Certain Conditions to the Exchange
Offer."
Holders who tender Original 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
Original Notes pursuant to the Exchange Offer. The Issuers will pay all charges
and expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "The Exchange Offer -- 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 Issuers, in their sole discretion, extend the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Issuers will notify the Exchange
Agent of any extension by written notice, prior to 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date,
and will mail to the registered holders of Original Notes an announcement
thereof.
The Issuers reserve the right, in their sole discretion, (i) to delay
accepting for exchange any Original Notes, to extend the Exchange Offer or to
terminate the Exchange Offer if any of the conditions set forth below under "The
Exchange Offer -- Certain Conditions to the Exchange Offer" shall not have been
satisfied, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent or (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 written notice thereof
to the registered holders of Original Notes. If the Exchange Offer is amended in
a manner determined by the Issuers to constitute a material change, the Issuers
will promptly disclose such amendment in a manner reasonably calculated to
inform the holders of the Original Notes of such amendment and the Issuers will
extend the Exchange Offer as necessary to provide the holders with a period of
five to ten business days, after such amendment, 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.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other terms of the Exchange Offer, the Issuers will not
be required to accept for exchange, or exchange any Series B Notes for, any
Original Notes, and may terminate the Exchange offer as provided herein before
the acceptance of any Original Notes for exchange, if:
(a) 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 Issuers' reasonable judgment, might materially impair the
ability of the Issuers to proceed with the Exchange Offer, or
21
<PAGE> 31
(b) any law, statute, rule or regulation is proposed, adopted or
enacted, or any existing law, statute, rule or regulation is interpreted by
the staff of the Commission, which, in the Issuers' reasonable judgment,
might materially impair the ability of the Issuers to proceed with the
Exchange Offer, or
(c) any governmental approval has not been obtained, which approval
the Issuers shall, in their reasonable discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
The Issuers expressly reserve the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Original Notes, by giving written
notice of such extension to the holders thereof. During any such extensions, all
Original Notes previously tendered will remain subject to the Exchange Offer and
may be accepted for exchange by the Issuers. Any Original Notes not accepted for
exchange for any reason will be returned without expense to the tendering holder
thereof as promptly as practicable after the expiration or termination of the
Exchange Offer.
The Issuers expressly reserve the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Original Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions of the
Exchange Offer specified above under "The Exchange Offer -- Certain Conditions
to the Exchange Offer." The Issuers will give written notice of any extension,
amendment, non-acceptance or termination to the holders of the Original Notes as
promptly as practicable, such notice in the case of any extension to be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date.
The foregoing conditions are for the sole benefit of the Issuers and may be
asserted by the Issuers regardless of the circumstances giving rise to any such
condition or may be waived by the Issuers in whole or in part at any time and
from time to time in their sole discretion. The failure by the Issuers at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Issuers will not accept for exchange any Original Notes
tendered, and no Series B Notes will be issued in exchange for any such Original
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act of 1939
(the "TIA").
PROCEDURES FOR TENDERING
Only a holder of Original Notes may tender such Original Notes in the
Exchange Offer. To tender in the Exchange Offer, a holder must complete, sign
and date the Letter of Transmittal, or facsimile thereof, have the signature
thereon guaranteed if required by the Letter of Transmittal, and mail or
otherwise deliver such Letter of Transmittal or such facsimile to the Exchange
Agent prior to 5:00 p.m., New York City time, on the Expiration Date. In
addition, either (i) Original Notes must be received by the Exchange Agent along
with the Letter of Transmittal, or (ii) a timely confirmation of book-entry
transfer (a "Book-Entry Confirmation") of such Original Notes, if such procedure
is available, into the Exchange Agent's account at the Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the holder must comply with the guaranteed delivery
procedures described below. To be tendered effectively, the Letter of
Transmittal and other required documents must be received by the Exchange Agent
at the address set forth below under "The Exchange Offer -- Exchange Agent"
prior to 5:00 p.m., New York City time, on the Expiration Date.
The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF ORIGINAL NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS
22
<PAGE> 32
RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR ORIGINAL NOTES
SHOULD BE SENT TO THE ISSUERS. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR OTHER NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Original Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder of Original Notes to tender on such beneficial owner's behalf.
If such beneficial owner wishes to tender on such owner's own behalf, such owner
must, prior to completing and executing the Letter of Transmittal and delivering
such owner's Original Notes, either make appropriate arrangements to register
ownership of the Original Notes in such owner's name or obtain a properly
completed bond power from the registered holder of Original Notes. The transfer
of registered ownership may take considerable time and may not be able to be
completed prior to the Expiration Date.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below, as the case be, must be guaranteed by an Eligible Institution (as defined
below) unless the Original Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter Transmittal or a notice of withdrawal, as the case may be, are required
to be guaranteed, such guarantor must be a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act which is a member of one of the recognized
signature guarantee programs identified in the Letter of Transmittal (an
"Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Original Notes listed therein, such Original Notes must
be endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Original
Notes with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Original Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by the
Issuers, evidence satisfactory to the Issuers of their authority to so act must
be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Original Notes and withdrawal of tendered
Original Notes will be determined by the Issuers in their sole discretion, which
determination will be final and binding. The Issuers reserve the absolute right
to reject any and all Original Notes not properly tendered or any Original Notes
the Issuers' acceptance of which would, in the opinion of counsel for the
Issuers, be unlawful. The Issuers also reserve the right to waive any defects,
irregularities or conditions of tender as to particular Original Notes. The
Issuers' interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Original Notes must be cured within such time as the
Issuers shall determine. Although the Issuers intend to notify holders of
defects or irregularities with respect to tenders of Original Notes, neither the
Issuers, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Original Notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived. Any Original Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In all cases, issuance of Series B Notes for Original Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of Notes or a timely
23
<PAGE> 33
Book-Entry Confirmation of such Original Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility, properly completed and duly executed Letter
of Transmittal and all other required documents. If any tendered Original Notes
are not accepted for exchange for any reason set forth in the terms and
conditions of the Exchange Offer or if Original Notes are submitted for a
greater principal amount than the holder desires to exchange, such unaccepted or
non-exchanged Original Notes will be returned without expense to the tendering
holder thereof (or, in the case of Original Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described below, such
non-exchanged Original Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent and DTC have confirmed that any Direct Participant (as
defined in "Description of Notes -- Book-Entry, Delivery and Form") in DTC's
book-entry transfer facility system may utilize DTC's ATOP procedures to tender
Original Notes. The Exchange Agent will establish an account with respect to the
Original Notes at DTC for purposes of the Exchange Offer within two business
days after the date of this Prospectus. Any Participant may make a book-entry
delivery of the Original Notes by causing DTC to transfer such Original Notes
into the Exchange Agent's account at DTC in accordance with DTC's ATOP
procedures for transfer. However, although delivery of Original Notes may be
effected through book-entry transfer into the Exchange Agent's account at DTC,
an Agent's Message or a completed and signed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal must in any case be delivered to and
received by the Exchange Agent at one of its addresses set forth under "The
Exchange Offer -- Exchange Agent" on or prior to the Expiration Date, or the
guaranteed delivery procedure set forth below must be complied with.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available or (ii) who cannot deliver their Original
Notes, the Letter of Transmittal or any other required documents to the Exchange
Agent prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent received from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the registered number(s)
of such Original Notes and the principal amount of Original Notes tendered,
stating that the tender is being made thereby and guaranteeing that, within
three (3) New York Stock Exchange trading days after the Expiration Date,
the Letter of Transmittal (or facsimile thereof) together with the Original
Notes or a Book-Entry Confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Original Notes in proper form
for transfer or a Book-Entry Confirmation, as the case may be, and all
other documents required by the Letter of Transmittal, are received by the
Exchange Agent within three (3) New York Stock Exchange trading days after
the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Original Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
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<PAGE> 34
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth below under "The
Exchange Offer -- Exchange Agent." Any such notice of withdrawal must specify
the name of the person having tendered the Original Notes to be withdrawn,
identify the Original Notes to be withdrawn (including the principal amount of
such Original Notes), and (where certificates for Original Notes have been
transmitted) specify the name in which such Original Notes were registered, if
different from that of the withdrawing holder. If certificates for Original
Notes have been delivered or otherwise identified to the Exchange Agent, then,
prior to the release of such certificates the withdrawing holder must also
submit the serial numbers of the particular certificates to be withdrawn and a
signed notice of withdrawal with signatures guaranteed by an Eligible
Institution unless such holder is an Eligible Institution. If Original Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Original
Notes and otherwise comply with the procedures of such facility. All questions
as to the validity, form and eligibility (including time of receipt) of such
notices will be determined by the Issuers, whose determination shall be final
and binding on all parties. Any Original Notes so withdrawn will be deemed not
to have been validly tendered for exchange for purposes of the Exchange Offer.
Any Original Notes which have been tendered for exchange but which are not
exchanged for any reason will be returned to the holder thereof without cost to
such holder (or, in the case of Original Notes tendered by book-entry transfer
into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant
to the book-entry transfer procedures described above, such Original Notes will
be credited to an account maintained with such Book-Entry Transfer Facility for
the Original Notes) as soon as practicable after withdrawal, rejection of tender
or termination of the Exchange Offer. Properly withdrawn Original Notes may be
retendered by following one of the procedures described under "Procedures for
Tendering Original Notes" above at any time on or prior to the Expiration Date.
EXCHANGE AGENT
The Huntington National Bank has been appointed as Exchange Agent of the
Exchange Offer. Questions and requests for assistance, request for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed
as follows:
<TABLE>
<CAPTION>
By Mail, Overnight Courier or Hand Delivery: By Facsimile:
- -------------------------------------------- -------------
<C> <C>
The Huntington National Bank The Huntington National Bank
41 South High Street-HC1112 Attention: Corporate Trust Department
Columbus, Ohio 43215 (614) 480-5223
Attention: Corporate Trust Department (For Eligible Institutions Only)
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Issuers. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telephone, telecopy or in person by officers and directors of the
Issuers and their affiliates.
The Issuers have not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to broker-dealers or others
soliciting acceptances of the Exchange Offer. The Issuers, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Issuers. Such expenses include registration fees, fees and
expenses of the Exchange Agent and Trustee, accounting and legal fees and
printing costs, and related fees and expenses.
The Issuers will pay all transfer taxes, if any, applicable to the exchange
of Original Notes pursuant to the Exchange Offer. If, however, certificates
representing Original 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 holder of Original Notes tendered, or if tendered Original Notes
are registered in the name of any person other
25
<PAGE> 35
than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Original 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.
TRANSFER TAXES
Holders who tender their Original Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Issuers to register Series B Notes in the name of, or request that
Original Notes not tendered or not accepted in the Exchange Offer be returned
to, a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Original Notes who do not exchange their Original Notes for
Series B Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Original Notes, as set forth in the legend
thereon as a consequence of the issuance of the Original Notes pursuant to the
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Original Notes may not be offered or sold, unless registered under
the Securities Act, except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. The
Issuers do not currently anticipate registering the Original Notes under the
Securities Act. Based on interpretations by the staff of the Commission, Series
B Notes issued pursuant to the Exchange Offer may be offered for resale, resold
or otherwise transferred by holders thereof (other than any such holder which is
an "affiliate" of the Issuers 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 Series B Notes are acquired
in the ordinary course of such holders' business and such holders have no
arrangement or understanding with respect to the distribution of the Series B
Notes to be acquired pursuant to the Exchange Offer. Any holder who tenders in
the Exchange Offer for the purpose of participating in a distribution of the
Series B Notes (i) could not rely on the applicable interpretations of the staff
of the Commission and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction. In addition, to comply with the securities laws of certain
jurisdictions, if applicable, the Series B Notes may not be offered or sold
unless they have been registered or complied with. The Issuers have agreed,
pursuant to the Registration Rights Agreement and subject to certain specified
limitations therein, to register or qualify the Series B Notes for offer or sale
under the securities or blue sky laws of such jurisdictions as are necessary to
consummate the Exchange Offer.
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<PAGE> 36
USE OF PROCEEDS
SERIES B NOTES
The Issuers will not receive any cash proceeds from the Exchange Offer. The
Exchange Offer is being made to satisfy the Issuers' obligations under the
Registration Rights Agreement.
ORIGINAL NOTES
The Issuers received approximately $198.7 million in net proceeds from the
sale of the Original Notes, after deducting the Initial Purchaser's discount and
estimated fees and expenses of such offering. The Issuers used such net proceeds
to repay certain amounts outstanding under the Senior Credit Facility. See
"Description of Certain Indebtedness -- Senior Credit Facility." Amounts thereby
made available under the Senior Credit Facility will be utilized by the Issuers
for working capital and other general corporate purposes.
CAPITALIZATION
The following table sets forth cash and cash equivalents and the
capitalization of the Company at June 30, 1997, and as adjusted to give effect
to (i) the sale of the Original Notes and the application of the net proceeds
therefrom, as if the sale had occurred on June 30, 1997; and (ii) consummation
of the Exchange Offer (assuming that all Original Notes are exchanged for Series
B Notes pursuant thereto). This information should be read in conjunction with
the Company's consolidated financial statements and the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere herein.
<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------
ACTUAL AS ADJUSTED
------ -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 348 $ 304
======== ========
Long-term debt (including current portion)
Senior credit facility (1):
Revolving credit portion............................... $ 87,000 $ 4,000
Term loan "A".......................................... 71,450 --
Term loan "B".......................................... 44,325 --
9 3/4% Senior Subordinated Notes.......................... 78,940 78,940
Capital leases............................................ 5,216 5,216
Installment notes payable................................. 3,779 3,779
9 1/2% Series B Notes..................................... -- 205,000
-------- --------
Total long-term debt................................... $290,710 $296,935
Trust principal............................................. 66,058 66,058
-------- --------
Total capitalization................................... $356,768 $362,993
======== ========
</TABLE>
- ------------
(1) The Senior Credit Facility provides for borrowings of up to $200 million for
working capital, capital expenditures and general corporate purposes and is
secured by substantially all of the assets of the Issuers, including all of
the capital stock of the Issuers (other than the Trust) and 65% of the stock
of Venture Canada. See "Description of Certain Indebtedness -- Senior Credit
Facility."
27
<PAGE> 37
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated balance sheet data and income statement data
presented below as of December 31, 1995 and 1996 and for the years ended
December 31, 1994, 1995 and 1996, are derived from the Company's consolidated
financial statements, audited by Deloitte & Touche LLP, independent auditors,
and should be read in conjunction with the Company's audited financial
statements and notes thereto included elsewhere herein. The selected
consolidated income statement data and balance sheet data presented below as of
December 31, 1992, 1993 and 1994 and for the years ended December 31, 1992 and
1993, are derived from the Company's audited consolidated financial statements
not included herein. The selected consolidated income statement data and balance
sheet data as of June 30, 1996 and 1997 and for the six months then ended, are
derived from unaudited financial statements but, in the opinion of management,
reflect all adjustments, consisting of only normal recurring adjustments,
necessary for a fair statement of the results for such periods and as of such
dates. The results for the six months ended June 30, 1997 are not necessarily
indicative of the results to be expected for the full fiscal year.
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
---------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA(1)(2):
Net sales........................................ $174,771 $205,567 $244,112 $251,142 $351,777 $125,795 $320,115
Cost of products sold............................ 146,157 163,521 199,717 211,262 302,940 102,131 262,160
Gross profit................................... 28,614 42,046 44,395 39,880 48,837 23,664 57,955
Selling, general and administrative expense...... 13,180 15,523 19,200 20,130 26,588 9,725 28,563
Payments to beneficiary in lieu of taxes(3)...... -- 1,177 3,405 576 666 666 472
Income from operations........................... 15,434 25,346 21,790 19,174 21,583 13,273 28,920
Interest expense................................. 10,390 11,158 14,345 15,032 19,248 7,409 14,208
Net income before extraordinary items and
taxes........................................ 5,044 14,188 7,445 4,142 2,335 5,864 14,712
Net extraordinary loss on early retirement of
debt......................................... -- 4,066 -- -- 2,738 -- --
Net income after extraordinary items........... 5,044 10,122 7,445 4,142 (403) 5,864 14,712
Tax provision(4)................................. -- -- -- -- 336 -- 1,413
Net income (loss).............................. 5,044 10,122 7,445 4,142 (739) 5,864 13,299
Ratio of earnings to fixed charges(5)............ 1.4x 2.2x 1.7x 1.3x 1.2x 1.8x 2.0x
OTHER FINANCIAL DATA:
EBITDA(6)........................................ $ 26,154 $ 38,611 $ 39,265 $ 35,818 $ 44,877 $ 23,302 $ 45,942
Depreciation and amortization.................... 10,720 12,088 14,070 16,068 22,628 9,363 16,550
Capital expenditures............................. 12,769 19,413 22,798 20,339 67,533 23,311 18,777
Cash provided by (used in) operating
activities..................................... 11,413 19,422 (3,066) 10,950 37,943 4,715 12,634
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.................................. $ 29,556 $ 32,291 $ 85,258 $ 74,354 $ 83,404 $ 57,455 $ 88,166
Property, plant and equipment -- net............. 94,501 102,277 111,472 116,299 203,975 130,534 208,016
Total assets..................................... 148,618 166,578 234,435 231,602 498,067 256,696 483,803
Total debt....................................... 94,064 94,957 153,118 152,463 299,996 157,414 290,710
Warrants......................................... 2,673 -- -- -- -- -- --
Trust principal(3)............................... 31,789 41,911 49,356 53,498 52,759 59,362 66,058
</TABLE>
- ------------
(1) The Trust operates as a holding company and has no independent operations of
its own. Separate financial statements of the Issuers have not been
presented because the Issuers do not believe that such information would be
material to a decision to invest in the Notes.
(2) The results for 1996 include the operations of Bailey from August 26, 1996,
and of Venture Grand Rapids from June 3, 1996.
(3) The Company made distributions to the beneficiary of the Trust in amounts
generally equal to taxes incurred by the beneficiary as a result of the
activities of the Trust's subsidiaries that have elected "S" corporation
status under the Code, of approximately $0.9 million, for the year ended
December 31,
28
<PAGE> 38
1992. For the years ended December 31, 1993, 1994, 1995 and 1996, and the
six months ended June 30, 1996 and 1997, the Company paid the beneficiary
compensation in lieu of a distribution of Trust principal for such
purposes. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
(4) This provision relates solely to Bailey and its subsidiaries (see Note 2
above). Other significant subsidiaries of the Trust have elected "S"
corporation status under the Code and, consequently, the Company does not
incur liability for federal and certain state income taxes for these
subsidiaries. Upon termination of the Trust, the S elections may terminate
and the corporation succeeding the Trust according to the terms of the Trust
would be subject to income tax.
(5) For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of net income before extraordinary items and fixed charges. Fixed
charges consist of (i) interest, whether expensed or capitalized; (ii)
amortization of debt discount and debt financing costs; and (iii) the
portion of rental expense that management believes is representative of the
interest component of rental expense.
(6) EBITDA represents income from operations before deducting taxes,
depreciation, amortization, interest and Trust Tax Distributions (as defined
in the Indenture). EBITDA is not presented as an alternative to net income,
as a measure of operating results or as an indicator of the Company's
performance, nor is it presented as an alternative to cash flow or as a
measure of liquidity, but rather to provide additional information related
to debt service capacity. EBITDA should not be considered in isolation or as
a substitute for net income or cash flow data prepared in accordance with
generally accepted accounting principles or as a measure of a company's
profitability. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for a discussion of liquidity and
operating results.
29
<PAGE> 39
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the Company's
consolidated statements of income expressed as a percentage of net sales. This
table and the subsequent discussion should be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
AS A PERCENTAGE OF NET SALES
-------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------- ----------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales........................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of products sold............................... 81.8 84.1 86.1 81.2 81.9
----- ----- ----- ----- -----
Gross profit........................................ 18.2 15.9 13.9 18.8 18.1
Selling, general and administrative expenses........ 7.9 8.0 7.6 7.7 8.9
Payments to beneficiary in lieu of Trust
distributions..................................... 1.4 0.2 0.2 0.5 0.2
----- ----- ----- ----- -----
Income from operations.............................. 8.9 7.7 6.1 10.6 9.0
Interest expense.................................... 5.9 6.0 5.4 5.9 4.4
----- ----- ----- ----- -----
Income before extraordinary items and taxes......... 3.0 1.7 0.7 4.7 4.6
Extraordinary loss on retirement of debt............ -- -- 0.8 -- --
----- ----- ----- ----- -----
Income before taxes................................. 3.0 1.7 (0.1) 4.7 4.6
Tax provision....................................... -- -- 0.1 -- 0.4
----- ----- ----- ----- -----
Net income (loss)................................... 3.0% 1.7% (0.2)% 4.7% 4.2%
===== ===== ===== ===== =====
</TABLE>
On June 3, 1996, the Company acquired certain assets from AutoStyle and
entered into a capital lease for all of AutoStyle's plant, property and
equipment located in Grand Rapids, Michigan and Hopkinsville, Kentucky.
Simultaneously, the Company entered into a long-term supply agreement with
General Motors for substantially all of AutoStyle's former business at revised
prices. This business includes General Motors U-Van (Transport, Venture,
Silhouette) fascias and side moldings, Cadillac (STS, Seville and Eldorado)
fascias, H-Car (LeSabre) fascias and F-Car (Camaro, Firebird) fenders, window
appliques and knee bolsters.
On August 26, 1996, the Company purchased all of the outstanding stock of
Bailey, an OEM supplier to General Motors, Ford and Chrysler.
In connection with the sale of the Original Notes, the subsidiaries of the
Trust that had conducted the business of AutoStyle and Bailey were merged or
otherwise consolidated with the Issuers and such subsidiaries' separate
existence ceased.
THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1997 COMPARED TO THE THREE AND SIX
MONTH PERIODS ENDED JUNE 30, 1996.
The period to period comparisons are substantially effected by the
acquisitions of Bailey and AutoStyle. The operations of these acquisitions have
been and continue to be rationalized among the various manufacturing facilities
to optimize plant capacity and utilization.
Net sales for the three and six months ended June 30, 1997 increased $85.8
million and $194.3 million, respectively, compared to the three and six months
ended June 30, 1996. This is a 115.1% increase to $160.4 million for the three
months ended June 30, 1997 and a 154.5% increase to $320.1 million for the six
months ended June 30, 1997, compared to $74.6 million and $125.8 million,
respectively, for the same periods of 1996. The substantial increase in net
sales during 1997 is primarily the result of the Bailey and Venture Grand Rapids
Acquisitions which generated additional net sales of approximately $82.9 million
and $173.5 million for the three and six month periods ended June 30, 1997,
respectively, and additional volume in the core business. Strikes at the OEMs
during the second quarter of 1997 did not have a significant impact on net
sales.
30
<PAGE> 40
Gross profit for the three months ended June 30, 1997 increased $11.7
million, or 81.8% to $26.0 million compared to $14.3 for the three months ended
June 30, 1996. Gross profit for the six months ended June 30, 1997 increased
$34.3 million, or 144.7% to $58.0 million, compared to $23.7 million for the six
months ended June 30, 1996. The increase in gross profit for the quarter and
first six months is due primarily to the increase in sales. However, gross
profit as a percentage of sales decreased 2.9% and 0.7% for the three and six
months ended June 30, 1997, respectively, as compared to the same periods in
1996. The decrease in gross profit as a percentage of sales is attributable to
launch cost and selling price reductions, which have become industry practice in
recent years, as OEM customers continue to expect annual productivity
improvements on the part of the supplier. As anticipated, tooling sales
decreased in the three months ended June 30, 1997 compared to the three months
ended March 31, 1997, principally due to the timing of revenue recognition under
the completed contract method. The Company expects to realize revenue under
these contracts, which generally account for higher margins than sales of
components, in the second half of the year, principally in the last three months
of the year.
Selling, general and administrative expenses increased $7.8 million, or
144.4% for the three months ended June 30, 1997 to $13.2 million, compared to
$5.4 million in the same period of 1996. During the six months ended June 30,
1997, selling, general and administrative expenses increased $18.9 million, or
194.8% to $28.6 million, compared to $9.7 million for the six months ended June
30, 1996. As a percentage of net sales, selling, general and administrative
expenses increased to 8.2% for the second quarter and increased to 8.9% for the
six months ended June 30, 1997, compared to 7.2% and 7.7%, respectively, in the
corresponding periods of 1996. The increase is primarily attributable to the
Bailey acquisition and represents certain reoccurring expenses.
Payments to the beneficiary of the Trust, in the amounts generally equal to
taxes incurred by the beneficiary as a result of the activities of the Trust's
subsidiaries which have elected S Corporation status, totaled $0.3 million and
$0.4 million in the three months ended June 30, 1997 and 1996, respectively.
During the six months ended June 30, 1997 and 1996, $0.5 million and $0.7
million, respectively, were paid to the beneficiary. These amounts were paid as
compensation rather than as distributions of Trust principal. As a result of
state tax law changes, the Company may pay such amounts to the beneficiary as
distributions of Trust principal in the future, rather than as compensation.
As a result of the foregoing, income from operations in the six months
ended June 30, 1997 increased $15.6 million, or 117.3%, to $28.9 million,
compared to $13.3 million in the same period of 1996. Income from operations
increased $4.0 million, or 47.1% to $12.5 million for the three months ended
June 30, 1997, compared to $8.5 million in the same period of 1996. As a
percentage of net sales, income from operations decreased to 7.8% in the three
months ended June 30, 1997 from 11.4% in the three months ended June 30, 1996.
For the first six months ended June 30, 1997 and 1996, income from operations as
a percentage of net sales was decreased to 9.0% from 10.6%, respectively.
Interest expense increased $3.6 million and $6.8 million to $7.3 million
and $14.2 million, respectively, in the three and six months ended June 30,
1997, compared to $3.7 million and $7.4 million, respectively, in the same
periods of 1996. The increase resulted from financing of the acquisitions and
increased working capital needs.
As a result of the foregoing, net income for the three months ended June
30, 1997 decreased $0.3 million, to $4.5 million compared to $4.8 million for
the three months ended June 30, 1996. Net income for the six months ended June
30, 1997 increased $7.4 million, to $13.3 million; compared to $5.9 million in
the six months ended June 30, 1996.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Net sales for the year ended December 31, 1996 increased $100.7 million, or
40.1%, to $351.8 million, compared to net sales of $251.1 million for the year
ended December 31, 1995. The increase in net sales was primarily the result of
the acquisition of Bailey, from August 26, 1996, and AutoStyle, from June 3,
1996. Specifically, Bailey accounted for $72.6 million and AutoStyle for $38.9
million of the total increase. These increases offset reductions in net sales
resulting from the discontinuance of the Chrysler ZJ fascias after the second
quarter of 1995, Buick LeSabre fascias in December of 1995 and fascias for the
GM "G" Body
31
<PAGE> 41
(Oldsmobile Aurora and Buick Riviera) during the first quarter of 1996 which
were not otherwise offset due to the delay in new model start ups.
Gross profit for the year ended December 31, 1996 increased $9.0 million,
or 22.5%, to $48.8 million compared to $39.9 million for the year ended December
31, 1995. The increase in gross profit for the year is attributable to the
increase in sales arising from the Bailey and Venture Grand Rapids Acquisitions.
Without the impact of these acquisitions, gross profit would have decreased for
the year ended December 31, 1996 due to the delay in launching of the GM "M"
vans (Astro and Safari) side molding program and GM full size vans (Express and
Savana). Full production of these vehicles did not begin until late June 1996.
Gross profit pressures are also attributable to selling price reductions, which
have become industry practice in recent years, as OEMs continue to expect annual
productivity improvements on the part of their suppliers. Gross profit margins
fell from the third quarter of 1996 due to lower margins attributable to net
sales from former Bailey operations.
Selling, general and administrative expenses increased $6.5 million, or
32.1%, for fiscal 1996 to $26.6 million, compared to $20.1 million in fiscal
1995. As a percentage of net sales, selling, general and administrative expenses
decreased to 7.6% for the year ended December 31, 1996, compared to 8.0% in
1995.
Payments to the beneficiary of the Trust, in the amounts generally equal to
taxes incurred by the beneficiary as a result of the activities of the Trust's
subsidiaries which have elected S corporation status, totaled $0.7 million and
$0.6 million in fiscal 1996 and 1995, respectively. These amounts were paid as
compensation rather than as distributions of Trust principal.
As a result of the foregoing, income from operations in the year ended
December 31, 1996 increased $2.4 million, or 12.6%, to $21.6 million, compared
to $19.2 million in fiscal 1995. As a percentage of net sales, income from
operations decreased to 6.1% in fiscal 1996 from 7.7% in fiscal 1995.
Interest expense increased $4.2 million to $19.2 million in fiscal 1996
compared to $15.0 million in fiscal 1995. The increase is the result of the new
credit agreement entered into on August 26, 1996. As a result of the
refinancing, the Company incurred an extraordinary loss in the amount of $2.7
million during the third quarter of 1996.
Due to the foregoing, net income for the year ended December 31, 1996
decreased $4.8 million, to $(0.7) million compared to $4.1 million for the year
ended December 31, 1995.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net sales in fiscal 1995 increased $7.0 million, or 2.9%, to $251.1 million
compared to $244.1 million in fiscal 1994. The increase in sales in 1995 results
from an increase in air bag cover sales, increased sales of interior components
for the Chrysler LH and JA cars, and the General Motors J-Car (Sunfire and
Cavalier). In addition, the Company had increased sales of fascias for the GM
Oldsmobile Aurora, Buick Riviera, and GM "M" van (Astro and Safari). Sales of
Chrysler ZJ fascias were discontinued after the second quarter of 1995. As
scheduled, the last shipments of Buick LeSabre fascias were sent in December
1995.
Gross profit for fiscal 1995 decreased by $4.5 million, or 10.2%, to $39.9
million compared to $44.4 million in fiscal 1994. As a percentage of net sales,
gross profit decreased from 18.2% in fiscal 1994 to 15.9% in fiscal 1995. The
decrease in gross profit is partially explained by the reduction in car
production from the prior year which occurred during the month of June 1995 and
through the fourth quarter. This is in addition to the delay in launching of the
GM "M" van (Astro and Safari) side molding program and GM full size vans
(Express and Savana). The decrease is further explained by the continuing shift
in sales to interior components as opposed to exterior painted components, such
as fascias and side moldings. Exterior components involve additional value added
activities and typically have higher margins than interior components. The
decrease in gross profit is also attributable to selling price reductions, which
have become industry practice in recent years, as OEM customers continue to
expect annual productivity improvements on the part of their suppliers. The
Company believes these price reductions will continue to be a feature of the OEM
supplier marketplace for the foreseeable future. Raw material prices increased
during the first part of 1995; however, the Company experienced a slight
reduction late in the fourth quarter. In order to maintain
32
<PAGE> 42
profitability, the Company has sought price reductions on purchases from its
suppliers and has improved production efficiency.
Selling, general and administrative expenses increased by $0.9 million, or
4.8%, to $20.1 million in fiscal 1995, compared to $19.2 million in fiscal 1994.
As a percentage of net sales, selling, general and administrative expenses
increased by only 0.1%, to 8.0% in fiscal 1995, compared to 7.9% in fiscal 1994.
This increase resulted from the payment of bonuses to a number of key employees
during fiscal 1995, in recognition of past service. After isolating the effect
of the bonuses, selling, general and administrative expenses as a percentage of
net sales were 7.4%, which represents a 0.5% decrease when compared to 1994.
Payments to the beneficiary of the Trust, in amounts generally equal to
taxes incurred by the beneficiary as a result of the activities of the Trust's
subsidiaries which have elected S corporation status, totaled $0.6 million in
1995 and $3.4 million in 1994. These amounts were paid as compensation rather
than as distributions of Trust principal. As a result of state tax law changes,
the Company may pay such amounts to the beneficiary as distributions of Trust
principal in the future, rather than as compensation.
Interest expense increased $0.7 million in fiscal 1995, to $15.0 million,
compared to $14.3 million in fiscal 1994. This is due primarily to the issuance
of the Senior Subordinated Notes on February 16, 1994.
As a result of the foregoing, income from operations in fiscal 1995
decreased $2.6 million, or 12.0%, to $19.2 million compared to $21.8 million in
fiscal 1994. Net income for fiscal 1995 decreased $3.3 million, or 44.4%, to
$4.1 million compared to $7.4 million in fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated working capital was $83.4 million at December
31, 1996, compared to $74.4 million at December 31, 1995, an increase of $9.0
million. The Company's working capital ratio decreased to 1.7x at December 31,
1996 from 3.2x at December 31, 1995, as a result of the growth of the Company's
balance sheet attributable to the Bailey and Venture Grand Rapids Acquisitions
and increased current liabilities attributable to the Bailey operations. At June
30, 1997, working capital was $88.2 million, and the Company's working capital
ratio increased to 1.8x.
The Company's principal sources of liquidity are internally generated
funds, cash equivalent investments and borrowings under the Senior Credit
Facility. Net cash flows provided by (used in) operating activities were $37.9
million, $11.0 million and $(3.1) million for the years 1996, 1995 and 1994,
respectively, and $12.6 million for the six months ended June 30, 1997. The
Company's cash flow from operating activities was higher in 1996 than in 1995 as
a result of increases in non-cash charges, such as depreciation, and current
liabilities that resulted from significant acquisitions. However, accounts
receivable were higher than expected due to pricing difficulties with a customer
which were resolved and paid in 1997. Increases in prepaids and other assets
were the result of the acquisition of Bailey.
Net cash flows used in investing activities were $124.5 million, $20.3
million and $22.8 million in 1996, 1995 and 1994 respectively, and $18.8 million
for the six months ended June 30, 1997. The 1996 amount is primarily for the
acquisition of Bailey. Capital expenditures for 1995 and 1994 aggregated $43.1
million, for the purchase of machinery and equipment, leasehold improvements and
the expansion of facilities to accommodate increased volumes. The Company
believes that it has sufficient capacity to meet current manufacturing
production needs through the 1999 model year.
In the ordinary course of business, the Company seeks additional business
with existing and new customers. The Company continues to compete for the right
to supply new components which could be material to the Company and require
substantial capital investment in machinery, equipment, tooling and facilities.
As of the date hereof, however, the Company has no formal commitments with
respect to any such material business and there is no assurance that the Company
will be awarded any such business.
In addition, the Company expects that its investment in molds will increase
as OEMs increasingly require the Company to finance the molds for new components
and defer receipt of revenue for such tooling over the
33
<PAGE> 43
production life of the related manufactured component. Historically, OEMs paid
for molds upon completion of the tool.
In 1996 and 1994, net cash flows from financing activities were $83.0
million and $53.6 million, respectively. The increase in 1996 was the result of
the Senior Credit Facility to facilitate the acquisition of Bailey and the
refinancing of certain obligations resulting from this acquisition. The increase
in 1994 was due to the Company's issuance of $100 million of Senior Subordinated
Notes on February 16, 1994, net of debt retirements and principal reductions.
During 1995, net cash flows from financing activities were $(0.7) million,
principally for repayment of indebtedness.
The Company's debt obligations contain various restrictive covenants that
require the Company to maintain stipulated financial ratios, including a minimum
consolidated net worth (adjusted yearly), fixed charge coverage ratio, interest
coverage ratio and total indebtedness ratio. As of December 31, 1996 and June
30, 1997, the Company was in compliance with all debt covenants.
The Senior Credit Facility permits the Company to borrow up to the lesser
of a borrowing base computed as a percentage of accounts receivable and
inventory, or $200 million less the amount of any letter of credit issued
against the Senior Credit Facility. At June 30, 1997, the Company had no
availability thereunder. On July 9, 1997, the Company issued the Original Notes,
the proceeds from which (approximately $198.7 million) were used to prepay
certain amounts under the Senior Credit Facility. On a pro forma basis at June
30, 1997, the Company would have had a maximum availability of $193.2 million,
and, pursuant to the borrowing base formula, could have borrowed $95.0 million
under the Senior Credit Facility. See "Use of Proceeds" and "Capitalization."
The Company believes that existing cash balances, cash flows from
operations, borrowings available under the bank credit facility and other
short-term arrangements will be sufficient to meet its anticipated capital
expenditures and debt obligations through the end of 1999.
34
<PAGE> 44
BUSINESS
GENERAL
The Company is a leading systems integrator, designer and manufacturer of
high quality molded and painted parts for OEMs and other Tier 1 suppliers. The
Company's products include both exterior and interior plastic components.
Exterior components include such items as front and rear bumper fascias, body
side moldings, claddings, fenders, grille opening panels and reinforcements,
farings, wheel lips, spoilers, and large body panels such as hoods, sunroofs,
doors and lift gates. Interior components include instrument panel systems,
airbag covers, side wall trim, garnishment molding systems, door panels and
consoles. The Company's principal customers include various divisions of General
Motors, Ford, Chrysler and a number of their various Tier 1 suppliers, such as
Autoliv S.A., TRW Automotive Company, Textron Automotive division of Textron
Corporation and Lear Corporation.
The Company is a full-service supplier and an industry leader in providing
plastic components and in applying new design and engineering technology to
reduce product development time. The Company has purchase orders to supply an
aggregate of over 1,000 components to be included on approximately 100 models of
cars, minivans, light trucks and sport utility vehicles for the 1997 model year
and currently expects to manufacture over 1,100 components to be included on a
comparable number of models to be produced for the 1998 model year, as compared
to supplying 399 components on 47 models for the 1994 model year. In recent
years, the Company has placed particular emphasis on designing and manufacturing
airbag covers and supplying components for higher growth sport utility, light
truck, minivan and high volume car segments of the market, which the Company
believes are less subject to the automotive industry's historical cyclicality.
As a result of this emphasis, the Company supplies certain components on a
number of models, such as the Buick LeSabre; Cadillac Seville, S5S and STS;
Chrysler "LH" cars (Chrysler LHS and Concorde, Dodge Intrepid and Eagle Vision),
Dakota trucks and "JA" cars (Cirrus, Stratus and Breeze); Ford F-series truck,
Explorer, Expedition, Mustang, Escort and Windstar; Oldsmobile Bravada, Intrigue
and Eighty-Eight; and Chevrolet Corvette, General Motors "M" vans (Astro and
Safari), Yukon, Tahoe, Suburban, GMX 130 and redesigned GMC and Chevrolet full
size vans (Express and Savana). In addition, the Company has been selected as a
sole-source supplier for certain components on the General Motors GMC Yukon
sport utility truck; Honda Accord and Civic; Jaguar; and Isuzu Rodeo. The
Company was awarded the engineering and design for the 1998 Chrysler "LH"
interior components, Chrysler "B" vans, the new "JR" program and the 2001 Jeep
Cherokee. The Company is also on the development team for the 1998 Chevrolet
"CK" full size truck, 2000 Ford Explorer and 2001 GM small truck sport utility
vehicle.
The Company believes that it is enhancing its competitive position to the
OEMs and other Tier 1 suppliers by moving away from positioning itself
exclusively as a component supplier to being a provider of complete interior and
exterior systems, consisting of rapid design, engineering, prototyping,
manufacturing and assembly expertise. The Company continuously strives to
maintain what it believes to be an industry leading position, applying
state-of-the-art design and engineering technology, including CAD/CAM and
optical-based design techniques. The Company believes that early involvement in
the design and engineering of new components affords the Company a competitive
advantage in securing new business and provides its customers with innovative
cost reduction opportunities through the Company's involvement in the
coordination of the design, development and just-in-time manufacturing
processes. The Company believes this competitive advantage is further enhanced
by the Company's adoption of "lean manufacturing" and "Kaizen" philosophies that
seek continuous improvement by identifying and eliminating waste, not only in
the Company's operations, but also in those of its customers and suppliers.
The Company has benefited from many of the changes occurring in the
automotive industry. As OEMs continue to consolidate suppliers, the Company is
well-positioned to remain a leader since the OEMs favor large, multi-dimensional
suppliers with global strategic relationships. In recent years, Ford and
Chrysler have increasingly transferred primary responsibility for design and
engineering of automotive components to full-service suppliers. The automotive
industry has increased the use of plastics in both interior and exterior
components of a vehicle to (i) reduce vehicle weight and cost; (ii) enhance
design flexibility; and (iii) shorten
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<PAGE> 45
development time and improve quality. As molding and painting technologies
continue to improve, the use of plastics for exterior trim is expected to
increase.
In 1996, the Company expanded its customer base and technology capabilities
through strategic acquisitions. The acquisition of Bailey allowed the Company to
expand its relationship into a Tier 1 supplier to Ford in North America. The
acquisition of certain assets from AutoStyle enhanced the Company's relationship
with General Motors. Moreover, the Bailey and Venture Grand Rapids Acquisitions
offered the Company the ability to expand into compression molding technologies
and to enhance its RIM capabilities as well as the ability to leverage and
provide new outlets for the Company's existing design, engineering and tooling
capabilities.
Venture Industries Corporation, the initial business which became part of
the Company, was founded in 1973 by a group of individuals, including Mr.
Winget. Mr. Winget is the only founder still involved with the Company and is
the sole beneficiary of the Trust. Since its inception, the Company has
experienced significant growth. The Company's net sales and EBITDA have
increased from $174.8 million and $26.2 million, respectively, for the year
ended December 31, 1992, to $351.8 million and $44.9 million, respectively, for
the year ended December 31, 1996. This represents compound annual growth rates
of 19% and 14%, respectively.
INDUSTRY TRENDS
The Company's business is providing systems integration and plastic trim
components to the OEM market. Although the Company sells replacement or service
components to OEMs, it does not participate in the automotive aftermarket. The
OEM market to which the Company sells its products consists of the design,
engineering, development and production of exterior and interior plastic
components to be used in the manufacture of new motor vehicles. The Company's
inception, performance, growth, and strategy have been directly related to
trends in the OEM market. Since the 1980s, Chrysler, Ford and GM have each
outsourced an increasing percentage of their production requirements. The OEMs
have also reduced the number of suppliers that may bid for new awards while
insisting that the remaining participants assist OEMs in their attempts to
accelerate new platform developments. Currently, OEMs are focusing on the
development of long-term, sole-source relationships with more capable
full-service suppliers. The criteria for supplier selection now includes not
only cost, quality and responsiveness, but also certain full-service
capabilities including design, research, engineering and project management
support. For capable suppliers, this changing environment should continue to
create the opportunity to grow by obtaining business previously awarded to
competing suppliers.
Competition for business within the Company's industry generally consists
of a competitive selection process in which the OEM approaches one or several
suppliers for an intended component with a conceptual design of the component as
well as estimated production volumes and, in some instances, target prices.
Discussions are held with each potential supplier concerning its ability to
manufacture, engineer and design the component at a unit price quoted by the
supplier. OEMs also have rigorous programs for evaluating and rating suppliers
which encompass quality, cost control, reliability of delivery, new technology
implementation and overall management leadership and structure which have
resulted in a sharply reduced number of component suppliers. The supplier is
generally selected to manufacture a component two to four years in advance of
production. Once selected, a supplier works with the OEM's design team to design
and develop a component which will satisfy the OEM's standards. The supplier is
typically responsible for the design, production and necessary tooling, at
negotiated fixed prices, required to manufacture the component on a sole source
basis to meet requirements for a model year. In practice, model year purchase
orders are typically renewed until the component is redesigned or eliminated due
to a model change, which normally occurs every two to six years for cars and
five to ten years for sport utility vehicles, light trucks and minivans. In
recent years, there has been a change to award sole source life of the program
contracts that cover components supplied for a particular model for the entire
product life cycle in exchange for annual price reductions. Consequently, a
supplier's ability to improve operating performance is somewhat dependent on its
ability to reduce costs and operate more efficiently over the life of the
program. The supplier is also at risk that the OEM will produce fewer units of
the model than anticipated. In addition, the supplier must compete for new
36
<PAGE> 46
business to supply components for successor models, and as such, there is a risk
that the OEM will not select the supplier to produce components on a successor
model.
As a result of ever-increasing global competition, OEMs are continually
upgrading their supplier policies. The OEMs are requiring suppliers to meet
increasingly strict standards of quality, overall cost reductions and increased
support for up-front design, engineering, project management and the ability to
supply on a global basis. These requirements are continually accelerating the
trend towards consolidation of the OEM supplier base which also involves a shift
in capital investment requirements from the OEMs to the suppliers.
The decision of OEMs to outsource an increasing number of components is
another area of potential growth for component suppliers. Domestic OEMs have
continued to increase the outsourcing of components and subassemblies from
internal divisions to outside suppliers. OEMs benefit from outsourcing because
outside suppliers generally have significantly lower cost structures and shorter
development periods, thus allowing the OEMs to focus on overall vehicle design,
assembly and consumer marketing.
The combined pressures of cost reduction, fuel economy enhancement,
durability, design flexibility and environmental concerns have caused automotive
manufacturers to concentrate their efforts on developing and employing lower
cost, lighter materials, which can be recycled. As a result, plastic content in
motor vehicles has grown significantly. This trend towards the use of plastic in
exterior and functional components has been driven by innovations in molding and
painting technologies, which have improved the performance and appearance of
molded plastic components, and improvements in materials and manufacturing
technologies which have a lower cost. In addition, because plastic components
can be more readily redesigned than steel components, OEMs are able to rapidly
and less expensively alter a vehicle's appearance through the use of plastics.
Due to lower up front tooling costs, plastic generally has an advantage over
steel for low volume production runs. Coupled with the industry trend towards
short production runs, this should lead to increased plastic content per
vehicle. Plastics are now commonly used in structural components such as grille
opening reinforcements and in such nonstructural components as interior and
exterior trim, door panels, instrument panels, grilles, bumpers, duct systems,
tail lights and fluid reservoirs. Increasingly, automobile designs require
large, plastic, molded assemblies for both the interior and exterior. Although,
for interior trim applications, substitution of plastic for other materials is
largely complete, interior applications which allow OEMs to enhance a vehicle's
appearance in cost-effective ways may grow. The use of plastics continues to
increase for exterior applications. As an example, compression molding, compared
to steel, is gaining favor for its light weight, lower-cost tooling and its
ability to consolidate a number of parts into one piece. Trucks, both pick-up
and heavy-duty models, represent a potential area for significant growth for
compression molding.
BUSINESS STRATEGY
The Company's business strategy is to capitalize on current conditions and
anticipate future automotive industry trends in order to supply an increasing
number of components to its existing OEM and Tier 1 supplier customers as well
as to expand these customer bases. The Company believes that the principal
sources for continued growth and increased market share lie in (i) capitalizing
on its engineering and design capabilities; (ii) expanding its capabilities to
provide integrated interior and exterior systems; and (iii) emphasizing its
status as a manufacturer of high quality components for North American OEMs. The
Company believes the key elements of achieving this strategy are the following:
Provide Full-Service Program Capability. In response to the evolving
purchasing and manufacturing policies of its OEM customers, the Company has
developed comprehensive full-service capabilities, including component research,
design and engineering, prototype production, tooling, manufacturing and
assembly. As the OEMs have focused increasingly on shortening vehicle design and
production cycles and reducing design and production costs, suppliers who have
the ability to take an idea or design from concept to mass production ("art to
part") are being involved earlier in the process and are being selected as
sole-source suppliers for vehicle components. This evolution of the OEM
relationship into strategic partnerships provides a significant advantage to
strong existing suppliers, such as the Company, in retaining existing contracts
as well as participating during the design phase for new vehicles, which is
integral to becoming a supplier to such new platforms.
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<PAGE> 47
In the past several years, the Company has made a substantial commitment to
product technology and product design, including establishing an Advanced
Engineering Center, integrating the use of CAD/CAM, and utilizing the latest
optical design technology to rapidly and cost-effectively replicate and modify
existing designs (using a proprietary reverse engineering process, licensed from
Mr. Winget, called reverse engineering automated process for rapid prototyping
("REAP")) as well as develop new prototypes. The Company believes its
participation with customers in the early phases of product design has enabled
it to provide better product quality at a lower cost in a shortened development
period.
Supply Highly Engineered, High Value-Added Components. The Company has,
over the past several years, changed its marketing emphasis to include its
advanced engineering capabilities to supply more highly engineered components.
These components are more difficult for a customer to produce in-house and are
difficult for a competitor to replicate due to the substantial up-front
investment and the specialized design and engineering required. The Company
believes that the number of companies that have the ability to participate in
the concept and design of a component and have efficient manufacturing
operations to competitively manufacture complex components, such as instrument
and door panel assemblies, is limited. This affords the Company the opportunity
to supply an increasing number of components to existing customers and will
offer it opportunities to expand its customer base.
Enhance Position as a Full Service Provider of Exterior and Interior
Plastic Trim. The Company believes that it is one of only a small number of
companies that can provide its customers with not only a full-service program
capability (as described above) but also a wide array of alternative plastic
molding technologies. The Company possesses the latest technologies associated
with thermoplastic injection molding, compression molding and RIM. With the
purchase of Bailey, the Company further completed its line of exterior
technologies by obtaining expertise pertaining to sheet molding compounds, which
are being increasingly utilized as a substitute for steel. By possessing a wide
range of plastic design and manufacturing technologies, the Company is able to
distinguish itself from its competition by offering the process that will best
meet the customers' needs, while often lowering design and production costs and
shortening the product development cycle.
Develop and Manufacture High Quality Products. The Company believes it
maintains an excellent reputation with the OEMs for providing world class
quality and customer service at competitive prices. The Company's reputation as
a high-quality, full-service supplier is exemplified by its receipt of major
quality awards from its OEM customers. Both the Company's Harper and Groesbeck
facilities are recipients of General Motors' highest quality award, the Mark of
Excellence. The Groesbeck facility has received the Chrysler Pentastar quality
award and several of the Company's facilities have also obtained Ford's Q-1
status. Quality levels are currently being standardized across OEMs through the
QS-9000 program, which is expected to lower the cost of maintaining separate
quality programs. As of the date hereof, the Company's Harper, Groesbeck,
Hillsdale, Grand Blanc, Canada and Malyn facilities have received or have been
recommended for QS-9000 certification. The Company is in the process of
obtaining QS-9000 certification for the remainder of the facilities and expects
certification to be completed by the end of 1997.
Emphasize Continuous Improvement. The Company follows "lean manufacturing"
and "Kaizen" philosophies that seek continuous improvement by identifying and
eliminating waste in its own operations and in those of its customers and
suppliers. These philosophies emphasize employee involvement in all phases of
the Company's operations by (i) empowering employees at all levels with
responsibility for their work, which leads to the identification of
opportunities for improvement and cost reduction; (ii) forming cross-functional
teams to investigate opportunities for process improvements; and (iii) rewarding
employee participation and involvement through financial incentives.
Provide Just-in-Time Delivery/Sequential Shipping. As OEMs have moved to
just-in-time inventory management, the timeliness and reliability of shipments
by their suppliers have become increasingly important. To service its customers
more effectively, the Company utilizes just-in-time manufacturing and sourcing
systems, which enable it to meet its customers' requirements for on-time
deliveries while minimizing the carrying levels of inventory. The Company is
connected to General Motors, Ford, Chrysler and other Tier 1 suppliers through
computer-linked electronic data interchange, which facilitates communication of
customer demand and delivery requirements. The Company also offers its customers
sequential shipping, in
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<PAGE> 48
which components are sent to automotive OEMs in the specific order in which the
vehicles are assembled, based on as little as two hours' lead time. The Company
believes it has established a reputation as a highly reliable and timely
supplier able to meet its customers' demanding delivery requirements.
Increase its Global Presence. The Company and affiliated companies have
established a presence in Canada, Australia, Asia, Africa and Europe in order to
serve customers on a global basis. Although the affiliated companies are outside
of the Trust, they are owned by Mr. Winget and use the Venture name. This global
presence has allowed the Company to leverage the Venture name as General Motors,
Chrysler, Ford and other Tier 1 suppliers make parts sourcing decisions to award
purchase orders to companies with world-wide capabilities. Through these
relationships, the Company has also established relationships with new
customers, such as BMW or Mercedes. The affiliated companies, in turn, have
provided, and are expected to provide, significant new outlets for the Company's
existing design, engineering and tooling capabilities. The Company or other
affiliated companies intend to continue to expand in foreign markets to meet the
OEMs' evolving global needs, either directly or as a supplier of design services
and molds to its affiliated companies.
Make Strategic Acquisitions. In recent years, OEMs have instituted tighter
quality, manufacturing, delivery and systems requirements which have resulted in
consolidation of the automotive supplier industry. Through strategic
acquisitions, the Company believes it can further leverage its capabilities and
relationships with existing customers by adding complementary products and
manufacturing processes. The Company also intends to pursue acquisitions which
offer an entree to new customers and to expand or enhance its customer base.
Consistent with this strategy, the recent Bailey acquisition in August 1996 has
provided the Company with new opportunities to win business with Ford while
expanding into new technologies such as compression molding. The Company
believes that the continuing supplier consolidation may provide attractive
opportunities to acquire companies which can be improved economically through
cost cutting, lean manufacturing techniques and use of existing tooling and
design capabilities. The Company believes that, as of the date hereof, it has
improved profitability at the Bailey facilities through labor rationalization,
raw materials savings and the elimination of administrative redundancies.
PRINCIPAL PRODUCTS
The Company produces thermoplastic injection molded, compression molded and
RIM plastic parts primarily for OEMs and other Tier 1 suppliers. The production
of many of the Company's components requires sophisticated technology and
considerable manufacturing expertise. The Company utilizes two component paint
technology, including soft-touch paints for interior applications (principally
air bag covers and interior consoles), as well as base coat and clear coat
paints applied to exterior components including fascias, fenders, lift gates,
wheel lips, spoilers and side moldings. The Company's side wall hard trim
components, scuff plates and seat back trims are molded in color. Vinyl and
cloth wrapping techniques are used to manufacture the Company's instrument
panels, side wall hard trim components and door panels. The Company also
emphasizes complex products, such as instrument panels, which require the
integration of multiple components, including ash trays and glove compartments,
into complete sub-assemblies.
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The Company's primary exterior and interior products are detailed and
illustrated below:
DIAGRAM OF EXTERIOR PRODUCTS
DIAGRAM OF INTERIOR PRODUCTS
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<PAGE> 50
The following sets forth information about the Company's automotive
products and vehicle models on which they are used or for which the Company has
been awarded business.
<TABLE>
<CAPTION>
AWARDED BUSINESS ON
COMPONENT OEM/CUSTOMER 1997 PRODUCTION(A) FUTURE PRODUCTION(B)
--------- ------------ ------------------ --------------------
<S> <C> <C> <C>
Interior Trim General Motors Achieva, Blazer, Cadillac S5S, Cavalier, Century, Regal, Skylark,
Century, Express/Savana Van, Lumina, Park GM Small Sport Utility
Avenue, Regal, Skylark, Sunfire
Ford Continental, Escort, Mountaineer, Taurus,
Thunderbird
Chrysler B Van, Breeze, Cirrus, Concorde, Grand B Van, LHS, Vision,
Cherokee, LHS, Intrepid, Stratus, Wrangler Intrepid, Jeep, Breeze,
Cirrus, Stratus
DEPCO Bonneville, LeSabre, Olds 88
Finley Beauville
Industries
Lear Chrysler Ram 150/350 Pickup, Viper, Windstar
Prince/Ford Continental
Instrument and General Motors Corvette, Olds 88
Door Panels/
Assemblies
Ford Continental
Chrysler Jeep Cherokee, B Van
Airbag Covers Morton Breeze, Caravan, Cirrus, Mazda 626, Sable, Accord, Cobra, Dodge
Taurus, Town Car, Stratus, Town & Country, Ram, GMX130, GM S5S,
Voyager Mustang, Mazda MX6,
Mercedes, PACCAR, Probe,
Subaru, Volkswagen
TRW Continental, Cougar, Mark VIII, PN96, Ranger,
Ram Pickup, Thunderbird, Windstar
Cladding/ General Motors Achieva, Achieva GT, Astro Van, Beretta, Cutlass, Malibu, Yukon
Exterior Blazer, Bonneville, Camaro, Cavalier, Century,
Corvette, Firebird, Grand Am, Grand-Am GT,
Grand Prix, DeVille, Eldorado, Seville, STS,
Intrigue, Lumina, Monte Carlo, Olds 88, Opel,
Regal, Safari, Saturn, Silhouette, Skylark,
Sunfire, Transport, Yukon, Express/Savana Van,
Venture
Ford Econoline Van, Escort, Explorer, F-Series Mustang
Pickups, Mark VIII, Mustang, Navigator, Nissan
Quest, Ranger, Thunderbird, Villager, Windstar
Chrysler B Van, Dakota, Durango, Eclipse, Minivan, Viper Dakota, Prowler, Viper
Dott Camaro, Firebird
Evart Intrepid, LHS
Freightliner Truck
Libraltar Bravada
Fascias General Motors DeVille, Eldorado, STS, Seville, LeSabre, Yukon
Safari, Transport, Opel, Venture
Ford Expedition, F-Series
Pickup, Ranger
Isuzu Rodeo Rodeo, Honda
</TABLE>
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<PAGE> 51
<TABLE>
<CAPTION>
AWARDED BUSINESS ON
COMPONENT OEM/CUSTOMER 1997 PRODUCTION(A) FUTURE PRODUCTION(B)
--------- ------------ ------------------ --------------------
<S> <C> <C> <C>
Functional General Motors Blazer, Delphi-AC Spark Plug, G Van,
Components Express/Savana Van, Seville, Skylark
Ford Escort, Mustang, Mystique, Navigator Econoline Van, F-Series
Pickups, PHN131-Sport
Utility
Miscellaneous Bombardier Sea Doo, Ski Doo
Non-Automotive Club Car Golf Cart bodies
Larson Mfg. Screen Door
</TABLE>
- ------------
(a) Represents models for which the Company will produce products in 1997.
(b) The amount of products produced under these awards is dependent on the
number of vehicles manufactured by the OEMs. Many of the models are versions
of vehicles not yet in production. See "Risk Factors -- Reliance on Major
Customers; The OEM Supplier Industry." There can be no assurance that any of
these vehicles will be produced or that the Company will generate certain
revenues under these awards even if the models are produced.
CUSTOMERS AND MARKETING
The North American automotive market is dominated by General Motors, Ford
and Chrysler, although foreign OEMs have achieved significant market share. The
Company's principal customers are General Motors, Ford and Chrysler and other
Tier 1 suppliers, such as Autoliv, S.A., TRW Automotive Company, Textron
Automotive division of Textron Corporation and Lear Corporation. While a large
percentage of the Company's sales are derived from General Motors, Ford and
Chrysler, the Company maintains a diversity of volume among the various
divisions of the OEMs, and is further diversified by its position as a supplier
for a number of high volume vehicle platforms manufactured by those divisions.
The Company has purchase orders to supply an aggregate of over 1,000 components
to be included on approximately 100 models of cars, minivans, light trucks and
sport utility vehicles for the 1997 model year and currently expects to
manufacture over 1,100 components to be included on a comparable number of
models to be produced for the 1998 model year. The acquisition of Bailey allowed
the Company to expand its relationship into a Tier 1 supplier to Ford in North
America. This gives the company a strong portfolio of sales among all three of
the U.S. OEMs. The Company continues to pursue opportunities with foreign-based
OEMs with North American operations and now supplies air dams to Isuzu Motors
for the Isuzu Rodeo. Beginning with the 1998 model, the Company will also supply
fascias on the Rodeo along with a companion vehicle assembled in the United
States for Honda. In addition, the Company will supply air bag covers for the
Honda Accord and Civic. The Company's non-automotive customers include Club Car,
Inc. (golf cart bodies and cowls) and Bombardier, Inc. (Ski Doo and Sea Doo
bodies).
The approximate net sales and percentage of net sales to the Company's
principal customers and customer categories for the years ended December 31,
1993 through 1996 and six months ended June 30, 1996 and 1997 are shown below
(dollars in millions):
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------- -----------------------
1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ---------- ----------
CUSTOMER $ % $ % $ % $ % $ % $ %
-------- - - - - - - - - - - - -
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
General Motors........ $118 57% $139 57% $123 49% $145 41% $ 60 47% $143 45%
Ford(1)............... -- -- -- -- -- -- 57 16 1 1 87 27
Chrysler.............. 53 26 48 20 56 22 41 12 24 19 27 8
Tier 1 Suppliers to
OEMs................ 21 11 50 20 62 25 81 23 35 28 53 17
Other Non-Automotive.. 13 6 7 3 10 4 28 8 6 5 10 3
---- --- ---- --- ---- --- ---- --- ---- --- ---- ---
Total............ $205 100% $244 100% $251 100% $352 100% $126 100% $320 100%
==== === ==== === ==== === ==== === ==== === ==== ===
</TABLE>
- ------------
(1) Prior to 1996, sales to Ford were not significant and are included under
sales to Tier 1 suppliers.
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<PAGE> 52
The Company's sales are made directly to the OEMs with marketing and
customer support assistance provided by an affiliated company, wholly owned by
Mr. Winget, and by other unaffiliated entities. See "Certain Transactions."
ENGINEERING AND DESIGN
The Company believes that its state-of-the-art technology, experienced
engineering and technical staff and reputation for product innovation are major
factors contributing to its market position.
Technology. The Company utilizes state-of-the-art technology to improve
product quality, increase price competitiveness and reduce product development
time. The Company's design and manufacturing technologies include integrated
CAD/CAM; computer-aided optical scanning and proprietary manufacturing systems;
gas-aided injection molding technology ("GAIN"); and two component paint
technology, including soft-touch paints for interior applications (principally
air bag covers and consoles). With the aid of its integrated computer design
systems and the introduction of optical scanning prototyping equipment, the
Company has significantly reduced the amount of time required to create a
prototype part and ultimately a production component. This process not only
reduces development time but also improves the accuracy of product and mold
tolerances. Further, the Company's advanced systems allow hundreds of design
solutions to be visualized and ergonomically tested quickly and easily,
facilitating product design and manufacturing.
Engineering and Technical Staff. The Company maintains an advanced
engineering center and quality assurance center, along with an engineering and
technical staff which generates ideas for new parts and extensions of existing
lines. The Company's engineering and technical staff work closely with the
Company's OEM customers to help design and develop new products, to ensure high
quality and coordinate development with the manufacture of new vehicles. The
design and engineering staff also provides suggested design and material changes
to the OEMs.
The Company maintains laboratories dedicated to product development,
tryout, certification and research. These laboratories are certified for use by
General Motors and Chrysler. In its tryout facility, five molding machines are
dedicated to simulate the manufacturing environment.
PRODUCTION CONTROL, MANUFACTURING AND QUALITY
Due to the evolving purchasing and manufacturing policies of the OEMs,
production control has emerged as the critical factor for coordinating and
integrating the customers' requirements with the Company's scheduling and
manufacturing processes.
Responding to these changes, the Company has developed and incorporated the
principles of "lean manufacturing" and "Kaizen" into its manufacturing
operations. These programs establish a work environment which encourages
employee involvement in identifying and eliminating waste. The Company's
operations are structured flexibly to respond to the demands of different
product runs and changing product delivery requirements while increasing
production efficiency. Additionally, the Company relies on the quality and
training of its work force and, when appropriate, automation, to reduce costs.
The Company attempts to minimize its investment in inventory by
coordinating its purchasing and production activities with anticipated customer
demands. Based upon their production forecasts, the OEMs generally provide the
Company with weekly releases four to thirteen weeks prior to actual delivery. To
facilitate the exchange of this information, the Company is connected to General
Motors, Ford and Chrysler and other Tier 1 suppliers through an electronic data
interchange system. To service its customers more effectively, the Company has
implemented "pull systems" at each of its manufacturing locations, to help it
meet its customers' requirements for on-time deliveries while reducing the
carrying levels of inventory. Pursuant to the "pull system," production is based
primarily upon demand rather than on forecasted need.
The Company believes it maintains an excellent reputation with the OEMs for
timely delivery and customer service and for providing world class quality at
competitive prices. The Company's reputation as a high-quality, full-service
supplier is exemplified by its receipt of major quality awards from its OEM
customers. Both the Company's Harper and Groesbeck facilities are recipients of
General Motors' highest
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<PAGE> 53
quality award, the Mark of Excellence. The Groesbeck facility has received the
Chrysler Pentastar quality award and several of the Company's facilities have
also obtained Ford's Q-1 status. Quality levels are currently being standardized
across OEMs through the QS-9000 program, which is expected to lower the cost of
maintaining separate quality programs. As of the date hereof, the Company's
Harper, Groesbeck, Hillsdale, Grand Blanc, Canada and Malyn facilities have
received, or have been recommended for, QS-9000 certification. The Company is in
the process of obtaining QS-9000 certification for the remainder of the
facilities and expects this to be completed by the end of 1997.
The Company's plastic components have sophisticated tooling requirements,
the costs of which are generally billed to the customer at pre-authorized
levels. Development of the tooling typically begins approximately two to three
years before production, after being selected by the customer to develop a
particular component or assembly. At that time, the Company commences its
tooling design and development work and accumulates in inventory the costs
incurred. The production tooling is ordered generally one year prior to
production. The Company supplies substantially all of its tooling requirements
from its own tooling operations.
RAW MATERIALS
The principal raw materials used by the Company are engineered plastic
resins such as nylon, polypropylene (including thermoplastics), polycarbonate,
acrylonitrile-butadiene-styrene, fiberglass reinforced polyester, PET and TPU; a
variety of ingredients used in the compression molding process; paint related
products; and steel for production molds. Although all of these materials are
available from one or more suppliers, the Company's customers generally specify
materials and suppliers to be used by the Company in connection with a specific
program. The Company procures most of its raw materials by issuing purchase
orders against one-year supply agreements under which the Company's annual needs
for such materials are estimated. Releases against such purchase orders are made
only upon the Company's receipt of corresponding orders from its customers. The
Company has not experienced raw material shortages, although there can be no
assurance that the Company will not experience raw material shortages in the
foreseeable future.
COMPETITION
The industry in which the Company competes is highly competitive.
Competition generally occurs on the basis of product groups. A large number of
actual or potential competitors exist, including the internal component
operations of the OEMs as well as independent suppliers, many of which are
larger than the Company. Some of the Company's competitors include Magna
International, Cambridge Industries, Inc., Buckeye Plastics, a division of
Worthington Industries, Textron Automotive division of Textron Corporation, The
Becker Group, Inc., Lear Corporation, Findley Industries, The Budd Company
plastic division, the Prince division of Johnson Controls, Inc., and United
Technologies Automotive division, plus a large number of smaller competitors. In
addition, the Company's business is increasingly competitive due to supplier
consolidations resulting from OEM supplier optimization policies and the
spin-off by OEMs of formerly in-house plastics manufacturing facilities.
However, these consolidations and divestitures should benefit the Company's
product pricing in the future as former marginal competitors are removed and the
former in-house facilities must now compete independently.
The Company competes on the basis of quality, cost, timely delivery and
customer service and, increasingly, on the basis of design and engineering
capability, painting capability, new product innovation, product testing
capability and its ability to reduce the time from concept to mass production
("art-to-part"). The Company believes that as OEMs continue to strive to reduce
new model development cost and timing, innovation and design and engineering
capabilities will become more important as a basis for distinguishing
competitors. Both are areas where the Company believes it has an outstanding
reputation.
Some of the OEMs have adopted supplier management policies designed to
strengthen their supply base. These policies include designating only some of
the suppliers as preferred future suppliers and, in some cases, encouraging new
suppliers to begin to supply selected product groups. The Company is such a
supplier to Chrysler and to Ford.
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<PAGE> 54
EMPLOYEES
The Company believes that its future success will continue to be enhanced
by rewarding and empowering employees. At December 31, 1996, the Company
employed approximately 4,300 persons. The Company has 680 hourly persons at the
Seabrook, New Hampshire and Lancaster, Ohio facilities, who are covered by
collective bargaining agreements with the United Auto Workers. The Lancaster
contract, representing about 8% of the workforce, was recently renewed for a
four year term, ending June 2001, and the Seabrook contract expires in 1999. In
1996, there was a union election at Vemco, Inc. The results of that election are
being held pending resolution of challenged ballots and election objections. The
Company has not experienced any work stoppages and considers its relations with
its employees to be good. However, many of the Company's OEM and Tier 1 supplier
customers and other suppliers to the Company's customers are unionized, and work
stoppages, slow-downs or other labor disputes experienced by, and the labor
relations policies of, OEMs and other Tier 1 suppliers could have an adverse
effect on the Company's results of operations.
PATENTS
The Company has the right to use various patents which aid in maintaining
its competitive position. These patents begin to expire in the next 15 years.
The expiration of such patents are not expected to have a material adverse
effect on the Company's operations. See "Certain Transactions."
PROPERTIES
The Company's executive offices are located in Fraser, Michigan. Molding
operations are conducted at fourteen facilities in Michigan, Ohio, Kentucky,
Indiana and New Hampshire. The utilization and capacity of the Company's
facilities may fluctuate based upon the mix of components the Company produces
and the vehicle models for which they are being produced by the Company. The
Company believes that substantially all of its property and equipment is in good
condition and that it has sufficient capacity to meet its current and projected
manufacturing and distribution needs through the 1999 model year.
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<PAGE> 55
The following table sets forth certain information concerning the Company's
facilities.
<TABLE>
<CAPTION>
SQUARE TYPE OF DESCRIPTION
LOCATION FOOTAGE INTEREST OF USE
-------- ------- -------- -----------
<S> <C> <C> <C>
MICHIGAN
Masonic Facility................... 178,000 Leased(1) Molding, Mold Fabrication and Repair
Malyn Complex...................... 23,000 Leased(1) Molding
22,000 Leased(1) Molding
18,000 Owned Warehouse
Technical Center................... 56,000 Owned Headquarters, Laboratory, Tryout, Mold
Fabrication
Commerce Facility.................. 24,000 Leased(1) Mold Fabrication and Repair
Doreka Center...................... 6,000 Leased Design and Engineering
Dearborn Center.................... 6,000 Leased Design and Engineering
Grand Blanc Facility............... 365,000 Owned Molding, Painting, Assembly
Grand Rapids Complex............... 440,000 Leased Molding, Painting, Assembly
125,000 Leased Assembly Warehouse
85,000 Leased Warehouse, Shipping
Harper Facility.................... 180,000 Leased(1) Molding, Painting, Assembly
Groesbeck Facility................. 128,000 Owned Molding
Design Center...................... 20,000 Leased Design and Engineering
Almont Facility.................... 10,000 Leased(1) Mold Fabrication and Repair
Troy Center........................ 10,000 Leased Mold Fabrication
Hillsdale Facility................. 119,000 Owned Molding, Painting, Assembly
Redford Facility................... 22,000 Leased(1) Mold Fabrication
Allen Park Center.................. 26,000 Leased Sales, Design, Engineering
KENTUCKY
Hopkinsville Complex............... 104,000 Leased Molding, Painting, Assembly
80,000 Leased Warehouse
NEW HAMPSHIRE
Seabrook Facility.................. 390,000 Owned Molding, Painting, Assembly
WALLACEBURG, ONTARIO, CANADA
Venture Canada Facility............ 35,000 Owned Painting and Assembly
OHIO
Conneaut Facility.................. 183,000 Leased Molding, Painting, Assembly
Lancaster Facility................. 156,000 Owned Molding, Painting, Assembly
INDIANA
Madison Facility................... 71,000 Owned Painting and Assembly
Hartford City Facility............. 116,000 Owned Molding and Assembly
Portland Facility.................. 120,000 Owned Molding and Painting (inactive)
</TABLE>
- ------------
(1) Leased from an affiliate of the Company. See "Certain Transactions."
In addition to the above facilities, the Company relies upon certain
affiliated companies, which are owned or controlled by Mr. Winget, to provide
facilities, machinery and equipment, technology or services to the Company that
are necessary for it to be a full service supplier. Deluxe Pattern Company
("Deluxe"), a company wholly owned by Mr. Winget's living trust, makes available
to the Company a 30,000 square foot advanced design and model building facility
under a usage agreement. In addition, Venture Automotive Corp. ("VAC"), a
company wholly owned by Mr. Winget's living trust, operates a 208,000 square
foot facility in Flint, Michigan at which it performed services for the Company
which included sequencing and value-added assembly of parts. Some of the
services previously performed by VAC have now been contracted to MAST Services,
LLC, in which N. Matthew Winget, Mr. Winget's son, owns a minority interest. In
addition, the
46
<PAGE> 56
Company has subcontracted certain work to Nova Corporation ("Nova"), a business
in which Mr. Winget has a significant equity interest. See "Certain
Transactions."
ENVIRONMENTAL MATTERS
The Company's operations are subject to numerous federal, state and local
laws and regulations pertaining to the generation and discharge of materials
into the environment. The Company has taken steps related to such matters in
order to minimize the risks of potentially harmful aspects of its operations on
the environment. However, from time to time, the Company has been subject to
claims asserted against it by regulatory agencies for environmental matters
relating to the generation and disposal of hazardous substances and wastes. Some
of these claims relate to properties or business lines acquired by the Company
after a release had occurred. In each known instance, however, the Company
believes that the claims asserted against it, or obligations incurred by it,
will not result in a material adverse effect upon the Company's financial
position or results of operations. Nonetheless, there can be no assurance that
activities at these facilities or facilities acquired in the future, or changes
in environmental laws and regulations, will not result in additional
environmental claims being asserted against the Company or additional
investigations or remedial actions being required.
The Company is currently involved in discussions with the Michigan
Department of Environmental Quality concerning the emissions from the Company's
Grand Blanc paint facility. Emissions levels are being evaluated, and it is
possible that the Company will be required to improve its systems to meet
applicable requirements. Although it is not anticipated that the improvements
will require substantial expenditures by the Company, there can be no assurances
that such will be the case.
Bailey has been notified of its status as a potentially responsible party
("PRP") at the ReSolve Superfund site in North Dartmouth, Massachusetts, the
Solvents Recovery Services site in Southington, Connecticut, the Old Southington
Landfill Superfund site in Southington, Connecticut, the Spectron, Inc. site in
Elkton, Maryland, and the Hazardous Waste Disposal Inc. site in Farmingdale, New
York. At all five sites, Bailey and all other PRPs are jointly and severally
liable for all remediation costs under applicable hazardous waste laws.
Therefore, the Company's proportionate share is subject to increase upon the
insolvency of other PRPs.
With respect to the ReSolve site, Bailey and its immediate predecessor, USM
Corporation's Bailey division (in the name of Emhart Corporation), have been
named as PRPs for wastes sent to the site during the 1970s. Recent estimates
provided by the PRP group responsible for the site's remediation indicate that
Bailey's potential liability for clean-up efforts at the site is approximately
$321,396 for which the Company is fully reserved and has posted a letter of
credit in favor of the PRP group. The recent discovery of the presence of
contaminants in a form not currently susceptible of short-term remediation,
however, has created uncertainty about the future scope and cost of clean-up
efforts at this site, and a possibility that the ultimate cost of remediation
may be higher than previously estimated. The Company is unable to predict what,
if any, effect this recent discovery may have on the Company.
On June 18, 1992, Bailey received notice from the EPA that it was a PRP
under the federal Superfund law with respect to the Solvents Recovery Services
of New England Site in Southington, Connecticut (the "SRSNE Site"). Based upon a
volumetric ranking dated July 7, 1993, the waste allocated to Bailey represented
0.11593% of the total identified waste at the SRSNE Site. Under the terms of a
settlement with Emhart, Bailey agreed to assume liability for wastes sent to the
SRSNE Site by the Seabrook, New Hampshire facility and Emhart agreed to assume
liability for wastes sent by USM's Amesbury, Massachusetts facility. The
identified PRPs have organized a group to negotiate with the EPA, and Bailey has
joined that group. The group has successfully negotiated with the EPA to reduce
the total estimated cost of the initial removal action at the SRSNE Site from an
original estimate of $14 million down to a current estimate of approximately $4
million. The total estimated cost of long-term remediation at the SRSNE Site is
not yet known.
In January 1994, Bailey received a Notice of Potential Liability for the
Old Southington Landfill Superfund Site (the "OSL Site") located in Southington,
Connecticut. Both Bailey and USM/Emhart received notices of liability for the
share of OSL Site costs allocated to USM Corporation (Amesbury, Massachusetts).
Bailey and Emhart entered into a settlement agreement under which Emhart will
assume
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<PAGE> 57
sole responsibility for all cleanup costs, imposed by the EPA, arising out of
the alleged liabilities of USM Corporation's Bailey division (Amesbury,
Massachusetts) for the OSL Site.
In June 1989, the EPA notified Bailey that it was a PRP under the federal
Superfund law for the Spectron, Inc. site located in Elkton, Maryland. A group
of PRPs ("Steering Committee") entered into agreements with the EPA to fund and
conduct a $2.8 million emergency response action to remove stored wastes at the
site and pay the government's past costs associated with the site, approximately
$635,000. There are several thousand PRPs at this site, with most being small
generators with low dollar exposure. In December 1989, nearly 800 entities,
including Bailey, that sent small quantities of waste to the site participated
on a cash-out basis in the settlement for past costs and the removal action, and
Bailey's allocated share was approximately $8,100. Participation in the cash-out
settlement gives the Company protection against contribution claims from third
parties for the first phase of the site cleanup ("Phase 1").
In August 1990, a separate PRP group ("Phase II PRP Group") was formed and
negotiated an agreement with the EPA to remediate contaminated seeps on the site
and perform a limited privately-funded remedial investigation/feasibility study
for the site (the so-called Phase II activities). Bailey was not asked to join
the Phase II PRP Group because that group determined that the companies that
paid for Phase I of the cleanup would not be asked to make any financial
contributions toward Phase II until the other customers have paid out an amount
per gallon equal to that paid by the Phase I parties. An additional
investigation was conducted as part of the Phase II activities to determine the
nature and extent of a new form of contamination discovered on the site;
additional design work will be commenced soon.
In October 1995, Bailey received a notice from the EPA that it was a PRP
that has liability for conducting a Remedial Investigation/Feasibility Study
("RI/FS") at the Spectron site. In connection with this, Bailey may have an
opportunity to enter into a de minimis party cash out settlement with the EPA
and the other PRPs, the terms of which currently are being negotiated. No
estimate can be made at this time as to the amount of the Company's liability at
the Spectron site.
In 1995, the New York Department of Environmental Conservation ("DEC")
notified Bailey, as well as a number of other parties, that it was named a
responsible party under the Environmental Conservation Law of the State of New
York with respect to the Hazardous Waste Disposal, Inc. site located in
Farmingdale, New York. Based on available information, Bailey's involvement at
the site appears to be related to the shipment of two drums of waste materials
to the site, and consequently minimal. Additional investigations have been
undertaken to determine: (1) whether there are any other entities that shipped
wastes to the site; and (2) whether any of the named parties actually shipped
more than was originally attributed to them. The results to date do not suggest
that the Company's ranking at the site will change significantly. The Company
has demanded that Emhart Corporation assume the defense of this claim. Emhart
Corporation has taken the Company's demand for a defense and indemnification
under advisement. In doing so, Emhart Corporation has taken the position that it
did not receive "prompt written notice" of the claim.
Bailey also faces the possibility of liability if it is deemed a successor
to TransPlastics with respect to wastes generated and disposed of by
TransPlastics when it owned the Conneaut property. TransPlastics has been
identified as a PRP at the Millcreek site in Millcreek Township, Pennsylvania,
and at the New Lyme Site located in Dodgeville, Ashtabula County, Ohio, and at
the Huth Oil Site in Cleveland, Ohio, three sites currently undergoing
remediation. Bailey also received notices from third parties regarding potential
claims in connection with the Huth Oil Site and the Millcreek site. Bailey did
not agree to assume any environmental liabilities of TransPlastics and, as a
result, submitted claims for indemnification for these matters to TransPlastics,
which liabilities TransPlastics has accepted. Under the terms of the Conneaut
Acquisition agreement, TransPlastics and its parent companies must indemnify
Bailey for any liability arising out of any such claim. Nevertheless, there can
be no assurance that TransPlastics and its parent companies will have sufficient
assets to satisfy the Company's potential liability for the remediation and any
associated damage or cost caused by the contamination.
The Company also faces potential liability in connection with the Contour
Acquisition (Hillsdale facility). An environmental site assessment completed by
The Boler Company ("Boler") determined that the ground water at the Hillsdale
facility was contaminated with chlorinated solvents as a result of Boler's past
site activities. The ground water contamination plume has migrated onto adjacent
properties. In addition, Contour
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<PAGE> 58
is listed as a PRP for a number of off-site disposal locations. The Contour
Acquisition Purchase and Sale Agreement requires Boler to indemnify Bailey for
any environmental liabilities which arise in connection with use of the property
prior to closing. In addition, Boler has executed a remediation agreement in
which it agreed to remediate, at its own expense, the identified ground water
contamination at the Hillsdale facility. Boler is currently conducting the
remediation at that facility. If Boler has insufficient resources to complete
remediation of any contamination for which it has indemnified Bailey or
otherwise becomes insolvent, the Company could incur successor liability for the
costs of remediation and any damages to third parties.
The Company also has potential liability in connection with contamination
at certain property in Cuba, Missouri, which had been leased by Bailey from 1985
to 1992. The landlord has undertaken to remediate this property at its own
expense. The Company has negotiated the termination of all obligations of the
Company with respect to the lease.
As a result of the environmental investigation, conducted as part of its
due diligence during the acquisition of the three Premix/E.M.S. Inc. facilities,
Bailey identified a number of environmental concerns. Premix/E.M.S. Inc., as
part of the acquisition agreement, agreed to pursue and address these concerns,
most of which it has completed. Pursuant to the acquisition agreement, Bailey
performed certain post-acquisition investigations which appeared to confirm the
presence of subsurface contamination, of which it has informed Premix/E.M.S.
Inc. Under the acquisition agreement, Premix/E.M.S. Inc. is obligated to
undertake necessary remediation of this problem, if in fact any is required.
Premix/E.M.S. Inc. is currently conducting the remediation at the Portland,
Indiana facility. Premix/E.M.S. Inc. has entered into an Environmental
Indemnification Agreement for the benefit of Bailey. The shareholders of
Premix/E.M.S. Inc. have also severally undertaken to reimburse Bailey in certain
limited circumstances, to the extent of distributions received by them from
Premix/E.M.S. Inc., and to the extent that Premix/E.M.S. Inc. does not directly
satisfy its indemnification obligations.
Estimates of the future cost of such environmental matters are necessarily
imprecise due to numerous uncertainties, including the enactment of new laws and
regulations, the development and application of new technologies, the
identification of new sites for which the Company may have remediation
responsibility and the apportionment and collectibility of remediation costs
among responsible parties. The Company establishes reserves for these
environmental matters when the loss is probable and reasonably estimable. At
June 30, 1997, the Company had a reserve of approximately $1.0 million to
address the issues discussed above and for known compliance monitoring
activities that may be incurred. It is possible that final resolution of some of
these matters may require the Company to make expenditures in excess of
established reserves, over an extended period of time and in a range of amounts
that cannot be reasonably estimated. Although the final resolution of any such
matters could have a material effect on the Company's consolidated operating
results for the particular reporting period in which an adjustment of the
reserve is recorded, the Company believes that any resulting adjustment should
not materially affect its consolidated financial position.
LEGAL PROCEEDINGS
In addition to the environmental matters described above, the Company is a
party to several legal proceedings incidental to the conduct of its business.
The Company believes that none of these actions, individually or in the
aggregate, will have a material adverse effect on the financial condition or
results of operations of the Company.
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<PAGE> 59
MANAGEMENT
EXECUTIVE MANAGEMENT
The following individuals are the Executive Managers of the Company, having
the operational titles set forth opposite their names. Because of its trust
structure, the Trust does not have executive officers or directors, although the
Special Advisor to the Trust, acting through the Trustee, has the authority to
designate individuals from time-to-time to act as officers as to particular
matters. Messrs. Winget, Schutz and Torakis serve as the directors of each
Issuer. Mr. Winget and Stephen M. Cheifetz serve as the directors of Venture
Canada. Mr. Butler is a director of Venture Holdings Corporation only.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Larry J. Winget................ 54 Chairman of the Board and Chief Executive Officer
Michael G. Torakis............. 40 President and Chief Financial Officer
A. James Schutz................ 51 Executive Vice President
Robert Wedge................... 59 President of Mold & Engineering Operations
Philip J. Kusky................ 52 President of Operations-Bailey
James E. Butler, Jr. .......... 44 Executive Vice President-Finance and Secretary
Charles Hunter................. 41 Executive Vice President-Design Engineering
Michael Juras.................. 55 Executive Vice President-Advanced Engineering and Marketing
Patricia A. Stephens........... 50 Executive Vice President-Purchasing
Joseph R. Tignanelli........... 35 Executive Vice President-Customer Service Operations
Larry J. Winget, Jr. .......... 36 Executive Vice President-Manufacturing Engineering
Warren Brown................... 53 Vice President-Exterior Operations
Larry R. Marshall.............. 49 Vice President-Engineering
</TABLE>
Larry J. Winget was one of the five original founders and shareholders of
Venture Industries Corporation and is the only one still involved with the
Company. Since 1987 he has owned 100% of the Company and is currently the sole
beneficiary of the Trust.
Michael G. Torakis joined the Company in 1985 and has been President,
Secretary, Treasurer and Chief Financial Officer of the Trust since 1995. Prior
to his appointment to his current position, he served in various other
capacities at the Company, including Executive Vice President.
A. James Schutz has been Executive Vice President since 1987, and has been
in the injection molding business for 23 years.
Robert Wedge joined the Company in November 1984 as Plant Manager, became
Vice President and General Manager of Venture Mold & Engineering in December
1993 and assumed his present position in April of 1995. Mr. Wedge has 34 years
of mold building experience.
Philip Kusky joined the Bailey Corporation in 1994 and assumed his current
role in 1995. Prior to that, he was, from 1988 to 1994, employed by Rockwell
International, his last position being Director of Sales, Marketing and
Engineering. Mr. Kusky has over 15 years in various senior management positions
for product engineering, sales and marketing.
James E. Butler joined the Company in 1994 and assumed his current position
in April of 1995. From 1981 until joining the Company, he was employed by
Coopers & Lybrand L.L.P., a certified public accounting firm.
Charles Hunter has been with the Company since 1989 and has held a number
of different positions in the Company involving mold building, design
engineering and prototype operations. He currently oversees world-wide design
and advanced engineering operations.
Michael Juras joined the Company in his current position in January 1997.
Prior to joining the Company, Mr. Juras had spent 30 years in various product
and manufacturing positions with General Motors, with his last position as
Director of Engineering Mid-Size Cars.
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<PAGE> 60
Patricia A. Stephens joined the Company in 1993 and has held positions
involving program management, contract administration and purchasing. She
previously had been employed for 23 years with General Motors, her last position
being purchasing agent.
Joseph R. Tignanelli, Larry J. Winget's son-in-law, has been employed by
the Company in several positions since 1980, including Molding Manager for
Venture Industries Corporation -- Groesbeck plant from 1985 until 1990,
Assistant Manager of Venture Industries Corporation from 1990 until 1993, and
Vice President of Venture Industries until being named to his current position
in October of 1995.
Larry J. Winget, Jr., Larry J. Winget's son, has been employed by the
Company in various positions since 1976, including Molding Plant Manager of
Vemco, Inc. from 1988 until 1990, Assistant Manager of Vemco, Inc. from 1990
until 1993, and Vice President and General Manager of Vemco, Inc. until being
named to his present position in April of 1995.
Warren Brown joined the Company in 1993 as Vice President-Mergers and
Acquisitions and assumed his current position in 1996. Prior to joining the
Company, Mr. Brown was employed for eight years as Chief Operating Officer of
Autodie Corporation. He has over 30 years experience in the automotive supplier
industry.
Larry R. Marshall joined the Company in 1985 and in April of 1995, assumed
his current position as Vice President Engineering. Prior to his current
position, he had been General Manager Sales and Estimating.
Stephen M. Cheifetz, 41, is a partner of Wilson, Walker, Hochberg, Slopen,
a Windsor, Ontario law firm, and has served as a partner of such firm for over
five years.
EXECUTIVE COMPENSATION
The following Summary Compensation Tables sets forth compensation paid for
the years ended December 31, 1996, 1995 and 1994, respectively, to those persons
who were, at such date, the chief executive officer of the Company and four
other executive officers who received more than $100,000 in compensation during
such year (collectively, the "Named Officers") for services in all capacities to
the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE(1)
----------------------------------------------------------------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY($)(2) BONUS($) COMPENSATION(3) COMPENSATION(4)
------------------ ---- ------------ -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Larry J. Winget.................... 1996 $513,820 -- $ 675,799 $250,807
Chairman of the Board and 1995 509,779 -- 576,905 253,271
Chief Executive Officer 1994 550,105 -- 3,405,445 15,747
Michael G. Torakis................. 1996 $257,615 $250,000 -- $ 4,800
President and 1995 216,039 250,000 -- 4,800
Chief Financial Officer 1994 183,339 -- -- 2,740
A. James Schutz.................... 1996 $231,491 $ 41,760 -- $ 4,800
Executive Vice President 1995 210,444 141,760 -- 4,800
1994 191,260 41,760 -- 2,836
Larry J. Winget, Jr................ 1996 $216,034 -- -- $ 3,950
Executive Vice President 1995 189,562 125,000 -- 1,600
1994 165,297 -- -- 1,500
Joseph R. Tignanelli............... 1996 189,084 -- -- $ 4,800
Executive Vice President 1995 166,426 120,000 -- 4,800
1994 142,958 -- -- 4,011
</TABLE>
- ------------
(1) The compensation described in this table does not include benefits under
group plans which do not discriminate in scope, terms or operation in favor
of the Named Officers and that are generally available to all salaried
employees, and certain perquisites and personal benefits received by the
Named Officers, where such perquisites do not exceed the lesser of $50,000
or 10% of such officer's salary and bonus.
(2) Includes salary reductions made under the Company's 401(k) Plan and the
Company's Cafeteria Benefit Plan.
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<PAGE> 61
(3) The amount indicated for Mr. Winget represents compensation in lieu of a
distribution of Trust Principal equal to taxes incurred by the beneficiary
as a result of activities of the subsidiaries of the Trust. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
(4) "All Other Compensation" is comprised of: (i) a contribution made by the
Company to the accounts of each of the Named Officers under the Company's
401(k) Plan; (ii) the incremental cost to the Company of additional premiums
for term life insurance benefits for the Named Officers which are not
generally available to the other salaried employees of the Company, and
(iii) with respect to Mr. Winget, the portion of the premium paid by the
Company under a life insurance policy (the "Reverse Split Dollar Policy")
attributable to the build-up of the cash surrender value of the policy,
which aggregated $1,039,195, $793,188 and $544,717 at December 31, 1996,
1995 and 1994, respectively, and is owned by Mr. Winget. The beneficiary of
the term insurance portion of the Reverse Split Dollar Policy is the
Company, which pays all premiums due under the policy and is entitled to
receive a $20 million benefit in the event of Mr. Winget's death. Mr. Winget
has the right to designate the distribution of the cash surrender value and
may, prior to his death, surrender the policy in cancellation thereof and
receive the benefit of the cash surrender value.
See the table below for complete details concerning all other compensation.
<TABLE>
<CAPTION>
NAME AND YEAR 401(K) TERM LIFE INSURANCE REVERSE SPLIT DOLLAR POLICY TOTAL
- ------------- ------ ------------------- --------------------------- -----
<S> <C> <C> <C> <C>
Winget
1996 $4,500 $300 246,007 250,807
1995 4,500 300 248,471 253,271
1994 2,312 325 13,110 15,747
Torakis
1996 $4,500 $300 -- $4,800
1995 4,500 300 -- 4,800
1994 2,415 325 -- 2,740
Schutz
1996 $4,500 $300 -- $4,800
1995 4,500 300 -- 4,800
1994 2,511 325 -- 2,836
Winget Jr.
1996 $3,650 $300 -- $3,950
1995 1,300 300 -- 1,600
1994 1,175 325 -- 1,500
Tignanelli
1996 $4,500 $300 -- $4,800
1995 4,500 300 -- 4,800
1994 3,686 325 -- 4,011
</TABLE>
COMPENSATION OF DIRECTORS
Messrs. Winget, Schutz, Torakis and Butler serve as the directors of the
Issuers and do not receive any additional compensation or fees for their service
to the Issuers in such capacities. Mr. Cheifetz does not receive compensation
for acting as a director of Venture Canada; however, the law firm of which he is
a partner acts as counsel to Venture Canada.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All of the Named Officers' compensation for the year ended December 31,
1996 was paid by Venture Service. Messrs. Winget and Torakis, in their
capacities as directors of Venture Service, participated in the deliberations
concerning executive compensation. In addition, some of the Named Officers have
engaged in certain transactions with the Company. See "Certain Transactions."
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<PAGE> 62
STOCK OWNERSHIP
All of the capital stock of the subsidiaries of the Trust is owned by the
Trust., of which Mr. Winget is the sole beneficiary. Mr. Winget's address is c/o
Venture Holdings Trust, 33662 James J. Pompo Drive, Fraser, Michigan 48026.
CERTAIN TRANSACTIONS
In addition to making distributions to Mr. Winget as sole beneficiary of
the Trust and compensating him in his capacity as an Executive Manager of the
Company, the Company has maintained business relationships and engaged in
certain transactions with Mr. Winget and certain companies owned or controlled
by him (each an "affiliate" and collectively, the "affiliates") as described
below. Since the Company operates for the benefit of Mr. Winget as sole
beneficiary of the Trust, the terms of these transactions are not the result of
arms'-length bargaining; however, the Company believes that such transactions
are on terms no less favorable to the Company than would be obtained if such
transactions or arrangements were arms'-length transactions with non-affiliated
persons.
Pursuant to the Indenture and the indenture relating to the Senior
Subordinated Notes, the Trust, each Issuer and each Guarantor is required to
maintain a Fairness Committee, at least one of whose members is independent,
which approves the terms and conditions of certain transactions between the
Company and its affiliates and participates in decisions concerning whether
certain corporate opportunities will be pursued by the Company. The Company has
complied with such requirement since the date of the issuance of the Senior
Subordinated Notes for transactions initiated after such date. The indentures
also contain other restrictions on transactions with affiliates, including the
Corporate Opportunity Agreement, and distributions to Mr. Winget. The Corporate
Opportunity Agreement, entered into in connection with the issuance of the
Senior Subordinated Notes, requires Mr. Winget to offer to the Company certain
corporate opportunities which relate to the Company's business before he may
pursue such opportunities outside the Company. See "Description of Notes."
FACILITIES AND EQUIPMENT
The Company leases, or has arranged for the usage of, certain facilities,
machinery and equipment that are owned by affiliates, as set forth below. The
Company believes that the lease and usage agreements are based on the fair
market value of the facilities, machinery and equipment at the inception of the
agreements. The Company has made significant capital improvements to these
properties. Such improvements are accounted for as leasehold improvements by the
Company. At the conclusion of the applicable lease or usage agreement, the
benefits of such improvements inure to the benefit of the lessor.
Venture Real Estate, Inc., a corporation wholly owned by Mr. Winget's
living trust since 1988, leases to the Company two separate injection molding
buildings in the Company's Malyn Complex, and its Commerce Mold Shop. Starting
in 1996, the Redford facility was leased to the Company. Monthly rental charges
under these leases are $49,650 through July 1996, and $84,567 beginning in
August 1996. Amounts paid to Venture Real Estate, Inc. and a predecessor
affiliate were approximately $440,800, $595,800 and $770,383 for the years ended
December 31, 1994, 1995 and 1996, respectively.
Deluxe Pattern Company ("Deluxe"), a corporation wholly owned by Mr.
Winget's living trust since 1989, provides an advanced design, model and
tool-building facility, and is engaged in the business of providing design and
model and tool-building services to the Company and to customers unaffiliated
with the Company. Since July, 1992, the Company has occupied and staffed the
Deluxe facility pursuant to a usage agreement. The Company paid Deluxe usage
fees of $396,000 for each of the years ended December 31, 1994, 1995 and 1996.
Such fees are based upon the amount of time the facility and advanced equipment
housed there are made available to the Company. In addition to the usage fees,
the Company paid Deluxe $879,419, $1,153,286 and $5,870,780 for the years ended
December 31, 1994, 1995 and 1996, respectively, for the purchase of goods and
services and equipment at net book value. The increase in 1996 relates primarily
to design services provided for 1998 model year production. Deluxe does not
directly employ its own workforce,
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<PAGE> 63
but rather, employees of the Company are made available to Deluxe on an as
needed basis, for which Deluxe pays the Company a fee. During the years ended
December 31, 1994, 1995 and 1996, the Company made sales to Deluxe of
$1,083,780, $1,080,000 and $1,080,000 respectively, and Deluxe paid the Company
$2,075,266, $3,286,861 and $9,632,131, respectively, for time spent by the
Company's employees on Deluxe business.
Harper Properties of Clinton Township Limited Partnership ("Harper
Properties") and Realven Corporation ("Realven") lease to the Company its Harper
facility (the "Harper Lease") and the machinery and equipment located at such
facility (the "Realven Lease"), respectively, pursuant to operating leases which
terminate on June 7, 1999. Harper Properties is a limited partnership in which
the living trusts of Mr. Winget and his wife, Alicia, and an affiliated company
are the general partners and Mr. Winget, members of his family, A. James Schutz,
an Executive Manager of the Company, and Michael G. Torakis, an Executive
Manager of the Company, are the limited partners. Realven is a corporation
wholly owned by Mr. Winget and his wife, Alicia. The Harper Lease provides for
semi-annual lease payments of $872,000, and the Realven Lease provides for
semi-annual lease payments of $218,000. Harper Properties and Realven have the
right to require the Company to enter into negotiations regarding an increase in
the lease payments under the Harper Lease and the Realven Lease, so that lease
payments under these leases will reflect all expenses to Harper Properties,
Realven and their owners. The Company has made several improvements to the
Harper facility and the machinery and equipment leased from Realven, and has
accounted for them as leasehold improvements. At the termination of the Harper
and Realven Leases, Harper Properties and Realven, respectively, will retain the
value, if any, of the leasehold improvements. The Company paid Harper Properties
$1,744,000 in each of the years ended December 31, 1994, 1995 and 1996,
respectively, under the Harper Lease. The Company paid Realven $436,000 in each
of the years ended December 31, 1994, 1995 and 1996, respectively, under the
Realven Lease.
Mr. Winget has since 1991 allowed the Company to use approximately 12
molding machines pursuant to the terms of usage agreements. In January of 1994,
Mr. Winget leased 28 additional injection molding machines to the Company as
part of the expansions of the Harper and Groesbeck facilities. Mr. Winget also
leases to the Company certain injection molding equipment. In February of 1995,
Mr. Winget contributed and assigned his interests in the leases to the various
injection molding machines and equipment to a new entity, Venture Heavy
Machinery Limited Liability Company. The Company paid Mr. Winget and/or Venture
Heavy Machinery Limited Liability Company $1,765,800 in each of the years ended
December 31, 1994, 1995 and 1996, respectively, under the usage agreements.
Venture Real Estate Acquisition Company and Venture Equipment Acquisition
Company, each wholly owned by Mr. Winget's living trust, acquired a 176,000
square foot injection molding facility and the machinery and equipment located
therein (including 35 molding machines), on February 4, 1994. The Company
entered into usage agreements for such facility (the Masonic facility),
machinery and equipment, the terms of which were reviewed and approved by the
Fairness Committee. During 1994, 1995 and 1996 the Company paid $728,570,
$584,075 and $1,277,431, respectively, to Venture Real Estate Acquisition
Company and Venture Equipment Acquisition Company pursuant to these agreements.
During 1994, 1995 and 1996 the Company purchased machinery and equipment
from VAC for a total cash purchase price of $717,242, $82,185 and $49,161,
respectively. In each of the equipment purchases, the price paid by the Company
was the affiliated seller's net book value of such assets.
BUSINESS RELATIONSHIPS
The Company maintains ongoing business relationships with affiliates, as
set forth below.
Nova Corporation ("Nova") is a corporation in which Windall Industries, a
corporation in which Mr. Winget owns a significant equity interest, owns 49% and
a former Executive Manager of the Company owns the controlling 51% interest.
Nova is a successor to Windall Industries' business. Nova supplies the Company
with certain small parts or components of large assemblies that are sold to the
Company's customers. The Company paid Nova $3,147,372, $3,651,666 and $2,286,308
for the years ended December 31, 1994, 1995 and 1996, respectively. In
connection with this relationship, the Company has provided Nova with
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various raw materials at cost and receives commission income, for which Nova
paid the Company $1,937,061, $1,381,575 and $811,659 in the years ended December
31, 1994, 1995 and 1996. Nova sells products to customers other than the
Company, and has and will compete with the Company for certain contracts. Nova
paid the Company $131,760, $162,300 and $162,300 pursuant to machinery and
equipment operating leases for the years ended December 31, 1994, 1995 and 1996,
respectively. The Company paid Windall Industries usage fees of $84,000 in each
of the years ended December 31, 1994, 1995 and 1996.
Venture Sales and Engineering ("VS&E") and Venture Foreign Sales
Corporation ("VFS"), corporations wholly owned by Mr. Winget, serve as the
Company's outside sales agencies for sales of products manufactured at the
Company's Vemco, Inc., Venture Industries and Venture Grand Rapids facilities.
Currently, the Company pays VS&E and VFS, in the aggregate, a sales commission
of 3% on all production sales. The Company paid VS&E, $5,926,653, $6,071,627 and
$6,391,229 in the years ended December 31, 1994, 1995 and 1996, respectively.
During 1994, VFS was established to handle foreign sales and the Company paid
VFS $258,000, $0 and $0 in 1994, 1995 and 1996, respectively.
VAC has, since 1991, performed sequencing and value-added assembly of parts
manufactured at the Company's Grand Blanc facility. The Company paid VAC
$10,909,874, $8,040,717 and $3,268,109 in the years ended December 31, 1994,
1995 and 1996, respectively, under this arrangement. During the years ended
December 31, 1994, 1995 and 1996, the Company made sales to VAC of $136,709,
$56,782 and $68,743 respectively. Beginning October 1, 1996 the manufacturing
services previously provided by VAC have been contracted to MAST Services LLC, a
company in which N. Matthew Winget, Mr. Winget's son, owns a minority interest.
Services for the period ending December 31, 1996 were $265,386.
MANAGEMENT SERVICES
Venture Service Company ("Venture Service") provides administrative
services and insurance to Deluxe, Windall Industries, VS&E and VAC. Deluxe,
Windall Industries, VS&E and VAC paid the Company $896,838, $652,093 and
$1,787,112 in the years ended December 31, 1994, 1995 and 1996, respectively.
Venture Asia Pacific Pty. Ltd. and its subsidiaries ("VAP") were provided
with management and sales services by the Company and paid the Company
$2,356,702 and $5,097,688 for 1995 and 1996, respectively. In addition, VAP also
reimbursed the Company for certain other expenditures made on its behalf and
assigned certain tooling contracts to the Company.
Pompo Insurance & Indemnity Company Ltd. ("Pompo"), a Barbados corporation
indirectly wholly owned by Mr. Winget, was incorporated in 1992 under the
Barbados Exempt Insurance Act. The Company purchases insurance from Pompo to
cover certain medical claims by the Company's employees, certain workers
compensation claims and a portion of a litigation claim. The Company has
accounted for this arrangement using the deposit method wherein the full amount
of the estimated liability for such claims is recorded in other liabilities and
the premiums paid to Pompo are recorded in other assets until such time that the
claims are settled. The Company remains primarily liable for any amounts in
excess of insurance coverage or any amounts not paid by Pompo under these
coverages. If a liability is settled for less than the amount of the premium
paid to Pompo, a portion of the excess is available as a premium credit on
future insurance. The Company paid Pompo premiums in the amounts of $500,000 in
the year ended December 31, 1994 for insurance coverage. No additional amounts
were paid in 1995 and 1996, however, the Company received and utilized a premium
credit of $651,100 and $210,910, respectively. In 1994, the litigation claim
insured by Pompo was settled and paid. As a result, the Company received and
utilized a premium credit for $560,000 in 1994.
OTHER
From time to time, the Company pays certain expenses on behalf of Mr.
Winget which he is obligated to repay to the Company. Such amounts payable by
Mr. Winget do not bear interest and are payable on demand. Mr. Winget's
indebtedness to the Company for such expenses was $90,276, $105,872 and $0 at
December 31,
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<PAGE> 65
1994, 1995, and 1996, respectively. The highest amount of such indebtedness
outstanding at any one time during such periods was $105,872.
Mr. Winget and his wife, Alicia, own the Acropolis Resort, which consists
of several separate units and a lodge near Gaylord, Michigan, a resort community
north of Detroit. The Company leases this facility from Mr. Winget primarily for
use by the Company's employees, who are permitted to use the facility on an
availability basis. Cumulative leasehold improvements to this facility through
December 31, 1996 aggregate $135,700. The Company's lease obligation to Mr.
Winget is based upon the actual utilization of the facility by the Company's
employees, provided that the Company is required to pay for the use of 500 room
nights per calendar year (approximately $25,000) whether or not such rooms are
rented. The Company paid Mr. Winget $90,121, $76,371 and $76,670 in the years
ended December 31, 1994, 1995 and 1996, respectively, under this arrangement.
Farm and Country Real Estate Company ("Farm and Country"), a corporation
wholly owned by Mr. Winget, leases to the Company approximately 84 acres of raw
land adjacent to the Company's Grand Blanc facility on a month-to-month basis.
This lease provides for monthly rental payments of $16,100. Rent paid in 1994,
1995 and 1996 was $95,200 (including $15,000 of prepaid rent), $178,200 and
$193,200, respectively.
Mr. Winget and Patent Holdings, Inc., a corporation wholly owned by Mr.
Winget, have granted to the Company non-exclusive, royalty free licenses to
certain patents which have been issued under applications filed by Mr. Winget,
as assignee. Mr. Winget and the affiliated companies also generally permit the
Company to utilize proprietary technologies or processes, such as REAP, which
are developed by Deluxe and the affiliated companies. The licenses are
perpetual, but provide that the licensor may negotiate a reasonable royalty in
the event that Mr. Winget or an Excluded Person (as defined in the Indenture) no
longer owns at least 80% of the beneficial interest of the Trust.
On July 1, 1996, Venture Industries Corporation and its affiliated
companies (not including the Trust or Venture Canada) (the "Venture
Guarantors"), along with VIC Management, L.L.C. ("VIC"), a limited liability
company wholly owned, directly or indirectly, by Mr. Winget, entered into an
agreement guaranteeing up to $3.5 million of the obligations of Atlantic
Automotive Components, L.L.C. ("Atlantic") to RIC Management Corp. ("RIC"). This
guarantee is one of a series of transactions whereby VIC acquired RIC's minority
interest in Atlantic. Deluxe agreed to fully indemnify the Venture Guarantors
for all amounts paid under the guarantee.
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THE TRUST
Venture Holdings Trust was established December 28, 1987 by Mr. Winget by
agreement (the "Trust Agreement") with a financial institution as Trustee.
Effective October 19, 1993, Mr. Winget assumed the duties of sole Trustee (the
"Trustee"). The Trust owns, directly or indirectly, all of the outstanding
capital stock of, or equity interests in, each of the Issuers.
Mr. Winget is the sole beneficiary of the Trust. He has the power to
terminate the Trust, but the Trust may only terminate upon his death, when
certain obligations specified in the Trust Agreement are no longer outstanding
or when the capital stock has been transferred to Venture Holdings Corporation
in accordance with the terms of the Trust Agreement. Upon a termination of the
Trust, the stock of the Issuers (other than Venture Holdings Corporation) will
be distributed in accordance with the Trust Agreement. Mr. Winget may not
transfer his beneficial interest in the Trust except in connection with a
termination of the Trust or upon his death. Mr. Winget has limited authority to
amend the Trust Agreement. The Trust cannot engage in any business or activity,
except for agreements related to the outstanding indebtedness of the Company.
See "Capitalization" and "Description of Certain Indebtedness."
Upon the death, disability, or unavailability of Mr. Winget, except for its
administrative duties in connection with the holding of the assets of the Trust
and receiving income on those assets, the successor Trustee may not take action
with respect to the assets of the Trust without the prior consent of the
"Special Advisor." Actions that the Trustee may not take without the prior
consent of the Special Advisor include (i) borrowing money or incurring other
obligations; (ii) disposing of the trust assets; (iii) making loans to the
Subsidiaries; (iv) making investments, except investment of funds in specified
money-market funds; and (v) exercising any of its rights as a shareholder in the
subsidiaries of the Trust.
The following sets forth the organizational structure of the Company.
ORGANIZATIONAL GRAPH
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The following summary of certain of the Company's debt agreements does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, such agreements, including the definitions therein of terms not
defined herein.
SENIOR CREDIT FACILITY
General. The Senior Credit Facility provides for up to $200 million of
revolving credit availability (the "Commitment Amount"), including the issuance
of letters of credit. The Issuers are parties to the Senior Credit Facility. The
obligations under the Senior Credit Facility are secured by substantially all
the assets of the Issuers, including all of the capital stock of the Issuers
(other than the Trust) and 65% of the stock of Venture Canada. As such, the
Notes are effectively subordinated to indebtedness incurred under the Senior
Credit Facility. The Senior Credit Facility permits the Company to borrow up to
the lesser of a borrowing base computed as a percentage of accounts receivable
and inventory, or $200 million less the amount of any letter of credit issued
against the Senior Credit Facility.
Interest Rates. Interest on outstanding borrowings under the Senior Credit
Facility is payable quarterly and accrues at an annual rate equal to either (i)
the Alternate Prime Rate (as defined in the Senior Credit Facility) plus the
Applicable Margin (as defined in the Senior Credit Facility), or (ii) the London
Interbank Offered Rate plus the Applicable Margin (a "LIBOR-based Rate"). The
Applicable Margin will be based upon the Company's Ratio of Total Debt to
trailing four quarter EBITDA (as defined in the Senior Credit Facility) as
follows:
<TABLE>
<CAPTION>
RATIO OF TOTAL
FUNDED APPLICABLE MARGIN
DEBT TO EBITDA PRIME/LIBOR
- -------------- -----------------
<S> <C>
>= 3.75 1.00% / 2.25%
>= 3.50 .75% / 2.00%
>= 3.25 .50% / 1.75%
>= 2.875 .25% / 1.50%
>= 2.50 0% / 1.25%
< 2.50 0% / 1.00%
</TABLE>
Maturity and Optional Prepayments. All borrowings under the Senior Credit
Facility mature in June, 2003, except that the aggregate principal amount
outstanding may not exceed the Commitment Amount at any time. Borrowings under
the Senior Credit Facility are prepayable at any time without premium or
penalty, except that any prepayment of a LIBOR-based Rate loan that is made
prior to the end of the applicable interest period shall be subject to
reimbursement of breakage costs.
Covenants. The Senior Credit Facility contains customary covenants,
including without limitation, reporting and other affirmative covenants;
financial covenants, including ratio of total debt to EBITDA, net worth, fixed
charge coverage ratio, interest coverage ratio (each as defined in and
calculated pursuant to the Senior Credit Facility); and negative covenants,
including restrictions on incurrence of other indebtedness, payment of cash
dividends and other distributions, liens in favor of parties other than the
lenders under the Senior Credit Facility, certain guaranties of obligations of
or advances to others, sales of material assets not in the ordinary course of
business, and restrictions on mergers and acquisitions.
Events of Default. The Senior Credit Facility contains customary events of
default including non-payment of principal, interest or fees; violation of
covenants; inaccuracy of representations or warranties; cross-defaults to
certain other indebtedness; and bankruptcy.
SENIOR SUBORDINATED NOTES
The Issuers are jointly and severally liable under an indenture relating to
the Senior Subordinated Notes. Venture Canada is also a guarantor under the
indenture relating to the Senior Subordinated Notes. As of June 30, 1997,
approximately $79 million was outstanding under the Senior Subordinated Notes.
Interest on the Senior Subordinated Notes is payable semi-annually. The
indenture for the Senior Subordinated Notes contains covenants with respect to
the following matters: (i) limitations on additional indebtedness; (ii)
limitations on restricted payments; (iii) limitations on transactions with
affiliates; (iv) corporate
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opportunities; (v) the application of the proceeds of certain asset sales; (vi)
limitations on liens; (vii) limitations on issuance of guarantees of and pledges
for indebtedness; (viii) limitation on equity interests of subsidiaries; (ix)
limitations on dividends and other payment restrictions affecting subsidiaries;
(x) limitations on other senior subordinated indebtedness; (xi) limitations on
new lines of business; and (xii) restrictions on mergers, consolidations and
transfers of all or substantially all of the assets of the issuers to another
person.
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DESCRIPTION OF NOTES
The Original Notes were issued pursuant to an indenture (the "Indenture")
dated as of July 1, 1997, by and among the Trust, Vemco, Inc., Vemco Leasing,
Inc., Venture Industries Corporation, Venture Holdings Corporation, Venture
Leasing Company, Venture Mold & Engineering Corporation and Venture Service
Company, as co-Issuers (the "Issuers") and The Huntington National Bank, as
trustee (the "Trustee"). The terms of the Indenture apply to the Original Notes
and to the Series B Notes to be issued therefor pursuant to the Exchange Offer
(all such Notes are referred to herein collectively as the "Notes"). Set forth
below is a summary of certain provisions of the Notes. This summary does not
purport to be complete and is qualified in its entirety by reference to all of
the provisions of the Indenture. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to them in the Indenture. Wherever
particular provisions of the Indenture are referred to in this summary, such
provisions are incorporated by reference as a part of the statements made and
such statements are qualified in their entirety by such reference. A copy of the
form of Indenture is available upon request. For purposes of this summary, the
term "Trust" refers only to Venture Holding Trust and not to any of its
subsidiaries. The term "Subsidiaries" as used herein, however, does not include
Unrestricted Subsidiaries.
GENERAL
The Notes are senior unsecured, joint and several obligations of the
Issuers, ranking pari passu in right of payment with all other senior
obligations of the Issuers. The Notes are limited in aggregate principal amount
to $205 million. The Notes may, and under certain circumstances shall, be
jointly and severally irrevocably and unconditionally guaranteed on a senior
basis by each of the future Subsidiaries of the Issuers, other than Foreign
Subsidiaries (the "Guarantors"). The guarantees will rank pari passu in right of
payment with all other senior obligations of the Guarantors. The obligations of
each Guarantor under its guarantee and each Issuer under the Notes (other than
the Trust) will be limited in a manner intended to avoid it being deemed a
fraudulent conveyance under applicable law. The Notes will be issued only in
fully registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. The Indenture will designate the Notes Designated Senior
Indebtedness and the Guarantees Designated Guarantor Senior Indebtedness for
purposes of the indenture governing the Senior Subordinated Notes.
The Notes will mature on July 1, 2005. The Notes bear interest at the rate
per annum stated on the cover page hereof from the date of issuance or from the
most recent Interest Payment Date to which interest has been paid or provided
for, payable semi-annually on January 1 and July 1 of each year, commencing
January 1, 1998, to the persons in whose names such Notes are registered at the
close of business on the December 15 or June 15 immediately preceding such
Interest Payment Date. Interest will be calculated on the basis of a 360-day
year consisting of twelve 30-day months.
Principal of, premium, if any, and interest and Liquidated Damages, if any,
on the Notes are payable, and the Notes may be presented for registration of
transfer or exchange, at the office or agency of the Issuers maintained for such
purpose, which office or agency shall be maintained in the Borough of Manhattan,
The City of New York, except as set forth below. At the option of the Issuers,
payment of interest may be made by check mailed to the Holders of the Notes at
the addresses set forth upon the registry books of the Issuers; provided that
all payments with respect to Global Notes and Certificated Notes the holders of
which have given wire transfer instructions to the Issuers and the Paying Agent,
will be required to be made by wire transfer of immediately available funds to
the accounts specified by the holders thereof. No service charge will be made
for any registration of transfer or exchange of Notes, but the Issuers may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Until otherwise designated by the
Issuers, the Issuers' office or agency will be the corporate trust office of the
Trustee presently located at the office of the Trustee in the Borough of
Manhattan, The City of New York.
CERTAIN BANKRUPTCY AND FRAUDULENT CONVEYANCE MATTERS
The Notes are co-issued by the Issuers. Under federal and state fraudulent
conveyance statutes or other legal principles, the Notes or the Guarantees may
be subordinated to existing or future indebtedness of the
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Issuers or the Guarantors, or voided or found not to be enforceable in
accordance with their terms. Among other things, such obligations may be avoided
if a court concludes that such obligations were incurred with intent to hinder,
delay or defraud creditors or for less than reasonably equivalent value or fair
consideration at a time when the Guarantor or Issuer was insolvent, was rendered
insolvent, or was left with inadequate capital to conduct its business. As such,
the obligations of each Issuer (other than the Trust) and Guarantor will be
limited in a manner intended to cause it not to be a fraudulent conveyance under
applicable law, although there can be no assurance that a court would give the
Holder the benefit of such provisions. See "Risk Factors -- Fraudulent
Conveyance."
OPTIONAL REDEMPTION
The Issuers do not have the right to redeem any Notes prior to July 1, 2001
(other than out of the Net Cash Proceeds of a Public Equity Offering, as
described in the next following paragraph). The Notes will be redeemable for
cash at the option of the Issuers, in whole or in part, at any time on or after
July 1, 2001, upon not less than 30 days nor more than 60 days notice to each
Holder of Notes, at the following redemption prices (expressed as percentages of
the principal amount) if redeemed during the 12-month period commencing July 1
of the years indicated below, in each case (subject to the right of Holders of
record on a Record Date to receive interest due on an Interest Payment Date that
is on or prior to such Redemption Date) together with accrued and unpaid
interest and Liquidated Damages, if any, thereon to the Redemption Date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2001........................................................ 104.750%
2002........................................................ 102.375%
2003 and thereafter......................................... 100.000%
</TABLE>
Until July 1, 2000, upon a Public Equity Offering, up to 35% of the
aggregate principal amount of the Notes originally issued may be redeemed at the
option of the Issuers within 120 days of such Public Equity Offering, on not
less than 30 days, but not more than 60 days, notice to each Holder of the Notes
to be redeemed, with cash from the Net Cash Proceeds of such Public Equity
Offering, at 109.500% of principal (subject to the right of Holders of record on
a Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date), together with accrued and unpaid interest and
Liquidated Damages, if any, to the date of redemption; provided, however, that
immediately following such redemption not less than 65% aggregate principal
amount of the Notes originally issued are outstanding.
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a pro rata basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.
The Notes do not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first class mail, at least 30
days and not more than 60 days prior to the date fixed for redemption, to the
Holder of each Note to be redeemed to such Holder's last address as then shown
upon the registry books of the Registrar. Any notice which relates to a Note to
be redeemed in part only must state the portion of the principal amount equal to
the unredeemed portion thereof and must state that on and after the date of
redemption, upon surrender of such Note, a new Note or Notes in a principal
amount equal to the unredeemed portion thereof will be issued. On and after the
date of redemption, interest will cease to accrue on the Notes or portions
thereof called for redemption, unless the Issuers default in the payment
thereof.
CERTAIN COVENANTS
Repurchase of Notes at the Option of the Holder Upon a Change of Control
The Indenture provides that in the event that a Change of Control has
occurred, each Holder of Notes will have the right, at such Holder's option,
pursuant to an irrevocable and unconditional offer by the Issuers
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(the "Change of Control Offer"), to require the Issuers to repurchase all or any
part of such Holder's Notes (provided, that the principal amount of such Notes
must be $1,000 or an integral multiple thereof) on a date (the "Change of
Control Purchase Date") that is no later than 55 Business Days after the
occurrence of such Change of Control, at a cash price equal to 101% of the
principal amount thereof (the "Change of Control Purchase Price"), together with
accrued and unpaid interest and Liquidated Damages, if any, to the Change of
Control Purchase Date. The Change of Control Offer shall be made within 20 days
following a Change of Control and shall remain open for at least 20 Business
Days following its commencement (the "Change of Control Offer Period"). Upon
expiration of the Change of Control Offer Period, the Issuers promptly shall
purchase all Notes properly tendered in response to the Change of Control Offer.
As used herein, a "Change of Control" means (i) any merger or consolidation
of the Trust with or into any person or any sale, transfer or other conveyance,
whether direct or indirect, of all or substantially all of the assets of the
Trust, on a consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction(s), any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable) other than an Excluded
Person is or becomes the "beneficial owner," directly or indirectly, of more
than 40% of the total voting power in the aggregate normally entitled to vote in
the election of directors, managers, or trustees, as applicable, of the
transferee(s) or surviving entity or entities and the Excluded Persons
"beneficially own" a lesser percentage and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of such directors, managers or trustees, as applicable, (ii) any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable) other than an Excluded
Person is or becomes the "beneficial owner," directly or indirectly, of more
than 40% of the total voting power in the aggregate of all classes of Capital
Stock of the Trust then outstanding normally entitled to vote in elections of
directors, managers or trustees and the Excluded Persons "beneficially own" a
lesser percentage and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of such directors,
managers or trustees, as applicable, or (iii) during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of any
such 12-month period constituted the Board of Directors of the Trust (together
with any new directors whose election by such Board or whose nomination for
election by the equity holders of the Trust, (A) with respect to Venture
Holdings Trust was made pursuant to the terms of the Venture Trust Instrument,
and (B) with respect to Venture Holdings Corporation or another successor to the
Trust, or their respective successors, after the occurrence of a Trust
Contribution, (x) was approved by the Beneficiary of Venture Holdings Trust on
or before the date of the Trust Contribution, or (y) was approved by a majority
of the directors of the Trust whose appointment, election or nomination to the
Board of Directors was approved in accordance with the preceding clause (x) or
by this clause (y)) cease for any reason to constitute a majority of the Board
of Directors of the Trust then in office. Notwithstanding anything in this
definition to the contrary, a "Change of Control" shall not be deemed to have
occurred solely as a result of a transaction pursuant to which the Trust is
reorganized or reconstituted as a corporation or a Trust Contribution occurs in
accordance with the provisions described under "Limitation on Merger, Sale or
Consolidation" and no event which is otherwise a "Change of Control" shall have
occurred.
On or before the Change of Control Purchase Date, the Issuers will (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent cash sufficient to
pay the Change of Control Purchase Price (together with accrued and unpaid
interest and Liquidated Damages, if any) of all Notes so tendered and (iii)
deliver to the Trustee Notes so accepted together with an Officers' Certificate
listing the Notes or portions thereof being purchased by the Issuers. The Paying
Agent promptly will pay the Holders of Notes so accepted an amount equal to the
Change of Control Purchase Price (together with accrued and unpaid interest plus
Liquidated Damages, if any), and the Trustee promptly will authenticate and
deliver to such Holders a new Note equal in principal amount to any unpurchased
portion of the Note surrendered. Any Notes not so accepted will be delivered
promptly by the Issuers to the Holder thereof. The Issuers publicly will
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Purchase Date.
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The phrase "all or substantially all" of the assets of the Trust will
likely be interpreted under applicable state law and will be dependent upon
particular facts and circumstances. As a result, there may be a degree of
uncertainty in ascertaining whether a sale or transfer of "all or substantially
all" of the assets of the Trust has occurred.
No assurances can be given that the Issuers will have available sufficient
funds to acquire Notes tendered upon the occurrence of a Change of Control. In
the event that the Issuers are required to purchase outstanding Notes upon the
occurrence of a Change of Control, the Issuers expect that they would seek third
party financing to the extent that they do not have available funds to meet
their purchase obligations. There can be no assurance that the Issuers would be
able to obtain such financing on a timely basis.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws. To the extent that the provisions of any securities laws or
regulations conflict with the terms hereof, the Issuers shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached their obligations under the Indenture or the Notes by virtue thereof.
Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock
The Indenture provides that, except (x) as set forth in this covenant or
(y) by merger or consolidation by and among or between any Issuer or Guarantor,
the Issuers and the Guarantors will not, and will not permit any of their
Subsidiaries to, directly or indirectly, issue, assume, guaranty, incur, become
directly or indirectly liable with respect to (including as a result of an
Acquisition), or otherwise become responsible for, contingently or otherwise
(individually and collectively, to "incur" or, as appropriate, an "incurrence"),
any Indebtedness (including Acquired Indebtedness) or any Disqualified Capital
Stock other than Permitted Indebtedness. Notwithstanding the foregoing, if (i)
no Default or Event of Default shall have occurred and be continuing at the time
of, or would occur after giving effect on a pro forma basis to, such incurrence
of Indebtedness or Disqualified Capital Stock and (ii) on the date of such
incurrence (the "Incurrence Date"), the Consolidated Coverage Ratio of the Trust
for the Reference Period immediately preceding the Incurrence Date, after giving
effect on a Pro Forma Basis to such incurrence of such Indebtedness or
Disqualified Capital Stock and the use of proceeds thereof, would be at least
2.0 to l (the "Debt Incurrence Ratio"), then the Trust may incur such
Indebtedness (including Acquired Indebtedness) or Disqualified Capital Stock,
the Issuers (other than the Trust) and the Guarantors may incur such
Indebtedness (including Acquired Indebtedness) and any other Subsidiaries may
incur Acquired Indebtedness.
Indebtedness or Disqualified Capital Stock of any person which is
outstanding at the time such person becomes a Subsidiary of the Trust (including
upon designation of any subsidiary or other person as a Subsidiary) or is merged
with or into or consolidated with the Trust or a Subsidiary of the Trust shall
be deemed to have been incurred at the time such person becomes such a
Subsidiary of the Trust or is merged with or into or consolidated with the Trust
or a Subsidiary of the Trust, as applicable, and such incurrence is subject to
the immediately preceding paragraph.
Accrual of interest, the accretion of accreted value and the payment of
interest in the form of additional Indebtedness will not be deemed to be an
incurrence of Indebtedness for purposes of this covenant.
For purposes of determining any particular amount of Indebtedness under
this covenant, guarantees, Liens, or obligations with respect to letters of
credit supporting Indebtedness otherwise included in the determination of such
particular amount shall not be included.
Limitation on Restricted Payments
The Indenture provides that the Issuers and the Guarantors will not, and
will not permit any of their Subsidiaries to, directly or indirectly, make any
Restricted Payment if, after giving effect to such Restricted Payment on a pro
forma basis, (1) a Default or an Event of Default shall have occurred and be
continuing, (2) the Trust is not permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Debt
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Incurrence Ratio in the first paragraph of the covenant "Limitation on
Incurrence of Additional Indebtedness and Disqualified Capital Stock," on a Pro
Forma Basis or (3) the aggregate amount of all Restricted Payments made by the
Trust and its Subsidiaries, including after giving effect to such proposed
Restricted Payment, from and after the Issue Date, would exceed the sum of (a)
$10 million, plus (b) 50% of the aggregate Consolidated Net Income of the Trust
and its Consolidated Subsidiaries for the period (taken as one accounting
period), commencing on the first day of the first fiscal quarter ending after
the Issue Date, to and including the last day of the fiscal quarter ended
immediately prior to the date of each such calculation (or, in the event
Consolidated Net Income for such period is a deficit, then minus 100% of such
deficit), plus (c) the aggregate Net Cash Proceeds received by the Trust from a
contribution by the holders of its Capital Stock (other than by the Subsidiaries
of the Trust) or the sale of its Qualified Capital Stock (other than (i) to a
Subsidiary of the Trust and (ii) to the extent applied in connection with a
Qualified Exchange), after the Issue Date, plus (d) the Net Cash Proceeds from
the sale of Investments by the Issuers (other than Permitted Investments) made
after the Issue Date, plus the total Investments, net, without duplication, of
any Indebtedness, in any Unrestricted Subsidiaries designated Subsidiaries,
provided that such amounts, taken with all other amounts distributed on or
realized from such Investments or designations, does not exceed the original
aggregate amount of such Investments.
The immediately preceding paragraph, however, will not prohibit:
(i) a Qualified Exchange;
(ii) the payment of any dividend or distribution on Qualified Capital
Stock within 60 days after the date of its declaration if such dividend
could have been made on the date of such declaration in compliance with the
foregoing provisions, provided the full amount of any Restricted Payment
made pursuant to clause (ii) will be deducted, without duplication, in the
calculation of the aggregate amount of Restricted Payments available to be
made referred to in clause (3) of the immediately preceding paragraph; or
(iii) (a) so long as the Trust is an entity described in Section
1361(a)(1), 1361(c)(2) or 1361(d) of the Code or any similar provision of
state or local law, (x) the Trust shall be permitted to distribute to the
Beneficiary of the Trust (or pay compensation to the Beneficiary of the
Trust in lieu of such distributions) all amounts distributed to the Trust
pursuant to the following clause (y), and (y) the Issuers (other than the
Trust) in the aggregate shall be permitted to make payments to the Trust in
cash as follows, calculated before giving effect to such payments (such
payments to be referred to hereinafter as "Trust Tax Distributions"):
(1) on (or within 15 days prior to) each April 15, June 15,
September 15 and January 15 an amount equal to the minimum federal and
state estimated quarterly income and intangible tax payments required to
be made on such date by the Beneficiary of the Trust in order to prevent
underpayment of estimated income tax pursuant to the rules set forth in
Sections 6654(b) and 6654(d)(1) of the Code or their successors or
supplements and any similar provision of applicable state income and
intangible tax law for any state with respect to which the Issuers
qualify as S corporations for state law purposes, such amount to be
calculated as though such Beneficiary's only income and loss in each
such quarter was an amount equal to the sum of the taxable income and
loss of the Issuers which are S corporations. The foregoing amounts may
be paid so long as (I) such Issuer is and was an S corporation for such
quarter, as defined in Section 1361 of the Code or its successors and
supplements, (II) no Default or Event of Default exists and is
continuing or would thereby occur, (III) special tax counsel to the
Issuers delivers to the Trustee, prior to the payment in respect of such
quarter, an opinion substantially in the form attached to the Indenture
(or, if the Beneficiary of the Trust is disabled or unavailable as
described in Section 3 of the Venture Trust Instrument, such special tax
counsel delivers to the Trustee, prior to the payment in respect of such
quarter, an opinion substantially in the form attached to the
Indenture), (IV) the Issuers have not received a private ruling or a
National Office Technical Advice Memorandum from the Internal Revenue
Service or, in respect of distributions made for state income tax
purposes, a similar ruling from any applicable state or local taxing
authority, that the Trust is not an entity described in
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Section 1361(a)(1), 1361(c)(2) or 1361(d) of the Code, or their
successors and supplements, or any similar provision of state or local
law or there has been a final "determination" (as used in Section 1313
of the Code) or similar state determination to the same effect, and (V)
the Issuers have complied with the terms of clauses (b), (c) and (d)
below. The amount that is distributable pursuant to clause (y) by each
Issuer which is an S corporation in respect of each of the quarters
described above shall be that proportion of the amount of the Trust Tax
Distribution for each such quarter which such Issuer's Tax Income for
such quarter bears to the aggregate Tax Income of all the Issuers which
are S corporations in such quarter. For purposes of the foregoing, "Tax
Income" shall mean one-quarter of an Issuer's actual taxable income for
the year prior to that with respect to which the calculations described
above are being made; and
(2) no later than September 15 of each year, the Issuers shall
cause their tax advisors, which shall be a nationally recognized
accounting firm, to determine the actual amount of federal and state
income tax liability of the Beneficiary of the Trust for the previous
calendar year computed as if the only income and loss of the Beneficiary
in such year was an amount equal to the sum of the taxable income and
loss of the Issuers which are S corporations (the "Actual Tax Amount").
The computation of the Actual Tax Amount made by the Issuers' tax
advisors shall be reviewed and reported on by a nationally recognized
accounting firm, which may be the Issuers' tax advisors. If (A) the
Actual Tax Amount, as determined by such tax advisor, is less than the
aggregate estimated amounts paid pursuant to clause (1) above in respect
of such year (the "Distributed Amounts") and/or (B) if the Actual Tax
Amount is at any time finally determined by the Internal Revenue Service
or a court of competent jurisdiction to be less than that determined by
such tax advisors, the Issuers shall cause the Beneficiary to the Trust,
within 75 days after such difference is determined, to reimburse to the
Trust, with no obligation on the part of the Trust to such Beneficiary
with respect to such reimbursement, the excess of the Distributed
Amounts over the Actual Tax Amount, as finally determined by the tax
advisors, the Internal Revenue Service or court of competent
jurisdiction, as the case may be, or the excess of the Actual Tax
Amount, as determined by the tax advisors, over the Actual Tax Amount as
determined by the Internal Revenue Service or court, as the case may be
(in either case, which excess amount may be offset by any amounts then
or subsequently owed to the Beneficiary by reason of clause (1) above).
If the excess of the Distributed Amounts over the Actual Tax Amount, as
finally determined by the tax advisors, is reimbursed to the Trust after
June 14 of such year, such excess shall bear interest from June 15 to
the date preceding the date it is paid at an interest rate equal to the
overpayment rate established under Section 6621(a)(1) of the Code or its
successor and supplements. Such reimbursed amount (if any) shall then be
reimbursed by the Trust to each of the Issuers that first distributed
such amounts to the Trust. If the Actual Tax Amount, as determined by
the tax advisors, the Internal Revenue Service or court, as the case may
be, is greater than the Distributed Amounts, each of the Issuers which
are S corporations shall distribute to the Trust, and the Trust shall
distribute to the Beneficiary, its share of the excess of the Actual
Amount over the Distributed Amounts, within 75 days after such
difference is determined, provided that no such distribution shall be
made by any of the Issuers unless a nationally recognized accounting
firm shall have reviewed and reported on the computation of the Actual
Tax Amount made by the tax advisors, which may be the same nationally
recognized accounting firm that acts as the Issuers' tax advisors. If
any payment is made (i) in contravention of clause (1) above and paid to
the Beneficiary of the Trust pursuant to clause (x) above or (ii) in
contravention of the proviso to the immediately preceding sentence and
paid to the Beneficiary of the Trust pursuant to the immediately
preceding sentence, the Issuers shall cause the Beneficiary of the Trust
to reimburse to each of the Issuers making such prohibited payment the
amount of such prohibited payment;
(b) in the event of the disability or unavailability of Larry J.
Winget as provided in the Venture Trust Instrument if the Trust remains a
trust (such date, an "S Trust Commencement Date"), (1) the Issuers shall
apply for a private ruling from the Internal Revenue Service to the effect
that each of the Issuers which was an S corporation immediately prior to
such disability or unavailability, as the case may be, qualifies, despite
such disability or unavailability, as an S corporation under Section
1361(a)(1) of the Code and that the Trust is an entity described in Section
1361(c)(2) or 1361(d) of the Code, or their
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successors and supplements; (2) the Trust shall not take any action that
would cause it to have income (as defined in Section 643(b) of the Code, or
its successors and supplements, and Act 340 of Michigan Compiled Acts,
1965, or its successors and supplements, except for corporate distributions
provided for in such act), for any period beginning on the S Trust
Commencement Date and continuing for the duration of such disability or
unavailability in excess of the amount of cash the Trust would be permitted
to distribute in respect of its Equity Interests pursuant to this "--
Limitation on Restricted Payments", provided, however, that if the Trust
shall have received a private letter ruling from the Internal Revenue
Service that it is an entity described in Section 1361(c)(2) of the Code,
or its successors and supplements, the foregoing limitation shall not apply
for the period such ruling is in effect; and (3) the Issuers shall notify
the Trustee of the occurrence of such S Trust Commencement Date no later
than 10 days following such date;
(c) if at any time the Issuers receive notification from the Internal
Revenue Service that any Issuer does not qualify as an S corporation under
Section 1361(a)(1) of the Code, (x) no further distributions shall be made
pursuant to clause (a)(1) above by such Issuer, and (y) the Issuers shall
cause the Beneficiary of the Trust either (A) to reimburse the Trust all
amounts paid by that Issuer pursuant to clause (a)(1) and clause (a)(2)
above with respect to all periods as to which that Issuer did not qualify
as an S corporation, with no obligation on the part of the Trust to such
Beneficiary with respect to such reimbursement, and the Trust shall then
pay such reimbursement to that Issuer, or (B) to reimburse such Issuer such
payments directly, within 75 days after such requirement for reimbursement
is determined; provided that no such reimbursement shall be required to the
extent to which such distribution would otherwise have been permitted,
after taking into account interest, penalties and additions to tax imposed
on such Issuer as a result of its failure to qualify as an S corporation
under Section 1361(a)(1) of the Code, or its successors and supplements. If
the Issuers at any time receive notification from the Internal Revenue
Service that the Trust is not an entity described in Section 1361(a)(1),
1361(c)(2) or 1361(d), or their successors and supplements, as the case may
be, of the Code, or if the Issuers fail to receive a favorable response to
a ruling request described in clause (b) within 360 days after the
disability or unavailability of Larry J. Winget, the Issuers shall take the
actions described in clauses (x) and (y) of the preceding sentence; and
(d) no Trust Tax Distribution may be made to the extent such
distribution would cause the aggregate cumulative amount of Trust Tax
Distributions to exceed the aggregate cumulative Tax Distribution Amounts
for periods completed since the date of the Indenture.
Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Issuers and the Guarantors will not, and
will not permit any of their Subsidiaries to, directly or indirectly, create,
assume or suffer to exist any consensual restriction on the ability of any
Subsidiary of the Trust to pay dividends or make other distributions to or on
behalf of, or to pay any obligation to or on behalf of, or otherwise to transfer
assets or property to or on behalf of, or make or pay loans or advances to or on
behalf of, the Trust or any Subsidiary of the Trust, except (a) restrictions
imposed by the Notes or the Indenture, (b) restrictions imposed by applicable
law, (c) existing restrictions under Indebtedness outstanding on the Issue Date
specified on an exhibit to the Indenture, (d) restrictions under any Acquired
Indebtedness not incurred in violation of the Indenture or any agreement
relating to any property, asset, or business acquired by the Trust or any of its
Subsidiaries, which restrictions in each case existed at the time of
Acquisition, were not put in place in connection with or in anticipation of such
Acquisition and are not applicable to any person, other than the person
acquired, or to any property, asset or business, other than the property, assets
and business so acquired, (e) any such restriction or requirement imposed by
Indebtedness incurred under paragraph (b) of the definition of "Permitted
Indebtedness" provided such restriction or requirement is not materially less
favorable than that imposed by the Credit Agreement as of the Issue Date, (f)
restrictions with respect solely to a Subsidiary of the Trust imposed pursuant
to a binding agreement which has been entered into for the sale or disposition
of all or substantially all of the Equity Interests or assets of such
Subsidiary, provided such restrictions apply solely to the Equity Interests or
assets of such Subsidiary which are being sold, and (g) in connection with and
pursuant to permitted Refinancing Indebtedness,
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replacements of restrictions imposed pursuant to clauses (a), (c) or (d) of this
paragraph that are not materially less favorable than those being replaced and
do not apply to any other person or assets than those that would have been
covered by the restrictions in the Indebtedness so refinanced. Notwithstanding
the foregoing, neither (a) customary provisions restricting subletting or
assignment of any lease entered into in the ordinary course of business,
consistent with industry practice, nor (b) Liens permitted under the terms of
the Indenture on assets securing the Indebtedness under the Credit Agreement
incurred in accordance with the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock" shall in and of themselves be
considered a restriction on the ability of the applicable Subsidiary to transfer
such agreement or assets, as the case may be.
Limitation on Liens Securing Indebtedness
The Issuers and the Guarantors will not, and will not permit any of their
Subsidiaries to, create, incur, assume or suffer to exist any Lien of any kind,
other than Permitted Liens, upon any of their respective assets owned on the
date of the Indenture or upon any income or profits therefrom, unless the
Issuers or the Guarantors provide, and cause their Subsidiaries to provide,
concurrently therewith, that the Notes are equally and ratably so secured,
provided that, if such Indebtedness is Subordinated Indebtedness, the Lien
securing such Subordinated Indebtedness shall be subordinate and junior to the
Lien securing the Notes with the same relative priority as such Subordinated
Indebtedness shall have with respect to the Notes.
Limitation on Sale of Assets and Subsidiary Stock
The Indenture provides that the Issuers and the Guarantors will not, and
will not permit any of their Subsidiaries to, in one or a series of related
transactions, convey, sell, transfer, assign or otherwise dispose of, directly
or indirectly, any of its property, business or assets, including by merger or
consolidation (in the case of a Guarantor or a Subsidiary of an Issuer), and
including any sale or other transfer or issuance of any Equity Interests of any
Subsidiary of the Trust, whether by the Trust or a Subsidiary of either or
through the issuance, sale or transfer of Equity Interests by a Subsidiary of
the Trust, and including any sale and leaseback transaction, other than
surrender of any reverse split dollar insurance policy (any of the foregoing, an
"Asset Sale"), unless (1)(a) within 395 days after the date of such Asset Sale,
the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount") are applied to
the optional redemption of the Notes in accordance with the terms of the
Indenture or to the repurchase of the Notes and any other Pari Passu
Indebtedness which by its terms requires such repurchase pursuant to an
irrevocable, unconditional cash offer (the "Asset Sale Offer") to repurchase
Notes and such Pari Passu Indebtedness at a purchase price of 100% of principal
amount (the "Asset Sale Offer Price") together with accrued and unpaid interest
and Liquidated Damages, if any, to the date of payment, made within 360 days of
such Asset Sale or (b) within 360 days following such Asset Sale, the Asset Sale
Offer Amount is (i) invested (or committed, pursuant to a binding commitment
subject only to reasonable, customary closing conditions, to be invested, and in
fact is so invested, within an additional 90 days) in assets and property (other
than notes, bonds, obligation and securities, except in connection with the
acquisition of a wholly owned Subsidiary) which in the good faith reasonable
judgment of the Board of Directors of the Trust will immediately constitute or
be a part of a Related Business of the Trust or such Subsidiary (if it continues
to be a Subsidiary) immediately following such transaction or (ii) used to
permanently reduce the amount of any Indebtedness permitted pursuant to
paragraph (b) of the definition "Permitted Indebtedness" (including that in the
case of a revolver or similar arrangement that makes credit available, such
commitment is also permanently reduced by such amount), or (c) the Asset Sale
Offer Amount is applied in a combination of (a) and (b), (2) at least 85% of the
total consideration received for such Asset Sale or series of related Asset
Sales consists of cash or Cash Equivalents, provided, however, that more than
15% of the total consideration may consist of consideration other than cash or
Cash Equivalents if (A) the portion of such consideration that does not consist
of cash or Cash Equivalents consists of assets of a type ordinarily used in the
operation of a Related Business to be used by the Issuers or a Subsidiary in the
conduct of a Related Business, (B) the terms of such Asset Sale have been
approved by a majority of the members of the Board of Directors of the Trust and
(C) if the value of the assets being disposed of by the Issuers or such
Subsidiary in such transaction (as determined in good faith by such members of
the Board of Directors) is at least $3 million, the Board of Directors of the
Trust has received a written opinion of a
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nationally recognized investment banking firm to the effect that such Asset Sale
is fair, from a financial point of view, to the Trust and the Trust has
delivered a copy of such opinion to the Trustee, (3) no Default or Event of
Default shall have occurred and be continuing at the time of, or would occur
after giving effect, on a pro forma basis, to, such Asset Sale, and (4) the
Board of Directors of the Trust determines in good faith that the Trust or such
Subsidiary, as applicable, receives fair market value for such Asset Sale.
For purposes of this covenant, "Asset Sale" shall not include a transaction
or series of related transactions for which the Company or its Subsidiaries
receive aggregate consideration of less than $250,000.
The Indenture provides that an acquisition of Notes pursuant to an Asset
Sale Offer may be deferred until the accumulated Net Cash Proceeds from Asset
Sales not applied to the uses set forth in (l) above (the "Excess Proceeds")
exceeds $5 million and that each Asset Sale Offer shall remain open for 20
Business Days following its commencement (the "Asset Sale Offer Period"). Upon
expiration of the Asset Sale Offer Period, the Trust shall apply the Asset Sale
Offer Amount plus an amount equal to accrued and unpaid interest and Liquidated
Damages, if any, to the purchase of all Notes and Pari Passu Indebtedness
properly tendered (on a pro rata basis if the Asset Sale Offer Amount is
insufficient to purchase all Notes and Pari Passu Indebtedness so tendered, such
pro rata basis determined so that the amount of Notes and Pari Passu
Indebtedness purchased bears the same ratio to each other that the total
principal amount of Notes tendered bears to the total Pari Passu Indebtedness
tendered) at the Asset Sale Offer Price (together with accrued interest). To the
extent that the aggregate amount of Notes and Pari Passu Indebtedness tendered
pursuant to an Asset Sale Offer is less than the Asset Sale Offer Amount, the
Trust may use any remaining Net Cash Proceeds for general corporate purposes as
otherwise permitted by the Indenture and following each Asset Sale Offer the
Excess Proceeds amount shall be reset to zero. For purposes of (2) above, total
consideration received means the total consideration received for such Asset
Sale minus the amount of (a) Indebtedness which is not Subordinated Indebtedness
assumed by a transferee which assumption permanently reduces the amount of
Indebtedness outstanding on the Issue Date or permitted pursuant to paragraph
(b), (c) or (d) of the definition "Permitted Indebtedness" (including that in
the case of a revolver or similar arrangement that makes credit available, such
commitment is so reduced by such amount) and (b) property that within 60 days of
such Asset Sale is converted into cash or Cash Equivalents).
Notwithstanding the foregoing provisions of the prior paragraphs, the
following actions shall not constitute Asset Sales:
(i) the Trust and its Subsidiaries may, in the ordinary course of
business, convey, sell, transfer, assign or otherwise dispose of inventory
acquired and held for resale in the ordinary course of business;
(ii) the Trust and its Subsidiaries may convey, sell, transfer, assign
or otherwise dispose of assets in accordance with the covenant "Limitation
on Merger, Sale or Consolidation";
(iii) the Trust and its Subsidiaries may sell or dispose of damaged,
worn out or other obsolete property in the ordinary course of business so
long as such property is no longer necessary for the proper conduct of the
business of the Trust or such Subsidiary, as applicable;
(iv) the Trust and its Subsidiaries may convey, sell, transfer, assign
or otherwise dispose of assets to the Trust or any of its other
Subsidiaries; and
(v) the Trust may contribute all of the Equity Interests of all
Subsidiaries of the Trust (other than any Equity Interests of the
Subsidiary which is to receive such contribution from the Trust) to Venture
Holdings Corporation or other successor to the Trust (a "Trust
Contribution").
All Net Cash Proceeds from an Event of Loss shall be invested, used for
prepayment of Indebtedness, or used to repurchase Notes, all of the foregoing
within the periods and as otherwise provided above in clause 1(a) or 1(b) of the
first paragraph of this covenant.
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In addition to the foregoing, the Trust will not, and will not permit any
Subsidiary to, directly or indirectly make any Asset Sale of any of the Equity
Interests of any Subsidiary except:
(i) pursuant to an Asset Sale of all the Equity Interests of such
Subsidiary; or
(ii) pursuant to an Asset Sale of shares of common stock with no
preferences or special rights or privileges and with no redemption or
prepayment provisions, provided that after such sale the Trust or its
Subsidiaries own at least 50.1% of the voting and economic interests of the
Capital Stock of such Subsidiary.
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws. To the extent that the provisions of any securities
laws or regulations conflict with the terms hereof, the Trust shall comply with
the applicable securities laws and regulations and shall not be deemed to have
breached its obligations hereunder by virtue thereof.
Limitation on Transactions with Affiliates
(a) The Indenture provides that the Issuers and Guarantors will not, and
will not permit any of their Subsidiaries to, on or after the Issue Date, enter
into any contract, agreement, arrangement or transaction with any Affiliate (an
"Affiliate Transaction"), or any series of related Affiliate Transactions (other
than Exempted Affiliate Transactions), (i) unless it is determined that the
terms of such Affiliate Transaction are fair and reasonable to the Issuer,
Guarantor or Subsidiary, and no less favorable to the Issuer, Guarantor or
Subsidiary than could have been obtained in an arm's-length transaction with a
non-Affiliate.
(b) In addition, the Issuers and Guarantors will not, and will not permit
any of their Subsidiaries to, enter into an Affiliate Transaction, or any series
of related Affiliate Transactions, unless (i) with respect to such Transaction
or Transactions involving or having a fair value of more than $250,000 the Trust
has (x) obtained the approval of majorities of the Board of Directors of the
Issuer, Guarantor or Subsidiary, as the case may be, or the Trust in the case of
Venture Canada, and the Fairness Committee of the Issuer, Guarantor or
Subsidiary, as the case may be, or the Trust in the case of Venture Canada, in
the exercise of their fiduciary duties and (y) either (1) obtained the approval
of majorities of the disinterested directors of the Issuer, Guarantor or
Subsidiary, as the case may be, or the Trust in the case of Venture Canada, if
any, and Independent members of the Fairness Committee or (2) obtained an
opinion of a qualified independent financial advisor to the effect that such
Transaction or Transactions are fair to the Issuer, Guarantor or Subsidiary, as
the case may be, from a financial point of view and (ii) with respect to such
Transaction or Transactions involving or having a fair value of more than $3.0
million, the Trust has (x) obtained the approval of majorities of the Board of
Directors of the Issuer, Guarantor or Subsidiary, as the case may be, or the
Trust in the case of Venture Canada, and the Fairness Committee of the Issuer,
Guarantor or Subsidiary, as the case may be, or the Trust in the case of Venture
Canada, in the exercise of their fiduciary duties, including majorities of the
disinterested directors of the Issuer, Guarantor or Subsidiary, as the case may
be, if any, and the Independent members of the Fairness Committee, and (y)
delivered to the Trustee an opinion of a qualified independent financial advisor
to the effect that such Transaction or Transactions are fair to the Issuer,
Guarantor or such Subsidiary, as the case may be, from a financial point of
view.
(c) Each Issuer, Guarantor and each of their Subsidiaries (other than
Venture Canada) will establish and maintain a Fairness Committee, at least one
of whose members shall be independent.
Corporate Opportunities
Larry J. Winget agreed pursuant to the Corporate Opportunity Agreement for
the benefit of the Holders of the Notes that if any corporate opportunity,
business opportunity, proposed transaction, acquisition, disposition,
participation, interest, or other opportunity to acquire an interest in any
business or prospect in the same business or in any business reasonably related
to the business of the Trust or any of its Subsidiaries or in any machinery or
equipment useful in the business of the Trust or any of its Subsidiaries (a
"Business Opportunity") comes to his attention or shall be made available to him
or any of his Affiliates, a complete and
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accurate description of such Business Opportunity, including all of the terms
and conditions thereof and the identity of all other Persons involved in the
Business Opportunity, shall be promptly presented in writing to the Board of
Directors of each of the Issuers and the Fairness Committee of each of the
Issuers and each Issuer shall be entitled to pursue and take advantage of such
Business Opportunity, either directly or through a wholly owned Subsidiary, and
Larry J. Winget shall not, nor shall any of his Affiliates (other than the Trust
or any wholly owned Subsidiary of the Trust), pursue or take advantage of a
Business Opportunity unless majorities of the Board of Directors of each of the
Issuers and the Fairness Committee of each of the Issuers (including majorities
of each Issuer's disinterested directors, if any, and Independent members of the
Fairness Committee) have determined that it is not in the interests of such
Issuer to pursue or take advantage of such Business Opportunity.
Notwithstanding the foregoing, Business Opportunities (1) relating to the
purchase of machinery and equipment or real estate and not constituting a
business within the meaning of Section 11.01(d) of Regulation S-X of the
Commission or (2) relating to the sale of goods and services by an Affiliate in
the ordinary course of business as conducted as of the Issue Date shall not be
subject to the Corporate Opportunity Agreement.
Limitation on Merger, Sale or Consolidation
The Indenture provides that the Trust will not consolidate with or merge
with or into another person or sell, lease, convey or transfer all or
substantially all of its assets (computed on a consolidated basis), whether in a
single transaction or a series of related transactions, to another person or
group of affiliated persons or adopt a plan of liquidation, unless (i) either
(a) the Trust is the continuing entity or (b) the resulting, surviving or
transferee entity or, in the case of a plan of liquidation, the entity which
receives the greatest value from such plan of liquidation is a corporation
organized under the laws of the United States, any state thereof or the District
of Columbia and expressly assumes by supplemental indenture all of the
obligations of the Trust in connection with the Notes and the Indenture; (ii) no
Default or Event of Default shall exist or shall occur immediately after giving
effect on a pro forma basis to such transaction; (iii) immediately after giving
effect to such transaction on a pro forma basis, the Consolidated Net Worth of
the consolidated surviving or transferee entity or, in the case of a Plan of
Liquidation, the entity which receives the greatest value from such plan of
liquidation is at least equal to the Consolidated Net Worth of the Trust
immediately prior to such transaction; and (iv) immediately after giving effect
to such transaction on a Pro Forma Basis, the consolidated resulting, surviving
or transferee entity or, in the case of a plan of liquidation, the entity which
receives the greatest value from such plan of liquidation would immediately
thereafter be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Debt Incurrence Ratio set forth in the covenant "Limitation on
Incurrence of Additional Indebtedness and Disqualified Capital Stock."
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Trust or consummation of a plan of liquidation in
accordance with the foregoing, the successor corporation formed by such
consolidation or into which the Trust is merged or to which such transfer is
made or, in the case of a plan of liquidation, the entity which receives the
greatest value from such plan of liquidation shall succeed to, and be
substituted for, and may exercise every right and power of, the Trust under the
Indenture with the same effect as if such successor corporation had been named
therein as an Issuer, and the Trust shall be released from the obligations under
the Notes and the Indenture except with respect to any obligations that arise
from, or are related to, such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries, the Trust's interest in which constitutes all or
substantially all of the properties and assets of the Trust shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Trust.
Notwithstanding anything contained in the Indenture to the contrary, the
Trust is permitted to contribute all of the Equity Interests of the Subsidiaries
then held by the Trust (other than the Equity Interests of the Subsidiary which
is to receive such contribution from the Trust) to Venture Holdings Corporation
or other successor to the Trust (a "Trust Contribution"), provided that (A) any
successor or surviving corporation is
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organized and existing under the laws of the United States, any state thereof or
the District of Columbia, (B) such contribution or reorganization is not
materially adverse to Holders of the Notes; it being understood, however, that
such contribution or reorganization shall not be considered materially adverse
to Holders of the Notes solely because the successor or surviving corporation is
subject to income taxation as a corporate entity, (C) immediately after giving
effect to such transaction, no Default or Event of Default exists, (D) the
actions comprising such contribution or reorganization (e.g., the contribution
of stock of the Subsidiaries, or the issuance of stock of the corporation in
exchange for assets of or Equity Interests in the Trust or in exchange for stock
of a corporation holding such Equity Interests, or the merger or consolidation
of such corporations) will not themselves directly result in material income tax
liability to the successor or surviving corporation, (E) the successor or
surviving corporation has assumed all obligations of the Trust, pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee, under
the Notes and the Indenture and (F) Holders of the Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
contribution or reorganization and will be subject to federal income tax on the
same amounts, in the same manner, and at the same time as would have been the
case if such contribution or reorganization had not occurred. If the successor
or surviving corporation after a Trust Contribution is not a corporation
described in Section 1361(a)(1) of the Code, the Trust's ability to make Trust
Tax Distributions must terminate prior to such contribution or reorganization
(except with respect to tax distributions in respect of taxable periods ending
on or prior to the date such contribution or reorganization is effective for
relevant tax purposes), other than tax distributions in respect of
Beneficiaries' income tax liability that results from the actions comprising
such contribution or reorganization. The Trust shall deliver to the Trustee
prior to such contribution or reorganization an officers' certificate covering
clauses (A) through (F) and the preceding sentence of this paragraph, stating
that such contribution or reorganization and such supplemental indenture comply
with the Indenture, and an opinion of counsel covering clauses (A), (D), (E) and
(F) above and the preceding sentence of this paragraph.
The Indenture provides that no Guarantor or Issuer (other than the Trust)
shall consolidate or merge with or into (whether or not such Guarantor or Issuer
is the surviving person) another person (other than an Issuer or Guarantor)
unless (i), subject to the provisions of "Release of Guarantors and Certain
Issuers", the person formed by or surviving any such consolidation or merger (if
other than such Guarantor or Issuer) assumes all the obligations of such
Guarantor or Issuer pursuant to a supplemental indenture in form reasonably
satisfactory to the Trustee, pursuant to which such person shall unconditionally
guarantee or assume, on a senior basis, all of such Guarantor's or Issuer's
obligations under the Indenture on the terms set forth in the Indenture; and
(ii) immediately before and immediately after giving effect to such transaction
on a pro forma basis, no Default or Event of Default shall have occurred or be
continuing and, if there is an incurrence of Indebtedness as a result of such
transaction, no Default or Event of Default shall have occurred on a Pro Forma
Basis.
Limitation on Lines of Business
The Indenture provides that the Issuers and Guarantors will not, and will
not permit any of their Subsidiaries to, directly or indirectly engage to any
substantial extent in any line or lines of business activity other than that
which, in the reasonable good faith judgment of the Board of Directors of the
Trust, is a Related Business.
Future Subsidiary Guarantors
The Indenture provides that all future Subsidiaries of the Issuers, other
than Foreign Subsidiaries, may, and after the Senior Subordinated Notes are no
longer outstanding shall, jointly and severally guarantee, irrevocably and
unconditionally, all principal, premium, if any, and interest and Liquidated
Damages, if any, on the Notes on a senior basis.
Release of Guarantors and Certain Issuers
The Indenture provides that upon the sale or disposition (whether by
merger, stock purchase, asset sale or otherwise) of a Guarantor or Issuer (other
than the Trust) of all or substantially all of its assets to an entity which is
not a Guarantor or Issuer or the designation of a Subsidiary to become an
Unrestricted Subsidiary, which transaction is otherwise in compliance with the
Indenture (including, without limitation, the provisions
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of the covenant "Limitations on Sale of Assets and Subsidiary Stock"), such
Guarantor or Issuer will be deemed released from its obligations under its
Guarantee of the Notes or the Notes, as the case may be; provided, however, that
any such termination shall occur only to the extent that all obligations of such
Guarantor or Issuer under all of its guarantees of, and under all of its pledges
of assets or other security interests which secure, any Indebtedness of the
Trust or any other Subsidiary shall also terminate upon such sale, disposition
or designation.
Limitation on Status as Investment Company
The Indenture prohibits the Trust, the Guarantors and their Subsidiaries
from being required to register as an "investment company" (as that term is
defined in the Investment Company Act of 1940, as amended), or from otherwise
becoming subject to regulation under the Investment Company Act.
Payments for Consent
None of the Issuers, the Guarantors or any of their Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture, the Notes or the Guarantees unless such consideration is
offered to be paid or agreed to be paid to all Holders of the Notes who so
consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
Limitation on Amendments to Agreements
The Trust shall not permit to be amended, modified or changed in any manner
the Venture Trust Instrument except that the Trust may make amendments,
modifications or changes which individually or in the aggregate are not adverse
to the interests of the Holders of the Notes. Without limiting the foregoing,
amendments to the Venture Trust Instrument reasonably necessary to conform to
the requirements of Section 1361(c)(2) or 1361(d) of the Code, or their
successors or supplements, shall not be deemed adverse to the interests of the
Holders of the Notes. The Trust will not amend, modify or in any way alter the
Corporate Opportunity Agreement in any manner adverse to the Trust or any of its
Subsidiaries.
REPORTS
The Indenture provides that whether or not the Trust is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Trust
shall deliver to the Trustee and, to each Holder within 15 days after it is or
would have been (if it were subject to such reporting obligations) required to
file such with the Commission, annual and quarterly financial statements
substantially equivalent to financial statements that would have been included
in reports filed with the Commission, if the Trust were subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with respect
to annual information only, a report thereon by the Trust's certified
independent public accountants as such would be required in such reports to the
Commission, and, in each case, a management's discussion and analysis of
financial condition and results of operations which would be so required. In
addition, the Issuers have agreed that, for so long as any Notes remain
outstanding, from and after the time the Trust files a registration statement
with the Commission with respect to the Notes, they will file such reports with
the Commission, provided that the Commission will accept such filings.
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as:
(i) the failure by the Issuers to pay any installment of interest on
the Notes as and when the same becomes due and payable and the continuance
of any such failure for 30 days,
(ii) the failure by the Issuers to pay all or any part of the
principal, or premium, if any, on the Notes when and as the same becomes
due and payable at maturity, redemption, by acceleration or otherwise,
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including, without limitation, payment of the Change of Control Purchase
Price or the Asset Sale Offer Price, or otherwise,
(iii) the failure by any Issuer, Guarantor or Subsidiary to observe or
perform any other covenant or agreement contained in the Notes or the
Indenture or by Larry J. Winget to observe and perform any covenant or
agreement contained in the Corporate Opportunity Agreement and the
continuance of such failure for a period of 30 days after written notice is
given to the Trust by the Trustee or to the Trust and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Notes
outstanding,
(iv) certain events of bankruptcy, insolvency or reorganization in
respect of the Issuers or any of their Material Subsidiaries,
(v) a default in Indebtedness of any Issuer, Guarantor or any of
their Subsidiaries with an aggregate principal amount in excess of $5
million which is either a default in payment of principal or as a result
of which the maturity of such Indebtedness has been accelerated prior to
its stated maturity,
(vi) final unsatisfied judgments not covered by insurance aggregating
in excess of $5 million, at any one time rendered against any Issuer,
Guarantor or any of their Subsidiaries and not stayed, bonded or discharged
within 60 days, and
(vii) any Guarantee shall for any reason cease to be, or be asserted
in writing by any Material Subsidiary or any Issuer not to be, in full
force and effect, enforceable in accordance with its terms, except to the
extent contemplated by the Indenture.
The Indenture provides that if a Default occurs and is continuing, the Trustee
must, within 90 days after the occurrence of such Default, give to the Holders
notice of such Default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv), above, relating to the Issuers or any Material
Subsidiary), then in every such case, unless the principal of all of the Notes
shall have already become due and payable, either the Trustee or the Holders of
25% in aggregate principal amount of the Notes then outstanding, by notice in
writing to the Trust (and to the Trustee if given by Holders) (an "Acceleration
Notice"), may declare all principal and premium, if any, determined as set forth
below, and accrued interest and Liquidated Damages, if any, thereon to be due
and payable immediately. If an Event of Default specified in clause (iv) above,
relating to the Trust or any Material Subsidiary occurs, all principal and
premium, if any, and accrued interest and Liquidated Damages, if any, thereon
will be immediately due and payable on all outstanding Notes without any
declaration or other act on the part of Trustee or the Holders. The Holders of a
majority in aggregate principal amount of Notes generally are authorized to
rescind such acceleration if all existing Events of Default have been cured or
waived.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Issuers with
the principal intention of avoiding payment of the premium that the Issuers
would have had to pay if the Issuers then had elected to redeem the Notes
pursuant to the optional redemption provisions of the Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes. If an Event of Default
occurs prior to July 1, 2001 by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Issuers with the principal intention of
avoiding the prohibition on redemption of the Notes prior to July 1, 2001, then
the premium specified in the Indenture shall also become immediately due and
payable to the extent permitted by law upon the acceleration of the Notes.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default, except a default
in the payment of principal of or interest on any Note not yet cured or a
default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holder of each outstanding Note affected.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee will be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
Holders, unless such Holders have offered to the Trustee reasonable security or
indemnity. Subject to all provisions of the Indenture and applicable law, the
Holders of
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a majority in aggregate principal amount of the Notes at the time outstanding
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.
The Issuers are required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Issuers are required upon
becoming aware of any default or Event of Default, to deliver to the Trustee a
statement specifying such default or Event of Default.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Issuers may, at their option and at any
time, elect to have their obligations and the obligations of the Guarantors
discharged with respect to the outstanding Notes ("Legal Defeasance"). Such
Legal Defeasance means that the Issuers shall be deemed to have paid and
discharged the entire indebtedness represented by, and the Indenture shall cease
to be of further effect as to, all outstanding Notes and Guarantees, except as
to (i) rights of Holders to receive payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due from the
trust funds; (ii) the Issuers' obligations with respect to such Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or
stolen Notes, and the maintenance of an office or agency for payment and money
for security payments held in trust; (iii) the rights, powers, trust, duties,
and immunities of the Trustee, and the Issuers' obligations in connection
therewith; and (iv) the Legal Defeasance provisions of the Indenture. In
addition, the Issuers may, at their option and at any time, elect to have the
obligations of the Issuers and the Guarantors released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including nonpayment, nonpayment of
guarantees, bankruptcy, receivership, rehabilitation and insolvency events)
described under "Events of Default" will no longer constitute an Event of
Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, U.S. legal tender, U.S. Government Obligations or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such Notes on the stated date for
payment thereof or on the redemption date of such principal or installment of
principal of, premium, if any, or interest and Liquidated Damages, if any, on
such Notes, and the Holders of Notes must have a valid, perfected, exclusive
security interest in such trust; (ii) in the case of the Legal Defeasance, the
Issuers shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to Trustee confirming that (A) the Issuers have
received from, or there has been published by the Internal Revenue Service, a
ruling or (B) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Holders of such Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred; (iii) in the case of Covenant
Defeasance, the Issuers shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to such Trustee confirming
that the Holders of such Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred; (iv) no Default or Event of Default shall occur and be continuing on
the date of such deposit or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under, the
Indenture or any other material agreement or instrument to which the Issuers or
any of their Subsidiaries is a party or by which the Issuers or any of their
Subsidiaries is bound; (vi) the Issuers shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Issuers with
the intent of preferring the Holders of such Notes over any other
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creditors of the Issuers or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Issuers or others; and (vii) the Issuers
shall have delivered to the Trustee an Officers' Certificate and an opinion of
counsel, each stating that the conditions precedent provided for in, in the case
of the Officers' Certificate, (i) through (vi) and, in the case of the opinion
of counsel, clauses (i) (with respect to the validity and perfection of the
security interest), (ii), (iii) and (v) of this paragraph have been complied
with.
If the funds deposited with the Trustee to effect Legal Defeasance or
Covenant Defeasance are insufficient to pay the principal of, premium, if any,
and interest and Liquidated Damages, if any, on the Notes when due, then the
obligations of the Issuers under the Indenture will be revived and no such
defeasance will be deemed to have occurred, provided, however, that if such
insufficiency is as to amount only, the Issuers will have 5 Business Days after
notice of the same from the Trustee to make up such insufficiency before the
Indenture is revived.
AMENDMENTS AND SUPPLEMENTS
The Indenture contains provisions permitting the Issuers, the Guarantors
and the Trustee to enter into a supplemental indenture for certain limited
purposes without the consent of the Holders. With the consent of the Holders of
not less than a majority in aggregate principal amount of the Notes at the time
outstanding, the Issuers, the Guarantors and the Trustee are permitted to amend
or supplement the Indenture or any supplemental indenture or modify the rights
of the Holders; provided that no such modification may, without the consent of
each Holder affected thereby: (i) change the Stated Maturity on any Note, or
reduce the principal amount thereof or the rate (or extend the time for payment)
of interest thereon or any premium payable upon the redemption thereof, or
change the place of payment where, or the coin or currency in which, any Note or
any premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), or
reduce the Change of Control Purchase Price or the Asset Sale Offer Price or
alter the provisions (including the defined terms used therein) regarding the
right of the Issuers to redeem the Notes in a manner adverse to the Holders, or
(ii) reduce the percentage in principal amount of the outstanding Notes, the
consent of whose Holders is required for any such amendment, supplemental
indenture or waiver provided for in the Indenture, or (iii) modify any of the
waiver provisions, except to increase any required percentage or to provide that
certain other provisions of the Indenture cannot be modified or waived without
the consent of the Holder of each outstanding Note affected thereby, or (iv)
cause the Notes or any Guarantee to become subordinate in right of payment to
any other Indebtedness.
NO PERSONAL LIABILITY
The Indenture provides that neither the trustee, grantor, Beneficiaries or
special advisors to the Trust, nor any direct or indirect shareholder, employee,
officer, director or agent (including independent members of the Fairness
Committees) of the Issuers and the Subsidiaries shall have any personal
liability in respect of the obligations of the Issuers or the Subsidiaries under
the Indenture, the Notes or the Guarantees by reason of his, her or its status
as such.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness or Disqualified Capital Stock of
any person existing at the time such person becomes a Subsidiary of the Trust,
including by designation, or is merged or consolidated into or with the Trust or
one of its Subsidiaries; provided, however, that Indebtedness of such person
that is redeemed, defeased, retired or otherwise repaid at the time of or
immediately upon consummation of the transaction by which such person becomes or
merges with or into a Subsidiary of the Company shall not be Acquired
Indebtedness.
"Acquisition" means the purchase or other acquisition of any person or
substantially all the assets of any person or line of business of such person by
any other person, whether by purchase, merger, consolidation, or other transfer,
and whether or not for consideration.
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"Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Trust. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, provided, that, with respect to an ownership interest in the Trust
and its Subsidiaries a Beneficial Owner of 10% or more of the total voting power
normally entitled to vote in the election of directors, managers or trustees, as
applicable, shall for such purposes be deemed to constitute control.
"Average Life" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of the
products (a) of the number of years from the date of determination to the date
or dates of each successive scheduled principal payment of such security or
instrument and (b) the amount of each such respective principal payment by (ii)
the sum of all such principal payments.
"Beneficial Owner" or "beneficial owner" has the meaning attributed to it
in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue
Date), whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time.
"Beneficiary" means (i) any beneficiary of the Trust while it is a trust or
(ii) any shareholder of a successor corporation to the Trust after a Trust
Contribution.
"Board of Directors" means (A) either the board of directors or managers of
any Issuer or Subsidiary, as the case may be, or any duly authorized committee
of either such board and (B), in the case of the Trust, the Special Advisor of
the Trust; provided that (i), in the event the Special Advisor's rights, duties
and powers are assumed by the Successor Special Advisor Group, "Board of
Directors" means the Successor Special Advisor Group of the Trust and (ii), in
the event the Trust is reorganized as a corporation or a Trust Contribution
shall occur, "Board of Directors" means the board of directors of the successor
corporation.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any person, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that person or any trust
beneficiary interests.
"Capitalized Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on the balance sheet in
accordance with GAAP.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), or (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $250 million, or (iii) commercial paper issued by others rated at
least A-1 or the equivalent thereof by Standard & Poor's Corporation or at least
P-1 or the equivalent thereof by Moody's Investors Service, Inc., or (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (ii) above, or (v) any money
market deposit accounts including those of the Trustee issued or offered by a
domestic commercial bank having capital and surplus in excess of $250 million,
or (vi) investments in money market funds which invest substantially all their
assets in securities of the type described in clauses (i), (ii) and (iii) above
and in the case of (i), (ii), and (iii) maturing within one year after the date
of acquisition.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Compensation" means any compensation which would be required to be
disclosed pursuant to Item 402 of Regulation S-K of the Commission, but
excluding the granting of restricted stock awards, stock options and SARs
required to be disclosed in columns (f) and (g) of the Summary Compensation
Table of such Item.
"Consolidated Coverage Ratio" of any person on any date of determination
(the "Transaction Date") means the ratio, on a Pro Forma Basis, of (a) the
aggregate amount of Consolidated EBITDA of such person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of, but only to the extent that the obligations giving
rise to such Consolidated Fixed Charges would no longer be obligations
contributing to such person's Consolidated Fixed Charges subsequent to the
Transaction Date) during the Reference Period.
"Consolidated EBITDA" means, with respect to any person, for any period,
the Consolidated Net Income of such person for such period adjusted to add
thereto (to the extent deducted from revenues in determining Consolidated Net
Income), without duplication, the sum of (i) consolidated income and Michigan
single business tax expense, (ii) consolidated depreciation and amortization
expense, provided that consolidated depreciation and amortization of a
Subsidiary that is a less than wholly owned Subsidiary shall only be added to
the extent of the equity interest of such person in such Subsidiary, (iii) other
non-cash charges of such person and its Subsidiaries reducing Consolidated Net
Income for such period, (iv) Consolidated Fixed Charges and (v) Trust Tax
Distributions.
"Consolidated Fixed Charges" of any person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such person and its
Consolidated Subsidiaries for such period, including (i) original issue discount
and non-cash interest payments or accruals on any Indebtedness, (ii) the
interest portion of all deferred payment obligations, and (iii) all commissions,
discounts and other fees and charges owed with respect to bankers' acceptances
and letters of credit financings and currency and Interest Swap and Hedging
Obligations, in each case to the extent attributable to such period, and (b) the
product of (x) the amount of dividends accrued or payable (or guaranteed) by
such person or any of its Consolidated Subsidiaries in respect of preferred
stock (other than by Subsidiaries of such person to such person or such person's
wholly owned Subsidiaries) and (y) one minus the then current effective
consolidated federal, state and local tax rate, of such person, expressed as a
decimal. For purposes of this definition, interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
in good faith by such person to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP.
"Consolidated Net Income" means, with respect to any person for any period,
the net income (or loss) of such person and its Consolidated Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period,
adjusted to exclude (only to the extent included in computing such net income
(or loss) and without duplication): (a) all gains and losses, net of taxes,
which are extraordinary (as determined in accordance with GAAP) and any gains or
losses, net of taxes and fees and expenses, from the sale or other disposition
of assets outside the ordinary course of business or from the issuance or sale
of any capital stock, (b) the net income of any person, other than a wholly
owned Consolidated Subsidiary, in which such person or any of its Consolidated
Subsidiaries has an interest, except to the extent of the amount of any
dividends or distributions actually paid in cash to such person or a wholly
owned Consolidated Subsidiary of such person during such period, but in any case
not in excess of such person's pro rata share of such person's net income for
such period, (c) the net income or loss of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition, (d)
the net income, if positive, of any of such person's Consolidated Subsidiaries
to the extent that the declaration or payment of dividends or similar
distributions is not at the time permitted by operation of the terms of its
charter or bylaws or any other agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Consolidated
Subsidiary, (e) any gain or loss, net of taxes, realized upon the termination of
any employee benefit plan, or (f) Trust Tax Distributions to the extent not
already deducted.
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"Consolidated Net Worth" of any person at any date means the aggregate
consolidated stockholders' equity or trust principal of such person (plus
amounts of equity attributable to preferred stock) and its Consolidated
Subsidiaries, as would be shown on the consolidated balance sheet of such person
prepared in accordance with GAAP, adjusted to exclude (to the extent included in
calculating such equity), (a) the amount of any such stockholders' equity
attributable to Disqualified Capital Stock or treasury stock of such person and
its Consolidated Subsidiaries, (b) all upward revaluations and other write-ups
in the book value of any asset of such person or a Consolidated Subsidiary of
such person, other than in connection with its acquisition, subsequent to the
Issue Date, and (c) all investments in Subsidiaries that are not Consolidated
Subsidiaries and in persons that are not Subsidiaries.
"Consolidated Subsidiary" means, for any person, each Subsidiary of such
person (whether now existing or hereafter created or acquired) the financial
statements of which are consolidated for financial statement reporting purposes
with the financial statements of such person in accordance with GAAP.
"Credit Agreement" means the credit agreement dated August 26, 1996, as
amended, by and among the Trust, certain of its subsidiaries, certain financial
institutions and NBD Bank, as agent, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit agreement and/or related documents may be amended,
restated, supplemented, restructured, renewed, replaced or otherwise modified
from time to time whether or not with the same agent, trustee, representative
lenders or holders, and, subject to the following provisos, irrespective of any
changes in the terms and conditions thereof, provided that the aggregate
principal amount of Indebtedness outstanding thereunder at any time does not
exceed the greater of (i) $200 million or (ii) the sum of 85% of the net book
value of accounts receivable and 60% of the net book value of inventories, in
each case measured in accordance with GAAP, plus accrued interest and such
additional amounts as may be deemed to be outstanding in the form of Interest
Swap and Hedging Obligations with lenders party to the Credit Agreement, minus
the amount of any such Indebtedness retired with Net Cash Proceeds from any
Asset Sale or assumed by a transferee in an Asset Sale, provided that an
incurrence under the Credit Agreement in excess of the greater of clause (i) or
(ii) may be made pursuant to the Debt Incurrence Ratio. Without limiting the
generality of the foregoing, the term "Credit Agreement" shall include any
amendment, amendment and restatement, renewal, extension, restructuring,
supplement or modification to any Credit Agreement and all refundings,
refinancings and replacements of any Credit Agreement, including any agreement
(i) extending the maturity of any Indebtedness incurred thereunder or
contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder, so long as borrowers and issuers include one or more of the Trust
and its Subsidiaries and their respective successors and assigns or (iii)
otherwise altering the terms and conditions thereof in a manner not prohibited
by the terms hereof.
"Disqualified Capital Stock" means (a) with respect to a person, except as
to any Subsidiary of such person, any Equity Interest of such person that, by
its terms or by the terms of any security into which it is convertible,
exercisable or exchangeable, is, or upon the happening of an event or the
passage of time would be, required to be redeemed or repurchased (including at
the option of the holder thereof) by such person or any of its Subsidiaries, in
whole or in part, on or prior to the Stated Maturity of the Notes and (b) with
respect to any Subsidiary of such person (including with respect to any
Subsidiary of the Trust), any Equity Interests other than any common equity with
no preference, privileges, or redemption or repayment provisions.
"Equity Interest" of any person means any shares, interests, participations
or other equivalents (however designated) in such person's equity (including any
trust beneficiary interests), and shall in any event include any Capital Stock
issued by, or partnership or membership interests in, such person.
"Event of Loss" means, with respect to any property or asset, any (i) loss,
destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"Excess Compensation" means the aggregate Compensation paid by the Trust
and its Subsidiaries in any fiscal year to Larry J. Winget and Family Members to
the extent such aggregate Compensation exceeds the sum of (a) Trust Tax
Distributions paid in such fiscal year as Compensation to the Beneficiary of the
Trust in lieu of distributions and (b) the greater of (i) $1.5 million
multiplied by one plus the percentage increase in
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the Consumer Price Index from July 1, 1997 to the first day of such fiscal year
and (ii) 5% of the sum of, without duplication, (A) Consolidated Net Income of
the Trust for the preceding fiscal year, plus (B) Trust Tax Distributions in the
preceding fiscal year, plus (C) the aggregate amount of Compensation paid by the
Trust and its Subsidiaries to Larry J. Winget and Family Members during the
preceding fiscal year.
"Excluded Person" means Larry J. Winget, his estate or legal
representative, members of his immediate family, all lineal descendants of Larry
J. Winget and all spouses of such lineal descendants (or any trust or entity
whose sole beneficiaries or Equity Interest holders are any one or more of the
foregoing).
"Exempted Affiliate Transaction" means (a) any transaction with an officer
or director in the ordinary course of business, including employee or director
compensation arrangements, (b) payments permitted under the terms of the
covenant discussed above under "Limitation on Restricted Payments" above, (c)
transactions solely between the Trust and any of its Subsidiaries or solely
among Subsidiaries of the Trust and (d) performance of any agreement in
existence on the Issue Date.
"Fairness Committee" means a committee duly established pursuant to the
Venture Trust Instrument and the bylaws of each other Issuer, Guarantor and
Subsidiary without whose approval (and without the approval of a majority of its
Independent members) the Trust, an Issuer, a Guarantor or a Subsidiary shall not
be authorized to enter into any transaction or take any action which pursuant to
the terms of this Indenture requires approval of the Fairness Committee.
"Family Members" means (i) Larry J. Winget's spouse and (ii) each of Larry
J. Winget's parents, children, grandchildren, siblings, mothers and
fathers-in-law, sons and daughters-in-law and brothers and sisters-in-law who
(a) shares the same principal residence as Larry J. Winget and (b) is an officer
or director of the Trust or any of its Subsidiaries or among the five most
highly compensated employees of the Trust or any of its Subsidiaries.
"Foreign Subsidiary" means a Subsidiary not organized under the laws of the
United States or any political subdivision thereof.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession in the United States as in effect on the Issue Date.
"Indebtedness" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such person, except for
accrued current liabilities incurred in the ordinary course of business, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except those incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditors, (iv) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks, (v)
Capitalized Lease Obligations, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such person with respect to any letter of credit;
(b) all net obligations of such person under Interest Swap and Hedging
Obligations; (c) all liabilities and obligations of others of the kind described
in the preceding clause (a) or (b) that such person has guaranteed or that is
otherwise its legal liability or which are secured by any assets or property of
such person; and (d) any and all deferrals, renewals, extensions, refinancing
and refundings (whether direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a), (b) or (c), or this clause (d), whether or not between or among the
same parties, and (e) all Disqualified Capital Stock of such person (measured at
the greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends). For purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
the Indenture, and if such price is based upon, or measured by, the fair
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market value of such Disqualified Capital Stock, such fair market value to be
determined in good faith by the board of directors of the issuer (or managing
general partner of the issuer) of such Disqualified Capital Stock.
"Independent" means, with respect to any Issuer, Guarantor or any of their
Subsidiaries, a person who would qualify as an "independent director" within the
meaning of the rules of the New York Stock Exchange and who (i) shall not
receive any payment or other fees for services to the Trust or any of its
Affiliates (other than for serving as a member of the Fairness Committee of the
Trust or of a Subsidiary of the Trust) and (ii) shall not be an Affiliate,
officer, member or employee of any firm, company or other entity that has
performed services for the Trust or any of its Affiliates during the preceding
three fiscal years or that the Trust or any of its Affiliates proposes to have
perform services if the amount of compensation for such services during any
fiscal year exceeded or would exceed 5% of such firm's gross revenues during any
of its three preceding fiscal years.
"Interest Swap and Hedging Obligation" means any obligation of any person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Investment" by any person in any other person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such person (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities, including any options or warrants, of such other
person; (b) the making by such person of any deposit with, or advance, loan or
other extension of credit to, such other person (including the purchase of
property from another person subject to an understanding or agreement,
contingent or otherwise, to resell such property to such other person) or any
commitment to make any such advance, loan or extension (but excluding accounts
receivable or deposits arising in the ordinary course of business); (c) other
than guarantees of Indebtedness of the Issuers or any Guarantor to the extent
the covenant "Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock" is not violated, the entering into by such person of
any guarantee of, or other credit support or contingent obligation with respect
to, Indebtedness or other liability of such other person; (d) the making of any
capital contribution by such person to such other person; and (e) the
designation by the Board of Directors of the Trust of any person to be an
Unrestricted Subsidiary. The Issuers shall be deemed to make an Investment in an
amount equal to the fair market value of the net assets of any subsidiary (or,
if none of the Issuers or their Subsidiaries has theretofore made an Investment
in such subsidiary, in an amount equal to the Investments being made), at the
time that such subsidiary is designated an Unrestricted Subsidiary, and any
property transferred to an Unrestricted Subsidiary from an Issuer or a
Subsidiary shall be deemed an Investment valued at its fair market value at the
time of such transfer, provided, however, if in any such case such fair market
value exceeds $3 million, such determination of fair market value shall be based
upon an opinion or appraisal by an accounting, appraisal or investment banking
firm of national standing.
"Issue Date" means the date of first issuance of the Notes under the
Indenture.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
security interest, hypothecation or other encumbrance upon or with respect to
any property of any kind, real or personal, movable or immovable, now owned or
hereafter acquired.
"Liquidated Damages" means all liquidated damages owing pursuant to the
Registration Rights Agreement.
"Material Subsidiary" means any Subsidiary of the Trust that is a
"significant subsidiary" of the Trust as defined in Rule 1-02 of Regulation S-X
of the Commission.
"Net Cash Proceeds" means the aggregate amount of cash or Cash Equivalents
received by the Trust in the case of a sale of Qualified Capital Stock and by
the Trust and its Subsidiaries in respect of an Asset Sale
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plus, in the case of an issuance of Qualified Capital Stock upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of the Trust that were issued for cash on or
after the Issue Date, the amount of cash originally received by the Trust upon
the issuance of such securities (including options, warrants, rights and
convertible or exchangeable debt) less, in each case, the sum of all payments,
fees, commissions and expenses (including, without limitation, the fees and
expenses of legal counsel and investment banking fees and expenses) incurred in
connection with such Asset Sale or sale of Qualified Capital Stock, and, in the
case of an Asset Sale only, less (a) the amount (estimated reasonably and in
good faith by the Trust) of income, franchise, sales and other applicable taxes
required to be paid by the Trust Beneficiary or any of its respective
Subsidiaries in connection with such Asset Sale, (b) repayment of Indebtedness
that is required to be repaid in connection with such Asset Sale and (c)
appropriate amounts to be provided by the Trust or any Subsidiary, as the case
may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and reserved by the Trust or any Subsidiary, as
the case may be after such Asset Sale, including, without limitation, pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"Operating Expense or Cost Reduction" means, with respect to the
calculation of a Consolidated Coverage Ratio on a Pro Forma Basis, an operating
expense or cost reduction with respect to an Acquisition, which, in the good
faith estimate of management, will be realized as a result of such Acquisition,
provided that the foregoing eliminations of operating expenses and realizations
of cost reductions shall be of the types permitted to be given effect to in
accordance with Article 11 of Regulation S-X under the Exchange Act as in effect
on the Issue Date and such reduction is subject to negative comfort by the
Trust's independent public accountants.
"Pari Passu Indebtedness" means any Indebtedness of any Issuer that is pari
passu in right of payment to the Securities.
"Permitted Indebtedness" means any of the following:
(a) the Issuers and the Guarantors may incur Indebtedness evidenced by
the Notes and represented by the Indenture up to the amounts specified
therein as of the date thereof;
(b) the Issuers and the Guarantors may incur Indebtedness pursuant to
the Credit Agreement;
(c) the Issuers or any Guarantor may guarantee any Indebtedness of any
other Issuer or any Guarantor that was permitted to be incurred under the
Debt Incurrence Ratio test of the covenant "Limitation on Incurrence of
Additional Indebtedness and Disqualified Stock" or under any other clause
of this definition or Indebtedness existing on the Issue Date;
(d) the Issuers or any Subsidiary may incur Indebtedness under
Interest Swap and Hedging Obligations (provided (i) that such Interest Swap
and Hedging Obligations are designed to protect the Issuers and their
Subsidiaries from fluctuations in interest rates on Indebtedness incurred
in accordance with the Indenture (and are used for bona fide hedging, and
not speculative, purposes), and (ii) the notional principal amount of such
Interest Swap and Hedging Obligations does not exceed the principal amount
of the Indebtedness to which such Interest Swap and Hedging Obligations
relate;
(e) the Issuers or any Subsidiary may incur Indebtedness represented
by letters of credit for the account of the Issuers or such Subsidiary, as
the case may be, in order to provide security for workers' compensation
claims and payment obligations in connection with self-insurance, that,
taken together do not in the aggregate exceed $5.0 million at any time
outstanding.
(f) the Issuers or any Subsidiary may incur Indebtedness arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred in connection with the
disposition of any business, assets or Subsidiary, other than guarantees of
Indebtedness incurred by any person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of financing such
acquisition; provided that the maximum aggregate liability in respect of
all such
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Indebtedness shall at no time exceed the gross proceeds actually received
by the Issuers and the Subsidiary in connection with such dispositions;
(g) the Issuers and the Guarantors, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clause (a) of this definition,
incurred under the Debt Incurrence Ratio test of the covenant "Limitation
on Incurrence of Additional Indebtedness and Disqualified Capital Stock,"
or which is outstanding on the Issue Date so long as such Refinancing
Indebtedness is secured only by the assets that secured the Indebtedness so
refinanced or assets acquired after the Issue Date or the Notes are equally
and ratably secured;
(h) the Issuers and the Guarantors may incur Indebtedness in an
aggregate amount outstanding at any time (including any Indebtedness issued
to refinance, replace, or refund such Indebtedness) of up to $5.0 million,
minus the amount of any such Indebtedness retired with Net Cash Proceeds
from any Asset Sale or assumed by a transferee in an Asset Sale;
(i) the Issuers and the Subsidiaries may incur Indebtedness solely in
respect of bankers acceptances and performance bonds (to the extent that
such incurrence does not result in the incurrence of any obligation to
repay any obligation relating to borrowed money of others), all in the
ordinary course of business in accordance with customary industry
practices, in amounts and for the purposes customary in the Issuers'
industry; provided that the aggregate principal amount outstanding of such
Indebtedness (including any Indebtedness issued to refinance, refund or
replace such Indebtedness) shall at no time exceed $1.0 million; and
(j) The Issuers may incur Indebtedness to each other or to any wholly
owned Subsidiary, and any wholly owned Subsidiary may incur Indebtedness to
any other wholly owned Subsidiary or to any Issuer; provided that, in the
case of Indebtedness of an Issuer, such obligations shall be unsecured and
subordinated in all respects to such Issuer's obligations pursuant to the
Notes and the date of any event that causes a Subsidiary to no longer be a
wholly owned Subsidiary shall be an Incurrence Date.
"Permitted Investment" means (a) Investments in any of the Notes and any
Permitted Indebtedness which is otherwise an Investment; (b) Investments in Cash
Equivalents; (c) any Investment in the Trust or a person in a Related Business,
which is, or as a result of such Investment becomes, a wholly owned Subsidiary
of the Trust; (d) other Investments not to exceed $5.0 million; (e) Investments
in non-cash proceeds taken in connection with an Asset Sale otherwise complying
with "Limitation on Sales of Asset and Subsidiary Stock"; (f) loans or advances
to employees and officers of the Issuers and their Subsidiaries in the ordinary
course of business for bona fide business purposes; (g) Investments in
securities of trade creditors or customers received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers; and (h) a Qualified Exchange.
"Permitted Lien" means (a) Liens incurred in connection with the Credit
Agreement; (b) Liens existing on the Issue Date; (c) Liens imposed by
governmental authorities for taxes, assessments or other charges not yet subject
to penalty or which are being contested in good faith and by appropriate
proceedings, if adequate reserves with respect thereto are maintained on the
books of the company in accordance with GAAP; (d) statutory liens of carriers,
warehousemen, mechanics, materialmen, landlords, repairmen or other like Liens
arising by operation of law in the ordinary course of business provided that (i)
the underlying obligations are not overdue for a period of more than 60 days, or
(ii) such Liens are being contested in good faith and by appropriate proceedings
and adequate reserves with respect thereto are maintained on the books of the
Trust in accordance with GAAP; (e) Liens securing the performance of bids, trade
contracts (other than borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business; (f) easements, rights-of-way, zoning,
similar restrictions and other similar encumbrances or title defects which,
singly or in the aggregate, do not in any case materially detract from the value
of the property subject thereto (as such property is used by the Trust or any of
its Subsidiaries) or interfere with the ordinary conduct of the business of the
Trust or any of its Subsidiaries; (g) Liens arising by operation of law in
connection with judgments, only to the extent, for an amount and for a period
not resulting in an Event of Default with respect thereto; (h) pledges or
deposits made in the ordinary
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course of business in connection with workers' compensation, unemployment
insurance and other types of social security legislation; (i) Liens securing the
Notes; (j) Liens securing Indebtedness of a person existing at the time such
person becomes a Subsidiary or is merged with or into the Trust or a Subsidiary,
provided that such Liens were in existence prior to the date of such
acquisition, merger or consolidation, were not incurred in anticipation thereof,
and do not extend to any other assets; (k) leases or subleases granted to other
persons in the ordinary course of business not materially interfering with the
conduct of the business of the Trust or any of its Subsidiaries or materially
detracting from the value of the relative assets of the Trust or any Subsidiary;
(l) Liens arising from precautionary Uniform Commercial Code financing statement
filings regarding operating leases entered into by the Trust or any of its
Subsidiaries in the ordinary course of business; (m) Liens to secure payment of
a portion of the purchase price of any tangible fixed asset acquired by any
Issuer or any Guarantor if the outstanding principal amount of the Indebtedness
is secured by any such Lien does not at any time exceed the purchase price paid
for such fixed asset, provided that such Lien does not encumber any other asset
at any time owned by any Issuer or any Guarantor, and provided, further, that
not more than one such Lien shall encumber such fixed asset at any one time; and
(n) Liens securing Refinancing Indebtedness incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to the
Holders of the Notes than the terms of the Liens securing such refinanced
Indebtedness, provided that the Indebtedness secured is not increased and the
lien is not extended to any additional assets or property unless the Notes are
equally and ratably secured by such additional assets or the additional assets
were acquired after the Issue Date.
"Pro Forma Basis" means, for purposes of calculating the Consolidated
Coverage Ratio, giving pro forma effect to certain transactions such that, (i)
Acquisitions which occurred during the Reference Period or subsequent to the
Reference Period and on or prior to the Transaction Date shall be assumed to
have occurred on the first day of the Reference Period and any Operating Expense
or Cost Reduction with respect to such Acquisition shall be deducted from such
calculation, (ii) transactions giving rise to the need to calculate the
Consolidated Coverage Ratio shall be assumed to have occurred on the first day
of the Reference Period, (iii) the incurrence of any Indebtedness or issuance of
any Disqualified Capital Stock during the Reference Period or subsequent to the
Reference Period and on or prior to the Transaction Date (and the application of
the proceeds therefrom, including to refinance or retire other Indebtedness)
shall be assumed to have occurred on the first day of such Reference Period
(except that, in making such computation, the amount of Indebtedness under any
revolving credit facility shall be computed based on the average daily balance
during the Reference Period), and (iv) the Consolidated Fixed Charges of such
person attributable to interest on any Indebtedness or dividends on any
Disqualified Capital Stock bearing a floating interest (or dividend) rate shall
be computed on a pro forma basis as if the average rate in effect from the
beginning of the Reference Period to the Transaction Date had been the
applicable rate for the entire period, unless such person or any of its
Subsidiaries is a party to an Interest Swap or Hedging Obligation (which shall
remain in effect for the 12-month period immediately following the Transaction
Date) that has the effect of fixing the interest rate on the date of
computation, in which case such rate (whether higher or lower) shall be used.
"Public Equity Offering" means an underwritten offering of common stock of
the Trust for cash pursuant to an effective registration statement under the
Securities Act.
"Qualified Capital Stock" means any Capital Stock of the Trust that is not
Disqualified Capital Stock.
"Qualified Exchange" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Indebtedness of any Issuer or Capital Stock
of the Trust issued on or after the Issue Date with the Net Cash Proceeds
received by the Trust from the substantially concurrent sale of Qualified
Capital Stock or any exchange of Qualified Capital Stock for any Capital Stock
or Indebtedness of the Trust issued on or after the Issue Date.
"Reference Period" with regard to any person means the four full fiscal
quarters ended immediately preceding any date upon which any determination is to
be made pursuant to the terms of the Notes or the Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem,
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defease, refund, refinance, discharge or otherwise retire for value, in whole or
in part, or (b) constituting an amendment, restatement, modification,
restructuring, replacement or supplement to, or a deferral or renewal of ((a)
and (b) above are, collectively, a "Refinancing"), any Indebtedness or
Disqualified Capital Stock in a principal amount or, in the case of Disqualified
Capital Stock, liquidation preference, not to exceed (after deduction of
reasonable and customary fees and expenses incurred in connection with the
Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
provided, that (A) such Refinancing Indebtedness of any Subsidiary of the Trust
shall only be used to Refinance outstanding Indebtedness or Disqualified Capital
Stock of such Subsidiary, (B) such Refinancing Indebtedness shall (x) not have
an Average Life shorter than the Indebtedness or Disqualified Capital Stock to
be so refinanced at the time of such Refinancing and (y) in all respects, be no
less subordinated or junior, if applicable, to the rights of Holders of the
Notes than was the Indebtedness or Disqualified Capital Stock to be refinanced
and (C) such Refinancing Indebtedness shall have a final stated maturity or
redemption date, as applicable, no earlier than the final stated maturity or
redemption date, as applicable, of the Indebtedness or Disqualified Capital
Stock to be so refinanced.
"Related Business" means the business conducted (or proposed to be
conducted) by the Issuers and their Subsidiaries as of the Issue Date and any
and all businesses that in the good faith judgment of the Board of Directors of
the Trust are reasonably related businesses in the automotive industry.
"Restricted Payment" means, with respect to any person, (a) the declaration
or payment of any dividend or other distribution in respect of Equity Interests
of such person or any parent or Subsidiary of such person, (b) any payment on
account of the purchase, redemption or other acquisition or retirement for value
of Equity Interests of such person or any Subsidiary or parent of such person,
(c) other than with the proceeds from the substantially concurrent sale of, or
in exchange for, Refinancing Indebtedness any purchase, redemption, or other
acquisition or retirement for value of, any payment in respect of any amendment
of the terms of or any defeasance of, any Subordinated Indebtedness, directly or
indirectly, by such person or a parent or Subsidiary of such person prior to the
scheduled maturity, any scheduled repayment of principal, or scheduled sinking
fund payment, as the case may be, of such Indebtedness, (d) any Investment by
such person, other than a Permitted Investment and (e) the payment of any Excess
Compensation; provided, however, that the term "Restricted Payment" does not
include (i) any dividend, distribution or other payment on or with respect to
Equity Interests of an issuer to the extent payable solely in shares of
Qualified Capital Stock of such issuer (and in order to eliminate fractional
shares otherwise created thereby); or (ii) any dividend, distribution or other
payment to the Issuers, or to any of the Guarantors, by the Issuers or any of
their Subsidiaries.
"Stated Maturity," when used with respect to any Note, means July 1, 2005.
"Subordinated Indebtedness" means Indebtedness of an Issuer or a Guarantor
that is subordinated in right of payment to the Notes or Guarantees, as
applicable, in any respect.
"Subsidiary," with respect to any person, means (i) a corporation a
majority of whose Equity Interests with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such person, by such person and one or more Subsidiaries of such person or by
one or more Subsidiaries of such person, (ii) any other person (other than a
corporation) in which such person, one or more Subsidiaries of such person, or
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (iii) a partnership in which such person or a Subsidiary of such person is,
at the time, a general partner. Notwithstanding the foregoing, an Unrestricted
Subsidiary shall not be a Subsidiary of the Trust or of any Subsidiary of the
Trust. Unless the context requires otherwise, Subsidiary means each direct and
indirect Subsidiary of the Trust.
"Tax Distribution Amount" means, in respect of any period after the Issue
Date during which the Trust is an entity described in Section 1361(a)(1),
1361(c)(2) or Section 1361(d) of the Code, an amount, described in good faith by
such Issuers' independent public accountants, which shall be a nationally
recognized accounting firm, equal to the sum of (x) the amount of intangibles
tax actually imposed on the Beneficiary of the Trust in respect of Trust Tax
Distributions for such period and (y)(a) the sum of the highest marginal
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federal income tax rate and highest state and local income tax rate applicable
to the Beneficiary of the Trust on income of the Issuers which are S
Corporations for federal, state or local income tax purposes for such period,
expressed as a percentage, multiplied by (b) such Issuers' taxable income for
such period computed taking into account, without limitation, the deduction for
single business and franchise tax actually imposed on such Issuers; provided
that (i) the foregoing shall be determined by giving effect to the deduction of
relevant state and local income and intangibles taxes for purposes of
determining federal income taxes, such deduction to be computed based on the
state and local income tax rates applicable in clause (y)(a) hereof and the
amount of intangibles tax determined under clause (x) hereof, and (ii) the
foregoing shall be reduced by the amount of cumulative tax losses of such
Issuers from any previous period (to the extent not previously utilized in
computing the Tax Distribution Amounts) since the Closing Date and any
investment tax credits and other tax credits generated by such Issuers.
"Trust" means (1) Venture Holdings Trust, a grantor trust organized under
the laws of the State of Michigan, (2) Venture Holdings Corporation after the
occurrence of a Trust Contribution or (3) any successor Person to Venture
Holdings Trust or Venture Holdings Corporation (after the occurrence of a Trust
Contribution) in accordance with the provisions under "Consolidation, Merger,
Sale of Assets."
"Unrestricted Subsidiary" means any subsidiary of the Trust that does not
own any Capital Stock of, or own or hold any Lien on any property of, the Trust
or any other Subsidiary of the Trust and that shall be designated an
Unrestricted Subsidiary by the Board of Directors of the Trust; provided that
(i) such subsidiary shall not engage, to any substantial extent, in any line or
lines of business activity other than a Related Business, (ii) neither
immediately prior thereto nor after giving pro forma effect to such designation
would there exist a Default or Event of Default and (iii) immediately after
giving effect thereto on a Pro Forma Basis, the Company could incur at least
$1.00 of Indebtedness pursuant to the Debt Incurrence Ratio contained in the
covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock." The Board of Directors of the Trust may designate any
Unrestricted Subsidiary to be a Subsidiary, provided, that (i) no Default or
Event of Default is existing or will occur as a consequence thereof and (ii)
immediately after giving effect to such designation, on a Pro Forma Basis, the
Trust could incur at least $1.00 of Indebtedness pursuant to the Debt Incurrence
Ratio contained in the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock." Each such designation shall be
evidenced by filing with the Trustee a certified copy of the resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions.
"Venture Trust Instrument" means the Agreement, dated December 28, 1987, as
amended, among Larry J. Winget, as Trustee, and Larry J. Winget, as Settlor,
Beneficiary and Special Advisor, as such agreement may be amended in accordance
with the terms of the Indenture.
"wholly owned Subsidiary" means a Subsidiary all the Equity Interests of
which are owned by the Trust or one or more wholly owned Subsidiaries of the
Trust.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the Original Notes have been issued and the
Series B Notes will initially be issued in the form of fully registered Global
Notes, which will be deposited with or on behalf of the Depository and
registered in the name of a nominee of the Depository.
Series B Notes issued in exchange for Original Notes that were originally
issued to or transferred to institutional "accredited investors" as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act or to any other persons
who are not qualified institutional buyers will be issued as Certificated Notes.
Upon the transfer to a qualified institutional buyer of Certificated Notes, such
Certificated Notes will be exchanged for an interest in the Global Notes
representing the principal amount of the Notes being transferred.
The Depository has advised the Issuers that the Depository intends to
follow the procedures described below:
The Depository will act as securities depository for the Global Notes.
The Global Notes will be issued as a fully registered security registered
in the name of Cede & Co. (the Depository's nominee).
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The Depository is a limited-purpose trust company organized under the
New York Banking Law, a banking organization within the meaning of the New
York Banking Law a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. The Depository holds securities that its
participants ("Participants") deposit with the Depository. The Depository
also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other
organizations ("Direct Participants"). The Depository is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the Depository's system is also available to others
such as securities brokers and dealers, banks, and trust companies that
clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The
Rules applicable to the Depository and its Participants are on file with
the Commission.
Purchase of Notes must be made by or through Direct Participants,
which will receive a credit for the Notes on the Depository's records. The
ownership interest of each actual purchaser of each Note represented by the
Global Notes ("Beneficial Owner") is in turn recorded on the Direct and
Indirect Participants' records. Transfers of ownership interests in the
Notes are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Notes, except in
the event that use of the book-entry system for the Notes is discontinued.
Conveyance of Notes and other communications by the Depository to
Direct Participants, by Direct Participants to Indirect Participants, and
by Direct Participants and Indirect Participants to Beneficial Owners are
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Notes are being redeemed, the Depository's practice is to determine by lot
the amount of the interest of each Direct Participant in such issue to be
redeemed.
Neither the Depository nor Cede & Co. will consent or vote with
respect to the Global Notes. Under its usual procedures, the Depository
mails an Omnibus Proxy to the issuer as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the Notes are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Principal of, premium and Liquidated Damages, if any, and interest
payments on the Notes will be made to the Depository. The Depository's
practice is to credit Direct Participants' accounts on the payable date in
accordance with their respective holdings shown on the Depository's records
unless the Depository has reason to believe that it will not receive
payment on the payable date. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form
or registered in "street name", and will be the responsibility of such
Participant and not of the Depository, the Paying Agent or the Issuers,
subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment to the Depository of principal of, premium and
Liquidated Damages, if any, and interest on the Notes are the
responsibility of the Issuers or the Paying Agent, disbursement of such
payments to Direct Participants shall be the responsibility of the
Depository, and disbursement of such payments to the Beneficial Owners
shall be the responsibility of Direct and Indirect Participants.
The information in this section concerning the Depository and the
Depository's book-entry system has been obtained from sources that the Issuers
believe to be reliable, but the Issuers take no responsibility for the accuracy
thereof.
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If the Depository is at any time unwilling, unable or ineligible to
continue as Depository and a successor Depository is not appointed by the
Issuers within 90 days, the Issuers will issue Certificated Notes in exchange
for the Global Notes. In addition, the Issuers may at any time and in their sole
discretion determine not to have any Notes in registered form represented by the
Global Notes and, in such event, will issue Certificated Notes in exchange for
the Global Notes. In any such instance, an owner of a beneficial interest in a
Global Note will be entitled to physical delivery of Certificated Notes
registered in its name. Upon the exchange of the Global Notes for Certificated
Notes, the Global Notes will be cancelled by the Trustee.
EXCHANGE OFFER; REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Issuers and the Initial Purchaser entered into the Registration Rights
Agreement pursuant to which the Issuers agreed, for the benefit of the Holders
of the Original Notes, that they would, at their cost, (i) within 60 days after
the Closing Date file a registration statement under the Securities Act (an
"Exchange Offer Registration Statement") with the Commission with respect to a
registered offer to exchange the Original Notes for the Series B Notes, which
have terms substantially identical in all material respects to the Original
Notes (except that the Series B Notes do not contain terms with respect to
transfer restrictions) and (ii) use their best efforts to cause such Exchange
Offer Registration Statement to be declared effective under the Securities Act
within 120 days after the Closing Date. Upon such Exchange Offer Registration
Statement being declared effective, the Issuers have agreed to offer Series B
Notes in exchange for properly tendered Original Notes. The Issuers also agreed
to keep the Exchange Offer open for not less than 20 business days (or longer if
required by applicable law) after the date notice of such Exchange Offer is
mailed to the Holders of the Original Notes. For each Original Note surrendered
pursuant to such Exchange Offer, the Holder of such Original Notes will receive
the Series B Notes having a principal amount equal to that of the surrendered
Original Notes. Under existing Commission interpretations, the Series B Notes
would in general be freely transferable after the Exchange Offer without further
registration under the Securities Act; provided that in the case of
broker-dealers a prospectus meeting the requirements of the Securities Act must
be delivered as required. The Issuers have agreed for a period of at least 180
days after consummation of the Exchange Offer to make available a prospectus
meeting the requirements of the Securities Act to any broker-dealer for use in
connection with any resale of any such Series B Notes so acquired. A
broker-dealer that delivers such a prospectus to purchasers in connection with
such resales will be subject to certain of the civil liability provisions under
the Securities Act and will be bound by the provisions of the Registration
Rights Agreement (including, without limitation, certain indemnification and
contribution rights and obligations).
Each Holder of the Original Notes who wishes to exchange such Original
Notes for Series B Notes in the Exchange Offer will be required to make certain
representations, including representations that (i) any Series B Notes to be
received by it will be acquired in the ordinary course of its business, (ii) it
has no arrangement with any person to participate in the distribution of the
Series B Notes and (iii) it is not an "affiliate," as defined in Rule 405 of the
Securities Act, of any of the Issuers, or if it is an affiliate of any of them,
it will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable. In addition, if the Holder is not a
broker-dealer, it will be required to represent that it is not engaged in, and
does not intend to engage in, the distribution of the Series B Notes. If the
Holder is a broker-dealer that will receive Series B Notes for its own account
in exchange for the Original Notes that were acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Series B Notes.
In the event that applicable interpretations of the staff of the Commission
do not permit the Issuers to effect an Exchange Offer, or if for any other
reason the Exchange Offer is not consummated within 165 days of the Closing
Date, the Issuers agreed, at their own expense, to (a) as promptly as
practicable, file a shelf registration statement covering resales of the
Original Notes (a "Shelf Registration Statement"), (b) use their best efforts to
cause such Shelf Registration Statement to be declared effective under the
Securities Act as promptly as practicable after the filing of such Shelf
Registration Statement and (c) use their best efforts to keep effective such
Shelf Registration Statement until the earlier of 24 months following the
Closing Date and such time as all of the Original Notes have been sold
thereunder, or otherwise cease to be a Transfer Restricted Security (as defined
in the Registration Rights Agreement). The Issuers agreed, in the event a
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Shelf Registration Statement is required to be filed, to provide to each Holder
of the Original Notes copies of the prospectus which is a part of such Shelf
Registration Statement, notify each such Holder when such Shelf Registration
Statement for the Original Notes has become effective and take certain other
actions that are required to permit unrestricted resales of the Original Notes.
A Holder of the Original Notes who sells such Original Notes pursuant to the
Shelf Registration Statement generally will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement which are applicable to such a
Holder (including certain indemnification and contribution rights and
obligations).
If (a) neither of the registration statements described above is filed on
or before the 60th day following the Closing Date, (b) neither of such
registration statements is declared effective by the Commission on or prior to
the 120th day after the Closing Date (the "Effectiveness Target Date"), (c) an
Exchange Offer Registration Statement becomes effective, and the Issuers fail to
consummate the Exchange Offer within 45 days of the earlier of the effectiveness
of such registration statement or the Effectiveness Target Date, or (d) the
Shelf Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Original Notes during the
period specified in the Registration Rights Agreement (each such event referred
to in clauses (a) through (d) above a "Registration Default"), then the Issuers
will pay to each Holder of the Original Notes, accruing from the date of the
first such Registration Default (or if such Registration Default has been cured,
from the date of the next Registration Default), liquidated damages ("Liquidated
Damages") in an amount equal to one-half of one percent (0.5%) per annum of the
principal amount of the Original Notes held by such Holder during the first
90-day period immediately following the occurrence of such Registration Default,
increasing by an additional one-half of one percent (0.5%) per annum of the
principal amount of such Original Notes during each subsequent 90-day period, up
to a maximum amount of Liquidated Damages equal to two percent (2.0%) per annum
of the principal amount of such Original Notes, which provision for Liquidated
Damages will continue until such Registration Default has been cured. Liquidated
Damages accrued as of any interest payment date will be payable on such date.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the certain United States federal
income tax consequences of the Exchange Offer to a holder of the Original Notes
that is an individual citizen or resident of the United States or a United
States corporation (a "U.S. Holder"). It is based on the Internal Revenue Code
of 1986, as amended to the date hereof (the "Code"), existing and proposed
Treasury regulations, and judicial and administrative determinations, all of
which are subject to change at any time, possibly on a retroactive basis. The
following relates only to the Original Notes, and the Series B Notes received
therefor, that are held as "capital assets" within the meaning of Section 1221
of the Code by U.S. Holders. It does not discuss state, local or foreign tax
consequences, nor does it discuss tax consequences to categories of holders that
are subject to special rules, such as foreign persons, tax-exempt organizations,
insurance companies, banks, and dealers in stocks and securities. Tax
consequences may vary depending on the particular status of an investor. No
rulings will be sought from the Internal Revenue Service with respect to the
federal income tax consequences of the Exchange Offer.
THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISION TO EXCHANGE ORIGINAL
NOTES FOR SERIES B NOTES. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR
CONCERNING THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO
ITS PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO EXCHANGE ORIGINAL NOTES
FOR SERIES B NOTES.
The Exchange Offer
The exchange of Original Notes pursuant to the Exchange Offer should be
treated as a continuation of the corresponding Original Notes because the terms
of the Series B Notes are not materially different from
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the terms of the Original Notes. Accordingly, such exchange should not
constitute a taxable event to U.S. Holders and, therefore, (i) no gain or loss
should be realized by a U.S. Holder upon receipt of a Series B Note; (ii) the
holding period of the Series B Note should include the holding period of the
Original Note exchanged therefor and (iii) the adjusted tax basis of the Series
B Note should be the same as the adjusted tax basis of the Original Note
exchanged therefor immediately before the exchange.
Stated Interest
Stated interest on a Note will be taxable to a U.S. Holder as ordinary
interest income at the time that such interest accrues or is received, in
accordance with the U.S. Holder's regular method of accounting for federal
income tax purposes.
Original Issue Discount
The Original Notes were issued with original issue discount ("OID") in an
amount equal to the excess of the stated principal amount due at maturity over
the issue price of the Notes. As a result, holders who held Original Notes as
part of the initial issuance thereof will be required to include OID in ordinary
income over the period that they hold the Series B Notes. The amount of OID to
be included in income will be determined using a constant yield method, which
will result in a greater portion of such discount being included in income in
the later part of the term of the Series B Notes.
Market Discount
A U.S. Holder of a Note, other than an initial Holder, will be treated as
holding the Note at a market discount (a "Market Discount Note") if the amount
for which such U.S. Holder purchased the Note is less than the Note's principal
amount, subject to a de minimus rule.
In general, any partial payment of principal on, or gain recognized on the
maturity or disposition of, a Market Discount Note will be treated as ordinary
income to the extent that such gain does not exceed the accrued market discount
on such Note. Alternatively, a U.S. Holder of a Market Discount Note may elect
to include market discount in income currently over the life of the Market
Discount Note. Such an election applies to all debt instruments with market
discount acquired by the electing U.S. Holder on or after the first day of the
first taxable year to which the election applies and may not be revoked without
the consent of the Internal Revenue Service.
Market discount accrues on a straight-line basis, unless the U.S. Holder
elects to accrue such discount on a constant yield to a maturity basis. Such
election is applicable only to the Note with respect to which it is made and it
is irrevocable. A U.S. Holder of a Market Discount Note that does not elect to
include market discount in income currently, generally will be required to defer
deductions for interest on borrowings allocable to such Note, in an amount not
exceeding the accrued market discount on such Note, until the maturity or
disposition of such Note.
Sale, Exchange or Retirement of the Notes
A U.S. Holder's tax basis in a Note generally will be its cost plus any
stated interest, market discount or OID that has been recognized as income, but
not yet received in cash. A U.S. Holder generally will recognize gain or loss on
the sale, exchange or retirement of a Note in an amount equal to the difference
between the amount realized on the sale, exchange or retirement and the tax
basis of the Note. Gain or loss recognized on the sale, exchange or retirement
of a Note (excluding amounts received in respect of accrued interest, which will
be taxable as ordinary interest income) generally will be capital gain or loss
and will be long-term capital gain or loss if the Note was held for more than a
year.
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Backup Withholding
Under certain circumstances, a U.S. Holder of a Note may be subject to
"backup withholding" at a 31% rate with respect to payments of interest thereon
or the gross proceeds from the disposition thereof. This withholding generally
applies if the U.S. Holder fails to furnish his or her social security number or
other taxpayer identification number in the specified manner and in certain
other circumstances. Any amount withheld from a payment to a U.S. Holder under
the backup withholding rules is allowable as a credit against such U.S. Holder's
federal income tax liability, provided that the required information is
furnished to the IRS. Corporations and certain other entities described in the
Code and Treasury regulations are exempt from backup withholding if their exempt
status is properly established.
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PLAN OF DISTRIBUTION
EXCHANGE OFFER
Each broker-dealer that receives Series B Notes for its own account in
connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Series B Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to below in
connection with resales of Series B Notes received in exchange for Original
Notes if such Original Notes were acquired by such Participating Broker-Dealers
for their own accounts as a result of market-making activities or other trading
activities. The Issuers have agreed that this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
in connection with resales of such Series B Notes for a period ending 180 days
after the Expiration Date (subject to extension under certain limited
circumstances described herein) or, if earlier, when all such Series B Notes
have been disposed of by such Participating Broker-Dealer. However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of Series B Notes received in exchange for Original Notes
pursuant to the Exchange Offer must notify the Issuers, or cause the Issuers to
be notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at one of
the addresses set forth herein under "The Exchange Offer -- Exchange Agent." See
"The Exchange Offer -- Resales of Series B Notes."
The Issuers will not receive any cash proceeds from the issuance of the
Series B Notes offered hereby. Series B Notes received by broker-dealers for
their own accounts in connection with 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 Series B 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 at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such Series
B Notes.
Any broker-dealer that resells Series B Notes that were received by it for
its own account in connection with the Exchange Offer and any broker or dealer
that participates in a distribution of such Series B Notes may be deemed to be
an "underwriter" within the meaning of the Securities Act, and any profit on any
such resale of Series B 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
is an "underwriter" within the meaning of the Securities Act.
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LEGAL MATTERS
Certain legal matters in connection with the Series B Notes offered hereby
will be passed upon for the Company by Dykema Gossett PLLC, Detroit, Michigan.
EXPERTS
The consolidated financial statements of Venture Holdings Trust as of
December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995 and
1994, and the consolidated financial statements of Bailey Corporation and
Subsidiaries as of July 28, 1996, and for the year then ended, included in this
Prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report appearing herein, and have been so included in reliance
upon their authority as experts in accounting and auditing.
The consolidated financial statements of Bailey Corporation and
Subsidiaries as of July 30, 1995 and the two years in the period ended July 30,
1995 included in this Prospectus have been audited by KPMG Peat Marwick LLP,
independent auditors, as stated in their report appearing herein, and have been
so included in reliance upon their authority as experts in accounting and
auditing.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
VENTURE HOLDINGS TRUST
Independent Auditors' Report................................ F-2
Consolidated Balance Sheets -- December 31, 1996 and 1995
and June 30, 1997 (unaudited)............................. F-3
Consolidated Statements of Income and Trust Principal --
Years Ended December 31, 1996, 1995 and 1994 and Six
Months Ended June 30, 1997 and 1996 (unaudited)........... F-4
Consolidated Statements of Cash Flows -- Years Ended
December 31, 1996, 1995 and 1994 and Six Months Ended June
30, 1997 and 1996 (unaudited)............................. F-5
Notes to Consolidated Financial Statements.................. F-6
BAILEY CORPORATION
Independent Auditors' Report................................ F-19
Independent Auditor's Report................................ F-20
Consolidated Balance Sheets -- July 28, 1996, and July 30,
1995...................................................... F-21
Consolidated Statements of Operations -- Fiscal Years Ended
July 28, 1996, July 30, 1995 and July 31, 1994............ F-22
Consolidated Statements of Stockholders' Equity (Deficit) --
Fiscal Years Ended July 28, 1996, July 30, 1995 and July
31, 1994.................................................. F-23
Consolidated Statements of Cash Flows -- Fiscal Years Ended
July 28, 1996, July 30, 1995 and July 31, 1994............ F-24
Notes to Consolidated Financial Statements.................. F-25
</TABLE>
F-1
<PAGE> 103
INDEPENDENT AUDITORS' REPORT
Trustee of Venture Holdings Trust
Fraser, Michigan
We have audited the accompanying consolidated balance sheets of Venture
Holdings Trust as of December 31, 1996 and 1995, and the related consolidated
statements of income and trust principal and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the consolidated financial position of Venture Holdings Trust as of
December 31, 1996 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
March 27, 1997
Detroit, MI
F-2
<PAGE> 104
VENTURE HOLDINGS TRUST
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- JUNE 30,
1996 1995 1997
---- ---- --------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................ $ 15,436,391 $ 19,003,585 $ 348,188
Accounts receivable, net (Notes 2 & 7)........... 129,668,405 66,942,383 136,723,315
Inventories (Notes 3 & 7)........................ 51,100,052 21,836,388 48,957,732
Prepaid expenses and other (Note 11)............. 14,212,797 761,506 11,371,026
------------ ------------ ------------
Total current assets.......................... 210,417,645 108,543,862 197,400,261
Property, Plant and Equipment, Net (Notes 4 & 7)... 203,974,613 116,298,903 208,015,824
Intangible Assets (Note 5)......................... 51,748,220 0 50,837,775
Other Assets (Notes 1 & 7)......................... 17,587,284 6,759,592 14,110,146
Deferred Tax Asset (Note 11)....................... 14,339,459 0 13,439,102
------------ ------------ ------------
Total Assets....................................... $498,067,221 $231,602,357 $483,803,108
============ ============ ============
LIABILITIES AND TRUST PRINCIPAL
Current Liabilities:
Accounts payable (Note 7)........................ $ 84,821,496 $ 17,638,670 $ 78,461,650
Accrued payroll & taxes.......................... 7,351,941 1,649,174 6,421,948
Accrued interest................................. 4,954,352 3,893,528 6,062,320
Other accrued expenses (Note 5).................. 19,254,872 179,975 12,804,547
Current portion of long-term debt (Note 6)....... 10,631,599 10,828,444 5,484,029
------------ ------------ ------------
Total current liabilities..................... 127,014,260 34,189,791 109,234,494
Other Liabilities (Note 10)........................ 15,911,578 2,280,000 9,993,082
Deferred Tax Liabilities (Note 11)................. 13,017,827 0 13,291,779
Long Term Debt (Note 6)............................ 289,364,393 141,634,574 285,225,752
Commitments and Contingencies (Note 8).............
Trust Principal.................................... 52,759,163 53,497,992 66,058,001
------------ ------------ ------------
Total Liabilities and Trust Principal.............. $498,067,221 $231,602,357 $483,803,108
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 105
VENTURE HOLDINGS TRUST
CONSOLIDATED STATEMENTS OF INCOME AND TRUST PRINCIPAL
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
-------------------------------------------- ---------------------------
1996 1995 1994 1997 1996
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net Sales (Notes 7 &
9)..................... $351,776,672 $251,142,038 $244,111,750 $320,115,012 $125,794,724
Cost of Products Sold
(Note 7)............... 302,939,580 211,261,596 199,716,270 262,159,858 102,130,560
------------ ------------ ------------ ------------ ------------
Gross Profit............. 48,837,092 39,880,442 44,395,480 57,955,154 23,664,164
Selling General and
Administrative Expense
(Note 7)............... 26,587,618 20,129,152 19,199,871 28,563,233 9,724,678
Payments to Beneficiary
in Lieu of Taxes
(Note 7)............... 666,400 576,905 3,405,445 471,597 666,400
------------ ------------ ------------ ------------ ------------
Income from Operations... 21,583,074 19,174,385 21,790,164 28,920,324 13,273,086
Interest Expense......... 19,248,276 15,032,351 14,345,300 14,207,773 7,408,878
------------ ------------ ------------ ------------ ------------
Net Income Before
Extraordinary Items and
Taxes.................. 2,334,798 4,142,034 7,444,864 14,712,551 5,864,208
Tax Provision (Note
11).................... 335,977 0 0 1,413,713 0
------------ ------------ ------------ ------------ ------------
Net Income Before
Extraordinary Items.... 1,998,821 4,142,034 7,444,864 13,298,838 5,864,208
------------ ------------ ------------ ------------ ------------
Net Extraordinary Loss on
Early Retirement of
Debt (Note 12)......... 2,737,650 0 0 0 0
------------ ------------ ------------ ------------ ------------
Net Income (Loss)........ (738,829) 4,142,034 7,444,864 13,298,838 5,864,208
Trust Principal,
Beginning of Period.... 53,497,992 49,355,958 41,911,094 52,759,163 53,497,992
------------ ------------ ------------ ------------ ------------
Trust Principal, End of
Period................. $ 52,759,163 $ 53,497,992 $ 49,355,958 $ 66,058,001 $ 59,362,200
============ ============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 106
VENTURE HOLDINGS TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------------ ------------------------------
1996 1995 1994 1997 1996
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows From Operating
Activities:
Net income (loss).............. $ (738,829) $ 4,142,034 $ 7,444,864 $ 13,298,838 $ 5,864,208
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization............... 22,628,168 16,068,043 14,069,959 16,550,335 9,362,858
Change in accounts
receivable................. (35,789,237) (2,405,872) (22,346,639) (7,054,910) (13,412,358)
Change in inventories........ (4,298,241) (371,462) (7,047,565) 2,142,320 (8,097,363)
Change in prepaid expenses... (4,116,190) (218,460) (68,774) 2,841,771 (1,453,987)
Change in other assets....... (3,504,790) 55,570 1,260,735 2,572,628 (1,827,106)
Change in accounts payable... 32,400,256 (5,728,211) 5,099,807 (6,359,845) 10,790,596
Change in accrued expenses... 21,220,398 (591,459) (1,478,615) (6,272,350) 3,487,688
Change in other
liabilities................ 8,725,068 0 0 (6,258,820) 0
Change in deferred taxes..... (1,321,632) 0 0 1,174,309 0
Net loss on early
extinguishment of debt..... 2,737,650 0 0 0 0
------------ ------------ ------------ ------------ ------------
Net cash (used in)
provided by operating
activities............ 37,942,621 10,950,183 (3,066,228) 12,634,276 4,714,536
Cash Flows From Investing
Activities:
Capital expenditures........... (67,532,784) (20,338,683) (22,798,411) (18,776,591) (23,311,333)
Purchase of Bailey, net of cash
acquired..................... (56,953,593) 0 0 0 0
------------ ------------ ------------ ------------ ------------
Net cash (used in)
investing
activities............ (124,486,377) (20,338,683) (22,798,411) (18,776,591) (23,311,333)
Cash Flows From Financing
Activities:
Net borrowings under revolving
credit agreement............. 91,000,000 0 (5,000,000) (4,000,000) 9,300,000
Net proceeds from issuance of
debt......................... 69,249,007 0 95,656,765 0 6,205,561
Principal payments on debt..... (14,534,795) (655,255) (37,014,105) (4,945,888) (10,554,132)
Payment for early
extinguishment of debt....... (62,737,650) 0 0 0 0
------------ ------------ ------------ ------------ ------------
Net cash (used in)
provided by financing
activities............ 82,976,562 (655,255) 53,642,660 (8,945,888) 4,951,429
------------ ------------ ------------ ------------ ------------
Net Increase (Decrease) in
Cash........................... (3,567,194) (10,043,755) 27,778,021 (15,088,203) (13,645,368)
Cash and Cash Equivalents at
Beginning of Period............ 19,003,585 29,047,340 1,269,319 15,436,391 19,003,585
------------ ------------ ------------ ------------ ------------
Cash and Cash Equivalents at End
of Period...................... $ 15,436,391 $ 19,003,585 $ 29,047,340 $ 348,188 $ 5,358,217
============ ============ ============ ============ ============
Supplemental Cash Flow
Information
Cash paid during the period for
interest..................... $ 18,187,455 $ 15,073,170 $ 12,595,446 $ 13,099,805 $ 4,951,690
============ ============ ============ ============ ============
Income taxes paid (refunded)... $ (2,179,055) $ 0 $ 0 $ 124,000 $ 0
============ ============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 107
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
Organization -- In 1987, the sole shareholder of the Venture Group of
companies contributed all the common stock of the companies to Venture Holdings
Trust (the Trust). Simultaneously, certain property, plant, and equipment was
contributed by the sole shareholder to certain companies owned by the Trust. In
exchange, the shareholder was named the sole beneficiary of the Trust.
The companies included in the Trust are Venture Industries Corporation,
Venture Mold and Engineering Corporation, Venture Industries Canada, Ltd.,
Vemco, Inc., Venture Leasing Company, Vemco Leasing, Inc., Venture Holdings
Corporation, Venture Service Company, Venture Western Michigan LTD., Venture
Grand Rapids L.L.C. and Bailey Corporation and its wholly owned subsidiaries,
Bailey Manufacturing Corporation and Bailey Transportation Products, Inc. Bailey
refers to Bailey Corporation and its wholly owned subsidiaries. The companies
included in the Trust are involved in the design and manufacturing of molded
parts and systems integration for North American automotive original equipment
manufacturers.
The Trust has been established as a grantor trust. The Trust received a
private letter ruling from the Internal Revenue Service confirming that the
Trust meets the requirements of a grantor trust under Section 1361(c)(2)(A)(i)
of the Internal Revenue Code.
Principles of Consolidation -- The consolidated financial statements
include the accounts of Venture Holdings Trust and its wholly owned subsidiaries
(collectively the "Company"). All intercompany accounts and transactions have
been eliminated.
The consolidated financial statements include only those assets and
liabilities which relate to the business of Venture Holdings Trust. These
statements do not include any assets or liabilities attributable to the
beneficiary's individual activities. However, the Company does enter into
various transactions with companies in which the sole beneficiary has an
interest. These transactions are summarized in Note 7-Related Party
Transactions.
Estimates -- The preparation of the Company's financial statements in
conformity with generally accepted accounting principals requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents -- Highly liquid investments with an initial
maturity of three months or less are classified as cash equivalents.
Inventories -- Manufactured parts inventories are stated at the lower of
cost or market using the first-in, first-out method. Inventory also includes
costs associated with building molds under contract. Molds owned by the Company
and used in the Company's manufacturing operations are transferred to tooling,
in property, plant and equipment, when the molds are operational.
Property and Depreciation -- Property, plant, and equipment are recorded at
cost. Depreciation is computed by the straight-line method over the estimated
useful lives of the various classes of assets. Tooling is amortized on a piece
price or straight line basis over the related production contract, generally 3
to 7 years. The principal estimated useful lives are as follows:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Building and improvements................................... 10-40
Machinery and equipment, and automobiles.................... 3-20
</TABLE>
Leasehold improvements are amortized over the useful life or the term of
the lease. Expenditures for maintenance and repairs are charged to expense as
incurred.
F-6
<PAGE> 108
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Intangible Assets -- The purchase price of companies in excess of the fair
value of net identifiable assets acquired ("goodwill") is amortized over 30
years using the straight-line method. The amount reported at December 31, 1996
and June 30, 1997 (unaudited) was $51.7 million and $50.8 million respectively,
which is net of accumulated amortization.
Long-Lived Assets and for Long-Lived Assets to be Disposed of -- Effective
January 1, 1996, 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" was adopted. This Statement establishes accounting
standards for the impairment of long-lived assets, and certain identifiable
intangibles, and goodwill related to those assets to be held and used and
long-lived and certain identifiable intangibles to be disposed of. The statement
requires that long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. In addition, the Statement requires that certain long-lived assets
and identifiable intangibles to be disposed of be reported at the lower of
carrying amount or fair value less cost to sell. The Company periodically
evaluates the carrying value for impairment, such evaluations are based
principally on the undiscounted cash flows of the operations to which the
goodwill is related.
Revenue Recognition -- Revenue from the sale of manufactured parts is
recognized when the parts are shipped. Revenue from mold sales is recognized
using the completed contract method due to the reasonably short build cycle.
Accounts receivable include unbilled receivables for mold contracts that are
substantially complete. The amounts are billed when final approval has been
received from the customer or in accordance with contract terms. Provision for
estimated losses on uncompleted contracts, if any, is made in the period such
losses are identified.
Other Assets -- Deferred financing costs are included in other assets and
are amortized over the life of the related financing arrangement.
Debt Discount -- The debt discount related to notes payable is amortized
using the interest method over the life of the notes.
Design Cost -- Certain costs incurred for the design of components to be
built for customers are recorded as deferred design costs which are included in
other assets. These costs are recovered based on units produced in each year
over the term of production contracts.
Income Taxes -- Amounts in the financial statements relating to income
taxes relate to Bailey and are calculated using the Statement of Financial
Accounting Standards Board No. 109, "Accounting for Income Taxes" (SFAS 109).
Other significant subsidiaries have elected to be taxed as S corporations
under the Internal Revenue Code. The beneficiary is required to report all
income, gains, losses, deductions, and credits of the S corporations included in
the Trust on his individual tax returns.
Separate Financial Statements -- Separate financial statements for the
Trust and each Subsidiary are not included in this report because each entity
(other than Venture Canada) is jointly and severally liable for the Company's
senior credit agreement and each entity (including Venture Canada) is jointly
and severally liable for the Company's senior subordinated notes either as a
co-issuer or as a guarantor. In addition, the aggregate total assets, net
earnings and net equity of the Subsidiaries of the Trust (with or without
Venture Canada) are substantially equivalent to the total assets, net earnings
and net equity of the Company on a consolidated basis.
Derivative Financial Instruments -- Interest rate swaps are utilized to
reduce the sensitivity of earnings to various market risk and manage funding
costs. The primary market risk include fluctuations in interest rates and
variability in spread relationships (i.e. Prime vs. LIBOR spreads). Interest
rate swaps are used to change the characteristics of its variable rate
exposures. Interest rate differentials resulting from interest rate swap
agreements used to change the interest rate characteristics are recorded on an
accrual basis as an adjustment
F-7
<PAGE> 109
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
to interest expense as part of operating activities. In the event of early
termination of an interest rate swap agreement designated as a hedge, the gain
or loss is deferred, and recognized as an adjustment to interest expense over
the remaining term of the underlying debt.
Unaudited Interim Information. The information as of and for the six month
periods ended June 30, 1996 and 1997 is unaudited but, in the opinion of
management, reflect all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation of the financial position, results
of operations and cash flows for such periods. The results for the six-month
period ended June 30, 1997 are not necessarily indicative of the results
expected for the full year.
2. ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30,
----------------------------- 1997
1996 1995 (UNAUDITED)
---- ---- -----------
<S> <C> <C> <C>
Accounts receivable (including related parties).... $115,469,546 $51,946,462 $124,742,924
Unbilled mold contract receivables................. 16,980,014 16,674,544 15,032,667
------------ ----------- ------------
132,449,560 68,621,006 139,775,591
Allowance for doubtful accounts.................... (2,781,155) (1,678,623) (3,052,276)
------------ ----------- ------------
Net accounts receivable............................ $129,668,405 $66,942,383 $136,723,315
============ =========== ============
</TABLE>
Substantially all of the receivables are from companies operating in the
domestic automobile industry.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30,
---------------------------- 1997
1996 1995 (UNAUDITED)
---- ---- -----------
<S> <C> <C> <C>
Raw material......................................... $23,405,983 $ 8,823,687 $22,589,268
Work-in-process -- manufactured parts................ 4,573,119 664,612 2,928,407
Work-in-process -- molds............................. 12,347,086 8,697,744 12,337,569
Finished goods....................................... 10,773,864 3,650,345 11,102,488
----------- ----------- -----------
Total........................................... $51,100,052 $21,836,388 $48,957,732
=========== =========== ===========
</TABLE>
F-8
<PAGE> 110
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
4. PROPERTY, PLANT, AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30,
------------------------------ 1997
1996 1995 (UNAUDITED)
---- ---- -----------
<S> <C> <C> <C>
Land.............................................. $ 2,613,981 $ 1,510,164 $ 2,480,578
Building and improvements......................... 47,365,371 40,075,679 46,806,904
Leasehold Improvements............................ 17,519,210 17,452,009 18,199,562
Machinery and equipment........................... 205,279,067 113,940,827 226,538,397
Tooling/Design.................................... 11,274,812 7,205,940 12,106,242
Office and transportation equipment............... 5,547,270 3,736,289 6,038,299
Construction in progress.......................... 4,785,003 2,234,312 991,323
------------ ------------ ------------
294,384,714 186,155,220 313,161,305
Less accumulated depreciation and amortization.... 90,410,101 69,856,317 105,145,481
------------ ------------ ------------
Total........................................ $203,974,613 $116,298,903 $208,015,824
============ ============ ============
</TABLE>
Included in property, plant and equipment is equipment and buildings held
under capitalized leases. These assets have a cost basis of $12,699,099 and
accumulated depreciation relating to these assets of $2,999,027 at December 31,
1996 and $4,084,557 at June 30, 1997 (unaudited).
5. BUSINESS ACQUISITIONS
Effective August 26, 1996, the Trust acquired Bailey Corporation and its
subsidiaries, a manufacturer of high quality molded plastic exterior components
for sale to automobile manufacturers for an aggregate purchase price of $57
million. This acquisition price was the cost to acquire all of the outstanding
shares of the company at $8.75 per share including all of the outstanding
options and warrants. The acquisition was accounted for as a purchase with the
purchase price allocated over the estimated fair value of the assets and
liabilities assumed, resulting in goodwill of $50 million. The goodwill is being
amortized over 30 years using the straight-line method. Bailey's assets and
liabilities are included in the accompanying consolidated balance sheet at
values representing a preliminary allocation of the purchase price.
Effective June 3, 1996, the Company acquired certain assets from AutoStyle
Plastics, Inc. for a purchase price of $6.7 million and entered into a capital
lease for all property, plant and equipment. The acquisition was accounted for
as a purchase with the purchase price allocated over the estimated fair value of
the assets and liabilities assumed, resulting in goodwill of $2.6 million. The
goodwill is being amortized over 30 years using the straight-line method.
The consolidated earnings includes the operations of Bailey from August 26,
1996 and the operations for AutoStyle Plastics, Inc. from June 3, 1996.
Unaudited pro forma results of operations represent the consolidation of
historical results for the twelve months ended December 31, 1996 and 1995,
assuming the acquisition of Bailey had occurred at January 1, are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
NUMBERS IN THOUSANDS
<S> <C> <C>
Net sales................................................ $471,118 $413,724
Net (loss) before extraordinary item..................... (887) (22,085)
Net (loss)............................................... (3,402) (22,085)
</TABLE>
F-9
<PAGE> 111
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The transaction had the following non-cash impact on the Company's balance
sheet at August 26, 1996 (in millions of dollars):
<TABLE>
<S> <C>
Current assets.............................................. $ 62
Non-current assets.......................................... 143
Current liabilities......................................... 159
Non-current liabilities..................................... 46
</TABLE>
6. DEBT
Debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------- JUNE 30, 1997
1996 1995 (UNAUDITED)
---- ---- -------------
<S> <C> <C> <C>
Revolving credit agreement......................... $ 91,000,000 $ 0 $ 87,000,000
Term loan A with fluctuating interest rate
currently at 8.375%.............................. 74,450,000 0 71,450,000
Term loan B with fluctuating interest rate
currently at 8.875%.............................. 44,550,000 0 44,325,000
Senior secured notes payable to financial
institutions with interest at 9.89%.............. 0 50,000,000 0
Registered senior subordinated notes payable with
interest at 9.75%................................ 78,940,000 100,000,000 78,940,000
Capital leases with interest at 8.25% to 11.5%..... 6,193,784 0 5,215,547
Installment notes payable with interest at 5.85% to
11.75%........................................... 4,862,208 2,463,018 3,779,234
------------ ------------ ------------
Total......................................... 299,995,992 152,463,018 290,709,781
Less current portion of debt..................... 10,631,599 10,828,444 5,484,029
------------ ------------ ------------
Total......................................... $289,364,393 $141,634,574 $285,225,752
============ ============ ============
</TABLE>
In connection with the acquisition of Bailey Corporation on August 26,
1996, the Company entered into a senior credit agreement with NBD Bank, as
Agent, which includes two term loans, term loan A for $75 million and term loan
B for $45 million and a new revolving loan facility discussed below. The term
loans are payable in quarterly payments of principal and interest beginning
December 31, 1996 and extending through June 30, 2002 and September 30, 2003,
respectively. The annual interest rate is fluctuating for borrowings under these
agreements based upon LIBOR or the bank's prime rate.
The new revolving credit agreement provides up to $94 million through June
30, 2002. The annual interest rate for borrowings under this agreement is a
floating rate based upon LIBOR or the banks prime rate which averaged 8.25% at
December 31, 1996 and 8.5% at June 30, 1997 (unaudited). The Company must pay a
fee of up to .5% of the unused portion of the commitment . The Company has
issued letters of credit of approximately $2.8 million at December 31, 1996, and
June 30, 1997 (unaudited) against this agreement thereby reducing the amount of
the unused credit to $91.2 million at December 31, 1996 and June 30, 1997
(unaudited). Availability is based upon the sum of the accounts receivable and
inventory borrowing bases as those terms are defined in the agreement. See
Subsequent Event Note 14.
Effective June 3, 1996, the Company entered into a $6.2 million capital
lease for plant property and equipment. The lease runs through May of 1998, and
requires monthly payments of principal and interest.
F-10
<PAGE> 112
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The trust has agreed to guarantee up to $3.5 million of obligations of a
related party. In a separate transaction, a different related party agreed to
fully indemnify the trust for all amounts paid under the guarantee.
See also Note 12. Extraordinary Items for information related to the early
retirement of debt.
The senior credit agreement, and the senior subordinated notes contain
certain restrictive covenants relating to cash flow, capital expenditures, debt,
trust principal, trust distributions, leases, and liens on assets.
Scheduled maturities of debt at December 31, 1996 were as follows:
<TABLE>
<S> <C>
1997........................................................ $ 10,631,599
1998........................................................ 13,557,750
1999........................................................ 15,855,657
2000........................................................ 17,388,223
2001........................................................ 21,195,889
Remaining years............................................. 221,366,874
------------
Total.................................................. $299,995,992
============
</TABLE>
To mitigate risk associated with changing interest rates on certain debt,
the Company entered into interest rate swap agreements. The notional amounts are
used to measure the volume of these agreements and do not represent exposure to
credit loss. The impact of interest rate swap agreements resulted in $177,863 of
additional interest expense for 1996 and $294,040 for six months ended June 30,
1997 (unaudited).
<TABLE>
<CAPTION>
NOTIONAL AMOUNTS NOTIONAL AMOUNTS
OUTSTANDING OUTSTANDING
VARIABLE AND WEIGHTED AND WEIGHTED
RATE MATURING AVERAGE RATES AVERAGE RATES
UNDERLYING FINANCIAL INSTRUMENT INDEX THROUGH DECEMBER 31, 1996 JUNE 30, 1997
------------------------------- -------- -------- ----------------- ----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Pay Fixed Interest Rate Swaps Term Loans... LIBOR 2001 $55,000,000 $55,000,000
Weighted average pay rate................ FIXED 2001 6.75% 6.75%
Weighted average receive rate............ LIBOR 2001 5.64% 5.75%
</TABLE>
7. RELATED PARTY TRANSACTIONS
The Company has entered into various transactions with entities that the
sole beneficiary owns or controls. These transactions include leases of real
estate, usage of machinery, equipment, and facilities, purchases and sales of
inventory, performance of manufacturing related services, administrative
services, insurance activities and the receipt and payment of sales commissions.
The Company provides or arranges for others to provide certain related
parties with various administrative and professional services, including
employee group insurance and benefit coverage, property and other insurance,
financial and cash management and administrative services such as data
processing. The related parties are charged fees and premiums for these
services. Administrative services were allocated to the entity for which they
were incurred and certain entities were charged a management fee.
In connection with the above mentioned cash management services, the
Company pays the administrative and operating expenses on behalf of certain
related parties and charges them for the amounts paid which results in
receivables from these related parties.
The Company purchased from Pompo Insurance & Indemnity Company Ltd.
("Pompo"), a corporation indirectly owned by the sole beneficiary, insurance to
cover certain medical claims by the Company's covered employees and certain
workers compensation claims. The Company remains an obligor for any amounts in
F-11
<PAGE> 113
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
excess of insurance coverage or any amounts not paid by Pompo under these
coverages. If a liability is settled for less than the amount of the premium a
portion of the excess is available as a premium credit on future insurance. The
Company has accounted for this arrangement using the deposit method wherein the
full amount of the estimated liability for such claims is recorded in other
liabilities and the premiums paid to Pompo are recorded in other assets until
such time that the claims are settled. The Company made no payments to Pompo in
1996 or for the six month period ended June 30, 1997 (unaudited). At December
31, 1996 and June 30, 1997 (unaudited) the Company had $2,784,500 on deposit
with Pompo. This amount was invested on a short term basis with a related party.
In accordance with the terms of the insurance agreement, in 1996, 1995 and
1994 the Company received and utilized premium credits of $210,910, $651,100 and
$560,000, respectively. For the six month period ended June 30, 1997
(unaudited), no credit was received or utilized.
During 1996, 1995 and 1994, the Company purchased machinery and equipment
for $49,161, $82,185 and $717,242 respectively, from Venture Automotive
Corporation (VAC), an entity wholly owned by the sole beneficiary of the
Company. No machinery or equipment was purchased for the six month periods ended
June 30, 1997 and 1996. VAC provided certain manufacturing related services on
behalf of the Trust for 1994, 1995 and until October 1, 1996. Inventory included
$405,463 and $307,567 at December 31, 1995 and 1994, respectively, that was on
consignment to VAC. As of June 30, 1997 VAC held no inventory.
Beginning October 1, 1996 the manufacturing services previously provided by
VAC were contracted to MAST, Services Inc., a company related to the sole
beneficiary of the Trust but not owned or controlled by him. Services for the
period ending December 31, 1996 and for the six months ended June 30, 1997
(unaudited) were $265,386 and $2,858,072, respectively.
During, 1995 and 1994, the Company purchased machinery and equipment for
$104,005 and, $742,256, respectively from Deluxe Pattern Corporation (Deluxe),
an entity wholly owned by the sole beneficiary of the Company. Deluxe provided
design, model and tool-building services to the Company of $4,279,796, and
$1,049,281 in 1996 and 1995, and $1,882,261 and $4,197,524 for the six months
ended June 30, 1996 and 1997, respectively. The Company received $1,080,000,
$1,080,000 and $1,083,780 from Deluxe in 1996, 1995 and 1994 for equipment
rentals and services. For the six month periods ended June 30, 1997 and 1996
(unaudited), the Company received $540,000 in each period for equipment rentals
and services.
The Company leases buildings and machinery and equipment that have a book
value of approximately $626,000 to an entity in which the sole beneficiary owns
a significant equity interest. During 1996, 1995, 1994, the Company received
$162,300, $162,300, and $131,760, respectively, in connection with this
agreement. For the six month periods ended June 30, 1997 and 1996 (unaudited)
the Company received $81,150 in each period related to these leases.
Venture Sales and Engineering and Venture Foreign Sales Corporation,
corporations wholly owned by the sole beneficiary, serve as the Company's sales
representatives. The Company pays Venture Sales and Engineering and Venture
Foreign Sales Corporation, in the aggregate, a sales commission of 3% on all
production sales.
The Company provided management services to Venture Asia Pacific Pty. Ltd.
(VAP) and its subsidiaries and corporations wholly owned by the sole
beneficiary. The Company received management fees and commissions totaling
$5,097,688 and $2,356,702 from VAP in 1996 and 1995, respectively. For the six
month periods ended June 30, 1997 and 1996 (unaudited) the Company received
$2,029,345 and $2,798,638, respectively. In addition, VAP also reimbursed the
Company for certain other expenditures made on its behalf and assigned certain
tooling contracts to the Company.
F-12
<PAGE> 114
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The following is a summary of transactions with all related parties at
December 31, 1996, 1995 and 1994 and for the years then ended and at June 30,
1996 and 1997 for the six month periods then ended (unaudited):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31 JUNE 30
--------------------------------------- -------------------------
1996 1995 1994 1997 1996
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue received for:
Materials sold, sales
commission and rent
charged..................... $ 2,122,703 $ 2,680,566 $ 3,289,310 $ 775,592 $ 791,798
Providing administrative
services.................... 149,136 149,136 362,811 0 77,675
Insurance and benefit
premiums.................... 420,237 502,957 534,027 90,623 209,343
Management Fees................ 5,097,688 2,356,702 0 2,029,345 2,798,638
Subcontracted services........... 9,632,131 3,286,861 2,075,266 5,434,931 2,814,013
Manufacturing related services
and inventory purchased........ 11,682,790 12,741,663 14,501,977 5,626,681 4,077,943
Rent expense paid................ 2,950,383 2,775,800 2,775,800 1,590,000 1,590,000
Machine and facility usage fees
paid........................... 3,397,101 2,703,446 3,257,692 1,562,114 1,536,338
Commission expense paid.......... 6,391,229 6,071,627 6,184,653 4,621,094 2,607,747
Litigation, workers compensation
and medical insurance
premiums....................... 0 0 500,000 0 0
Property, Plant and Equipment
purchased...................... 49,161 186,190 1,459,498 0 0
Beneficiary receivable........... 0 105,872 90,276 0 0
</TABLE>
The result of these related party transactions is a net receivable, which
is included in accounts receivable as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------- JUNE 30,
1996 1995 1994 1997
---- ---- ---- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net Amounts Receivable...................... $14,975,942 $11,216,805 $7,091,345 $16,837,506
Net Amounts Payable......................... 2,268,615 1,407,752 2,121,701 2,376,750
----------- ----------- ---------- -----------
Net Amounts Receivable...................... $12,707,327 $ 9,809,053 $4,969,644 $14,460,756
=========== =========== ========== ===========
</TABLE>
In accordance with the Company's debt agreements, payments are permitted to
be made to the Company's sole beneficiary for income tax payments and may be
made as a bonus payment or distribution of Trust Principal. The payments for the
years ended December 31, 1996, 1995 and 1994, and for the six month periods
ended June 30, 1997 and 1996, were recorded as expense.
F-13
<PAGE> 115
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
8. COMMITMENTS AND CONTINGENCIES
Operating Leases -- The Trust leases certain machinery and equipment under
operating leases which have initial or remaining terms of one year or more at
December 31, 1996. Future minimum lease commitments, including related party
leases, are as follows:
<TABLE>
<CAPTION>
RELATED PARTY OTHER
OPERATING OPERATING
LEASES LEASES
------------- ---------
<S> <C> <C>
Years:
1997.................................................. 2,180,000 4,215,563
1998.................................................. 2,180,000 2,471,316
1999.................................................. 1,090,000 539,230
2000.................................................. 185,999
2001.................................................. 24,677
Remaining years....................................... 0 0
---------- ----------
Total............................................ $5,450,000 $7,436,785
========== ==========
</TABLE>
Rent expense for operating leases and other agreements with a term of
greater than one month, including amounts paid to related parties, was
$4,973,043, $3,346,962, and $3,717,006 for the years ended December 31, 1996,
1995, and 1994, respectively. For the six month periods ended June 30, 1997 and
1996 (unaudited), $3,204,419 and $1,588,217, respectively, were paid for rent
expense. Usage fees paid based on monthly usage of certain machinery and
equipment and facilities, all of which were paid to related parties, were
$3,397,101, $2,703,446 and $3,257,692 for the years ended December 31, 1996,
1995 and 1994, respectively. For the six months ended June 30, 1997 and 1996
(unaudited), $1,562,114 and $1,536,338 were paid to related parties,
respectively for usage fees.
Litigation -- Bailey was served with a summons and complaint with respect
to a purported class action suit brought in the United States District Court for
the District of New Hampshire. The complaint alleged that Bailey violated Rule
10b-5 of the Securities Exchange Act of 1934 by a purported dissemination of
misleading information as to its financial position in connection with the
purchase and sale of its securities. Bailey was successful in having the
complaint dismissed, and a second amended complaint dismissed with prejudice.
The plaintiff subsequently appealed this decision to the First Circuit Court of
Appeals. Subsequent to year end, the Appeals Court affirmed the District Court
dismissal. Although an appeal to the U.S. Supreme Court is possible legal
counsel believes it is unlikely given the nature of the case. However, if the
plaintiff is successful, Bailey intends to vigorously assert defenses which it
believes to be meritorious.
Suits and counter suits were filed by the Company and the contractor that
built the paint line at Vemco Inc. involving its construction. The parties were
in arbitration and on July 12, 1993 the Company was awarded approximately $3.1
million which was confirmed by the Federal Court on November 10, 1993. The
contractor appealed this decision to the Federal Appeals Court and prevailed in
having the award overturned. The Company has appealed part of the decision to
the U. S. Supreme Court and is awaiting a decision. In addition, the Company is
preparing for a new arbitration hearing. Management and its legal counsel
believe that the likelihood of an unfavorable outcome associated with
arbitrating the case is remote. The final settlement of this matter may result
in an adjustment to the carrying value of the paint line.
Environmental Costs -- The Company is subject to potential liability under
government regulations and various claims and legal actions which are pending or
may be asserted against the Company concerning environmental matters. Estimates
of future costs of such environmental matters are necessarily imprecise due to
numerous uncertainties, including the enactment of new laws and regulations, the
development and application of new technologies, the identification of new sites
for which the Company may have remediation
F-14
<PAGE> 116
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
responsibility and the apportionment and collectibility of remediation costs
among responsible parties. The Company establishes reserves for these
environmental matters when a loss is probable and reasonably estimable. The
Company's reserves for these environmental matters totaled $1,321,391 at
December 31, 1996 and $988,799 at June 30, 1997 (unaudited).
The Company is party to various contractual, legal and environmental
proceedings, some which assert claims for large amounts. Although the ultimate
cost of resolving these matters could not be precisely determined at December
31, 1996 and at June 30, 1997 (unaudited), management believes, based on
currently known facts and circumstances, that the disposition of these matters
will not have a material adverse effect on the Company's consolidated financial
position and results of operations. These matters are subject to many
uncertainties, and the outcome of individual matters is not predictable with
assurance. It is more than remote but less than likely that the final resolution
of these matters many require the Company to make expenditures, in excess of
established reserves, over an extended period of time and in a range of amounts
that cannot be reasonably estimated.
9. CONCENTRATIONS
Approximately 69%, 71%, and 77% of the Company's sales for the years ended
1996, 1995 and 1994, respectively, are with two in 1995 and 1994, and three in
1996 of the major domestic automobile manufacturers. For the six month period
ended June 30, 1997 (unaudited) approximately 80% of the sales were with the
three major domestic automobile manufactures, and for the six month period ended
June 30, 1996 (unaudited) approximately 66% of the sales were with two of the
manufacturers. Many of the Company's automotive industry customers are unionized
and work stoppages, slow-downs experienced by them, and their employee relations
policies could have an adverse effect on the Company's results of operations.
Approximately 8% of the workforce is covered by a collective bargaining
agreement which will expire within one year.
10. PENSIONS, PROFIT-SHARING AND SALARY REDUCTION PLAN
The Company sponsors profit-sharing and salary reduction 401(k) plans which
covers substantially all employees. The plans provide for the Company to
contribute a discretionary amount each year. Contributions were $1,315,972,
$1,309,727 and $924,670, for the years ended December 31, 1996, 1995 and 1994,
respectively; and $624,779 and $853,797 for the six month periods ended June 30,
1996 and 1997 (unaudited), respectively.
Bailey Corporation has various retirement plans covering substantially all
Bailey employees, including five defined benefit pension plans covering
full-time hourly and salaried employees. The benefits payable under the plans
are generally determined based on the employees' length of service and earnings.
For all plans, Bailey Corporation's funding policy is to make at least the
minimum annual contributions required by Federal law and regulation.
F-15
<PAGE> 117
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The funded status of the defined benefit plans at December 31, 1996 was as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED BENEFITS
ACCUMULATED BENEFITS EXCEED ASSETS
-------------------- --------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested Benefits........................................ $4,891,678 $ 8,632,823
Nonvested benefits..................................... 53,637 64,788
---------- -----------
Accumulated benefit obligation........................... 4,945,315 8,697,611
Projected benefit obligation............................. 6,163,154 8,697,611
Market value of plan assets.............................. 5,576,048 5,389,333
---------- -----------
Excess (deficiency) of assets over projected benefit
obligation............................................. (587,106) (3,308,278)
Unrecognized net (gain)/loss............................. (77,100) (115,260)
---------- -----------
Prepaid (accrued) pension cost........................... $ (664,206) $(3,423,538)
========== ===========
</TABLE>
The date used to measure plan assets and liabilities is as of September 30
each year.
The weighted-average assumed discount rate was 7.5%. The assumed rate of
return on plan assets was 8.5%. For salary based plans, the expected rate of
increase in compensation levels was 5.5%.
Plan assets consist principally of cash and cash equivalents, listed common
stocks, debentures, and fixed income securities.
Bailey Corporation and the Union agreed to temporarily freeze benefit
accruals of the Bailey Hourly Pension Plan in consideration for providing an
increasing schedule of benefit levels during the course of the bargaining
agreement. A salaried pension plan is frozen and no further service liability
will accrue under the plan. The schedule of increasing monthly benefit levels
for each year of service is as follows for retirements occurring on or after:
June 8, 1997.....................................$21
June 8, 1998.....................................$22
11. INCOME TAXES
Amounts in the financial statements related to income taxes are for the
operations of Bailey Corporation and its subsidiaries. The other significant
Subsidiaries have elected S corporation status under the Internal Revenue Code.
The beneficiary is required to report all income, gains, losses, deductions, and
credits of the S corporations included in the Trust on his individual tax
returns.
F-16
<PAGE> 118
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The provision for income tax expense (benefit) for the period ended:
<TABLE>
<CAPTION>
DECEMBER 31, SIX MONTHS ENDED
1996 JUNE 30, 1997
------------ ----------------
(UNAUDITED)
<S> <C> <C>
Currently Payable
United States................................... $ 0 $ 0
State and Local................................. 0 239,404
-------- ----------
Total........................................ $ 0 $ 239,404
======== ==========
Deferred
United States................................... $292,724 $1,022,552
State and Local................................. 43,253 151,757
-------- ----------
Total........................................ $335,977 $1,174,309
======== ==========
</TABLE>
The Company does not provide for U.S. income taxes or foreign withholding
taxes on cumulative undistributed earnings of foreign subsidiaries as these
earnings are all taxed currently to the beneficiary of the Trust.
The effective tax rate on pretax income was 232.7% for the year ended
December 31, 1996, of which 192.5% relates to permanent differences not
deductible for income taxes and 5.2% for state and local income taxes, net of
the federal tax benefit.
The effective tax rate on pretax income was 73.0% for the six months ended
June 30, 1997, of which 32.8% relates to permanent differences not deductible
for income taxes and 5.2% for state and local income taxes, net of the federal
tax benefit.
The tax-effected temporary differences and carryforwards which comprised
deferred assets and liabilities were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ --------
(UNAUDITED)
<S> <C> <C>
Deferred tax assets:
Accrued expenses and reserves............................. $17,759,012 $12,140,940
Net Operating Loss carryforward........................... 5,180,628 9,893,324
Minimum tax credit carryforward........................... 763,827 763,827
Other..................................................... 557,274 562,293
----------- -----------
Total deferred tax assets.............................. 24,260,741 23,360,384
Deferred tax liabilities:
Depreciation.............................................. 12,191,084 12,407,777
Other..................................................... 826,743 884,002
----------- -----------
Total deferred tax liabilities......................... 13,017,827 13,291,779
----------- -----------
Net deferred tax asset................................. $11,242,914 $10,068,605
=========== ===========
</TABLE>
The current portion of deferred tax assets, $9,921,282, is included in
prepaid expense and others at December 31, 1996 and at June 30, 1997
(unaudited). Bailey Corporation's U.S. net operating loss carryforwards totaled
$14,152,441 at December 31, 1996 and 25,875,564 at June 30, 1997 (unaudited)
which expire in the year 2011. Alternative minimum tax credit carryforward
totaled $763,827 and have no expiration date.
F-17
<PAGE> 119
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
12. EXTRAORDINARY ITEMS
The senior secured notes payable to financial institutions required
semiannual interest payments at 9.89% and annual principal payments of
$10,000,000 each year commencing March 15, 1996. The outstanding balance of
$40,000,000 was refinanced on August 26, 1996 which resulted in an extraordinary
loss of $3,425,721 ($2,546,630 prepayment penalty plus unamortized deferred
financing costs of $879,091) in the quarter ended September 30, 1996.
On September 23, 1996 the Company redeemed $21,060,000 of the senior
subordinated bonds at 95% of par in conjunction with the refinancing under the
new credit agreement for acquisition of Bailey Corporation as required by the
First Supplement Indenture. The early extinguishment resulted in an
extraordinary gain of $688,071 (net of unamortized deferred financing costs of
$364,929).
13. FINANCIAL INSTRUMENTS
The estimated fair values of the Company's debt instruments have been
determined using available market information. However, considerable judgment is
required in interpreting market data to develop the estimates of fair value.
Accordingly, the estimates presented herein may not be indicative of the amounts
that the Company could realize in a current market exchange. The use of
different assumptions or valuation methodologies may have a material effect on
the estimated fair value amounts. The fair value of long-term debt was estimated
using quoted market prices or market prices or similar debt.
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995 JUNE 30, 1997 (UNAUDITED)
---------------------------- ---------------------------- ----------------------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
-------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Debt................. $197,940,000 $191,230,100 $150,000,000 $133,500,000 $194,715,000 $192,700,000
</TABLE>
The fair values of interest rate swaps were estimated by discounting
expected cash flows using quoted market interest rates. Interest rate swaps are
also discussed in Note 1.
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995 JUNE 30, 1997 (UNAUDITED)
------------------------------- ---------------------------- -------------------------------
NOTIONAL UNREALIZED GAIN/ NOTIONAL UNREALIZED GAIN/ NOTIONAL UNREALIZED GAIN/
AMOUNT (LOSSES) AMOUNT (LOSSES) AMOUNT (LOSSES)
-------- ---------------- -------- ---------------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Interest Rate
swaps.............. $55,000,000 ($1,036,131) 0 0 $55,000,000 (954,719)
</TABLE>
The carrying values of cash and cash equivalents, accounts receivables and
accounts payable approximate fair market value due to the short term maturities
of these instruments.
14. SUBSEQUENT EVENTS (UNAUDITED)
The Trust issued $205 million senior unsecured notes due 2005. $116 million
of the net proceeds was used to repay Term Loans "A and B" under the senior
credit facility (the Facility, Note 6). In addition, approximately $83 million
will be used to pay down the amount outstanding under the revolving credit
portion of the facility. Any net proceeds remaining after such payments will be
used for working capital and other general corporate purposes. In connection
with the senior unsecured notes certain subsidiaries will be merged and or
liquidated into other subsidiaries.
The senior credit facility was amended and will provide for borrowings of
up to $200 million under the revolving credit agreement.
F-18
<PAGE> 120
INDEPENDENT AUDITORS' REPORT
Trustee of Venture Holdings Trust
Fraser, Michigan
We have audited the accompanying consolidated balance sheet of Bailey
Corporation and subsidiaries (a wholly owned subsidiary of Venture Holdings
Trust since August 26, 1996) as of July 28, 1996 and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The consolidated financial statements
of Bailey Corporation for each of the years ended July 30, 1995 and July 31,
1994, were audited by other auditors whose report, dated October 25, 1995,
expressed an unqualified opinion on those statements.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of Bailey Corporation
as of July 28, 1996 and the results of their operations and their cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Detroit, Michigan
June 26, 1997
F-19
<PAGE> 121
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Stockholders
BAILEY CORPORATION AND SUBSIDIARIES:
We have audited the accompanying consolidated balance sheet of Bailey
Corporation and subsidiaries as of July 30, 1995 and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
ended July 30, 1995 and July 31, 1994. 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 conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Bailey
Corporation and subsidiaries as of July 30, 1995 and the results of their
operations and their cash flows for the years July 30, 1995 and July 31, 1994 in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
October 25, 1995
F-20
<PAGE> 122
BAILEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 28, 1996 AND JULY 30, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 1,079 $ 313
Restricted cash........................................... 0 817
Accounts receivable, net of allowances of $1,225 in 1996
and $763 in 1995....................................... 21,208 13,751
Inventories (Note 3)...................................... 20,797 18,325
Prepaid expenses and other current assets (Note 4)........ 4,082 4,026
Deferred income taxes (Note 11)........................... 14,217 3,709
-------- --------
Total current assets................................. 61,383 40,941
Property, plant and equipment, net (Notes 2, 5 and 8)....... 49,646 50,391
Other assets, net (Note 6).................................. 8,799 9,389
-------- --------
$119,828 $100,721
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft............................................ $ 814 $ 1,585
Short-term debt (Note 7).................................. 14,292 9,360
Current portion of long-term debt (Note 8)................ 9,829 7,765
Accounts payable.......................................... 31,426 18,611
Loss contracts reserve.................................... 11,790
Accrued liabilities and other current liabilities......... 6,627 5,535
Income taxes payable (Note 11)............................ 357 167
-------- --------
Total current liabilities............................ 75,135 43,023
Long-term debt, less current portion (Note 8)............... 31,020 33,136
Loss contracts reserve, less current portion (Note 9)....... 6,546
Other long-term liabilities................................. 4,150 2,245
Deferred income taxes (Note 11)............................. 4,907 3,437
Commitments and contingencies (Note 15)..................... -- --
Total liabilities.................................... 121,758 81,841
-------- --------
Stockholders' equity (Note 12):
Common stock, $.10 par value, 20,000,000 shares
authorized; 5,393,558 shares issued and outstanding in
1996 and 1995.......................................... 539 539
Additional paid-in capital................................ 13,805 13,805
Retained earnings......................................... (14,523) 5,202
Minimum pension liability adjustment (Note 10)............ (1,488) (403)
Treasury stock, 40,000 shares, at cost.................... (263) (263)
-------- --------
Total stockholders' equity........................... (1,930) 18,880
-------- --------
$119,828 $100,721
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-21
<PAGE> 123
BAILEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEARS ENDED 1996, 1995 AND 1994
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net sales (Note 13)...................................... $ 172,880 $ 168,228 $ 108,313
Cost and expenses:
Cost of products sold.................................. 183,230 151,414 92,379
Selling, general and administrative expenses........... 15,653 15,300 9,313
---------- ---------- ----------
Operating (loss) income........................... (26,003) 1,514 6,621
Interest expense (net)................................... 4,806 3,871 1,648
---------- ---------- ----------
Income (loss) before income taxes................. (30,809) (2,357) 4,973
Income tax provision (benefit) (Note 11)................. (11,084) (778) 2,207
---------- ---------- ----------
Net income (loss)................................. $ (19,725) $ (1,579) $ 2,766
========== ========== ==========
Net income (loss) per common share:
Primary................................................ $ (3.66) $ (.29) $ .52
========== ========== ==========
Fully diluted.......................................... $ (3.66) $ (.29) $ .52
========== ========== ==========
Weighted average shares outstanding:
Primary................................................ 5,394,000 5,444,000 5,313,000
---------- ---------- ----------
Fully diluted.......................................... 5,394,000 5,444,000 5,356,000
---------- ---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-22
<PAGE> 124
BAILEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE FISCAL YEARS ENDED 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
MINIMUM
COMMON STOCK ADDITIONAL RETAINED PENSION
--------------- PAID-IN EARNINGS LIABILITY TREASURY
SHARES AMOUNT CAPITAL (DEFICIT) ADJUSTMENT STOCK TOTAL
------ ------ ---------- --------- ---------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance July 31, 1993................. 4,071 407 2,566 4,015 -- -- 6,988
Public offering of common stock
(Note 12)........................ 1,076 108 10,488 -- -- -- 10,596
Exercise of stock options (Note
12).............................. 119 12 439 -- -- -- 451
Exercise of warrants (Note 12)...... 116 11 (11) -- -- -- --
Tax benefit from exercise of stock
options.......................... -- -- 105 -- -- -- 105
Minimum pension liability
adjustment....................... -- -- -- -- (306) -- (306)
Net income.......................... -- -- -- 2,766 -- -- 2,766
----- ---- ------- -------- ------- ----- --------
Balance July 31, 1994................. 5,382 538 13,587 6,781 (306) -- 20,600
Purchase of treasury stock.......... -- -- -- -- -- (263) (263)
Exercise of stock options (Note
12).............................. 12 1 25 -- -- -- 26
Tax benefit from exercise of stock
options.......................... -- -- 193 -- -- -- 193
Minimum pension liability adjustment
(Note 10)........................ -- -- -- -- (97) -- (97)
Net loss............................ -- -- -- (1,579) -- -- (1,579)
===== ==== ======= ======== ======= ===== ========
Balance at July 30, 1995.............. 5,394 $539 $13,805 $ 5,202 $ (403) $(263) $ 18,880
Exercise of stock options (Note
12).............................. -- -- -- -- -- -- --
Tax benefit from exercise of stock
options (Note 11)................ -- -- -- -- -- -- --
Minimum pension liability adjustment
(Note 10)........................ (1,085) (1,085)
Net loss............................ -- -- -- (19,725) -- -- (19,725)
----- ---- ------- -------- ------- ----- --------
Balance at July 28, 1996.............. 5,394 $539 $13,805 $(14,523) $(1,488) $(263) $ (1,930)
===== ==== ======= ======== ======= ===== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-23
<PAGE> 125
BAILEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $(19,725) $(1,579) $ 2,766
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization.......................... 5,699 5,268 3,120
Loss contracts reserve................................. 18,336 -- --
Loss (gain) on disposal of property, plant and
equipment............................................ -- 2 (23)
Deferred income taxes.................................. (9,038) (1,433) 1,010
Gain on early payment of debt.......................... -- -- (165)
Change in assets and liabilities, net of effects of
acquisitions:
(Increase) decrease in accounts receivable........... (7,457) 6,058 (1,146)
(Increase) decrease in inventory..................... (2,472) (2,825) 158
(Increase) decrease in prepaid expenses and other
current assets.................................... (56) (2,607) (208)
Decrease (increase) in other assets -- net........... 442 (3,035) (1,724)
Increase in accounts payable......................... 12,815 57 2,390
Increase (decrease) in accrued liabilities and other
current liabilities............................... 1,092 (453) (561)
Increase (decrease) in income taxes payable.......... 190 234 (1,107)
Increase (decrease) in other liabilities............. 956 (227) 278
-------- ------- --------
Net cash (used in) provided by operating
activities...................................... 782 (540) 4,788
-------- ------- --------
Cash flows from investing activities:
Capital expenditures...................................... (4,942) (7,506) (4,333)
Acquisition of businesses, net of cash acquired........... -- (723) (9,375)
Proceeds from sale of property and equipment.............. -- 36 77
-------- ------- --------
Net cash used in investing activities............. (4,942) (8,193) (13,631)
-------- ------- --------
Cash flows from financing activities:
Increase (decrease) in short-term debt (including bank
overdrafts), net....................................... 4,161 6,778 (3,800)
Proceeds from long-term borrowings........................ 1,908 4,000 8,000
Payments on long-term debt and capital leases............. (1,960) (1,696) (6,459)
Proceeds from issuance of common stock.................... -- -- 10,596
Proceeds from exercise of stock options................... 26 451
Purchase of Treasury Stock................................ -- (263) --
Decrease in restricted cash............................... 817 -- --
-------- ------- --------
Net cash provided by financing activities......... 4,926 8,845 8,788
-------- ------- --------
Net increase (decrease) in cash................... 766 112 (55)
Cash, beginning of year..................................... 313 201 256
-------- ------- --------
Cash, end of year........................................... $ 1,079 $ 313 $ 201
======== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-24
<PAGE> 126
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For Fiscal Years Ended 1996, 1995 and 1994
(1) SIGNIFICANT ACCOUNTING POLICIES
Business Operations
Bailey Corporation (the "Company") is a manufacturer of high quality
compression molded plastic exterior/interior components for sale to automobile
manufacturers. Customers include original equipment manufacturers and other
suppliers to the automobile industry in the United States and Canada.
Fiscal Year
The fiscal year of the Company ends on the nearest Sunday prior to or at
July 31. All references herein to 1996, 1995, and 1994 mean the fiscal years
ended July 28, 1996, July 30, 1995, and July 31, 1994, respectively.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany transactions and
balances are eliminated in consolidation.
Inventories
Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market (net realizable value).
Depreciation and Amortization
Depreciation and amortization is provided on a straight-line basis over the
estimated useful lives of owned assets. Assets held under capital leases are
depreciated over their respective lease term. The following is a summary of
estimated useful lives:
<TABLE>
<S> <C>
Land improvements........................................... 5 years
Buildings and improvements.................................. 15-30 years
Machinery and equipment..................................... 3 -11 years
</TABLE>
Goodwill
Goodwill consists principally of excess purchase price over fair market
value of net assets acquired, and is being amortized over 40 years using the
straight-line method.
Deferred Tooling, Design and Pre-production Costs
Unreimbursed costs incurred for customer-owned tooling are recorded as
deferred tooling costs. Costs incurred for the design of components to be built
for customers are recorded as deferred design, engineering and pre-production
costs. These costs are to be recovered over the term of production contracts to
which the tooling, design and pre-production costs relate determined based on
units produced.
Reimbursable Deferred Automation
In connection with production programs, the Company purchases automation
equipment for which it is reimbursed by the customer on a per piece shipped
basis. Amounts estimated to be reimbursed in the succeeding twelve months are
classified as current. Reimbursements estimated to be received beyond one year
are included in other assets. Title to the equipment reverts to the customer
upon completion of the production program.
F-25
<PAGE> 127
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
Earnings per Share
Earnings per share are calculated by dividing net income (loss) by the
weighted average common shares outstanding during each period, including the
dilutive effect of warrants and options outstanding during the period. Fully
diluted earnings per share also include the assumed conversion of convertible
debt. In fiscal 1996 and 1995 warrants, options and convertible debt were
anti-dilutive, and accordingly, have not been included in the calculation.
Income Taxes
Amounts in the financial statements related to income taxes are calculated
using the principles of Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (FAS 109). Prepaid and deferred taxes reflect the
impact of temporary differences between the amounts of assets and liabilities
recognized for financial reporting purposes and the amounts recognized for tax
purposes. These deferred balances are measured by applying currently enacted tax
rates. A valuation allowance reduces deferred tax assets when it is "more likely
than not" that some portion or all of the deferred tax assets will not be
recognized.
Revenue Recognition
Sales are recognized upon shipment of products to customers.
Long-Term Production Contracts
The Company evaluates its long-term production contracts for loss on a
vehicle program basis. Contracts are evaluated periodically utilizing forecasted
production and contracted sales prices. Losses are recognized when management
estimates the anticipated cost of production will exceed the contracted sales
price. During 1996, $24,840,000 was accrued for contracts deemed to be in a loss
position. At July 28, 1996, the Company had $18,336,000 in accrued liabilities
for existing long-term production contracts in a loss position.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
(2) BUSINESS ACQUISITIONS
Effective July 31, 1994, the Company acquired substantially all of the
assets of Premix/EMS Inc. (the "Premix/EMS Acquisition"), a manufacturer of
automotive molded plastic exterior components, for an aggregate purchase price
of $34,484,000, subject to post-closing adjustments. Payment consisted of a
secured five year promissory note in the principal amount of $7,000,000, bearing
interest annually at a floating prime rate; a five-year convertible debenture in
principal amount of $9,000,000, bearing interest at a fixed rate of 8% per
annum, and convertible into Bailey Corporation common stock at $10 per share;
cash of $9,855,000 less $480,000 held pending satisfaction of certain conditions
(in fiscal 1995, this amount was fully paid); and assumption of certain
liabilities totaling $8,629,000. The acquisition has been accounted for as a
purchase with the purchase price allocated over the estimated fair value of the
assets and liabilities assumed, resulting in goodwill of $3,227,000 at July 31,
1994.
The determination of the final purchase price was subject to a post-closing
audit which was completed in fiscal year 1995. As a result of the audit and
receipt of final appraisals of the fair market value of the net assets
F-26
<PAGE> 128
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
acquired, the entire amount of goodwill was reclassified to machinery and
equipment in the fourth quarter. The Company unsuccessfully sought recovery of a
portion of the purchase price and instituted arbitration procedures with the
sellers in the second quarter of 1996. The Company completed the arbitration
procedures which resulted in the company having the price reduced by $1,000,000
and the postponement, with interest, of certain principal payment for one year.
The following unaudited pro forma summary presents the consolidated results
of operations assuming that the Premix/EMS Acquisition occurred at the beginning
of fiscal 1994, after giving effect to certain adjustments, including interest
expense on the acquisition debt and related income tax effects. The pro forma
results have been prepared for comparative purposes only and do not purport to
be indicative of what would have occurred had the Premix/EMS Acquisition been
made as of that date or of results which may occur in the future.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JULY 1, 1994
-----------------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C>
Net sales................................................... $166,894
Net income (loss)........................................... $ (1,573)
Net income (loss) per share................................. $ (.29)
</TABLE>
(3) INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Raw materials............................................ $ 7,770 $ 7,424
Work-in-process.......................................... 2,799 2,555
Finished goods........................................... 2,649 2,745
Tooling 7,579 5,601
------- -------
$20,797 $18,325
======= =======
</TABLE>
(4) PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following (in
thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Prepaid insurance.......................................... $ 669 $ 595
Prepaid expenses........................................... 430 430
Miscellaneous receivables.................................. 24 614
Other...................................................... 6 99
Reimbursable deferred automation (Note 1).................. 446 1,240
Income taxes receivable.................................... 2,507 1,048
------ ------
$4,082 $4,026
====== ======
</TABLE>
F-27
<PAGE> 129
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost and consists of the
following (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land and improvements....................................... $ 1,104 $ 1,098
Buildings and improvements.................................. 17,584 16,557
Machinery and equipment..................................... 55,700 51,791
-------- --------
Total.................................................. 74,388 69,446
Less accumulated depreciation.......................... (24,742) (19,055)
-------- --------
Net.................................................... $ 49,646 $ 50,391
======== ========
</TABLE>
Included in property, plant and equipment is equipment held under
capitalized leases. This equipment has a cost basis of $6,494,000 and $5,685,000
at July 28, 1996, and July 30, 1995, respectively. Accumulated depreciation
relating to this equipment amounted to $2,163,000 and $1,874,000 at July 28,
1996 and July 30, 1995, respectively.
Depreciation expense, including amortization of capitalized leases, was
$5,687,000, $5,256,000, $3,108,000 in fiscal 1996, 1995, and 1994, respectively.
Portland Plant Shutdown
On August 3, 1995, the Company announced its intention to temporarily
curtail operations in its Portland, Indiana, manufacturing facility. The Company
does not expect any material costs to be incurred relating to this curtailment.
Losses to be recognized in connection with the curtailment were recognized in
the first quarter of fiscal 1996.
(6) OTHER ASSETS
Other assets consist of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Goodwill, net of accumulated amortization of $60 and $48 in
1996 and 1995, respectively (Note 2)...................... $ 265 $ 410
Deferred tooling, design, and pre-production costs (Note
1)........................................................ 6,181 4,782
Reimbursable deferred automation, net of current portion of
$1,240 (Note 1)........................................... 2,144
Pension intangible assets and prepaid costs (Note 10)....... 1,741 1,446
Other assets, net........................................... 612 607
------ ------
$8,799 $9,389
====== ======
</TABLE>
Amortization of goodwill amounted to $12,000 in each of the fiscal years
1996, 1995, and 1994.
(7) SHORT-TERM DEBT
The Company maintains a revolving credit facility with a maximum
availability of $24,000,000, subject to certain limitations based on the levels
of accounts receivable and inventory.
Short-term debt consists of the revolving credit facility which carried a
balance of $14,292,000 and $9,360,000 at July 28, 1996 and July 30, 1995,
respectively.
On July 28, 1995, the Company elected to issue a $4,000,000 Fixed Maturity
Carve Out Note under the existing credit agreement which reclassified $4,000,000
of outstanding borrowings under the revolving credit
F-28
<PAGE> 130
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
facility to long term debt. The Fixed Maturity Carve Out Note is due in its
entirety on August 1, 1998, provided that no event of default has occurred prior
to the due date.
Obligations to the bank are secured by substantially all assets of the
Company. The term note bears interest at the bank's prime rate (8.25% at July
28, 1996) plus 0.5%. The revolving credit facility and the Fixed Maturity Carve
Out Note bear interest at the bank's prime rate. The credit agreement includes,
among other provisions, restrictive covenants relating to the maintenance of
certain financial and earnings ratios, prohibits the payment of cash dividends,
and restricts the incurrence of additional debt, except with approval of the
bank. As of July 31, 1996 as to certain of these covenants there were conditions
of non-compliance by the Company. As part of the acquisition of Bailey by
Venture Holdings Trust (see Note 18) the debt was refinanced, therefore waivers
were not obtained from the banks.
(8) LONG-TERM DEBT
Long term debt outstanding consists of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Term note payable to bank (Note 7).......................... $ 6,533 $ 7,333
Fixed Maturity Carve Out Note (Note 7)...................... 4,000 4,000
Ohio Bond Fund(a)........................................... 2,193 2,476
Fixed asset note(b)......................................... 5,047 5,047
Secured promissory note(c).................................. 7,667 7,000
8% convertible debenture(d)................................. 9,000 9,000
Industrial Revenue Bonds at various rates from 5% to 7% and
due in varying amounts to 2003............................ 776 975
Capital lease obligations, at various rates from 8.5% to
13.0% and due in varying amounts to 2003.................. 4,383 3,820
------- -------
Total secured debt..................................... 39,599 39,651
9% convertible subordinated notes(e)........................ 1,250 1,250
------- -------
40,849 40,901
Less current portion........................................ 9,829 7,765
------- -------
$31,020 $33,136
======= =======
</TABLE>
- ---------------
(a) This funding was received from the Director of Development of the State of
Ohio in the form of a long term lease. Ten percent or $317,000 was withheld
to reduce the amount of the final payment and an additional $500,000 was
withheld as additional security for payments under the lease. Both are
reflected as restricted cash under current assets. In August 1995, the
Company filed an application with the Director of Development for the State
of Ohio requesting conversion of both restricted cash amounts ($817,000) to
letters of credit, which was granted in fiscal year 1996.
(b) This note relates to a prior acquisition and was payable by July 1, 1996
(the "Fixed Asset Note Extension Date"). The note bears interest at the rate
of 8% and is secured by the acquired equipment and by mortgages on each of
the Hillsdale and Madison properties. The Company failed to pay the entire
principal on or prior to the Fixed Asset Note Extension Date, however, the
Company was granted an extension and repaid the note in full on August 26,
1996 (Note 18).
(c) This note relates to the Premix/EMS Acquisition (Note 2). Principal payments
of $625,000 are due bi-annually beginning on January 31, 1996, with a final
installment of $2,625,000 due on July 31, 1999. The note bears interest at a
floating prime rate and is secured by the acquired property, plant and
equipment. An additional secured promissory note was established with Premix
in January 1996 to cover the interest
F-29
<PAGE> 131
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
obligation. This note bears interest at a floating prime rate and is also
secured by the acquired property, plant and equipment. The entire obligation
is classified as current.
(d) This note relates to the Premix/EMS Acquisition (Note 2) and matures on July
31, 1999. The note is convertible into Bailey Corporation common stock at
$10 per share and requires the Company to obtain an effective registration
statement to register the "convertible shares."
(e) These notes were issued through a private placement during April 1993. The
notes are convertible into common stock in the Company at $10 per share, and
mature in the year 2000.
Aggregate principal payments due over the next five years (and thereafter)
are as follows for the fiscal years ending (in thousands):
<TABLE>
<S> <C>
July 27, 1997............................................... $ 9,829
July 26, 1998............................................... 5,486
July 25, 1999............................................... 18,902
July 31, 2000............................................... 1,449
July 30, 2001............................................... 3,460
Thereafter.................................................. 1,723
-------
$40,849
=======
</TABLE>
See Note 18 -- Subsequent Events
(9) OTHER LONG-TERM LIABILITIES
Other long-term liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Additional minimum pension liability (Note 10).............. $2,796 $1,848
Deferred gain on sale of equipment.......................... -- 108
Environmental liability (Note 15)........................... 1,322 289
Other....................................................... 32 --
------ ------
$4,150 $2,245
====== ======
</TABLE>
(10) PENSION PLANS
The Company has various retirement plans covering substantially all
employees. The Company maintains five defined benefit pension plans covering
certain full-time hourly and salaried employees. After meeting certain
qualifications, an employee acquires a vested right to future benefits. The
benefits payable under the plans are generally determined on the basis of the
employees' length of service and earnings. For all plans, the Company's funding
policy is to make at least the minimum annual contributions required by Federal
law and regulation.
The components of net pension cost are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service costs -- benefits earned during the period.... $ 341 $ 316 $ 108
Interest cost on projected benefit obligations........ 939 873 505
Return on assets...................................... (818) (1,001) (108)
Net amortization and deferral......................... 141 450 (85)
----- ------- -----
Net pension cost................................. $ 603 $ 638 $ 420
===== ======= =====
</TABLE>
F-30
<PAGE> 132
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
The funded status of the defined benefit plans was as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
-------------------------- --------------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits.............................. $4,788 $ 8,543 $3,865 $ 6,231
Nonvested benefits........................... 51 64 181 346
------ ------- ------ -------
Accumulated benefit obligation................. 4,839 8,607 4,046 6,577
====== ======= ====== =======
Projected benefit obligation................... 5,653 8,607 4,770 6,968
Market value of plan assets.................... 5,901 5,165 5,181 4,438
Excess (deficiency) of assets over projected
benefit obligation........................... 248 (3,442) 411 (2,530)
Unrecognized net loss.......................... 455 1,759 330 674
Unrecognized prior service costs............... -- 785 -- 879
Unrecognized net transition obligation......... -- 252 -- 294
------ ------- ------ -------
Prepaid (accrued) pension cost................. $ 703 $ (646) $ 741 $ (683)
====== ======= ====== =======
</TABLE>
An additional liability of $2,796,000 and $1,848,000 related to certain
plans has been included in other long-term liabilities at July 28, 1996 and July
30, 1995, respectively, to reflect the required minimum liability for
unrecognized prior service costs. As a result of recording this additional
liability the Company recorded a reduction to stockholders' equity of
$1,488,000, at July 28, 1996 and $403,000 at July 30, 1995, respectively. In
addition, an intangible asset in the amount of $1,038,000 and $1,173,000 has
been included in other assets at July 28, 1996 and July 30, 1995, respectively,
to reflect the allowable asset recognizable up to the amount of unrecognized
prior service costs.
The weighted-average assumed discount rate and rate of return on plan
assets was 7.5% and 8% in 1996 and 1995, respectively. The expected rate of
increase in compensation levels used was 4.5% for 1996 and 1995.
Plan assets consist principally of cash and cash equivalents, listed common
stocks, debentures, and fixed income securities.
The Company has a defined contribution plan whereby eligible employees may
contribute up to 10% of their salary, with a dollar-for-dollar match by the
Company of up to 2% of an employee's salary. The Company recorded expense under
this plan of $294,000, $286,000 and $220,000 for 1996, 1995 and 1994,
respectively.
During fiscal year 1994 the Company and the Union agreed to temporarily
freeze benefit accruals of the Bailey Hourly Pension Plan in consideration for
providing an increasing schedule of benefit levels during the course of the
bargaining agreement. The schedule of increasing benefit levels for years of
service is as follows for retirements occurring on or after:
<TABLE>
<S> <C>
June 8, 1996................................................ $20.00
June 8, 1997................................................ $21.00
June 8, 1998................................................ $22.00
</TABLE>
F-31
<PAGE> 133
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
(11) INCOME TAXES
Income tax expense (benefit) from operations consists of (in thousands):
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
<S> <C> <C> <C>
Year ended July 28, 1996:
U.S. Federal.............................................. $(2,324) $(7,698) $(10,022)
State and local........................................... 278 (1,340) (1,062)
------- ------- --------
$(2,046) $(9,038) $(11,084)
======= ======= ========
Year ended July 30, 1995:
U.S. Federal.............................................. $ 513 $(1,218) $ (705)
State and local........................................... 142 (215) (73)
------- ------- --------
$ 655 $(1,433) $ (778)
======= ======= ========
Year ended July 31, 1994:
U.S. Federal.............................................. $ 1,001 $ 698 $ 1,699
State and local........................................... 355 153 508
------- ------- --------
$ 1,356 $ 851 $ 2,207
======= ======= ========
</TABLE>
The reconciliation between the U.S. Federal statutory rate and the
Company's effective rate is:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------------
JULY 30, JULY 31, JULY 31,
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Statutory Federal income tax rate........................... 34.0% 34.0% 34.0%
State taxes (benefit), net.................................. 5.9 (3.1) 6.9
Environmental settlement.................................... -- 2.1
Benefit of net operating loss carryback..................... (7.5)
Other, net.................................................. 3.6 2.1 1.4
---- ---- ----
36.0% 33.0% 44.4%
==== ==== ====
</TABLE>
F-32
<PAGE> 134
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at July 28,
1996 and July 30, 1995 are presented below (in thousands):
<TABLE>
<CAPTION>
JULY 28, JULY 31,
1996 1995
-------- --------
<S> <C> <C>
Deferred tax assets:
Accounts receivable....................................... $ 543 $ 450
Inventories............................................... 647 414
Accrued Expenses and Reserves............................. 8,612 979
Minimum pension adjustment................................ 271 271
Alternative minimum tax credit carryforwards.............. 764 1,329
Net operating loss carryforwards.......................... 2,860 160
Environmental Liability................................... 520 106
------- -------
Total deferred tax assets.............................. 14,217 3,709
------- -------
Deferred tax liabilities:
Property, plant and equipment............................. (3,973) (2,732)
Deferred tooling, design and pre-production costs......... (872) (640)
Other..................................................... (62) (65)
------- -------
Total deferred tax liabilities......................... (4,907) (3,437)
------- -------
Net deferred tax assets................................ $ 9,310 $ 272
======= =======
</TABLE>
The Company's net operating loss carryforwards totaled $8,500,496 at July
28, 1996 and will expire in the year 2011. Alternative minimum tax credit
carryforwards totaled $763,827 and have no expiration date.
Management believes the Company will obtain the full benefit of net
operating loss carryforwards and other temporary differences recorded as
deferred tax assets on the basis of its evaluation of the Company's anticipated
profitability over the years that the temporary difference are expected to be
tax deductions. Management believes that sufficient book and taxable income will
be generated to realize the benefit of these assets. This assessment takes into
account the acquisition by Venture Holdings Trust (see Note 18) and the
Company's expected future earnings based on automotive supply contracts for
parts to be produced beginning with the 1997 model year.
(12) STOCKHOLDERS' EQUITY
Public Offering
In September, 1993, the Company completed a public offering of 1,076,600
shares of its $.10 par value common stock. The net proceeds from the offering of
$10,596,000 were used to reduce short-term borrowings, pay down certain
long-term debt, retire the subordinated debentures payable to related parties,
and to fund working capital requirements.
Stockholder Rights Plan
On September 28, 1995, the Board of Directors of the Company adopted a
stockholder rights plan. Under the plan, the Company declared a dividend of one
Right for each outstanding share of common stock, par value $.10 per share. The
Rights will be issued to the holders of record of shares of Common Stock
outstanding on September 28, 1995, and with respect to shares of Common Stock
issued thereafter until the Distribution Date (as defined in the Rights
Agreement) and, in certain circumstances, with respect to shares of Common Stock
issued after the Distribution Date. Each Right, when it becomes exercisable as
defined in the Rights Agreement , will entitle the registered holder to purchase
from the Company one share of Common Stock at a price of $28. The description
and terms of the Rights are set forth in a Rights Agreement dated as
F-33
<PAGE> 135
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
of September 28, 1995 between the Company and State Street Bank and Trust
Company, as Rights Agent. In connection with the purchase of Bailey by Venture
Holdings Trust (Note 18) these rights were terminated.
Common Stock Warrants
In addition to warrants issued with subordinated debentures issued in June
1992, the Company, in connection with a financing agreement in 1988, issued a
warrant to a lender to purchase 115,794 shares of common stock at $.0033 per
share. The estimated value of this warrant at the time of issuance was $175,000,
which was recorded as a liability. The warrant was subject to certain put and
call provisions, which expired on June 30, 1992. Therefore the amount of the
expired put option was transferred to additional paid-in capital in 1992. On
August 5, 1993, 115,794 shares of common stock were issued pursuant to the
exercise of these warrants. At July 30, 1995, 62,500 warrants remain outstanding
relating to the subordinated debentures issued in June 1992 (Note 18).
Stock Option Plans
In April 1986, the Company adopted an incentive stock option plan ("the
1986 plan"). The Company has reserved 200,000 shares of common stock for
distribution under the 1986 plan. Options to purchase common stock under the
1986 plan will be exercisable during a period not to exceed ten years from the
date the options are granted with option prices of not less than 100% of the
fair market value of the stock on the respective date of grant, or 110% of the
fair market value if granted to persons owning more than 10% of the outstanding
stock.
On November 2, 1994, 10,000 options were granted under the 1986 plan at
equivalent exercise prices and vesting periods as the non-qualified stock
options.
On November 2, 1994, the Company granted 293,000 non-qualified stock
options to key employees at an exercise price equivalent to the fair market
value on the date of grant ($7.18). Up to 25% of the options were exercisable
effective on the grant date with all remaining options vesting ratably over
three years. Subsequent to November 2, 1994, 55,000 options were cancelled as a
result of termination of the employees' employment.
In connection with a four-year employment agreement with an officer of a
subsidiary, on June 26, 1992 the Company granted options to purchase 120,000
shares of the Company's common stock, exercisable for 30,000 shares immediately
and an additional 30,000 shares on each anniversary of the employment agreement.
The options are exercisable at $4.75 per share as determined by the agreement.
In fiscal year 1994, 60,000 shares were exercised.
During 1994 the Company granted two option agreements to two officers of
the Corporation. The first agreement granted options to purchase 50,000 shares
of the Company's common stock at $6.125 per share (market value on date of
issuance), exercisable for 12,500 shares immediately and an additional 12,500
shares on each anniversary of the agreement. The second agreement granted
options to purchase 100,000 shares of the Company's common stock at $11 per
share (market value on date of issuance), exercisable for 25,000 shares
immediately and an additional 25,000 shares on each anniversary of the
agreement.
Subsequent to year end in connection with the acquisition (Note 18), all
options, both vested and non-vested, were rescinded. In exchange for the
options, Venture Holdings Trust agreed to settle these obligations for
approximately $5.1 million which represents the difference between the purchase
price ($8.75 per share) and the option exercise price. This represents
approximately 1.7 million option shares.
F-34
<PAGE> 136
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
(13) MAJOR CUSTOMERS
Sales to third parties are concentrated in a few major customers and
consisted of the following percentages of the Company's total net sales:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Ford Motor Company.......................................... 59% 57% 83%
General Motors Corporation.................................. 24% 28% 5%
Freightliner Corporation.................................... 2% 5% 5%
Other....................................................... 15% 10% 7%
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
(14) RELATED PARTY TRANSACTIONS
Certain nonemployee directors provided consulting services to the Company
totaling $248,000, $288,000 and $298,000 in 1996, 1995, and 1994, respectively.
Interest payments made to related parties on subordinated debentures which
were retired in the first quarter of fiscal 1994 amounted to $15,000 in fiscal
year 1994.
(15) COMMITMENTS AND CONTINGENCIES
The Company is subject to a variety of legal proceedings, contractual
obligations and environmental issues, arising out of the conduct of its
business, which are pending or threatened.
Environmental Costs
The Company and its immediate predecessor, USM's Bailey Division, have been
named as potentially responsible parties ("PRP") at the Resolve Superfund site
and at the Solvents Recovery Services site. At both sites, the Company and all
other PRP's are jointly and severally liable for all remediation costs under
applicable environmental laws. The Company is pursuing indemnification from USM
and/or USM's insurers for some of its costs associated with the remediation
efforts at both sites.
The Company also faces potential environmental liability relating to the
Conneaut, Contour and Premix/EMS Acquisitions if the former owners cannot
fulfill the environmental obligations relating to their ownership. For each
acquisition the Company has been indemnified for environmental obligations
arising prior to its ownership as part of the acquisition agreements.
Additionally, part of the purchase consideration for the Conneaut Acquisition
was escrowed and the right to offset debt issued by the Company in connection
with the Contour and Premix/EMS Acquisitions exists to specifically cover
environmental obligations of the former owners.
The Company's policy is to accrue environmental costs of a non-capital
nature when it is both probable that a liability has been incurred and the
amount can be reasonably estimated. On-going costs of compliance with
environmental laws are charged to expense when incurred. Where the estimate is a
range and no amount within the range is a better estimate than any other amount,
the Company accrues the minimum amount in the range. The reliability and
precision of the environmental accruals are affected by numerous factors, such
as different stages of site evaluation, the allocation of responsibility among
PRP's and the assertion of additional claims. The Company adjusts its accruals
as new remediation requirements are defined, as information becomes available
permitting reasonable estimates to be made, and to reflect new and changing
facts. At July 28, 1996, and July 30, 1995, the Company's environmental accruals
totaled $1,322,000 and $289,000, respectively and related to its share of
mandated payments as a PRP for remediation of the Resolve site. The Company
believes it has identified and accrued for its material likely environmental
exposures and that any
F-35
<PAGE> 137
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
additional liability relating to identified sites is immaterial to its
liquidity, financial position and results of operations and liquidity.
During fiscal 1995 and 1994, the Company paid approximately $33,000 and
$370,000, respectively, for mandated payments as a PRP for remediation of the
Resolve site which was charged against previously accrued liabilities.
Additionally, in May 1994, the Company settled alleged waste handling violations
through payment of a $300,000 fine. The settlement resolved all claims by the
state of New Hampshire arising out of a 1990 review.
Litigation
In June 1994, the Company was served with a summons and complaint with
respect to a purported class action suit brought in the United States District
Court for the District of New Hampshire. The complaint alleged that the Company
violated Rule 10b-5 of the Securities Exchange Act of 1934 by a purported
dissemination of misleading information as to its financial position in
connection with the purchase and sale of its securities. The Company was
successful in having the complaint dismissed, and second amended complaint
dismissed with prejudice. The plaintiff subsequently appealed this decision to
the First Circuit Court of Appeals. Subsequent to year end, the Appeals Court
affirmed the District Court dismissal. Although an appeal to the U.S. Supreme
Court is possible, legal counsel believes it is unlikely given the nature of the
case. If the plaintiff is successful, Bailey intends to vigorously assert
defenses which it believes to be meritorious.
The Company is also involved in other litigation arising in the normal
course of business. Management does not believe that such litigation will have a
material impact on its financial position or results of operations or liquidity.
Development Joint Venture
The Company has entered into a joint venture for the development of certain
non-automotive plastic products. The joint venture, a limited liability company
named Rail Pak, LLC (the Venture), is 60% owned by the Company and 40% by an
unrelated third party corporation. Under the agreement, the Company has
committed to providing limited technical support and to funding initial product
development up to $300,000 (Phase I) and at the option of the Company, at its
sole discretion, may either elect to continue funding for production (Phase II)
or may surrender its interests in the venture with no remaining liability.
During the fiscal year ended July 30, 1995, the Company funded the venture in
the cash amount of $240,000 and is committed to an additional $60,000 of funding
to the Venture for Phase I. Due to the uncertainty of continuation of the
Venture on the part of the Company, Phase I costs are expensed as engineering
costs in the Company's financial accounts. In the event that the Company elects
to proceed with funding Phase II (the production phase), the accounts of the
Venture will be included in the Company's consolidated financial statements.
Nonemployee Directors' Retirement Agreements
In October 1994, four nonemployee directors rescinded existing agreements
issued during fiscal 1994 in exchange for new retirement agreements, the terms
of which were under negotiation. The new agreements are expected to provide a
maximum benefit of $60,000 per year for five years after retirement from the
board, plus lifetime participation in the Company's healthcare plan. On June 5,
1996 the directors entered into non-compete agreements, which will take effect
upon their termination of services. The agreements provide $60,000 per year for
five years and other fringe benefits.
F-36
<PAGE> 138
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
Leases
The Company leases certain office facilities, machinery and equipment and
automobiles under operating leases with unexpired terms ranging from one to four
years. Payments due under operating leases over the next five years are as
follows for the fiscal years ending (in thousands):
<TABLE>
<CAPTION>
<S> <C>
July 28, 1997............................................... $484
July 27, 1998............................................... 155
July 26, 1999............................................... 62
July 25, 2000............................................... 22
----
$723
====
</TABLE>
Rent expense under operating leases was $1,335,000, $911,000 and $589,000
for the fiscal years ended 1996, 1995 and 1994, respectively.
Letters of Credit
At July 28, 1996 and July 30, 1995, the Company was contingently liable for
$2,300,000 and $1,096,000 related to letters of credit outstanding which
guarantee various trade activities.
(16) SUPPLEMENTAL CASH FLOW INFORMATION
Selected cash payments and noncash activities were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Cash paid for:
Interest.................................................. $4,738 $3,061 $ 1,716
Income taxes.............................................. 55 1,206 2,680
Net assets acquired through issuance of debt in the
Premix/EMS Acquisition (Notes 2 and 8).................... -- -- 16,480
Minimum pension liability charge to equity (Note 10)........ 1,085 97 306
Gain on debt extinguishment (Note 8)........................ -- -- 165
Tax benefit from exercise of stock options.................. -- 193 105
Assets acquired under capitalized leases.................... 809 1,469 212
</TABLE>
F-37
<PAGE> 139
BAILEY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- Continued
(17) QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1995
Net sales..................................... $45,177 $41,057 $47,729 $34,265 $168,228
Gross profit (loss)........................... 6,740 5,479 5,798 (1,203) 16,814
Operating income (loss)....................... 3,355 1,777 1,964 (5,582) 1,514
Net income (loss)............................. 1,473 522 588 (4,162) (1,579)
Net income (loss) per share -- primary........ $.27 $.10 $.11 $(.77) $(.29)
Net income (loss) per share -- fully
diluted..................................... $.25 $.10 $.11 $(.77) $(.29)
1994
Net sales..................................... 26,903 26,653 30,677 24,080 108,313
Gross profit (loss)........................... 4,058 3,958 4,834 3,084 15,934
Operating income (loss)....................... 2,076 1,853 2,098 594 6,621
Net income (loss)............................. 940 867 894 65 2,766
Net income (loss) per share -- primary(1)..... $.19 $.16 $.16 $.01 $.52
Net income (loss) per share -- fully
diluted..................................... $.18 $.16 $.16 $.01 $.52
</TABLE>
- ------------
(1) Note: Due to rounding, the sum of quarterly figures do not equal full year
net income per share
(18) SUBSEQUENT EVENTS
On August 26, 1996 all of the Company's stock was acquired by Venture
Holdings Trust, a privately held company, for an aggregate purchase price of $57
million. The purchase price reflects a per share price of $8.75 for each of the
outstanding shares of the Company including all of the outstanding options and
warrants. As a result of the acquisition, the Company is no longer required to
publicly file its financial statements with the Securities and Exchange
Commission. In connection with the acquisition, the following debt was
refinanced:
<TABLE>
<S> <C>
Revolving Credit Facility................................... $18,024
Capital Leases.............................................. 1,534
9% Convertible Subordinated notes........................... 1,250
Term note payable to bank................................... 6,467
Fixed asset note............................................ 5,047
Secured promissory note..................................... 7,667
8% convertible debenture.................................... 9,000
Fixed Maturity carve out note............................... 4,000
-------
$52,989
=======
</TABLE>
F-38
<PAGE> 140
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME AND OPERATIONS
The following unaudited pro forma condensed consolidated statement of
income and operating data of the Company, for the year ended December 31, 1996,
gives effect to the acquisition of Bailey as if it occurred on January 1, 1996.
The unaudited pro forma condensed consolidated financial information does not
purport to represent what the Company's results of operations would actually
have been had the acquisition of Bailey occurred on the date indicated above or
to project the Company's results of operations for any future date or period.
This unaudited pro forma condensed consolidated financial information should be
read in conjunction with the accompanying notes and with the historical
financial statements of the Company and the financial statement of Bailey,
including, in each case, the notes thereto, and the information set forth in
"Summary Financial and Operating Data," "Selected Consolidated Financial Data"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations," all included elsewhere herein.
P-1
<PAGE> 141
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME AND OPERATING DATA
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
UNAUDITED
BAILEY CORPORATION VENTURE HOLDINGS PRO FORMA PRO FORMA
AND SUBSIDIARIES(1) TRUST(2) ADJUSTMENTS TOTAL
------------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales.............................. $119,341 $351,777 $ 0 $471,118
Cost of Sales.......................... 112,273 302,940 (8,607)A 406,129
(477)B
Gross Profit........................... 7,068 48,837 9,084 64,989
Selling & Administrative............... 10,240 26,588 (474)A 38,784
1,148C
1,428D
786E
(932)F
Payments to Beneficiaries.............. 0 666 0 666
Income from Operations................. (3,172) 21,583 7,128 25,539
Interest Expense....................... 3,048 19,248 4,130G 26,426
Income before Extraordinary............ (6,220) 2,335 2,998 (887)
Extraordinary Loss..................... 0 2,738 0 2,738
Income After Extraordinary Loss........ (6,220) (403) 2,998 (3,625)
Income Taxes........................... (1,759) 336 1,200H (223)
Net Income............................. $ (4,461) $ (739) $ 1,798 $ (3,402)
Depreciation & Amortization............ 4,595 22,628 3,362 30,585
EBITDA................................. 1,423 44,877 10,490 56,790
</TABLE>
- ---------------
(1) Financial information presented includes Bailey Corporation and Subsidiaries
for the period from January 1, 1996 through August 25, 1996.
(2) Financial information presented includes Venture Holding Trust for the
twelve months ended December 31, 1996 and Bailey Corporation and
Subsidiaries for the period from August 26, 1996 through December 31, 1996.
A The pro forma adjustment represents the savings related to headcount
reductions subsequent to the acquisition of Bailey Corporation and
Subsidiaries of approximately 300 employees, that resulted from the
consolidation of certain functions. The majority of the headcount reductions
occurred in November 1996.
B The pro forma adjustment represents volume pricing discounts related to
combining the individual entities procurement of raw materials with respect
to an existing supplier.
C The pro forma adjustment represents the amortization of the goodwill that
resulted from the Bailey Corporation and Subsidiaries acquisition over a
thirty year period, net of amortization previously recognized on goodwill
related to Bailey Corporation and Subsidiaries (pre-acquisition) from 1/1/96
to 8/25/96.
D The pro forma adjustment represents the depreciation expense related to the
revaluation of acquired fixed assets. The write-up of machinery and
equipment is depreciated over a range of 5 to 20 years and the write-up of
buildings is depreciated over a range of 10 to 40 years.
E The pro forma adjustment represents the amortization of transaction and
financing costs resulting from the acquisition over the term of the
additional debt, net of amortization previously recognized on deferred
financing costs related to Bailey Corporation and Subsidiaries
(pre-acquisition) from 1/1/96 to 8/25/96.
F The pro forma adjustment represents the elimination of redundant general and
administrative expenses.
G The pro forma adjustment represents the incremental interest expense
necessary to reflect the total interest expense on the outstanding debt of
the combined entity.
H The pro forma adjustment represents the income tax effect of pro forma
adjustments A thru G at the applicable statutory rates of approximately 40%.
P-2
<PAGE> 142
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFERING
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE ISSUERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN
THOSE TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUERS
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>
Summary................................. 1
Risk Factors............................ 14
Exchange Offer.......................... 19
Use of Proceeds......................... 27
Capitalization.......................... 27
Selected Consolidated Financial Data.... 28
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 30
Business................................ 35
Management.............................. 50
Stock Ownership......................... 53
Certain Transactions.................... 53
The Trust............................... 57
Description of Certain Indebtedness..... 58
Description of Notes.................... 60
Certain Federal Income Tax
Considerations........................ 88
Plan of Distribution.................... 91
Legal Matters........................... 92
Experts................................. 92
Index to Consolidated Financial
Statements............................ F-1
Unaudited Pro Forma Condensed Statement
of Income and Operations.............. P-1
</TABLE>
Until , 1997 (40 days after the date of this Prospectus) all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
======================================================
======================================================
$205,000,000
VENTURE LOGO
VENTURE HOLDINGS TRUST
SERIES B 9 1/2% SENIOR
NOTES DUE 2005
------------------------------
PROSPECTUS
, 1997
------------------------------
======================================================
<PAGE> 143
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 561 through 571 of the Michigan Business Corporation Act set forth
the conditions and limitations governing the indemnification of directors,
officers and other persons.
Reference is made to Sections 5.9 and 9.1 of Venture Holdings Trust, filed
as Exhibit 10.1, which set forth provisions relating to the liability and
indemnification of the trustee, settlor, beneficiary and special advisor(s) of
the Trust. Reference is also made to Articles IX, IX, VIII, VIII, VIII and VIII
of the Articles of Incorporation of Vemco, Inc., Venture Industries Corporation,
Venture Mold & Engineering Corporation, Venture Leasing Company, Vemco Leasing,
Inc. and Venture Service Company, respectively, copies of which are filed as
Exhibits 3.1, 3.2, 3.3, 3.4, 3.5 and 3.7, respectively, which provide for the
indemnification of directors against certain liabilities to the full extent
permitted by the aforesaid sections of the Michigan Business Corporation Act. In
addition, reference is also made to Articles V, V, V, VI, VI, VI and VI, of the
Bylaws of Vemco, Inc., Venture Industries Corporation, Venture Mold &
Engineering Corporation, Venture Leasing Company, Vemco Leasing, Inc., Venture
Holdings Corporation and Venture Service Company, respectively, filed as
Exhibits 3.8, 3.9, 3.10, 3.11, 3.12, 3.13 and 3.14, respectively, which
generally authorize the board of each Issuer to provide indemnification for
directors, officers and certain other persons of the Issuers to the full extent
permitted by Michigan law.
The Bylaws of the Registrants (except Venture Holdings Trust) also
generally authorize them to purchase and maintain insurance on behalf of their
directors, officers and certain other employees and agents against any liability
asserted against them in such capacities or arising out of their status as such
whether or not the Registrants would have the power to indemnify such persons
against such liabilities under the provisions of the Bylaws or Michigan law. The
Registrants, along with certain affiliated companies, maintain primary directors
and officers liability insurance coverage in the amount of $3.0 million, and
have received a binder for excess directors and officers liability coverage in
the amount of $3.0 million.
The Issuers entered into agreements with certain of their officers and
directors for indemnification and advancement of expenses in 1994. Such
indemnification agreements are incorporated by reference as Exhibits 10.18,
10.19 and 10.20.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<S> <C> <C>
3.1 * Restated Articles of Incorporation of Vemco, Inc.
3.2 * Restated Articles of Incorporation of Venture Industries
Corporation
3.3 * Restated Articles of Incorporation of Venture Mold &
Engineering Corporation
3.4 * Restated Articles of Incorporation of Venture Leasing
Company
3.5 * Restated Articles of Incorporation of Vemco Leasing, Inc.
3.6 * Restated Articles of Incorporation of Venture Holdings
Corporation
3.7 * Restated Articles of Incorporation of Venture Service
Company
3.8 *** Bylaws of Vemco, Inc. filed as Exhibit 3.9 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
3.9 *** Bylaws of Venture Industries Corporation filed as Exhibit
3.10 to the Registrants' Registration Statement on Form S-1,
effective February 8, 1994 and incorporated herein by
reference.
3.10 *** Bylaws of Venture Mold & Engineering Corporation filed as
Exhibit 3.11 to the Registrants' Registration Statement on
Form S-1, effective February 8, 1994 and incorporated herein
by reference.
</TABLE>
II-1
<PAGE> 144
3.11 *** Bylaws of Venture Leasing Company filed as Exhibit 3.12 to
the Registrants' Registration Statement on Form S-1,
effective February 8, 1994 and incorporated herein by
reference.
3.12 *** Bylaws of Vemco Leasing, Inc. filed as Exhibit 3.13 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
3.13 *** Bylaws of Venture Holdings Corporation filed as Exhibit 3.14
to the Registrants' Registration Statement on Form S-1,
effective February 8, 1994 and incorporated herein by
reference.
3.14 *** Bylaws of Venture Service Company filed as Exhibit 3.15 to
the Registrants' Registration Statement on Form S-1,
effective February 8, 1994 and incorporated herein by
reference.
4.1 ** Indenture for 9 1/2% Senior Notes due 2005 (including form
of Notes)
4.2 *** Indenture for 9 3/4% Senior Subordinated Notes due 2004
(including form of Notes) filed as Exhibit 4.1 to the
Registrants' Annual Report on Form 10-K for the fiscal year
ended December 31, 1993 and incorporated herein by
reference.
4.2.1 ** First Supplemental Indenture, dated August 8, 1996, to the
Indenture filed as Exhibit 4.2.
4.2.2 ** Supplemental Indenture of Vemco Acquisition Corp., as
Supplemental Guarantor, to the Indenture filed as Exhibit
4.2.
4.2.3 ** Supplemental Indenture of Venture Grand Rapids L.L.C., as
Supplemental Guarantor, to the Indenture filed as Exhibit
4.2.
4.2.4 ** Supplemental Indenture of Venture Western Michigan Ltd., as
Supplemental Guarantor, to the Indenture filed as Exhibit
4.2.
4.2.5 ** Supplemental Indenture of Bailey Corporation as Supplemental
Guarantor, to the Indenture filed as Exhibit 4.2.
4.2.6 ** Supplemental Indenture of Bailey Manufacturing Corporation,
as Supplemental Guarantor, to the Indenture filed as Exhibit
4.2.
4.2.7 ** Supplemental Indenture of Bailey Transportation Products,
Inc., as Supplemental Guarantor, to the Indenture filed as
Exhibit 4.2.
4.3 ** Registrant Rights Agreement, dated as of July 9, 1997 among
Venture Holdings Trust, Vemco, Inc., Venture Industries
Corporation, Venture Holdings Corporation Inc., Venture
Leasing Company, Venture Mold & Engineering Corporation and
Venture Service Company, as Issuers, and First Chicago
Capital Markets, Inc., as Initial Purchaser.
5.1 ** Opinion of Dykema Gossett PLLC
10.1 ** Amended and Restated Venture Holdings Trust effective as of
February 16, 1994.
10.2 ** Amended and Restated Credit Agreement dated as of July 9,
1997 among Venture Holdings Trust, certain Borrowing
Subsidiaries (as defined therein), the Lenders party thereto
and NBD Bank, as Agent.
10.3 ** Corporate Opportunity Agreement, dated February 16, 1994, by
and between Larry J. Winget and Comerica Bank, as Indenture
Trustee.
10.3.1 ** Agreement dated July 9, 1997 by Larry J. Winget to be bound
by the terms of the Corporate Opportunity Agreement, filed
as Exhibit 10.3, for the benefit of the holders of the
Issuers' 9 1/2% Senior Notes due 2005.
10.4 *** Service Agreement dated as of January 1, 1992 by and between
Venture Industries Corporation, Vemco, Inc., Venture Mold &
Engineering Corporation, Venture Leasing Company, Vemco
Leasing, Inc., Deluxe Pattern Corporation, Venture
Automotive Corp., Venture Sales & Engineering Corp. and
Venture Service Company filed as Exhibit 10.11 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
II-2
<PAGE> 145
<TABLE>
<S> <C> <C>
10.5 *** Lease dated as of November 1, 1990 by and among Venture
Industries Corporation, Venture Technical Development
Company, Venture Mold & Engineering Corporation, Vemco,
Inc., Deluxe Pattern Company, Venture Automotive Corp.,
Larry J. Winget and Alicia Winget (Acropolis Resort) filed
as Exhibit 10.14 to the Registrants' Registration Statement
on Form S-1, effective February 8, 1994 and incorporated
herein by reference.
10.6 *** Real Estate Lease Agreement dated December 7, 1988 by and
between Harper Properties of Clinton Township Limited
Partnership and Venture Industries Corporation (Harper
Lease) filed as Exhibit 10.15 to the Registrants'
Registration Statement on Form S-1, effective February 8,
1994 and incorporated herein by reference.
10.6.1 *** First amendment to Real Estate Lease Agreement dated
December 30, 1993 by and between Harper Properties of
Clinton Township Limited Partnership and Venture Industries
Corporation (Harper Lease) filed as Exhibit 10.15.1 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.7 *** Machinery and Equipment Lease Agreement dated as of December
7, 1988 by and between Realven Corporation and Venture
Industries Corporation (Realven Lease) filed as Exhibit
10.16 to the Registrants Registration Statement on Form S-1,
effective February 8, 1994 and incorporated herein by
reference.
10.7.1 *** First amendment to Machinery and Equipment Lease Agreement
dated December 30, 1993 by and between Realven Corporation
and Venture Industries Corporation (Realven Lease) filed as
Exhibit 10.16.1 to the Registrants' Registration Statement
on Form S-1, effective February 8, 1994 and incorporated
herein by reference.
10.8 *** Real Estate Lease Agreement dated as of January 27, 1989 by
and between Venture Real Estate, Inc. and Venture Mold &
Engineering Corporation (Commerce Road facility) filed as
Exhibit 10.17 to the Registrants' Registration Statement on
Form S-1, effective February 8, 1994 and incorporated herein
by reference.
10.9 *** Real Estate Lease Agreement dated as of August 1, 1992 by
and between Venture Real Estate, Inc. and Venture Industries
Corporation (17400 Malyn) filed as Exhibit 10.18 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.10 *** Real Estate Lease Agreement dated as of August 1, 1992 by
and between Venture Real Estate, Inc. and Venture Industries
Corporation (17350 Malyn)filed as Exhibit 10.19 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.11 *** Farm and Country Real Estate Company and Vemco, Inc. Real
Estate Availability and Usage Agreement dated April 24, 1992
filed as Exhibit 10.20 to the Registrants' Registration
Statement on Form S-1, effective February 8, 1994 and
incorporated herein by reference.
10.12 *** Sales Representation Agreement by and between Vemco, Inc.
and Venture Sales & Engineering Corporation filed as Exhibit
10.21 to the Registrants' Registration Statement on Form
S-1, effective February 8, 1994 and incorporated herein by
reference.
10.12.1 *** Sales Representation Agreement by and between Venture
Industries Corporation and Venture Sales & Engineering
Corporation filed as Exhibit 10.21.1 to the Registrants'
Registration Statement on Form S-1, effective February 8,
1994 and incorporated herein by reference.
10.13 *** Manufacturing Agreement by and between Venture Automotive
Corp. and Vemco, Inc. filed as Exhibit 10.22 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.14 *** Machinery Usage Agreements between Larry J. Winget Living
Trust and Venture Industries Corporation filed as Exhibit
10.23 to the Registrants' Registration Statement on Form
S-1, effective February 8, 1994 and incorporated herein by
reference.
</TABLE>
II-3
<PAGE> 146
10.14.1 *** Machinery Usage Agreement between Larry J. Winget Living
Trust and Vemco, Inc. filed as Exhibit 10.23.1 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.15 *** Machinery Usage Agreement between Deluxe Pattern Corporation
and Venture Mold & Engineering filed as Exhibit 10.24 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.16 *** Form of Machinery and Equipment Lease Agreement between
Venture Industries Corporation and Nova Industries, Inc.
filed as Exhibit 10.25 to the Registrants' Registration
Statement on Form S-1, effective February 8, 1994 and
incorporated herein by reference.
10.17 *** Form of Machinery and Equipment Lease Agreement between
Venture Industries Corporation and Nova Industries, Inc.
filed as Exhibit 10.26 to the Registrants' Registration
Statement on Form S-1, effective February 8, 1994 and
incorporated herein by reference.
10.18 *** Indemnification Agreement between the Company and Larry J.
Winget filed as Exhibit 10.25 to the Registrants' Annual
Report on Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.
10.19 *** Indemnification Agreement between the Company and Michael G.
Torakis filed as Exhibit 10.26 to the Registrants' Annual
Report on Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.
10.20 *** Indemnification Agreement between the Company and A. James
Schutz filed as Exhibit 10.27 to the Registrants' Annual
Report on Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.
10.21 *** Indemnity Agreement between Venture Holdings Trust and
Stephen M. Cheifetz filed as Exhibit 10.31 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.22 *** Insurance Policies issued by Pompo Insurance & Indemnity
Company Ltd. to the Registrants and affiliated companies
filed as Exhibit 10.32 to the Registrants' Registration
Statement on Form S-1, effective February.
10.23 ** Real Estate Usage Agreement between Venture Real Estate
Acquisition Company and Venture Industries Corporation dated
February 15, 1995.
10.24 ** Machinery Usage Agreement between Venture Equipment
Acquisition Company and Venture Industries Corporation dated
February 15, 1995.
10.25 ** Lease between the Director of Development of the State of
Ohio and Bailey Transportation Products, Inc. dated as of
July 1, 1992 (Ohio Enterprise Bond Fund Program).
10.26 ** Loan Agreement between the Director of Development of the
State of Ohio and Bailey Transportation Products, Inc. dated
as of July 29, 1992.
10.27 ** Agreement of Venture Industries Corporation and Affiliates
to Lease and Sublease the Operating Assets of AutoStyle
Plastics, Inc., dated June 2, 1996.
10.27.1 ** Assignment of the AutoStyle Lease Agreement, filed as
Exhibit 10.27, to Venture Holdings Trust, dated September 1,
1996.
10.27.2 ** Assignment of the AutoStyle Lease Agreement, filed as
Exhibit 10.27, from Venture Holdings Trust to Venture
Western Michigan, Ltd., dated September 1, 1996.
10.28 ** Guaranty, by Venture Industries Corporation and its
affiliated companies, of up to $3.5 million of obligations
of Atlantic Automotive Components, L.L.C., dated July 1,
1996.
10.29 ** Venture Industries Group Participation Agreement between
Venture Industries Corporation and Venture Asia Pacific Pty
Ltd.
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<PAGE> 147
<TABLE>
<S> <C> <C>
10.30 ** License Agreement as to Proprietary Technologies and
Processes, dated July 2, 1997, between Larry J. Winget and
Venture Industries Corporation, Vemco, Inc., Venture Mold &
Engineering Corporation, Venture Industries Canada Ltd.,
Vemco Leasing, Inc., Venture Leasing Company,Venture Service
Company, Venture Holdings Corporation and Venture Holdings
Trust
10.31 ** License Agreement as to Patents, dated July 2, 1997, between
Larry J. Winget and Venture Industries Corporation, Vemco,
Inc., Venture Mold & Engineering Corporation, Venture
Industries Canada Ltd., Vemco Leasing, Inc., Venture Leasing
Company, Venture Service Company, Venture Holdings
Corporation and Venture Holdings Trust
12 ** Statement re Computation of Ratios
21 ** Subsidiaries of the Registrants
23.1 ** Consent of Deloitte & Touche LLP
23.2 ** Consent of Dykema Gossett PLLC (contained in their opinion
filed as Exhibit 5.1)
23.3 ** Consent of KPMG Peat Marwick LLP
24 ** Power of Attorney (included on signature page to this
Registration Statement)
25 ** Statement of Eligibility of Trustee
27 ** Financial Data Schedule
99.1 ** Form of Letter of Transmittal
99.2 ** Form of Notice of Guaranteed Delivery
99.3 ** Form of Letter to Registered Holders and Depository Trust
Company Participants
99.4 ** Form of Letter to Clients
99.5 ** Form of Instruction to Registered Holder and/or Book Entry
Transfer Participants from Beneficial Owner
</TABLE>
- ------------
* To be filed by amendment.
** Filed herewith.
*** Previously filed.
II-5
<PAGE> 148
ITEM 22. UNDERTAKINGS
The undersigned registrants hereby undertake:
(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 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.
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 Act 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 any 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 Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-6
<PAGE> 149
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Detroit, State of
Michigan, on August 27, 1997.
VENTURE HOLDINGS TRUST
By: /s/ LARRY J. WINGET
------------------------------------
Larry J. Winget, Trustee
VEMCO, INC., VENTURE INDUSTRIES
CORPORATION, VENTURE MOLD &
ENGINEERING CORPORATION, VENTURE
LEASING COMPANY, VEMCO LEASING,
INC., VENTURE SERVICE COMPANY AND
VENTURE HOLDINGS CORPORATION
By: /s/ MICHAEL G. TORAKIS
------------------------------------
Michael G. Torakis,
President and Chief Financial
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael G. Torakis and James E. Butler,
Jr., and each of them, jointly and severally, his true and lawful
attorneys-in-fact and agents, each with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto such 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 and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents, or any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on August 27, 1997 in Detroit, Michigan.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
/s/ LARRY J. WINGET Principal Executive Officer and director of each
- ------------------------------------------------ registrant
Larry J. Winget
/s/ MICHAEL G. TORAKIS Principal Financial Officer, and director of each
- ------------------------------------------------ registrant
Michael G. Torakis
/s/ A. JAMES SCHUTZ Director of each registrant
- ------------------------------------------------
A. James Schutz
/s/ JAMES E. BUTLER, JR. Principal Accounting Officer and Director of
- ------------------------------------------------ Venture Holdings Corporation
James E. Butler, Jr.
</TABLE>
II-7
<PAGE> 150
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
3.1 * Restated Articles of Incorporation of Vemco, Inc.
3.2 * Restated Articles of Incorporation of Venture Industries
Corporation
3.3 * Restated Articles of Incorporation of Venture Mold &
Engineering Corporation
3.4 * Restated Articles of Incorporation of Venture Leasing
Company
3.5 * Restated Articles of Incorporation of Vemco Leasing, Inc.
3.6 * Restated Articles of Incorporation of Venture Holdings
Corporation
3.7 * Restated Articles of Incorporation of Venture Service
Company
3.8 *** Bylaws of Vemco, Inc. filed as Exhibit 3.9 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
3.9 *** Bylaws of Venture Industries Corporation filed as Exhibit
3.10 to the Registrants' Registration Statement on Form S-1,
effective February 8, 1994 and incorporated herein by
reference.
3.10 *** Bylaws of Venture Mold & Engineering Corporation filed as
Exhibit 3.11 to the Registrants' Registration Statement on
Form S-1, effective February 8, 1994 and incorporated herein
by reference.
3.11 *** Bylaws of Venture Leasing Company filed as Exhibit 3.12 to
the Registrants' Registration Statement on Form S-1,
effective February 8, 1994 and incorporated herein by
reference.
3.12 *** Bylaws of Vemco Leasing, Inc. filed as Exhibit 3.13 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
3.13 *** Bylaws of Venture Holdings Corporation filed as Exhibit 3.14
to the Registrants' Registration Statement on Form S-1,
effective February 8, 1994 and incorporated herein by
reference.
3.14 *** Bylaws of Venture Service Company filed as Exhibit 3.15 to
the Registrants' Registration Statement on Form S-1,
effective February 8, 1994 and incorporated herein by
reference.
4.1 ** Indenture for 9 1/2% Senior Notes due 2005 (including form
of Notes)
4.2 *** Indenture for 9 3/4% Senior Subordinated Notes due 2004
(including form of Notes) filed as Exhibit 4.1 to the
Registrants' Annual Report on Form 10-K for the fiscal year
ended December 31, 1993 and incorporated herein by
reference.
4.2.1 ** First Supplemental Indenture, dated August 8, 1996, to the
Indenture filed as Exhibit 4.2.
4.2.2 ** Supplemental Indenture of Vemco Acquisition Corp., as
Supplemental Guarantor, to the Indenture filed as Exhibit
4.2.
4.2.3 ** Supplemental Indenture of Venture Grand Rapids L.L.C., as
Supplemental Guarantor, to the Indenture filed as Exhibit
4.2.
4.2.4 ** Supplemental Indenture of Venture Western Michigan Ltd., as
Supplemental Guarantor, to the Indenture filed as Exhibit
4.2.
4.2.5 ** Supplemental Indenture of Bailey Corporation as Supplemental
Guarantor, to the Indenture filed as Exhibit 4.2.
4.2.6 ** Supplemental Indenture of Bailey Manufacturing Corporation,
as Supplemental Guarantor, to the Indenture filed as Exhibit
4.2.
4.2.7 ** Supplemental Indenture of Bailey Transportation Products,
Inc., as Supplemental Guarantor, to the Indenture filed as
Exhibit 4.2.
4.3 ** Registrant Rights Agreement, dated as of July 9, 1997 among
Venture Holdings Trust, Vemco, Inc., Venture Industries
Corporation, Venture Holdings Corporation Inc., Venture
Leasing Company, Venture Mold & Engineering Corporation and
Venture Service Company, as Issuers, and First Chicago
Capital Markets, Inc., as Initial Purchaser.
</TABLE>
<PAGE> 151
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
5.1 ** Opinion of Dykema Gossett PLLC
10.1 ** Amended and Restated Venture Holdings Trust effective as of
February 16, 1994.
10.2 ** Amended and Restated Credit Agreement dated as of July 9,
1997 among Venture Holdings Trust, certain Borrowing
Subsidiaries (as defined therein), the Lenders party thereto
and NBD Bank, as Agent.
10.3 ** Corporate Opportunity Agreement, dated February 16, 1994, by
and between Larry J. Winget and Comerica Bank, as Indenture
Trustee.
10.3.1 ** Agreement dated July 9, 1997 by Larry J. Winget to be bound
by the terms of the Corporate Opportunity Agreement, filed
as Exhibit 10.3, for the benefit of the holders of the
Issuers' 9 1/2% Senior Notes due 2005.
10.4 *** Service Agreement dated as of January 1, 1992 by and between
Venture Industries Corporation, Vemco, Inc., Venture Mold &
Engineering Corporation, Venture Leasing Company, Vemco
Leasing, Inc., Deluxe Pattern Corporation, Venture
Automotive Corp., Venture Sales & Engineering Corp. and
Venture Service Company filed as Exhibit 10.11 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.5 *** Lease dated as of November 1, 1990 by and among Venture
Industries Corporation, Venture Technical Development
Company, Venture Mold & Engineering Corporation, Vemco,
Inc., Deluxe Pattern Company, Venture Automotive Corp.,
Larry J. Winget and Alicia Winget (Acropolis Resort) filed
as Exhibit 10.14 to the Registrants' Registration Statement
on Form S-1, effective February 8, 1994 and incorporated
herein by reference.
10.6 *** Real Estate Lease Agreement dated December 7, 1988 by and
between Harper Properties of Clinton Township Limited
Partnership and Venture Industries Corporation (Harper
Lease) filed as Exhibit 10.15 to the Registrants'
Registration Statement on Form S-1, effective February 8,
1994 and incorporated herein by reference.
10.6.1 *** First amendment to Real Estate Lease Agreement dated
December 30, 1993 by and between Harper Properties of
Clinton Township Limited Partnership and Venture Industries
Corporation (Harper Lease) filed as Exhibit 10.15.1 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.7 *** Machinery and Equipment Lease Agreement dated as of December
7, 1988 by and between Realven Corporation and Venture
Industries Corporation (Realven Lease) filed as Exhibit
10.16 to the Registrants Registration Statement on Form S-1,
effective February 8, 1994 and incorporated herein by
reference.
10.7.1 *** First amendment to Machinery and Equipment Lease Agreement
dated December 30, 1993 by and between Realven Corporation
and Venture Industries Corporation (Realven Lease) filed as
Exhibit 10.16.1 to the Registrants' Registration Statement
on Form S-1, effective February 8, 1994 and incorporated
herein by reference.
10.8 *** Real Estate Lease Agreement dated as of January 27, 1989 by
and between Venture Real Estate, Inc. and Venture Mold &
Engineering Corporation (Commerce Road facility) filed as
Exhibit 10.17 to the Registrants' Registration Statement on
Form S-1, effective February 8, 1994 and incorporated herein
by reference.
10.9 *** Real Estate Lease Agreement dated as of August 1, 1992 by
and between Venture Real Estate, Inc. and Venture Industries
Corporation (17400 Malyn) filed as Exhibit 10.18 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
</TABLE>
<PAGE> 152
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
10.10 *** Real Estate Lease Agreement dated as of August 1, 1992 by
and between Venture Real Estate, Inc. and Venture Industries
Corporation (17350 Malyn)filed as Exhibit 10.19 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.11 *** Farm and Country Real Estate Company and Vemco, Inc. Real
Estate Availability and Usage Agreement dated April 24, 1992
filed as Exhibit 10.20 to the Registrants' Registration
Statement on Form S-1, effective February 8, 1994 and
incorporated herein by reference.
10.12 *** Sales Representation Agreement by and between Vemco, Inc.
and Venture Sales & Engineering Corporation filed as Exhibit
10.21 to the Registrants' Registration Statement on Form
S-1, effective February 8, 1994 and incorporated herein by
reference.
10.12.1 *** Sales Representation Agreement by and between Venture
Industries Corporation and Venture Sales & Engineering
Corporation filed as Exhibit 10.21.1 to the Registrants'
Registration Statement on Form S-1, effective February 8,
1994 and incorporated herein by reference.
10.13 *** Manufacturing Agreement by and between Venture Automotive
Corp. and Vemco, Inc. filed as Exhibit 10.22 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.14 *** Machinery Usage Agreements between Larry J. Winget Living
Trust and Venture Industries Corporation filed as Exhibit
10.23 to the Registrants' Registration Statement on Form
S-1, effective February 8, 1994 and incorporated herein by
reference.
10.14.1 *** Machinery Usage Agreement between Larry J. Winget Living
Trust and Vemco, Inc. filed as Exhibit 10.23.1 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.15 *** Machinery Usage Agreement between Deluxe Pattern Corporation
and Venture Mold & Engineering filed as Exhibit 10.24 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.16 *** Form of Machinery and Equipment Lease Agreement between
Venture Industries Corporation and Nova Industries, Inc.
filed as Exhibit 10.25 to the Registrants' Registration
Statement on Form S-1, effective February 8, 1994 and
incorporated herein by reference.
10.17 *** Form of Machinery and Equipment Lease Agreement between
Venture Industries Corporation and Nova Industries, Inc.
filed as Exhibit 10.26 to the Registrants' Registration
Statement on Form S-1, effective February 8, 1994 and
incorporated herein by reference.
10.18 *** Indemnification Agreement between the Company and Larry J.
Winget filed as Exhibit 10.25 to the Registrants' Annual
Report on Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.
10.19 *** Indemnification Agreement between the Company and Michael G.
Torakis filed as Exhibit 10.26 to the Registrants' Annual
Report on Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.
10.20 *** Indemnification Agreement between the Company and A. James
Schutz filed as Exhibit 10.27 to the Registrants' Annual
Report on Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.
10.21 *** Indemnity Agreement between Venture Holdings Trust and
Stephen M. Cheifetz filed as Exhibit 10.31 to the
Registrants' Registration Statement on Form S-1, effective
February 8, 1994 and incorporated herein by reference.
10.22 *** Insurance Policies issued by Pompo Insurance & Indemnity
Company Ltd. to the Registrants and affiliated companies
filed as Exhibit 10.32 to the Registrants' Registration
Statement on Form S-1, effective February.
10.23 ** Real Estate Usage Agreement between Venture Real Estate
Acquisition Company and Venture Industries Corporation dated
February 15, 1995.
</TABLE>
<PAGE> 153
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
10.24 ** Machinery Usage Agreement between Venture Equipment
Acquisition Company and Venture Industries Corporation dated
February 15, 1995.
10.25 ** Lease between the Director of Development of the State of
Ohio and Bailey Transportation Products, Inc. dated as of
July 1, 1992 (Ohio Enterprise Bond Fund Program).
10.26 ** Loan Agreement between the Director of Development of the
State of Ohio and Bailey Transportation Products, Inc. dated
as of July 29, 1992.
10.27 ** Agreement of Venture Industries Corporation and Affiliates
to Lease and Sublease the Operating Assets of AutoStyle
Plastics, Inc., dated June 2, 1996.
10.27.1 ** Assignment of the AutoStyle Lease Agreement, filed as
Exhibit 10.27, to Venture Holdings Trust, dated September 1,
1996.
10.27.2 ** Assignment of the AutoStyle Lease Agreement, filed as
Exhibit 10.27, from Venture Holdings Trust to Venture
Western Michigan, Ltd., dated September 1, 1996.
10.28 ** Guaranty, by Venture Industries Corporation and its
affiliated companies, of up to $3.5 million of obligations
of Atlantic Automotive Components, L.L.C., dated July 1,
1996.
10.29 ** Venture Industries Group Participation Agreement between
Venture Industries Corporation and Venture Asia Pacific Pty
Ltd.
10.30 ** License Agreement as to Proprietary Technologies and
Processes, dated July 2, 1997, between Larry J. Winget and
Venture Industries Corporation, Vemco, Inc., Venture Mold &
Engineering Corporation, Venture Industries Canada Ltd.,
Vemco Leasing, Inc., Venture Leasing Company,Venture Service
Company, Venture Holdings Corporation and Venture Holdings
Trust
10.31 ** License Agreement as to Patents, dated July 2, 1997, between
Larry J. Winget and Venture Industries Corporation, Vemco,
Inc., Venture Mold & Engineering Corporation, Venture
Industries Canada Ltd., Vemco Leasing, Inc., Venture Leasing
Company, Venture Service Company, Venture Holdings
Corporation and Venture Holdings Trust
12 ** Statement re Computation of Ratios
21 ** Subsidiaries of the Registrants
23.1 ** Consent of Deloitte & Touche LLP
23.2 ** Consent of Dykema Gossett PLLC (contained in their opinion
filed as Exhibit 5.1)
23.3 ** Consent of KPMG Peat Marwick LLP
24 ** Power of Attorney (included on signature page to this
Registration Statement)
25 ** Statement of Eligibility of Trustee
27 ** Financial Data Schedule
99.1 ** Form of Letter of Transmittal
99.2 ** Form of Notice of Guaranteed Delivery
99.3 ** Form of Letter to Registered Holders and Depository Trust
Company Participants
99.4 ** Form of Letter to Clients
99.5 ** Form of Instruction to Registered Holder and/or Book Entry
Transfer Participants from Beneficial Owner
</TABLE>
- ------------
* To be filed by amendment.
** Filed herewith.
*** Previously filed.
<PAGE> 1
EXHIBIT 4.1
================================================================================
VENTURE HOLDINGS TRUST,
VEMCO, INC.,
VEMCO LEASING, INC.,
VENTURE INDUSTRIES CORPORATION,
VENTURE HOLDINGS CORPORATION,
VENTURE LEASING COMPANY,
VENTURE MOLD & ENGINEERING CORPORATION
AND
VENTURE SERVICE COMPANY,
ISSUERS,
AND
---------------------------,
TRUSTEE
----------------
INDENTURE
Dated as of July 1, 1997
The Huntington National Bank
$205,000,000
9 1/2% Senior Notes due 2005
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
- ------- -------
<S> <C> <C>
310(a)(1) ............................................................... 7.10
(a)(2) ............................................................... 7.10
(a)(3) ............................................................... N.A.
(a)(4) ............................................................... N.A.
(a)(5) ............................................................... 7.10
(b) ............................................................... 7.8;
............................................................... 7.10;
............................................................... 12.2
(c) ............................................................... N.A.
311(a) ............................................................... 7.11
(b) ............................................................... 7.11
(c) ............................................................... N.A.
312(a) ............................................................... 2.5
(b) ............................................................... 12.3
(c) ............................................................... 12.3
313(a) ............................................................... 7.6
(b)(1) ............................................................... N.A.
(b)(2) ............................................................... 7.6
(c) ............................................................... 7.6;
............................................................... 12.2
(d) ............................................................... 7.6
314(a) ............................................................... 4.7;
............................................................... 4.6
(b) ............................................................... N.A.
(c)(1) ............................................................... 2.2;
............................................................... 7.2;
............................................................... 12.4
(c)(2) ............................................................... 7.2;
............................................................... 12.4
(c)(3) ............................................................... N.A
(d) ............................................................... N.A
(e) ............................................................... 12.5
(f) ............................................................... N.A.
315(a) ............................................................... 7.1(b)
(b) ............................................................... 7.5;
............................................................... 7.6;
............................................................... 12.2
(c) ............................................................... 7.1(a)
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
- ------- -------
<S> <C>
(d) ...................................................... 7.2;
...................................................... 6.11;
...................................................... 7.1(c)
(e) ...................................................... 6.14
316(a)(last sentence)................................................ 2.9
(a)(1)(A) ...................................................... 6.11
(a)(1)(B) ...................................................... 6.12
(a)(2) ...................................................... N.A.
(b) ...................................................... 6.12;
...................................................... 6.8
317(a)(1) ...................................................... 6.3
(a)(2) ...................................................... 6.4
(b) ...................................................... 2.4
318(a) ...................................................... 12.1
</TABLE>
- ------------------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be
deemed to be a part of the Indenture.
ii
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C> <C>
Section 1.1 Definitions....................................... 1
Section 1.2 Incorporation by Reference of TIA................. 24
Section 1.3 Rules of Construction............................. 24
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating................................... 25
Section 2.2 Execution and Authentication...................... 25
Section 2.3 Registrar and Paying Agent........................ 26
Section 2.4 Paying Agent to Hold Assets in Trust.............. 27
Section 2.5 Securityholder Lists.............................. 27
Section 2.6 Transfer and Exchange............................. 28
Section 2.7 Replacement Securities............................ 34
Section 2.8 Outstanding Securities............................ 35
Section 2.9 Treasury Securities............................... 35
Section 2.10 Temporary Securities.............................. 35
Section 2.11 Cancellation...................................... 36
Section 2.12 Defaulted Interest................................ 36
Section 2.13 CUSIP Numbers..................................... 36
ARTICLE III
REDEMPTION
Section 3.1 Right of Redemption............................... 37
Section 3.2 Notices to Trustee................................ 37
Section 3.3 Selection of Securities to Be Redeemed............ 38
Section 3.4 Notice of Redemption.............................. 38
Section 3.5 Effect of Notice of Redemption.................... 39
Section 3.6 Deposit of Redemption Price....................... 40
Section 3.7 Securities Redeemed in Part....................... 40
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities............................. 41
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
Section 4.2 Maintenance of Office or Agency............................ 41
Section 4.3 Limitation on Restricted Payments.......................... 42
Section 4.4 Corporate Existence........................................ 47
Section 4.5 Payment of Taxes and Other Claims.......................... 47
Section 4.6 Compliance Certificate; Notice of Default.................. 47
Section 4.7 Reports.................................................... 48
Section 4.8 Waiver of Stay, Extension or Usury Laws.................... 49
Section 4.9 Limitation on Transactions with Affiliates................. 49
Section 4.10 Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock................................. 50
Section 4.11 Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries..................................... 51
Section 4.12 Limitation on Liens Securing Indebtedness.................. 52
Section 4.13 Limitation on Sale of Assets and Subsidiary Stock.......... 53
Section 4.14 Limitation on Lines of Business............................ 58
Section 4.15 Limitation on Status as Investment Company................. 58
Section 4.16 Future Subsidiary Guarantors............................... 58
Section 4.17 Payment for Consent........................................ 58
Section 4.18 Corporate Opportunities.................................... 58
Section 4.19 Limitation on Amendments to Agreements..................... 59
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1 Limitation on Merger, Sale or Consolidation................ 60
Section 5.2 Successor Corporation Substituted.......................... 62
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default.......................................... 62
Section 6.2 Acceleration of Maturity Date; Rescission and
Annulment.................................................. 64
Section 6.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.................................................... 66
Section 6.4 Trustee May File Proofs of Claim........................... 67
Section 6.5 Trustee May Enforce Claims Without Possession of
Securities................................................. 67
Section 6.6 Priorities................................................. 68
Section 6.7 Limitation on Suits........................................ 68
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
Section 6.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest....................................... 69
Section 6.9 Rights and Remedies Cumulative............................. 70
Section 6.10 Delay or Omission Not Waiver............................... 70
Section 6.11 Control by Holders......................................... 70
Section 6.12 Waiver of Past Default..................................... 70
Section 6.13 Undertaking for Costs...................................... 71
Section 6.14 Restoration of Rights and Remedies......................... 71
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee.......................................... 72
Section 7.2 Rights of Trustee.......................................... 73
Section 7.3 Individual Rights of Trustee............................... 74
Section 7.4 Trustee's Disclaimer....................................... 74
Section 7.5 Notice of Default.......................................... 75
Section 7.6 Reports by Trustee to Holders.............................. 75
Section 7.7 Compensation and Indemnity................................. 75
Section 7.8 Replacement of Trustee..................................... 76
Section 7.9 Successor Trustee by Merger, Etc........................... 77
Section 7.10 Eligibility; Disqualification.............................. 78
Section 7.11 Preferential Collection of Claims against Issuers.......... 78
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 Option to Effect Legal Defeasance or Covenant
Defeasance................................................. 78
Section 8.2 Legal Defeasance and Discharge............................. 78
Section 8.3 Covenant Defeasance........................................ 79
Section 8.4 Conditions to Legal or Covenant Defeasance................. 79
Section 8.5 Deposited Cash and U.S. Government Obligations to Be Held
in Trust; Other Miscellaneous Provisions................... 81
Section 8.6 Repayment to Issuers....................................... 81
Section 8.7 Reinstatement.............................................. 82
</TABLE>
v
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
<S> <C> <C> <C>
Section 9.1 Supplemental Indentures Without Consent of Holders......... 83
Section 9.2 Amendments, Supplemental Indentures and Waivers with
Consent of Holders......................................... 84
Section 9.3 Compliance with TIA........................................ 85
Section 9.4 Revocation and Effect of Consents.......................... 85
Section 9.5 Notation on or Exchange of Securities...................... 86
Section 9.6 Trustee to Sign Amendments, Etc............................ 87
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
Section 10.1 Repurchase of Securities at Option of the Holder upon
Change of Control......................................... 87
ARTICLE XI
GUARANTEES
Section 11.1 Guarantees................................................. 90
Section 11.2 Execution and Delivery of Guarantee........................ 92
Section 11.3 Certain Bankruptcy Events.................................. 92
Section 11.4 Release of Guarantors and Certain Issuers.................. 92
ARTICLE XII
MISCELLANEOUS
Section 12.1 TIA Controls............................................... 93
Section 12.2 Notices.................................................... 93
Section 12.3 Communications by Holders with Other Holders............... 94
Section 12.4 Certificate and Opinion as to Conditions Precedent......... 94
Section 12.5 Statements Required in Certificate or Opinion.............. 95
Section 12.6 Rules by Trustee, Paying Agent, Registrar.................. 95
Section 12.7 Legal Holidays............................................. 95
Section 12.8 Governing Law.............................................. 96
Section 12.9 No Adverse Interpretation of Other Agreements.............. 96
Section 12.10 No Recourse Against Others................................. 96
Section 12.11 Successors................................................. 96
</TABLE>
vi
<PAGE> 8
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
Section 12.12 Duplicate Originals........................................ 97
Section 12.13 Severability............................................... 97
Section 12.14 Table of Contents, Headings, Etc........................... 97
</TABLE>
vii
<PAGE> 9
SCHEDULES
Schedule 1 - Restriction on Dividends
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Guarantee
Exhibit C-1 - Form of Tax Opinion
Exhibit C-2 - Form of Tax Opinion
viii
<PAGE> 10
INDENTURE, dated as of July ___, 1997, among Venture Holdings Trust,
a grantor trust organized under the laws of Michigan (the "Trust"), Vemco, Inc.,
Vemco Leasing, Inc., Venture Industries Corporation, Venture Holdings
Corporation, Venture Leasing Company, Venture Mold & Engineering Corporation and
Venture Service Company, each a Michigan Corporation (each an "Issuer" and,
together with the Trust, the "Issuers") and The Huntington National Bank, a
national banking association, as Trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Issuers' 9
1/2% Senior Notes due 2005:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1 Definitions.
"Acceleration Notice" shall have the meaning specified in Section
6.2.
"Acquired Indebtedness" means Indebtedness or Disqualified Capital
Stock of any person existing at the time such person becomes a Subsidiary of the
Trust, including by designation, or is merged or consolidated into or with the
Trust or one of its Subsidiaries; provided, however, that Indebtedness of such
person that is redeemed, defeased, retired or otherwise repaid at the time of or
immediately upon consummation of the transaction by which such person becomes or
merges with or into a Subsidiary of the Company shall not be Acquired
Indebtedness.
"Acquisition" means the purchase or other acquisition of any person
or substantially all the assets of any person or line of business of such person
by any other person, whether by purchase, merger, consolidation, or other
transfer, and whether or not for consideration.
"Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Trust. For
purposes of this definition, the term "control" means the power to direct the
management and policies
<PAGE> 11
of a person, directly or through one or more intermediaries, whether through the
ownership of voting securities, by contract, or otherwise, provided, that, with
respect to an ownership interest in the Trust and its Subsidiaries a Beneficial
Owner of 10% or more of the total voting power normally entitled to vote in the
election of directors, managers or trustees, as applicable, shall for such
purposes be deemed to constitute control.
"Affiliate Transaction" shall have the meaning specified in Section
4.9.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Sale" shall have the meaning specified in Section 4.13.
"Asset Sale Offer" shall have the meaning specified in Section 4.13.
"Asset Sale Offer Amount" shall have the meaning specified in
Section 4.13.
"Asset Sale Offer Price" shall have the meaning specified in Section
4.13.
"Average Life" means, as of the date of determination, with respect
to any security or instrument, the quotient obtained by dividing (i) the sum of
the products (a) of the number of years from the date of determination to the
date or dates of each successive scheduled principal payment of such security or
instrument and (b) the amount of each such respective principal payment by (ii)
the sum of all such principal payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Beneficial Owner" or "beneficial owner" has the meaning attributed
to it in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue
Date), whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such person has the
2
<PAGE> 12
right to acquire, whether such right is exercisable immediately or only after
the passage of time.
"Beneficiary" means (i) any beneficiary of the Trust while it is a
trust or (ii) any shareholder of a successor corporation to the Trust after a
Trust Contribution.
"Board of Directors" means (A) either the board of directors or
managers of any Issuer or Subsidiary, as the case may be, or any duly authorized
committee of either such board and (B), in the case of the Trust, the Special
Advisor of the Trust; provided that (i), in the event the Special Advisor's
rights, duties and powers are assumed by the Successor Special Advisor Group,
"Board of Directors" means the Successor Special Advisor Group of the Trust and
(ii), in the event the Trust is reorganized as a corporation or a Trust
Contribution shall occur, "Board of Directors" means the board of directors of
the successor corporation.
"Board Resolution" means, with respect to any person, a duly adopted
resolution of the Board of Directors of such person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York,
are authorized or obligated by law or executive order to close.
"Business Opportunity" shall have the meaning specified in Section
4.18.
"Capital Stock" means, with respect to any person, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that person or any trust
beneficiary interests.
"Capitalized Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on the balance sheet in
accordance with GAAP.
3
<PAGE> 13
"Cash" or "cash" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public or private debts.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), or (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $250 million, or (iii) commercial paper issued by others rated at
least A-1 or the equivalent thereof by Standard & Poor's Corporation or at least
P-1 or the equivalent thereof by Moody's Investors Service, Inc., or (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (ii) above, or (v) any money
market deposit accounts including those of the Trustee issued or offered by a
domestic commercial bank having capital and surplus in excess of $250 million,
or (vi) investments in money market funds which invest substantially all their
assets in securities of the type described in clauses (i), (ii) and (iii) above
and in the case of (i), (ii), and (iii) maturing within one year after the date
of acquisition.
"Change of Control" means (i) any merger or consolidation of the
Trust with or into any person or any sale, transfer or other conveyance, whether
direct or indirect, of all or substantially all of the assets of the Trust, on a
consolidated basis, in one transaction or a series of related transactions, if,
immediately after giving effect to such transaction(s), any "person" or "group"
(as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable) other than an Excluded Person is or becomes the
"beneficial owner," directly or indirectly, of more than 40% of the total voting
power in the aggregate normally entitled to vote in the election of directors,
managers, or trustees, as applicable, of the transferee(s) or surviving entity
or entities and the Excluded Persons "beneficially own" a lesser percentage and
do not have the right or ability by voting power, contract or otherwise to elect
or designate for election a majority of such
4
<PAGE> 14
directors, managers or trustees, as applicable, (ii) any "person" or "group" (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable) other than an Excluded Person is or becomes the
"beneficial owner," directly or indirectly, of more than 40% of the total voting
power in the aggregate of all classes of Capital Stock of the Trust then
outstanding normally entitled to vote in elections of directors, managers or
trustees and the Excluded Persons "beneficially own" a lesser percentage and do
not have the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of such directors, managers or trustees, as
applicable, or (iii) during any period of 12 consecutive months after the Issue
Date, individuals who at the beginning of any such 12-month period constituted
the Board of Directors of the Trust (together with any new directors whose
election by such Board or whose nomination for election by the equity holders of
the Trust, (A) with respect to Venture Holdings Trust was made pursuant to the
terms of the Venture Trust Instrument, and (B) with respect to Venture Holdings
Corporation or another successor to the Trust, or their respective successors,
after the occurrence of a Trust Contribution, (x) was approved by the
Beneficiary of Venture Holdings Trust on or before the date of the Trust
Contribution, or (y) was approved by a majority of the directors of the Trust
whose appointment, election or nomination to the Board of Directors was approved
in accordance with the preceding clause (x) or by this clause (y)) cease for any
reason to constitute a majority of the Board of Directors of the Trust then in
office. Notwithstanding anything in this definition to the contrary, a "Change
of Control" shall not be deemed to have occurred solely as a result of a
transaction pursuant to which the Trust is reorganized or reconstituted as a
corporation or a Trust Contribution occurs in accordance with the provisions
described under Article V and no event which is otherwise a "Change of Control"
above shall have occurred.
"Change of Control Offer" shall have the meaning specified in
Section 10.1.
"Change of Control Purchase Date" shall have the meaning specified
in Section 10.1.
"Change of Control Purchase Price" shall have the meaning specified
in Section 10.1.
5
<PAGE> 15
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation" means any compensation which would be required to be
disclosed pursuant to Item 402 of Regulation S-K of the Commission, but
excluding the granting of restricted stock awards, stock options and SARs
required to be disclosed in columns (f) and (g) of the Summary Compensation
Table of such Item.
"Consolidated Coverage Ratio" of any person on any date of
determination (the "Transaction Date") means the ratio, on a Pro Forma Basis, of
(a) the aggregate amount of Consolidated EBITDA of such person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of, but only to the extent that the obligations giving
rise to such Consolidated Fixed Charges would no longer be obligations
contributing to such person's Consolidated Fixed Charges subsequent to the
Transaction Date) during the Reference Period.
"Consolidated EBITDA" means, with respect to any person, for any
period, the Consolidated Net Income of such person for such period adjusted to
add thereto (to the extent deducted from revenues in determining Consolidated
Net Income), without duplication, the sum of (i) consolidated income and
Michigan single business tax expense, (ii) consolidated depreciation and
amortization expense, provided that consolidated depreciation and amortization
of a Subsidiary that is a less than wholly owned Subsidiary shall only be added
to the extent of the equity interest of such person in such Subsidiary, (iii)
other non-cash charges of such person and its Subsidiaries reducing Consolidated
Net Income for such period, (iv) Consolidated Fixed Charges and (v) Trust Tax
Distributions.
"Consolidated Fixed Charges" of any person means, for any period,
the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued (including, in accordance with the following
sentence,
6
<PAGE> 16
interest attributable to Capitalized Lease Obligations) of such person and its
Consolidated Subsidiaries for such period, including (i) original issue discount
and non-cash interest payments or accruals on any Indebtedness, (ii) the
interest portion of all deferred payment obligations, and (iii) all commissions,
discounts and other fees and charges owed with respect to bankers' acceptances
and letters of credit financings and currency and Interest Swap and Hedging
Obligations, in each case to the extent attributable to such period, and (b) the
product of (x) the amount of dividends accrued or payable (or guaranteed) by
such person or any of its Consolidated Subsidiaries in respect of preferred
stock (other than by Subsidiaries of such person to such person or such person's
wholly owned Subsidiaries) and (y) one minus the then current effective
consolidated federal, state and local tax rate, of such person, expressed as a
decimal. For purposes of this definition, interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
in good faith by such person to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP.
"Consolidated Net Income" means, with respect to any person for any
period, the net income (or loss) of such person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication): (a) all gains and losses, net of
taxes, which are extraordinary (as determined in accordance with GAAP) and any
gains or losses, net of taxes and fees and expenses, from the sale or other
disposition of assets outside the ordinary course of business or from the
issuance or sale of any capital stock, (b) the net income of any person, other
than a wholly owned Consolidated Subsidiary, in which such person or any of its
Consolidated Subsidiaries has an interest, except to the extent of the amount of
any dividends or distributions actually paid in cash to such person or a wholly
owned Consolidated Subsidiary of such person during such period, but in any case
not in excess of such person's pro rata share of such person's net income for
such period, (c) the net income or loss of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition, (d)
the net income, if positive, of any of such person's Consolidated Subsidiaries
to the extent that the declaration or payment of dividends or
7
<PAGE> 17
similar distributions is not at the time permitted by operation of the terms of
its charter or bylaws or any other agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such Consolidated
Subsidiary, (e) any gain or loss, net of taxes, realized upon the termination of
any employee benefit plan, or (f) Trust Tax Distributions, to the extent not
already deducted.
"Consolidated Net Worth" of any person at any date means the
aggregate consolidated stockholders' equity or trust principal of such person
(plus amounts of equity attributable to preferred stock) and its Consolidated
Subsidiaries, as would be shown on the consolidated balance sheet of such person
prepared in accordance with GAAP, adjusted to exclude (to the extent included in
calculating such equity), (a) the amount of any such stockholders' equity
attributable to Disqualified Capital Stock or treasury stock of such person and
its Consolidated Subsidiaries, (b) all upward revaluations and other write-ups
in the book value of any asset of such person or a Consolidated Subsidiary of
such person, other than in connection with its acquisition, subsequent to the
Issue Date, and (c) all investments in Subsidiaries that are not Consolidated
Subsidiaries and in persons that are not Subsidiaries.
"Consolidated Subsidiary" means, for any person, each Subsidiary of
such person (whether now existing or hereafter created or acquired) the
financial statements of which are consolidated for financial statement reporting
purposes with the financial statements of such person in accordance with GAAP.
"Credit Agreement" means the credit agreement dated August 26, 1996,
as amended, by and among the Trust, certain of its subsidiaries, certain
financial institutions and NBD Bank, as agent, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, as such credit agreement and/or related documents may be
amended, restated, supplemented, restructured, renewed, replaced or otherwise
modified from time to time whether or not with the same agent, trustee,
representative lenders or holders, and, subject to the following provisos,
irrespective of any changes in the terms and conditions thereof; provided that
the aggregate principal amount of Indebtedness outstanding at any time does not
exceed the greater of (i) $200 million or (ii) the
8
<PAGE> 18
sum of 85% of the net book value of accounts receivable and 60% of the net book
value of inventories, in each case measured in accordance with GAAP, plus
accrued interest and such additional amounts as may be deemed to be outstanding
in the form of Interest Swap and Hedging Obligations with lenders party to the
Credit Agreement, minus the amount of any such Indebtedness retired with Net
Cash Proceeds from any Asset Sale or assumed by a transferee in an Asset Sale,
provided that an incurrence under the Credit Agreement in excess of the greater
of clause (i) or (ii) may be made pursuant to the Debt Incurrence Ratio. Without
limiting the generality of the foregoing, the term "Credit Agreement" shall
include any amendment, amendment and restatement, renewal, extension,
restructuring, supplement or modification to any Credit Agreement and all
refundings, refinancings and replacements of any Credit Agreement, including any
agreement (i) extending the maturity of any Indebtedness incurred thereunder or
contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder, so long as borrowers and issuers include one or more of the Trust
and its Subsidiaries and their respective successors and assigns or (iii)
otherwise altering the terms and conditions thereof in a manner not prohibited
by the terms hereof.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Debt Incurrence Ratio" shall have the meaning specified in Section
4.10.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Definitive Securities" means Securities that are in the form of the
Note attached hereto as Exhibit A that do not include the information called for
by footnotes 1 and 2 thereof.
"Depository" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.3
as the Depository with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Inden-
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<PAGE> 19
ture, and, thereafter, "Depository" shall mean or include such successor.
"Disqualified Capital Stock" means (a) with respect to a person,
except as to any Subsidiary of such person, any Equity Interest of such person
that, by its terms or by the terms of any security into which it is convertible,
exercisable or exchangeable, is, or upon the happening of an event or the
passage of time would be, required to be redeemed or repurchased (including at
the option of the holder thereof) by such person or any of its Subsidiaries, in
whole or in part, on or prior to the Stated Maturity of the Notes and (b) with
respect to any Subsidiary of such person (including with respect to any
Subsidiary of the Trust), any Equity Interests other than any common equity with
no preference, privileges, or redemption or repayment provisions.
"Equity Interest" of any person means any shares, interests,
participations or other equivalents (however designated) in such person's equity
(including any trust beneficiary interests), and shall in any event include any
Capital Stock issued by, or partnership or membership interests in, such person.
"Event of Default" shall have the meaning specified in Section 6.1.
"Event of Loss" means, with respect to any property or asset, any
(i) loss, destruction or damage of such property or asset or (ii) any
condemnation, seizure or taking, by exercise of the power of eminent domain or
otherwise, of such property or asset, or confiscation or requisition of the use
of such property or asset.
Excess Compensation" means the aggregate Compensation paid by the
Trust and its Subsidiaries in any fiscal year to Larry J. Winget and Family
Members to the extent such aggregate Compensation exceeds the sum of (a) Trust
Tax Distributions paid in such fiscal year as Compensation to the Beneficiary of
the Trust in lieu of distributions and (b) the greater of (i) $1.5 million
multiplied by one plus the percentage increase in the Consumer Price Index from
July 1, 1997 to the first day of such fiscal year and (ii) 5% of the sum of,
without duplication, (A) Consolidated Net Income of the Trust for the preceding
fiscal
10
<PAGE> 20
year, plus (B) Trust Tax Distributions in the preceding fiscal year, plus (C)
the aggregate amount of Compensation paid by the Trust and its Subsidiaries to
Larry J. Winget and Family Members during the preceding fiscal year.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Exchange Offer" means the offer by the Issuers to exchange the
Series B Notes thereof for the Original Notes thereof made pursuant to the
Registration Rights Agreement.
"Excluded Person" means Larry J. Winget, his estate or legal
representative, members of his immediate family, all lineal descendants of Larry
J. Winget and all spouses of such lineal descendants (or any trust or entity
whose sole beneficiaries or Equity Interest holders are any one or more of the
foregoing).
"Exempted Affiliate Transaction" means (a) any transaction with an
officer or director in the ordinary course of business, including employee or
director compensation arrangements, (b) payments permitted under the terms of
Section 4.3, (c) transactions solely between the Trust and any of its
Subsidiaries or solely among Subsidiaries of the Trust and (d) performance of
any agreement in existence on the Issue Date.
"Fairness Committee" means a committee duly established pursuant to
the Venture Trust Instrument and the bylaws of each other Issuer, Guarantor and
Subsidiary without whose approval (and without the approval of a majority of its
Independent members) the Trust, an Issuer, a Guarantor or a Subsidiary shall not
be authorized to enter into any transaction or take any action which pursuant to
the terms of this Indenture requires approval of the Fairness Committee.
"Family Members" means (i) Larry J. Winget's spouse and (ii) each of
Larry J. Winget's parents, children, grandchildren, siblings, mothers and
fathers-in-law, sons and daughters-in-law and brothers and sisters-in-law who
(a) shares the same principal residence as Larry J. Winget and (b) is an officer
or director of the Trust or any of its Subsidiaries or among the five most
11
<PAGE> 21
highly compensated employees of the Trust or any of its Subsidiaries.
"Foreign Subsidiary" means a Subsidiary not organized under the laws
of the United States or any political subdivision thereof.
"GAAP" means United States generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession in the United States as in effect on the Issue Date.
"Global Security" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 2
to the form of Security attached hereto as Exhibit A.
"Guarantee" shall have the meaning provided in Section 11.1.
"Guarantors" means the Guarantors provided in Article XI hereof.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"incur" shall have the meaning specified in Section 4.10.
"Incurrence Date" shall have the meaning specified in Section 4.10.
"Indebtedness" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such person, except for
accrued current liabilities incurred in the ordinary course of business, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid
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<PAGE> 22
of the purchase price of any property or services, except those incurred in the
ordinary course of its business that would constitute ordinarily a trade payable
to trade creditors, (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) Capitalized Lease Obligations, or
(vi) evidenced by a letter of credit or a reimbursement obligation of such
person with respect to any letter of credit; (b) all net obligations of such
person under Interest Swap and Hedging Obligations; (c) all liabilities and
obligations of others of the kind described in the preceding clause (a) or (b)
that such person has guaranteed or that is otherwise its legal liability or
which are secured by any assets or property of such person; and (d) any and all
deferrals, renewals, extensions, refinancing and refundings (whether direct or
indirect) of, or amendments, modifications or supplements to, any liability of
the kind described in any of the preceding clauses (a), (b) or (c), or this
clause (d), whether or not between or among the same parties, and (e) all
Disqualified Capital Stock of such person (measured at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends). For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value to be determined in good faith by the
board of directors of the issuer (or managing general partner of the issuer) of
such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Independent" means, with respect to any Issuer or Guarantor or any
of their Subsidiaries, a person who would qualify as an "independent director"
within the meaning of the rules of the New York Stock Exchange and who (i) shall
not receive any payment or other fees for services to the Trust or any of its
Affiliates (other than for serving as a member of the Fairness Committee of the
Trust or of a Subsidiary of the Trust) and (ii) shall not be an Affiliate,
officer, member or employee
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<PAGE> 23
of any firm, company or other entity that has performed services for the Trust
or any of its Affiliates during the preceding three fiscal years or that the
Trust or any of its Affiliates proposes to have perform services if the amount
of compensation for such services during any fiscal year exceeded or would
exceed 5% of such firm's gross revenues during any of its three preceding fiscal
years.
"Initial Purchasers" means First Chicago Capital Markets, Inc. and
Donaldson, Lufkin & Jenrette Securities Corporation.
"Interest Payment Date" means the stated due date of an installment
of interest on the Securities.
"Interest Swap and Hedging Obligation" means any obligation of any
person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Investment" by any person in any other person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other person; (b) the making by such person of any deposit with, or
advance, loan or other extension of credit to, such other person (including the
purchase of property from another person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
person) or any commitment to make any such advance, loan or extension (but
excluding accounts receivable or deposits arising in the ordinary course of
business); (c) other than guarantees of
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<PAGE> 24
Indebtedness of the Issuers or any Guarantor to the extent Section 4.10 is not
violated, the entering into by such person of any guarantee of, or other credit
support or contingent obligation with respect to, Indebtedness or other
liability of such other person; (d) the making of any capital contribution by
such person to such other person; and (e) the designation by the Board of
Directors of the Trust of any person to be an Unrestricted Subsidiary. The
Issuers shall be deemed to make an Investment in an amount equal to the fair
market value of the net assets of any subsidiary (or, if none of the Issuers or
their Subsidiaries has theretofore made an Investment in such subsidiary, in an
amount equal to the Investments being made), at the time that such subsidiary is
designated an Unrestricted Subsidiary, and any property transferred to an
Unrestricted Subsidiary from an Issuer or a Subsidiary shall be deemed an
Investment valued at its fair market value at the time of such transfer,
provided, however, if in any such case such fair market value exceeds $3
million, such determination of fair market value shall be based upon an opinion
or appraisal by an accounting, appraisal or investment banking firm of national
standing.
"Issue Date" means the date of first issuance of the Notes under the
Indenture.
"Issuer" means each party named as such in this Indenture until a
successor replaces it pursuant to the Indenture and thereafter means such
successor.
"Legal Holiday" shall have the meaning provided in Section 12.7.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.
"Liquidated Damages" means all liquidated damages owing pursuant to
the Registration Rights Agreement.
"Material Subsidiary" means any Subsidiary of the Trust that is a
"significant subsidiary" of the Trust as defined in Rule 1-02 of Regulation S-X
of the Commission.
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<PAGE> 25
"Maturity Date," 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 Stated Maturity, a Change of Control Purchase
Date, a purchase date with respect to an Asset Sale Offer or by declaration of
acceleration, call for redemption or otherwise.
"Net Cash Proceeds" means the aggregate amount of cash or Cash
Equivalents received by the Trust in the case of a sale of Qualified Capital
Stock and by the Trust and its Subsidiaries in respect of an Asset Sale plus, in
the case of an issuance of Qualified Capital Stock upon any exercise, exchange
or conversion of securities (including options, warrants, rights and convertible
or exchangeable debt) of the Trust that were issued for cash on or after the
Issue Date, the amount of cash originally received by the Trust upon the
issuance of such securities (including options, warrants, rights and convertible
or exchangeable debt) less, in each case, the sum of all payments, fees,
commissions and expenses (including, without limitation, the fees and expenses
of legal counsel and investment banking fees and expenses) incurred in
connection with such Asset Sale or sale of Qualified Capital Stock, and, in the
case of an Asset Sale only, less (a) the amount (estimated reasonably and in
good faith by the Trust) of income, franchise, sales and other applicable taxes
required to be paid by the Trust Beneficiary or any of its respective
Subsidiaries in connection with such Asset Sale, (b) repayment of Indebtedness
that is required to be repaid in connection with such Asset Sale and (c)
appropriate amounts to be provided by the Trust or any Subsidiary, as the case
may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and reserved by the Trust or any Subsidiary, as
the case may be after such Asset Sale, including, without limitation, pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"Notes" See "Securities."
"Offering Memorandum" means the Offering Memorandum of the Issuers
dated July 2, 1997 with respect to the Securities.
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<PAGE> 26
"Officer" means, with respect to the Issuers, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary or Assistant
Secretary, and in addition with respect to the Trust, the Special Advisor under
the Venture Trust Instrument.
"Officers' Certificate" means, with respect to the Issuers or any
Guarantor, a certificate signed by two Officers of relevant Issuers or such
Guarantor and otherwise complying with the requirements of Sections 12.4 and
12.5.
"Operating Expense or Cost Reduction" means, with respect to the
calculation of a Consolidated Coverage Ratio on a Pro Forma Basis, an operating
expense or cost reduction with respect to an Acquisition, which, in the good
faith estimate of management, will be realized as a result of such Acquisition,
provided that the foregoing eliminations of operating expenses and realizations
of cost reductions shall be of the types permitted to be given effect to in
accordance with Article 11 of Regulation S-X under the Exchange Act as in effect
on the Issue Date and such reduction is subject to negative comfort by the
Trust's independent public accountants.
"Opinion of Counsel" means a written opinion from legal counsel to
the Issuers complying with the requirements of Sections 12.4 and 12.5. Unless
otherwise required by this Indenture, the counsel may be in-house counsel to the
Issuers.
"Original Notes" means the 9 1/2% Senior Notes due 2005, as amended
and supplemented from time to time in accordance with the terms hereof, that are
issued pursuant to this Indenture.
"Pari Passu Indebtedness" means any Indebtedness of any Issuer that
is pari passu in right of payment to the Securities.
"Paying Agent" shall have the meaning specified in Section 2.3.
"Permitted Indebtedness" means any of the following:
(a) the Issuers and the Guarantors may incur Indebtedness evidenced
by the Notes and represented by the
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<PAGE> 27
Indenture up to the amounts specified therein as of the date thereof;
(b) the Issuers and the Guarantors may incur Indebtedness pursuant
to the Credit Agreement;
(c) the Issuers or any Guarantor may guarantee any Indebtedness of
any other Issuer or any Guarantor that was permitted to be incurred under
the Debt Incurrence Ratio test of Section 4.10 or under any other clause
of this definition or Indebtedness existing on the Issue Date;
(d) the Issuers or any Subsidiary may incur Indebtedness under
Interest Swap and Hedging Obligations (provided (i) that such Interest
Swap and Hedging Obligations are designed to protect the Issuers and their
Subsidiaries from fluctuations in interest rates on Indebtedness incurred
in accordance with the Indenture (and are used for bona fide hedging, and
not speculative, purposes), and (ii) the notional principal amount of such
Interest Swap and Hedging Obligations does not exceed the principal amount
of the Indebtedness to which such Interest Swap and Hedging Obligations
relate;
(e) the Issuers or any Subsidiary may incur Indebtedness represented
by letters of credit for the account of the Issuers or such Subsidiary, as
the case may be, in order to provide security for workers' compensation
claims and payment obligations in connection with self-insurance, that,
taken together do not in the aggregate exceed $5 million at any time
outstanding.
(f) the Issuers or any Subsidiary may incur Indebtedness arising
from agreements providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred in connection with
the disposition of any business, assets or Subsidiary, other than
guarantees of Indebtedness incurred by any person acquiring all or any
portion of such business, assets or Subsidiary for the purpose of
financing such acquisition; provided that the maximum aggregate liability
in respect of all such Indebtedness shall at no time exceed the gross
proceeds
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<PAGE> 28
actually received by the Issuers and the Subsidiary in connection with
such dispositions;
(g) the Issuers and the Guarantors, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clause (a) of this definition,
incurred under the Debt Incurrence Ratio test of Section 4.10 or which is
outstanding on the Issue Date so long as such Refinancing Indebtedness is
secured only by the assets that secured the Indebtedness so refinanced or
assets acquired after the Issue Date or the Notes are equally and ratably
secured;
(h) the Issuers and the Guarantors may incur Indebtedness in an
aggregate amount outstanding at any time (including any Indebtedness
issued to refinance, replace, or refund such Indebtedness) of up to $5
million, minus the amount of any such Indebtedness retired with Net Cash
Proceeds from any Asset Sale or assumed by a transferee in an Asset Sale;
(i) the Issuers and the Subsidiaries may incur Indebtedness solely
in respect of bankers acceptances and performance bonds (to the extent
that such incurrence does not result in the incurrence of any obligation
to repay any obligation relating to borrowed money of others), all in the
ordinary course of business in accordance with customary industry
practices, in amounts and for the purposes customary in the Issuers'
industry; provided that the aggregate principal amount outstanding of such
Indebtedness (including any Indebtedness issued to refinance, refund or
replace such Indebtedness) shall at no time exceed $1 million; and
(j) The Issuers may incur Indebtedness to each other or to any
wholly owned Subsidiary, and any wholly owned Subsidiary may incur
Indebtedness to any other wholly owned Subsidiary or to any Issuer;
provided that, in the case of Indebtedness of an Issuer, such obligations
shall be unsecured and subordinated in all respects to such Issuer's
obligations pursuant to the Notes and the date of any event that causes a
Subsidiary to no longer be a wholly owned Subsidiary shall be an
Incurrence Date.
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<PAGE> 29
"Permitted Investment" means (a) Investments in any of the Notes and
any Permitted Indebtedness which is otherwise an Investment; (b) Investments in
Cash Equivalents; (c) any Investment in the Trust or a person in a Related
Business, which is, or as a result of such Investment becomes, a wholly owned
Subsidiary of the Trust; (d) other Investments not to exceed $5 million; (e)
Investments in non-cash proceeds taken in connection with an Asset Sale
otherwise complying with Section 4.13; (f) loans or advances to employees and
officers of the Issuers and their Subsidiaries in the ordinary course of
business for bona fide business purposes; (g) Investments in securities of trade
creditors or customers received pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such trade creditors or
customers; and (h) a Qualified Exchange.
"Permitted Lien" means (a) Liens incurred in connection with the
Credit Agreement; (b) Liens existing on the Issue Date; (c) Liens imposed by
governmental authorities for taxes, assessments or other charges not yet subject
to penalty or which are being contested in good faith and by appropriate
proceedings, if adequate reserves with respect thereto are maintained on the
books of the company in accordance with GAAP; (d) statutory liens of carriers,
warehousemen, mechanics, materialmen, landlords, repairmen or other like Liens
arising by operation of law in the ordinary course of business provided that (i)
the underlying obligations are not overdue for a period of more than 60 days, or
(ii) such Liens are being contested in good faith and by appropriate proceedings
and adequate reserves with respect thereto are maintained on the books of the
Trust in accordance with GAAP; (e) Liens securing the performance of bids, trade
contracts (other than borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business; (f) easements, rights-of-way, zoning,
similar restrictions and other similar encumbrances or title defects which,
singly or in the aggregate, do not in any case materially detract from the value
of the property subject thereto (as such property is used by the Trust or any of
its Subsidiaries) or interfere with the ordinary conduct of the business of the
Trust or any of its Subsidiaries; (g) Liens arising by operation of law in
connection with judgments, only to the extent, for an amount and for a period
not resulting in an Event of Default with respect thereto; (h)
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<PAGE> 30
pledges or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social security
legislation; (i) Liens securing the Notes; (j) Liens securing Indebtedness of a
person existing at the time such person becomes a Subsidiary or is merged with
or into the Trust or a Subsidiary, provided that such Liens were in existence
prior to the date of such acquisition, merger or consolidation, were not
incurred in anticipation thereof, and do not extend to any other assets; (k)
leases or subleases granted to other persons in the ordinary course of business
not materially interfering with the conduct of the business of the Trust or any
of its Subsidiaries or materially detracting from the value of the relative
assets of the Trust or any Subsidiary; (l) Liens arising from precautionary
Uniform Commercial Code financing statement filings regarding operating leases
entered into by the Trust or any of its Subsidiaries in the ordinary course of
business; (m) Liens to secure payment of a portion of the purchase price of any
tangible fixed asset acquired by any Issuer or any Guarantor if the outstanding
principal amount of the Indebtedness is secured by any such Lien does not at any
time exceed the purchase price paid for such fixed asset, provided that such
Lien does not encumber any other asset at any time owned by any Issuer or any
Guarantor, and provided, further, that not more than one such Lien shall
encumber such fixed asset at any one time; and (n) Liens securing Refinancing
Indebtedness incurred to refinance any Indebtedness that was previously so
secured in a manner no more adverse to the Holders of the Notes than the terms
of the Liens securing such refinanced Indebtedness, provided that the
Indebtedness secured is not increased and the lien is not extended to any
additional assets or property unless the Notes are equally and ratably secured
by such additional assets or the additional assets were acquired after the Issue
Date.
"Person" or "person" means any individual, limited liability
company, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
"principal" of any Indebtedness (including the Securities) means the
principal of such Indebtedness plus any applicable premium, if any, on such
Indebtedness.
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<PAGE> 31
"Pro Forma Basis" means, for purposes of calculating the
Consolidated Coverage Ratio, giving pro forma effect to certain transactions
such that, (i) Acquisitions which occurred during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date shall
be assumed to have occurred on the first day of the Reference Period and any
Operating Expense or Cost Reduction with respect to such Acquisition shall be
deducted from such calculation, (ii) transactions giving rise to the need to
calculate the Consolidated Coverage Ratio shall be assumed to have occurred on
the first day of the Reference Period, (iii) the incurrence of any Indebtedness
or issuance of any Disqualified Capital Stock during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date (and
the application of the proceeds therefrom, including to refinance or retire
other Indebtedness) shall be assumed to have occurred on the first day of such
Reference Period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based on the
average daily balance during the Reference Period), and (iv) the Consolidated
Fixed Charges of such person attributable to interest on any Indebtedness or
dividends on any Disqualified Capital Stock bearing a floating interest (or
dividend) rate shall be computed on a pro forma basis as if the average rate in
effect from the beginning of the Reference Period to the Transaction Date had
been the applicable rate for the entire period, unless such person or any of its
Subsidiaries is a party to an Interest Swap or Hedging Obligation (which shall
remain in effect for the 12-month period immediately following the Transaction
Date) that has the effect of fixing the interest rate on the date of
computation, in which case such rate (whether higher or lower) shall be used.
"Property" or "property" means any right or interest in or to
property or assets of any kind whatsoever, whether real, personal or mixed and
whether tangible, intangible, contingent, indirect or direct.
"Public Equity Offering" means an underwritten offering of common
stock of the Trust for cash pursuant to an effective registration statement
under the Securities Act.
"Qualified Capital Stock" means any Capital Stock of the Trust that
is not Disqualified Capital Stock.
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<PAGE> 32
"Qualified Exchange" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Indebtedness of any Issuer or
Capital Stock of the Trust issued on or after the Issue Date with the Net Cash
Proceeds received by the Trust from the substantially concurrent sale of
Qualified Capital Stock or any exchange of Qualified Capital Stock for any
Capital Stock or Indebtedness of the Trust issued on or after the Issue Date.
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to be
redeemed, means the redemption price for such redemption set forth in Paragraph
5 in the form of Security, which shall include in each case accrued and unpaid
interest with respect to such Security to the applicable Redemption Date.
"Reference Period" with regard to any person means the four full
fiscal quarters ended immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Notes or the Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified
Capital Stock (a) issued in exchange for, or the proceeds from the issuance and
sale of which are used substantially concurrently to repay, redeem, defease,
refund, refinance, discharge or otherwise retire for value, in whole or in part,
or (b) constituting an amendment, restatement, modification, restructuring,
replacement or supplement to, or a deferral or renewal of ((a) and (b) above
are, collectively, a "Refinancing"), any Indebtedness or Disqualified Capital
Stock in a principal amount or, in the case of Disqualified Capital Stock,
liquidation preference, not to exceed (after deduction of reasonable and
customary fees and expenses incurred in connection with the Refinancing) the
lesser of (i) the principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, of the Indebtedness or Disqualified Capital Stock
so Refinanced
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<PAGE> 33
and (ii) if such Indebtedness being Refinanced was issued with an original issue
discount, the accreted value thereof (as determined in accordance with GAAP) at
the time of such Refinancing; provided, that (A) such Refinancing Indebtedness
of any Subsidiary of the Trust shall only be used to Refinance outstanding
Indebtedness or Disqualified Capital Stock of such Subsidiary, (B) such
Refinancing Indebtedness shall (x) not have an Average Life shorter than the
Indebtedness or Disqualified Capital Stock to be so refinanced at the time of
such Refinancing and (y) in all respects, be no less subordinated or junior, if
applicable, to the rights of Holders of the Notes than was the Indebtedness or
Disqualified Capital Stock to be refinanced and (C) such Refinancing
Indebtedness shall have a final stated maturity or redemption date, as
applicable, no earlier than the final stated maturity or redemption date, as
applicable, of the Indebtedness or Disqualified Capital Stock to be so
refinanced.
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among the Issuers and the Initial Purchasers, dated as of the
Issue Date.
"Related Business" means the business conducted (or proposed to be
conducted) by the Issuers and their Subsidiaries as of the Issue Date and any
and all businesses that in the good faith judgment of the Board of Directors of
the Trust are reasonably related businesses in the automotive industry.
"Representative" means NBD Bank or any successor or successors under
the Credit Agreement.
"Restricted Payment" means, with respect to any person, (a) the
declaration or payment of any dividend or other distribution in respect of
Equity Interests of such person or any parent or Subsidiary of such person, (b)
any payment on account of the purchase, redemption or other acquisition or
retirement for value of Equity Interests of such person or any Subsidiary or
parent of such person, (c) other than with the proceeds from the substantially
concurrent sale of, or in exchange for, Refinancing Indebtedness any purchase,
redemption, or other acquisition or retirement for value of, any payment in
respect of any amendment
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of the terms of or any defeasance of, any Subordinated Indebtedness, directly or
indirectly, by such person or a parent or Subsidiary of such person prior to the
scheduled maturity, any scheduled repayment of principal, or scheduled sinking
fund payment, as the case may be, of such Indebtedness, (d) any Investment by
such person, other than a Permitted Investment and (e) the payment of Excess
Compensation; provided, however, that the term "Restricted Payment" does not
include (i) any dividend, distribution or other payment on or with respect to
Equity Interests of an issuer to the extent payable solely in shares of
Qualified Capital Stock of such issuer (and in order to eliminate fractional
shares otherwise created thereby); or (ii) any dividend, distribution or other
payment to the Issuers, or to any of the Guarantors, by the Issuers or any of
their Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Securities" or "Notes" means, prior to the Exchange Offer, the
Original Notes, and after the Exchange Offer, the Original Notes (if any) and
the Series B Notes, in each case as amended or modified from time to time in
accordance with the terms hereof, issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Trustee, as custodian with respect
to the Securities in global form, or any successor entity thereto.
"Securityholder" See "Holder."
"Series B Notes" means the Series B 9 1/2% Senior Notes due 2005, in
substantially the form set forth on the Form of Note set forth as Exhibit A
hereto, to be issued pursuant to this Indenture in connection with the Exchange
Offer.
"Stated Maturity," when used with respect to any Note, means July 1,
2005.
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"Subordinated Indebtedness" means Indebtedness of an Issuer or a
Guarantor that is subordinated in right of payment to the Notes or Guarantees,
as applicable, in any respect.
"Subsidiary," with respect to any person, means (i) a corporation a
majority of whose Equity Interests with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such person, by such person and one or more Subsidiaries of such person or by
one or more Subsidiaries of such person, (ii) any other person (other than a
corporation) in which such person, one or more Subsidiaries of such person, or
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (iii) a partnership in which such person or a Subsidiary of such person is,
at the time, a general partner. Notwithstanding the foregoing, an Unrestricted
Subsidiary shall not be a Subsidiary of the Trust or of any Subsidiary of the
Trust. Unless the context requires otherwise, Subsidiary means each direct and
indirect Subsidiary of the Trust.
"Tax Distribution Amount" means, in respect of any period after the
Issue Date during which the Trust is an entity described in Section 1361(a)(1),
1361(c)(2) or Section 1361(d) of the Code, an amount, described in good faith by
such Issuers' independent public accountants, which shall be a nationally
recognized accounting firm, equal to the sum of (x) the amount of intangibles
tax actually imposed on the Beneficiary of the Trust in respect of Trust Tax
Distributions for such period and (y) (a) the sum of the highest marginal
federal income tax rate and highest state and local income tax rate applicable
to the Beneficiary of the Trust on income of the Issuers which are S
Corporations for federal, state or local income tax purposes for such period,
expressed as a percentage, multiplied by (b) such Issuers' taxable income for
such period computed taking into account, without limitation, the deduction for
single business and franchise tax actually imposed on such Issuers; provided
that (i) the foregoing shall be determined by giving effect to the deduction of
relevant state and local income and intangibles taxes for purposes of
determining federal income taxes, such deduction to be computed based on the
state and local income tax rates applicable in clause (y)(a) hereof and the
amount of intangibles tax determined under clause (x) hereof, and (ii) the
foregoing shall
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<PAGE> 36
be reduced by the amount of cumulative tax losses of such Issuers from any
previous period (to the extent not previously utilized in computing the Tax
Distribution Amounts) since the Closing Date and any investment tax credits and
other tax credits generated by such Issuers.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) as in effect on the date of the execution of this Indenture,
except as permitted in Section 9.3.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.6.
"Trust" means (1) Venture Holdings Trust, a grantor trust organized
under the laws of the State of Michigan, (2) Venture Holdings Corporation after
the occurrence of a Trust Contribution or (3) any successor Person to Venture
Holdings Trust or Venture Holdings Corporation (after the occurrence of a Trust
Contribution) in accordance with the provisions of Article V.
"Trust Contribution" shall have the meaning specified in Section
5.1.
"Trust Tax Distributions" shall have the meaning provided in Section
4.3.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
department (or any successor group) of the Trustee including any vice president,
assistant vice president, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer of
the corporate trust department (or any successor group) of the Trustee to whom
such trust matter is referred because of his knowledge of and familiarity with
the particular subject.
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"Unrestricted Subsidiary" means any subsidiary of the Trust that
does not own any Capital Stock of, or own or hold any Lien on any property of,
the Trust or any other Subsidiary of the Trust and that shall be designated an
Unrestricted Subsidiary by the Board of Directors of the Trust; provided that
(i) such subsidiary shall not engage, to any substantial extent, in any line or
lines of business activity other than a Related Business, (ii) neither
immediately prior thereto nor after giving pro forma effect to such designation
would there exist a Default or Event of Default and (iii) immediately after
giving effect thereto on a Pro Forma Basis, the Company could incur at least
$1.00 of Indebtedness pursuant to the Debt Incurrence Ratio contained in Section
4.10. The Board of Directors of the Trust may designate any Unrestricted
Subsidiary to be a Subsidiary, provided, that (i) no Default or Event of Default
is existing or will occur as a consequence thereof and (ii) immediately after
giving effect to such designation, on a Pro Forma Basis, the Trust could incur
at least $1.00 of Indebtedness pursuant to the Debt Incurrence Ratio contained
in Section 4.10. Each such designation shall be evidenced by filing with the
Trustee a certified copy of the resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"U.S. Government Obligations" means direct non-callable obligations
of, or noncallable obligations guaranteed by, the United States of America for
the payment of which obligation or guarantee the full faith and credit of the
United States of America is pledged.
"Venture Canada" means Venture Industries Canada Ltd.
"Venture Trust Instrument" means the Agreement, dated December 28,
1987, as amended, among Larry J. Winget, as Trustee, and Larry J. Winget, as
Settlor, Beneficiary and Special Advisor, as such agreement may be amended in
accordance with the terms of the Indenture.
"wholly owned Subsidiary" means a Subsidiary all the Equity
Interests of which are owned by the Trust or one or more wholly owned
Subsidiaries of the Trust.
Section 2 Incorporation by Reference of TIA.
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Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuers and any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
Section 3 Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and
words in the plural include the singular;
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(v) provisions apply to successive events and
transactions;
(vi) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(vii) references to Sections or Articles means
reference to such Section or Article in this Indenture, unless
stated otherwise.
ARTICLE II
THE SECURITIES
Section 1 Form and Dating.
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto which
Exhibit is part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Issuers shall
approve the form of the Securities and any notation, legend or endorsement on
them. Any such notations, legends or endorsements not contained in the form of
Security attached as Exhibit A hereto shall be delivered in writing to the
Trustee. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the form of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Issuers and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby. The Securities are designated "Designated Senior Indebtedness" for all
purposes of the indenture governing the Issuers' 9-3/4% Senior Subordinated
Notes due 2004.
Section 2 Execution and Authentication.
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Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Securities for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Issuers shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security, but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate the Original Notes for original issue
in the aggregate principal amount of up to $205,000,000 and shall authenticate
Series B Notes for original issue in the aggregate principal amount of up to
$205,000,000, in each case upon a written order of the Issuers in the form of an
Officers' Certificate; provided that such Series B Notes shall be issuable only
upon the valid surrender for cancellation of Original Notes of a like aggregate
principal amount in accordance with the Registration Rights Agreement. The
Officers' Certificate shall specify the amount of Securities to be authenticated
and the date on which the Securities are to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed
$205,000,000, except as provided in Section 2.7. Upon the written order of the
Issuers in the form of an Officers' Certificate, the Trustee shall authenticate
Securities in substitution of Securities originally issued to reflect any name
change of either of the Issuers.
The Trustee may appoint an authenticating agent acceptable to the
Issuers to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Issuers, any Affiliate of the Issuers
or any of their respective Subsidiaries.
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Securities shall be issuable only in fully registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
Section 3 Registrar and Paying Agent.
The Issuers shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
registration of transfer or for exchange ("Registrar") and an office or agency
in the Borough of Manhattan, The City of New York where Securities may be
presented for payment ("Paying Agent") and an office or agency where notices and
demands to or upon the Issuers in respect of the Securities may be served. The
Issuers may act as Registrar or Paying Agent, except that, for the purposes of
Articles III, VIII, X and Section 4.13 neither Issuer nor any Affiliate thereof
shall act as Paying Agent. The Registrar shall keep a register of the Securities
and of their transfer and exchange. The Issuers may have one or more
co-Registrars and one or more additional Paying Agents. The term "Paying Agent"
includes any additional Paying Agent. The Issuers hereby initially appoint the
Trustee as Registrar and Paying Agent, and the Trustee hereby initially agrees
so to act.
The Issuers shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Issuers shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Issuers fail to maintain a Registrar or Paying Agent, the Trustee
shall act as such.
The Issuers initially appoint The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Securities.
The Issuers initially appoint the Trustee to act as Securities
Custodian with respect to the Global Securities.
Section 4 Paying Agent to Hold Assets in Trust.
The Issuers shall require each Paying Agent other than the Trustee
to agree in writing that each Paying Agent shall hold
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in trust for the benefit of Holders or the Trustee all assets held by the Paying
Agent for the payment of principal of, or interest (and Liquidated Damages, if
any) on, the Securities (whether such assets have been distributed to it by the
Issuers or any other obligor on the Securities), and shall notify the Trustee in
writing of any Default by the Issuers (or any other obligor on the Securities)
in making any such payment. If any Issuer or any Subsidiary thereof acts as
Paying Agent, it shall segregate such assets and hold them as a separate trust
fund for the benefit of the Holders or the Trustee. The Issuers at any time may
require a Paying Agent to distribute all assets held by it to the Trustee and
account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee and
to account for any assets distributed. Upon distribution to the Trustee of all
assets that shall have been delivered by the Issuers to the Paying Agent, the
Paying Agent (if other than either of the Issuers) shall have no further
liability for such assets.
Section 5 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Issuers shall furnish, or
cause to be furnished, to the Trustee on or before the third Business Day
preceding each Interest Payment Date and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee
reasonably may require of the names and addresses of Holders.
Section 6 Transfer and Exchange.
(a) When Definitive Securities are presented to the
Registrar or a co-Registrar with a request
(x) to register the transfer of such Definitive Securities
or
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(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied
by a written instrument of transfer in form reasonably
satisfactory to the Issuers and the Registrar or co-Registrar,
duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of Transfer Restricted
Securities that are Definitive Securities, shall be
accompanied by the following additional information and
documents, as applicable:
(A) if such Transfer Restricted Securities are
being delivered to the Registrar by a Holder for registration
in the name of such Holder, without transfer, a certification
from such Holder to that effect (in substantially the form set
forth on the reverse of the Security); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act, a certification to that effect
(in the form set forth on the reverse of the Security); or
(C) if such Transfer Restricted Security is being
transferred (i) pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act, (ii)
outside the United States in a transaction meeting the
requirements of Rule
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904 under the Securities Act, (iii) pursuant to an effective
registration statement under the Securities Act, (iv) to an
"institutional accredited investor" within the meaning of Rule
501(A)(1), (2), (3) or (7) under the Securities Act that is
acquiring the Security for its own account, or for the account
of such an institutional accredited investor, in each case in
a minimum principal amount of $100,000, not with a view to or
for offer or sale in connection with any distribution in
violation of the Securities Act or (v) in reliance on another
exemption from the registration requirements of the Securities
Act, a certification to that effect (in the form set forth on
the reverse of the Security) and in the case of (iv) above a
transferee letter of representation in substantially the form
set forth in the Offering Memorandum and in the case of (i),
(ii), (iii) and (v) above, if the Issuers or the Trustee so
request, an Opinion of Counsel reasonably acceptable to the
Issuers and to the Trustee to the effect that such transfer is
in compliance with the Securities Act.
(b) Restrictions on Transfer of a Definitive
Security for a Beneficial Interest in a Global Security. A Definitive Security
may not be exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Registrar
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Registrar, together with:
(i) if such Definitive Security is a
Transfer Restricted Security, a certification, substantially in the
form set forth on the reverse of the Security, that such Definitive
Security is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act; and
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(ii) whether or not such Definitive
Security is a Transfer Restricted Security, written instructions
directing the Registrar to make, or to direct the Securities Custodian
to make, an endorsement on the Global Security to reflect an increase
in the aggregate principal amount of the Securities represented by the
Global Security,
then the Registrar shall cancel such Definitive Security and cause, or direct
the Securities Custodian to cause, in accordance with the standing instructions
and procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Issuers shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities.
The transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depository, in accordance with this Indenture
(including the restrictions on transfer set forth herein) and the procedures of
the Depository therefor, all in accordance with the Securities Act.
(d) Transfer of a Beneficial Interest in a Global
Security for a Definitive Security.
(i) Any person having a beneficial
interest in a Global Security may upon request exchange such beneficial
interest for a Definitive Security. Upon receipt by the Trustee of
written instructions or such other form of instructions as is customary
for the Depository from the Depository or its nominee on behalf of any
Person having a beneficial interest in a Global Security and upon
receipt by the Trustee of a written order or such other form of
instructions as is customary for the Depository or the Person
designated by the Depository as having such a beneficial interest in a
Transfer Restricted Security only, the following additional information
and documents (all of which may be submitted by facsimile):
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<PAGE> 46
(A) if such beneficial
interest is being transferred to the Person designated by the
Depository as being the beneficial owner, a certification from
such person to that effect (in substantially the form set
forth on the reverse of the Security); or
(B) if such beneficial
interest is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act, a
certification to that effect from the transferor (in the form
set forth on the reverse of the Security); or
(C) if such beneficial
interest is being transferred (i) pursuant to an exemption
from registration in accordance with Rule 144 under the
Securities Act, (ii) outside the United States in a
transaction meeting the requirements of Rule 904 under the
Securities Act, (iii) pursuant to an effective registration
statement under the Securities Act, (iv) to an "institutional
accredited investor" within the meaning of Rule 501(A)(1),
(2), (3) or (7) under the Securities Act that is acquiring the
security for its own account, or for the account of such an
institutional accredited investor, in each case in a minimum
principal amount of $100,000, not with a view to or for offer
or sale in connection with distribution in violation of the
Securities Act or (v) in reliance on another exemption from
the registration requirements of the Securities Act, a
certification to that effect from the trans- feree or
transferor (in the form set forth on the reverse of the
Security) and in the case of (iv) above a transferee letter of
representation in substantially the form set forth in the
Offering Memorandum and in the case of
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<PAGE> 47
(i), (ii), (iii) and (v) above, if the Issuers or the Trustee
so requests, an Opinion of Counsel reasonably acceptable to
the Issuers and to the Trustee to the effect that such
transfer is in compliance with the Securities Act,
then the Registrar or the Securities Custodian, at the direction of the
Trustee, will cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities
Custodian, the aggregate principal amount of the Global Security to be
reduced and, following such reduction, the Company will execute and the
Trustee will authenticate and deliver to the transferee a Definitive
Security in the appropriate principal amount.
(ii) Definitive Securities issued in
exchange for a beneficial interest in a Global Security pursuant to
this Section 2.6(d) shall be registered in such names and in such
authorized denominations as the Depository, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct
the Trustee. The Registrar shall deliver such Definitive Securities to
the persons in whose names such Securities are so registered.
(e) Restrictions on Transfer and Exchange of
Global Securities. Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in subsection (f) of this Section 2.6), a Global
Security may not be transferred as a whole except by the Depository to a nominee
of the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities in
Absence of Depository. If at any time:
(i) the Depository for the Securities
notifies the Issuers that the Depository is unwilling or unable to
continue as Depository for the Global
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Securities and a successor Depository for the Global Securities is not
appointed by the Issuers within 90 days after delivery of such notice; or
(ii) the Issuers, in their sole discretion,
notify the Trustee in writing that they elect to cause the issuance of
Definitive Securities under this Indenture,
then the Issuers will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and make available for delivery Definitive Securities, in an
aggregate principal amount equal to the principal amount of the Global
Securities, in exchange for such Global Securities.
(g) Legends. Each Security certificate evidencing
the Global Securities and the Definitive Securities (and all Securities issued
in exchange therefor or substitution thereof) shall bear a legend in
substantially the following form:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION
5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT
THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR
THE BENEFIT OF THE ISSUERS THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURI-
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TIES ACT, (d) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN
THE MEANING OF RULE 501 (A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, IN EACH CASE HAVING A MINIMUM PURCHASE PRICE OF
$100,000 FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (IN THE CASE OF (d) UPON DELIVERY OF A TRANSFEREE LETTER
OF REPRESENTATION AND IN THE CASE OF (b), (c), (d) or (e) UPON
AN OPINION OF COUNSEL IF THE ISSUERS OR TRUSTEE SO REQUESTS),
(2) TO THE ISSUERS OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(h) Cancellation and/or Adjustment of Global
Security. At such time as all beneficial interests in a Global Security have
either been exchanged for Definitive Securities, redeemed, repurchased or
cancelled, such Global Security shall be returned to or retained and cancelled
by the Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Security is exchanged for Definitive Securities, redeemed,
repurchased or cancelled, the principal amount of Securities represented by such
Global Security shall be reduced and an endorsement shall be made on such Global
Security, by the Trustee or the Securities Custodian, at the direction of the
Trustee, to reflect such reduction.
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(i) Obligations with respect to Transfers and
Exchanges of Definitive Securities.
(i) To permit registrations of transfers
and exchanges, the Issuers shall execute and the Trustee shall
authenticate Definitive Securities and Global Securities at the
Registrar's or co-Registrar's request.
(ii) No service charge shall be made
for any registration of transfer or exchange, but the Issuers may require
payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other than
any such transfer taxes, assessments, or similar governmental charge
payable upon exchanges or transfers pursuant to Section 2.2, 2.10, 3.5,
4.13, 9.5 or 10.1).
(iii) The Registrar or co-Registrar
shall not be required to register the transfer of or exchange of (a) any
Definitive Security selected for redemption in whole or in part pursuant
to Article III, except the unredeemed portion of any Definitive Security
being redeemed in part, or (b) any Security for a period beginning 15 days
before the mailing of a notice of an offer to repurchase pursuant to
Article X or Section 4.13 hereof or a notice of redemption of Securities
pursuant to Article III hereof and ending at the close of business on the
day of such mailing.
(iv) 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 other
than to require delivery of such certificates and other documentation or
evidence as 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.
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Section 7 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if
the Holder of a Security claims and submits an affidavit and/or other evidence,
satisfactory to the Trustee and the Issuers, to the Trustee to the effect that
the Security has been lost, destroyed or wrongfully taken, the Issuers shall
issue and the Trustee shall authenticate a replacement Security if the Trustee's
requirements are met. If required by the Trustee or the Issuers, such Holder
must provide an indemnity bond or other indemnity, sufficient in the judgment of
both the Issuers and the Trustee, to protect the Issuers, the Trustee or any
Agent from any loss which any of them may suffer if a Security is replaced. The
Issuers and the Trustee may charge such Holder for their reasonable,
out-of-pocket expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Issuers.
Section 8 Outstanding Securities.
Securities outstanding at any time are all the Securities that
have been authenticated by the Trustee except those cancelled by it, those
delivered to it for cancellation, those reductions in the interest in a Global
Security effected by the Trustee hereunder and those described in this Section
2.8 as not outstanding. A Security does not cease to be outstanding because the
Issuers or an Affiliate of the Issuers holds the Security, except as provided in
Section 2.9.
If a Security is replaced pursuant to Section 2.7 (other than
a mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser, as defined under the New York Uniform
Commercial Code. A mutilated Security ceases to be outstanding upon surrender of
such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent
(other than the Issuers or an Affiliate of the Issuers) holds cash sufficient to
pay all of the principal and interest (and Liquidated Damages, if any) due on
the Securities payable on
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that date and payment of the Securities called for redemption is not otherwise
prohibited, then on and after that date such Securities cease to be outstanding
and interest on them ceases to accrue.
Section 9 Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, amendment, supplement,
waiver or consent, Securities owned by the Issuers, any Guarantor and Affiliates
of the Issuers or of any Guarantor shall be disregarded, except that, for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, amendment, supplement, waiver or consent, only Securities that a
Trust Officer of the Trustee actually knows are so owned shall be disregarded.
Section 10 Temporary Securities.
Until definitive Securities are ready for delivery, the
Issuers may prepare, the Guarantors shall endorse and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Issuers
reasonably and in good faith consider appropriate for temporary Securities.
Without unreasonable delay, the Issuers shall prepare, the Guarantors shall
endorse and the Trustee shall authenticate definitive Securities in exchange for
temporary Securities. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as permanent
Securities authenticated and delivered hereunder.
Section 11 Cancellation.
The Issuers at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange or payment.
The Trustee, or at the direction of the Trustee, the Registrar or the Paying
Agent (other than the Issuers or an Affiliate of the Company), and no one else,
shall cancel and, at the written direction of the Issuers, shall dispose of all
Securities surrendered for transfer, exchange, payment or cancellation in
accordance with its
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customary procedures. Subject to Section 2.7, the Issuers may not issue new
Securities to replace Securities it has paid or delivered to the Trustee for
cancellation. No Securities shall be authenticated in lieu of or in exchange for
any Securities cancelled as provided in this Section 2.11, except as expressly
permitted in the form of Securities and as permitted by this Indenture.
Section 12 Defaulted Interest.
If the Issuers default in a payment of interest (and
Liquidated Damages, if any) on the Securities, the Issuers shall pay the
defaulted interest (and Liquidated Damages, if any), plus (to the extent lawful)
interest on the defaulted interest (and Liquidated Damages, if any), to the
persons who are Holders on a Record Date (or at the Issuers' option a subsequent
special record date) which date shall be the fifteenth day next preceding the
date fixed by the Issuers for the payment of defaulted interest, whether or not
such day is a Business Day, unless the Trustee fixes another record date. At
least 15 days before the subsequent special record date, the Issuers shall mail
to each Holder with a copy to the Trustee a notice that states the subsequent
special record date, the payment date and the amount of defaulted interest (and
Liquidated Damages, if any), and interest payable on such defaulted interest
(and Liquidated Damages), if any, to be paid.
Section 13 CUSIP Numbers.
The Issuers 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 Issuers will promptly notify
the Trustee of any change in the CUSIP numbers.
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ARTICLE III
REDEMPTION
Section 1 Right of Redemption.
Redemption of Securities shall be made only in accordance with
this Article III. At their election, the Issuers may redeem the Securities in
whole or in part, at any time or from time to time on or after July 1, 2001, at
the Redemption Prices specified under the caption "Redemption," in the Form of
Note attached as Exhibit A hereto, plus accrued but unpaid interest (and
Liquidated Damages, if any) to the Redemption Date. Except as provided in this
paragraph, the next following paragraph and paragraph 5 of the Notes, the Notes
may not otherwise be redeemed at the option of the Company.
Until July 1, 2000, upon a Public Equity Offering, up to 35%
aggregate principal amount of the Notes originally issued may be redeemed at the
option of the Issuers within 120 days of such Public Equity Offering, on not
less than 30 days, but not more than 60 days' notice to each Holder of the Notes
to be redeemed, with cash from the Net Cash Proceeds of such Public Equity
Offering, at 109.5% of principal (subject to the right of Holders of record on a
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date), together with accrued but unpaid interest and
Liquidated Damages, if any, to the date of redemption; provided, however, that
immediately following such redemption not less than 65% aggregate principal
amount of the Notes originally issued are outstanding.
Section 2 Notices to Trustee.
If the Issuers elect to redeem Securities pursuant to this
Article III, they shall notify the Trustee in writing of the date on which the
Notes are to be redeemed ("Redemption Date") and the principal amount of
Securities to be redeemed and whether they want the Trustee to give notice of
redemption to the Holders in the name of and at the expense of the Issuers.
If the Issuers elect to reduce the principal amount of
Securities to be redeemed pursuant to Paragraph 5 of the Securi-
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ties by crediting against any such redemption Securities it has not previously
delivered to the Trustee for cancellation, it shall so notify the Trustee of the
amount of the reduction and deliver such Securities with such notice.
The Issuers shall give each notice to the Trustee provided for
in this Section 3.2 at least 45 days (unless a shorter period is acceptable to
the Trustee) before the Redemption Date.
Section 3 Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant
to Paragraph 5 thereof, the Trustee shall select from among such Securities to
be redeemed pro rata or by lot or by such other method as the Trustee shall
determine to be fair and appropriate and in such manner as complies with any
applicable legal and stock exchange requirements.
The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption and shall promptly notify
the Issuers in writing of the Securities selected for redemption and, in the
case of any Security selected for partial redemption, the principal amount
thereof to be redeemed. Securities in denominations of $1,000 may be redeemed
only in whole. The Trustee may select for redemption portions (equal to $1,000
or any integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption.
Section 4 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Issuers shall mail a notice of redemption by first class mail, postage
prepaid, to each Holder whose Securities are to be redeemed, at such Holder's
last address as then shown on the registry books of the Registrar. At the
Issuers' request, the Trustee shall give the notice of redemption in the
Issuers' name and at the Issuers' expense. Each notice for redemption shall
identify the Securities to be redeemed and shall state:
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(1) the Redemption Date;
(2) the Redemption Price, including the amount of accrued
but unpaid interest (and Liquidated Damages, if any) to be paid upon such
redemption;
(3) the name, address and telephone number of the Paying
Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent at the address specified in such notice to
collect the Redemption Price;
(5) that, unless (a) the Issuers default in their
obligation to deposit cash with the Paying Agent in accordance with
Section 3.6 hereof, interest on Securities called for redemption ceases to
accrue on and after the Redemption Date and the only remaining right of
the Holders of such Securities is to receive payment of the Redemption
Price, including accrued but unpaid interest (and Liquidated Damages, if
any), upon surrender to the Paying Agent of the Securities called for
redemption and to be redeemed;
(6) if any Security is being redeemed in part, the
portion of the principal amount, equal to $1,000 or any integral multiple
thereof, of such Security to be redeemed and that, after the Redemption
Date, and upon surrender of such Security, a new Security or Securities in
aggregate principal amount equal to the unredeemed portion thereof will be
issued;
(7) if less than all the Securities are to be redeemed,
the identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption;
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(8) the CUSIP number of the Securities to be redeemed;
and
(9) that the notice is being sent pursuant to this
Section 3.4 and pursuant to the optional redemption provisions of
Paragraph 5 of the Securities.
Section 5 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.4, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price, including accrued but unpaid interest (and
Liquidated Damages, if any). Upon surrender to the Trustee or Paying Agent, such
Securities called for redemption shall be paid at the Redemption Price,
including interest (and Liquidated Damages, if any), if any, accrued to and
unpaid on the Redemption Date; provided that if the Redemption Date is after a
regular Record Date and on or prior to the Interest Payment Date, the accrued
interest (and Liquidated Damages, if any) shall be payable to the Holder of the
redeemed Securities registered on the relevant Record Date; and provided,
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
Section 6 Deposit of Redemption Price.
On or before the Redemption Date, the Issuers shall deposit
with the Paying Agent (other than the Issuers or an Affiliate of either of the
Issuers) cash sufficient to pay the Redemption Price of, including accrued but
unpaid interest on (and Liquidated Damages, if any), all Securities to be
redeemed on such Redemption Date (other than Securities or portions thereof
called for redemption on that date that have been delivered by the Issuers to
the Trustee for cancellation). The Paying Agent shall promptly return to the
Issuers any cash so deposited which is not required for that purpose upon the
written request of the Issuers.
If the Issuers comply with the preceding paragraph and the
other provisions of this Article III and payment of the
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Securities called for redemption is not otherwise prohibited, interest on the
Securities to be redeemed will cease to accrue on the applicable Redemption
Date, whether or not such Securities are presented for payment. Notwithstanding
anything herein to the contrary, if any Security surrendered for redemption in
the manner provided in the Securities shall not be so paid upon surrender for
redemption because of the failure of the Issuers to comply with the preceding
paragraph and the other provisions of this Article III, interest shall continue
to accrue and be paid from the Redemption Date until such payment is made on the
unpaid principal, and, to the extent lawful, on any interest not paid on such
unpaid principal, in each case at the rate and in the manner provided in Section
4.1 hereof and the Securities.
Section 7 Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part,
the Issuers shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge, a new Security or Securities equal in principal
amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
COVENANTS
Section 1 Payment of Securities.
The Issuers shall pay in same day funds the principal of and
interest (and Liquidated Damages, if any) on the Securities on the dates and in
the manner provided in the Securities and this Indenture. An installment of
principal of or interest (and Liquidated Damages, if any) on the Securities
shall be considered paid on the date it is due if the Trustee or Paying Agent
(other than the Issuers or an Affiliate of either of the Issuers) holds for the
benefit of the Holders, on or before 10:00 a.m. New York City time on that date,
cash deposited and designated for and sufficient to pay the installment.
The Issuers shall pay interest on overdue principal and on
overdue installments of interest (and Liquidated Damages, if
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any) at the rate specified in the Securities compounded semi-annually, to the
extent lawful.
Notwithstanding the foregoing, each Issuer (other than the
Trust) and by its acceptance of a Security issued hereunder each Holder hereby
confirms that it is the intention of all such parties that the issuances of the
Notes by such Issuer not constitute a fraudulent transfer or conveyance for
purpose of any Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such Issuers hereby
irrevocably agree that the obligations of such Issuers under the Notes shall be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Issuer and after giving effect to any
collections from or payments made by or on behalf of any other Issuers in
respect of the obligations of such other Issuer, result in the obligations of
such Issuer under such issuance of Notes not constituting such a fraudulent
transfer or conveyance.
Section 2 Maintenance of Office or Agency.
The Issuers and the Guarantors shall 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 Issuers and the Guarantors in respect of the Securities and this Indenture
may be served (so long as the notice is also served pursuant to Section 12.2).
The Issuers and the Guarantors shall 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 Issuers and the Guarantors 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 address of the Trustee set forth in Section 12.2.
The Issuers and the Guarantors may also from time to time
designate one or more other offices or agencies 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
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in any manner relieve the Issuers and the Guarantors of their obligation to
maintain an office or agency in the Borough of Manhattan, The City of New York,
for such purposes. The Issuers and the Guarantors shall 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. The Issuers and the Guarantors
hereby initially designate the principal corporate trust office of the Trustee
as such office.
Section 3 Limitation on Restricted Payments.
The Issuers and the Guarantors shall not, and shall not permit
any of their Subsidiaries to directly or indirectly, make any Restricted Payment
if, after giving effect to such Restricted Payment on a pro forma basis, (1) a
Default or an Event of Default shall have occurred and be continuing, (2) the
Trust is not permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Debt Incurrence Ratio in Section 4.10 on a Pro Forma Basis or
(3) the aggregate amount of all Restricted Payments made by the Trust and its
Subsidiaries, including after giving effect to such proposed Restricted Payment,
from and after the Issue Date, would exceed the sum of (a) $10 million, plus (b)
50% of the aggregate Consolidated Net Income of the Trust and its Consolidated
Subsidiaries for the period (taken as one accounting period), commencing on the
first day of the first fiscal quarter ending after the Issue Date, to and
including the last day of the fiscal quarter ended immediately prior to the date
of each such calculation (or, in the event Consolidated Net Income for such
period is a deficit, then minus 100% of such deficit), plus (c) the aggregate
Net Cash Proceeds received by the Trust from a contribution by the holders of
its Capital Stock (other than by the Subsidiaries of the Trust) or the sale of
its Qualified Capital Stock (other than (i) to a Subsidiary of the Trust and
(ii) to the extent applied in connection with a Qualified Exchange), after the
Issue Date, plus (d) the Net Cash Proceeds from the sale of Investments by the
Issuers (other than Permitted Investments) made after the Issue Date, plus the
total Investments, net, without duplication, of any Indebtedness, in any
Unrestricted Subsidiaries designated Subsidiaries, provided that such amounts,
taken with all other amounts distributed on or realized from such Investments or
designations, does not exceed the original aggregate amount of such Investments.
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The immediately preceding paragraph, however, will not
prohibit:
(i) a Qualified Exchange;
(ii) the payment of any dividend or
distribution on Qualified Capital Stock within 60 days after the date
of its declaration if such dividend could have been made on the date of
such declaration in compliance with the foregoing provisions, provided
the full amount of any Restricted Payment made pursuant to clause (ii)
will be deducted, without duplication, in the calculation of the
aggregate amount of Restricted Payments available to be made referred
to in clause (3) of the immediately preceding paragraph; or
(iii) (a) so long as the Trust is an
entity described in Section 1361(a)(1), 1361(c)(2) or 1361(d) of the
Code or any similar provision of state or local law, (x) the Trust
shall be permitted to distribute to the Beneficiary of the Trust (or
pay compensation to the Beneficiary of the Trust in lieu of such
distributions) all amounts distributed to the Trust pursuant to the
following clause (y), and (y) the Issuers (other than the Trust) in the
aggregate shall be permitted to make payments to the Trust in cash as
follows, calculated before giving effect to such payments (such
payments to be referred to hereinafter as "Trust Tax Distributions"):
(1) on (or within 15 days prior to)
each April 15, June 15, September 15 and January 15 an amount equal to
the minimum federal and state estimated quarterly income and intangible
tax payments required to be made on such date by the Beneficiary of the
Trust in order to prevent underpayment of estimated income tax pursuant
to the rules set forth in Sections 6654(b) and 6654(d)(1) of the Code
or their successors or supplements and any similar provision of
applicable state income and intangible tax law for any state with
respect to which the Issuers qualify as S corporations for state law
purposes, such amount to be calculated as though such Beneficiary's
only income and loss in each
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such quarter was an amount equal to the sum of the taxable income
and loss of the Issuers which are S corporations. The foregoing
amounts may be paid so long as (I) such Issuer is and was an S
corporation for such quarter, as defined in Section 1361 of the Code
or its successors and supplements, (II) no Default or Event of
Default exists and is continuing or would thereby occur, (III)
special tax counsel to the Issuers delivers to the Trustee, prior to
the payment in respect of such quarter, an opinion substantially in
the form attached hereto as Exhibit C-1 (or, if the Beneficiary of
the Trust is disabled or unavailable as described in Section 3 of
the Venture Trust Instrument, such special tax counsel delivers to
the Trustee, prior to the payment in respect of such quarter, an
opinion substantially in the form attached hereto as Exhibit C-2),
(IV) the Issuers have not received a private ruling or a National
Office Technical Advice Memorandum from the Internal Revenue Service
or, in respect of distributions made for state income tax purposes,
a similar ruling from any applicable state or local taxing
authority, that the Trust is not an entity described in Section
1361(a)(1), 1361(c)(2) or 1361(d) of the Code, or their successors
and supplements, or any similar provision of state or local law or
there has been a final "determination" (as used in Section 1313 of
the Code) or similar state determination to the same effect, and (V)
the Issuers have complied with the terms of clauses (b), (c) and (d)
below. The amount that is distributable pursuant to clause (y) by
each Issuer which is an S corporation in respect of each of the
quarters described above shall be that proportion of the amount of
the Trust Tax Distribution for each such quarter which such Issuer's
Tax Income for such quarter bears to the aggregate Tax Income of all
the Issuers which are S corporations in such quarter. For purposes
of the foregoing, "Tax Income" shall mean one-quarter of an Issuer's
actual taxable income for the year prior to that with respect to
which the calculations described above are being made; and
(2) no later than September 15 of each year, the Issuers
shall cause their tax advisors,
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which shall be a nationally recognized accounting firm, to determine
the actual amount of federal and state income tax liability of the
Beneficiary of the Trust for the previous calendar year computed as
if the only income and loss of the Beneficiary in such year was an
amount equal to the sum of the taxable income and loss of the
Issuers which are S corporations (the "Actual Tax Amount"). The
computation of the Actual Tax Amount made by the Issuers' tax
advisors shall be reviewed and reported on by a nationally
recognized accounting firm, which may be the Issuers' tax advisors.
If (A) the Actual Tax Amount, as determined by such tax advisor, is
less than the aggregate estimated amounts paid pursuant to clause
(1) above in respect of such year (the "Distributed Amounts") and/or
(B) if the Actual Tax Amount is at any time finally determined by
the Internal Revenue Service or a court of competent jurisdiction to
be less than that determined by such tax advisors, the Issuers shall
cause the Beneficiary to the Trust, within 75 days after such
difference is determined, to reimburse to the Trust, with no
obligation on the part of the Trust to such Beneficiary with respect
to such reimbursement, the excess of the Distributed Amounts over
the Actual Tax Amount, as finally determined by the tax advisors,
the Internal Revenue Service or court of competent jurisdiction, as
the case may be, or the excess of the Actual Tax Amount, as
determined by the tax advisors, over the Actual Tax Amount as
determined by the Internal Revenue Service or court, as the case may
be (in either case, which excess amount may be offset by any amounts
then or subsequently owed to the Beneficiary by reason of clause (1)
above). If the excess of the Distributed Amounts over the Actual Tax
Amount, as finally determined by the tax advisors, is reimbursed to
the Trust after June 14 of such year, such excess shall bear
interest from June 15 to the date preceding the date it is paid at
an interest rate equal to the overpayment rate established under
Section 6621(a)(1) of the Code or its successor and supplements.
Such reimbursed amount (if any) shall then be reimbursed by the
Trust to each of the Issuers that first distributed such amounts to
the Trust. If the Actual Tax Amount, as determined by the tax
advi-
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sors, the Internal Revenue Service or court, as the case may be, is
greater than the Distributed Amounts, each of the Issuers which are
S corporations shall distribute to the Trust, and the Trust shall
distribute to the Beneficiary, its share of the excess of the Actual
Amount over the Distributed Amounts, within 75 days after such
difference is determined, provided that no such distribution shall
be made by any of the Issuers unless a nationally recognized
accounting firm shall have reviewed and reported on the computation
of the Actual Tax Amount made by the tax advisors, which may be the
same nationally recognized accounting firm that acts as the Issuers'
tax advisors. If any payment is made (i) in contravention of clause
(1) above and paid to the Beneficiary of the Trust pursuant to
clause (x) above or (ii) in contravention of the proviso to the
immediately preceding sentence and paid to the Beneficiary of the
Trust pursuant to the immediately preceding sentence, the Issuers
shall cause the Beneficiary of the Trust to reimburse to each of the
Issuers making such prohibited payment the amount of such prohibited
payment;
(b) in the event of the disability or unavailability
of Larry J. Winget as provided in the Venture Trust Instrument if the Trust
remains a Trust (such date, an "S Trust Commencement Date"), (1) the Issuers
shall apply for a private ruling from the Internal Revenue Service to the effect
that each of the Issuers which was an S corporation immediately prior to such
disability or unavailability, as the case may be, qualifies, despite such
disability or unavailability, as an S corporation under Section 1361(a)(1) of
the Code and that the Trust is an entity described in Section 1361(c)(2) or
1361(d) of the Code, or their successors and supplements; (2) the Trust shall
not take any action that would cause it to have income (as defined in Section
643(b) of the Code, or its successors and supplements, and Act 340 of Michigan
Compiled Acts, 1965, or its successors and supplements, except for corporate
distributions provided for in such act), for any period beginning on the S Trust
Commencement Date and continuing for the duration of such disability or
unavailability in excess of the amount of cash the Trust would be permitted to
distribute in respect of its Equity Interests pursuant to this Section 4.3,
provided, however, that if the
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Trust shall have received a private letter ruling from the Internal Revenue
Service that it is an entity described in Section 1361(c)(2) of the Code, or its
successors and supplements, the foregoing limitation shall not apply for the
period such ruling is in effect; and (3) the Issuers shall notify the Trustee of
the occurrence of such S Trust Commencement Date no later than 10 days following
such date;
(c) if at any time the Issuers receive notification
from the Internal Revenue Service that any Issuer does not qualify as an S
corporation under Section 1361(a)(1) of the Code, (x) no further distributions
shall be made pursuant to clause (a)(1) above by such Issuer, and (y) the
Issuers shall cause the Beneficiary of the Trust either (A) to reimburse the
Trust all amounts paid by that Issuer pursuant to clause (a)(1) and clause
(a)(2) above with respect to all periods as to which that Issuer did not qualify
as an S corporation, with no obligation on the part of the Trust to such
Beneficiary with respect to such reimbursement, and the Trust shall then pay
such reimbursement to that Issuer, or (B) to reimburse such Issuer such payments
directly, within 75 days after such requirement for reimbursement is determined;
provided that no such reimbursement shall be required to the extent to which
such distribution would otherwise have been permitted, after taking into account
interest, penalties and additions to tax imposed on such Issuer as a result of
its failure to qualify as an S corporation under Section 1361(a)(1) of the Code,
or its successors and supplements. If the Issuers at any time receive
notification from the Internal Revenue Service that the Trust is not an entity
described in Section 1361(a)(1), 1361(c)(2) or 1361(d), or their successors and
supplements, as the case may be, of the Code, or if the Issuers fail to receive
a favorable response to a ruling request described in clause (b) within 360 days
after the disability or unavailability of Larry J. Winget, the Issuers shall
take the actions described in clauses (x) and (y) of the preceding sentence; and
(d) no Trust Tax Distribution may be made to the
extent such distribution would cause the aggregate cumulative amount of Trust
Tax Distributions to exceed the aggregate cumulative Tax Distribution Amounts
for periods completed since the date of the Indenture.
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Section 4 Corporate Existence.
The Issuers and the Guarantors shall do or cause to be done
all things necessary to preserve and keep in full force and effect their
corporate or other existence and the corporate or other existence of each of
their Subsidiaries in accordance with the respective organizational documents of
each of them and the rights (charter and statutory) and corporate franchises of
the Issuers and the Guarantors and each of their Subsidiaries; provided,
however, that neither the Issuers nor any of the Guarantors shall be required to
preserve, with respect to itself, any right or franchise, and with respect to
any of their Subsidiaries, any such existence, right or franchise, if (a) the
Board of Directors of the Trust shall determine reasonably and in good faith
that the preservation thereof is no longer desirable in the conduct of the
business of the Issuers and (b) the loss thereof is not disadvantageous in any
material respect to the Holders; provided, further, nothing in this Section 4.4
shall prohibit a merger or sale of assets not otherwise prohibited by this
Indenture.
Section 5 Payment of Taxes and Other Claims.
The Issuers and the Guarantors shall, and shall cause each of
their Subsidiaries to, pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Issuers, any Guarantor or any
of their Subsidiaries or properties and assets of the Issuers, any Guarantor or
any of their Subsidiaries and (ii) all lawful claims, whether for labor,
materials, supplies, services or anything else, which have become due and
payable and which by law have or may become a Lien upon the property and assets
of the Issuers, any Guarantor or any of their Subsidiaries; provided, however,
that neither the Issuers nor any Guarantor shall be required to pay or discharge
or cause to be paid or discharged any such tax, assessment, charge or claim
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which disputed amounts adequate reserves have
been established in accordance with GAAP.
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Section 6 Compliance Certificate; Notice of Default.
(a) The Issuers shall deliver to the Trustee
within 120 days after the end of their fiscal year an Officers' Certificate, one
of the signers of which shall be the principal executive, financial or
accounting officer of the Issuers, complying (whether or not required) with
Section 314(a)(4) of the TIA and stating that a review of their activities and
the activities of their Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to determining
whether the Issuers have kept, observed, performed and fulfilled their
obligations (without regard to notice requirements or grace periods) under this
Indenture and further stating, as to each such Officer signing such certificate,
whether or not the signer knows of any failure by the Issuers, any Guarantor or
any Subsidiary of the Issuers or any Guarantor to comply with any conditions or
covenants in this Indenture and, if such signer does know of such a failure to
comply, the certificate shall describe such failure with particularity. The
Officers' Certificate shall also notify the Trustee should the relevant fiscal
year end on any date other than the current fiscal year end date.
(b) So long as not contrary to the then current
recommendation of the American Institute of Certified Public Accountants, the
Issuers shall deliver to the Trustee within 120 days after the end of each of
their fiscal years a written report of a firm of independent certified public
accountants with an established national reputation stating that in conducting
their audit for such fiscal year, nothing has come to their attention that
caused them to believe that the Issuers or any Subsidiary of the Issuers were
not in compliance with the provisions set forth in Section 4.3, 4.10 or 4.13 of
this Indenture.
(c) The Issuers shall, so long as any of the
Securities are outstanding, deliver to the Trustee, immediately upon becoming
aware of any Default or Event of Default under this Indenture, an Officers'
Certificate specifying such Default or Event of Default and what action the
Issuers are taking or propose to take with respect thereto. The Trustee shall
not be deemed to have knowledge of a Default or an Event of Default unless one
of its Trust Officers receives notice of the Default giving rise thereto from
the Issuers or any of the Holders.
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Section 7 Reports.
Whether or not the Trust is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Trust shall deliver
to the Trustee and to each Holder within 15 days after it is or would have been
(if it were subject to such reporting obligations) required to file such with
the Commission, annual and quarterly financial statements substantially
equivalent to financial statements that would have been included in reports
filed with the Commission, if the Trust were subject to the requirements of
Section 13 or 15(d) of the Exchange Act, including, with respect to annual
information only, a report thereon by the Trust's certified independent public
accountants as such would be required in such reports to the Commission, and, in
each case, a management's discussion and analysis of financial condition and
results of operations which would be so required. In addition, the Issuers have
agreed that, for so long as any Notes remain outstanding, from and after the
time the Trust files a registration statement with the Commission with respect
to the Notes, they will file such reports with the Commission, provided that the
Commission will accept such filing. 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 Issuers' compliance with any of their covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
Section 8 Waiver of Stay, Extension or Usury Laws.
Each of the Issuers and each Guarantor covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or any usury law or other law wherever enacted which
would prohibit or forgive the Issuers or any Guarantor from paying all or any
portion of the principal of or interest (and Liquidated Damages, if any) on the
Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Indenture; and (to the extent that they may lawfully do so) each of the Issuers
and each Guarantor hereby expressly waives all benefit or advan-
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tage of any such law insofar as such law applies to the Securities, and covenant
that it shall not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 9 Limitation on Transactions with Affiliates.
(a) The Issuers and Guarantors will not, and will
not permit any of their Subsidiaries to, on or after the Issue Date, enter into
any contract, agreement, arrangement or transaction with any Affiliate (an
"Affiliate Transaction"), or any series of related Affiliate Transactions (other
than Exempted Affiliate Transactions), (i) unless it is determined that the
terms of such Affiliate Transaction are fair and reasonable to the Issuer,
Guarantor or Subsidiary, and no less favorable to the Issuer, Guarantor or
Subsidiary than could have been obtained in an arm's-length transaction with a
non-Affiliate.
(b) The Issuers and Guarantors will not, and will
not permit any of their Subsidiaries to, enter into an Affiliate Transaction, or
any series of related Affiliate Transactions, unless (i) with respect to such
Transaction or Transactions involving or having a fair value of more than
$250,000 the Trust has (x) obtained the approval of majorities of the Board of
Directors of the Issuer, Guarantor or Subsidiary, as the case may be, or the
Trust in the case of Venture Canada, and the Fairness Committee of the Issuer,
Guarantor or Subsidiary, as the case may be, or the Trust in the case of Venture
Canada, in the exercise of their fiduciary duties and (y) either (1) obtained
the approval of majorities of the disinterested directors of the Issuer,
Guarantor or Subsidiary, as the case may be, or the Trust in the case of Venture
Canada, if any, and Independent members of the Fairness Committee or (2)
obtained an opinion of a qualified independent financial advisor to the effect
that such Transaction or Transactions are fair to the Issuer, Guarantor or
Subsidiary, as the case may be, from a financial point of view and (ii) with
respect to such Transaction or Transactions involving or having a fair value of
more than $3.0 million, the Trust has (x) obtained the approval of majorities of
the Board of Directors of the Issuer, Guarantor or Subsidiary, as the case may
be, or the Trust in the case of Venture Canada, and the Fairness Committee of
the Issuer, Guarantor or Subsidiary, as the case may be, or the Trust
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in the case of Venture Canada, in the exercise of their fiduciary duties,
including majorities of the disinterested directors of the Issuer, Guarantor or
Subsidiary, as the case may be, if any, and the Independent members of the
Fairness Committee, and (y) delivered to the Trustee an opinion of a qualified
independent financial advisor to the effect that such Transaction or
Transactions are fair to the Issuer, Guarantor or such Subsidiary, as the case
may be, from a financial point of view.
(c) Each Issuer and Guarantor and each of their
Subsidiaries (other than Venture Canada) will establish and maintain a Fairness
Committee, at least one of whose members shall be independent.
Section 10 Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock.
Except (x) as set forth in this covenant or (y) by merger or
consolidation by and among or between any Issuer or Guarantor, the Issuers and
the Guarantors will not, and will not permit any of their Subsidiaries to,
directly or indirectly, issue, assume, guaranty, incur, become directly or
indirectly liable with respect to (including as a result of an Acquisition), or
otherwise become responsible for, contingently or otherwise (individually and
collectively, to "incur" or, as appropriate, an "incurrence"), any Indebtedness
(including Acquired Indebtedness) or any Disqualified Capital Stock other than
Permitted Indebtedness. Notwithstanding the foregoing, if (i) no Default or
Event of Default shall have occurred and be continuing at the time of, or would
occur after giving effect on a pro forma basis to, such incurrence of
Indebtedness or Disqualified Capital Stock and (ii) on the date of such
incurrence (the "Incurrence Date"), the Consolidated Coverage Ratio of the Trust
for the Reference Period immediately preceding the Incurrence Date, after giving
effect on a Pro Forma Basis to such incurrence of such Indebtedness or
Disqualified Capital Stock and the use of proceeds thereof, would be at least
2.0 to l (the "Debt Incurrence Ratio"), then the Trust may incur such
Indebtedness (including Acquired Indebtedness) or Disqualified Capital Stock the
Issuers (other than the Trust) and the Guarantors may incur such Indebtedness
(including Acquired Indebtedness) and any other Subsidiaries may incur Acquired
Indebtedness.
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Indebtedness or Disqualified Capital Stock of any person which
is outstanding at the time such person becomes a Subsidiary of the Trust
(including upon designation of any subsidiary or other person as a Subsidiary)
or is merged with or into or consolidated with the Trust or a Subsidiary of the
Trust shall be deemed to have been incurred at the time such person becomes such
a Subsidiary of the Trust or is merged with or into or consolidated with the
Trust or a Subsidiary of the Trust, as applicable, and such incurrence is
subject to the immediately preceding paragraph.
Accrual of interest, the accretion of accreted value and the
payment of interest in the form of additional Indebtedness will not be deemed to
be an incurrence of Indebtedness for purposes of this covenant.
For purposes of determining any particular amount of
Indebtedness under this covenant, guarantees, Liens, or obligations with respect
to letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included.
Section 11 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Issuers and the Guarantors will not, and will not permit
any of their Subsidiaries to, directly or indirectly, create, assume or suffer
to exist any consensual restriction on the ability of any Subsidiary of the
Trust to pay dividends or make other distributions to or on behalf of, or to pay
any obligation to or on behalf of, or otherwise to transfer assets or property
to or on behalf of, or make or pay loans or advances to or on behalf of, the
Trust or any Subsidiary of the Trust, except (a) restrictions imposed by the
Notes or the Indenture, (b) restrictions imposed by applicable law, (c) existing
restrictions under Indebtedness outstanding on the Issue Date specified on
Schedule I to the Indenture, (d) restrictions under any Acquired Indebtedness
not incurred in violation of the Indenture or any agreement relating to any
property, asset, or business acquired by the Trust or any of its Subsidiaries,
which restrictions in each case existed at the time of Acquisition, were not put
in place in connection with or in anticipation of such Acquisition and are not
applicable to any person, other than the person
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acquired, or to any property, asset or business, other than the property, assets
and business so acquired, (e) any such restriction or requirement imposed by
Indebtedness incurred under paragraph (b) of the definition of "Permitted
Indebtedness" provided such restriction or requirement is not materially less
favorable than that imposed by the Credit Agreement as of the Issue Date, (f)
restrictions with respect solely to a Subsidiary of the Trust imposed pursuant
to a binding agreement which has been entered into for the sale or disposition
of all or substantially all of the Equity Interests or assets of such
Subsidiary, provided such restrictions apply solely to the Equity Interests or
assets of such Subsidiary which are being sold, and (g) in connection with and
pursuant to permitted Refinancing Indebtedness, replacements of restrictions
imposed pursuant to clauses (a), (c) or (d) of this paragraph that are not
materially less favorable than those being replaced and do not apply to any
other person or assets than those that would have been covered by the
restrictions in the Indebtedness so refinanced. Notwithstanding the foregoing,
neither (a) customary provisions restricting subletting or assignment of any
lease entered into in the ordinary course of business, consistent with industry
practice, nor (b) Liens permitted under the terms of the Indenture on assets
securing the Indebtedness under the Credit Agreement incurred in accordance with
Section 4.10 shall in and of themselves be considered a restriction on the
ability of the applicable Subsidiary to transfer such agreement or assets, as
the case may be.
Section 12 Limitation on Liens Securing Indebtedness.
The Issuers and the Guarantors will not, and will not permit
any of their Subsidiaries to, create, incur, assume or suffer to exist any Lien
of any kind, other than Permitted Liens, upon any of their respective assets
owned on the date of the Indenture or upon any income or profits therefrom,
unless the Issuers or the Guarantors provide, and cause their Subsidiaries to
provide, concurrently therewith, that the Notes are equally and ratably so
secured, provided that, if such Indebtedness is Subordinated Indebtedness, the
Lien securing such Subordinated Indebtedness shall be subordinate and junior to
the Lien securing the Notes with the same relative priority as such Subordinated
Indebtedness shall have with respect to the Notes.
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Section 13 Limitation on Sale of Assets and Subsidiary
Stock.
The Issuers and the Guarantors will not, and will not permit
any of their Subsidiaries to, in one or a series of related transactions,
convey, sell, transfer, assign or otherwise dispose of, directly or indirectly,
any of its property, business or assets, including by merger or consolidation
(in the case of a Guarantor or a Subsidiary of an Issuer), and including any
sale or other transfer or issuance of any Equity Interests of any Subsidiary of
the Trust, whether by the Trust or a Subsidiary of either or through the
issuance, sale or transfer of Equity Interests by a Subsidiary of the Trust, and
including any sale and leaseback transaction, other than surrender of any
reverse split dollar insurance policy (any of the foregoing, an "Asset Sale"),
unless (1)(a) within 395 days after the date of such Asset Sale, the Net Cash
Proceeds therefrom (the "Asset Sale Offer Amount") are applied to the optional
redemption of the Notes in accordance with the terms of the Indenture or to the
repurchase of the Notes and any other Pari Passu Indebtedness which by its terms
requires such repurchase pursuant to an irrevocable, unconditional cash offer
(the "Asset Sale Offer") to repurchase Notes and such Pari Passu Indebtedness at
a purchase price of 100% of principal amount (the "Asset Sale Offer Price")
together with accrued and unpaid interest and Liquidated Damages, if any, to the
date of payment, made within 360 days of such Asset Sale or (b) within 360 days
following such Asset Sale, the Asset Sale Offer Amount is (i) invested (or
committed, pursuant to a binding commitment subject only to reasonable,
customary closing conditions, to be invested, and in fact is so invested, within
an additional 90 days) in assets and property (other than notes, bonds,
obligation and securities, except in connection with the acquisition of a wholly
owned Subsidiary) which in the good faith reasonable judgment of the Board of
Directors of the Trust will immediately constitute or be a part of a Related
Business of the Trust or such Subsidiary (if it continues to be a Subsidiary)
immediately following such transaction or (ii) used to permanently reduce the
amount of any Indebtedness permitted pursuant to paragraph (b) of the definition
"Permitted Indebtedness" (including that in the case of a revolver or similar
arrangement that makes credit available, such commitment is also permanently
reduced by such amount), or (c) the Asset Sale Offer Amount is applied in a
combination of (a) and (b), (2) at least
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85% of the total consideration received for such Asset Sale or series of related
Asset Sales consists of cash or Cash Equivalents, provided, however, that more
than 15% of the total consideration may consist of consideration other than cash
or Cash Equivalents if (A) the portion of such consideration that does not
consist of cash or Cash Equivalents consists of assets of a type ordinarily used
in the operation of a Related Business to be used by the Issuers or a Subsidiary
in the conduct of a Related Business, (B) the terms of such Asset Sale have been
approved by a majority of the members of the Board of Directors of the Trust and
(C) if the value of the assets being disposed of by the Issuers or such
Subsidiary in such transaction (as determined in good faith by such members of
the Board of Directors) is at least $3 million, the Board of Directors of the
Trust has received a written opinion of a nationally recognized investment
banking firm to the effect that such Asset Sale is fair, from a financial point
of view, to the Trust and the Trust has delivered a copy of such opinion to the
Trustee, (3) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect, on a pro forma
basis, to, such Asset Sale, and (4) the Board of Directors of the Trust
determines in good faith that the Trust or such Subsidiary, as applicable,
receives fair market value for such Asset Sale.
For purposes of this covenant, "Asset Sale" shall not include
a transaction or series of related transactions for which the Company or its
Subsidiaries receive aggregate consideration of less than $250,000.
An acquisition of Notes pursuant to an Asset Sale Offer may be
deferred until the accumulated Net Cash Proceeds from Asset Sales not applied to
the uses set forth in (1) above (the "Excess Proceeds") exceeds $5 million and
that each Asset Sale Offer shall remain open for 20 Business Days following its
commencement (the "Asset Sale Offer Period"). Upon expiration of the Asset Sale
Offer Period, the Trust shall apply the Asset Sale Offer Amount plus an amount
equal to accrued and unpaid interest and Liquidated Damages, if any, to the
purchase of all Notes and Pari Passu Indebtedness properly tendered (on a pro
rata basis if the Asset Sale Offer Amount is insufficient to purchase all Notes
and Pari Passu Indebtedness so tendered, such pro rata basis determined so that
the amount of Notes and Pari Passu Indebtedness purchased bears the same ratio
to each other that the total
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principal amount of Notes tendered bears to the total Pari Passu Indebtedness
tendered) at the Asset Sale Offer Price (together with accrued interest). To the
extent that the aggregate amount of Notes and Pari Passu Indebtedness tendered
pursuant to an Asset Sale Offer is less than the Asset Sale Offer Amount, the
Trust may use any remaining Net Cash Proceeds for general corporate purposes as
otherwise permitted by the Indenture and following each Asset Sale Offer the
Excess Proceeds amount shall be reset to zero. For purposes of (2) above, total
consideration received means the total consideration received for such Asset
Sale minus the amount of (a) Indebtedness which is not Subordinated Indebtedness
assumed by a transferee which assumption permanently reduces the amount of
Indebtedness outstanding on the Issue Date or permitted pursuant to paragraph
(b), (c) or (d) of the definition "Permitted Indebtedness" (including that in
the case of a revolver or similar arrangement that makes credit available, such
commitment is so reduced by such amount) and (b) property that within 60 days of
such Asset Sale is converted into cash or Cash Equivalents).
Notwithstanding the foregoing provisions of the prior
paragraph, the following actions shall not constitute Asset Sales:
(i) the Trust and its Subsidiaries may,
in the ordinary course of business, convey, sell, transfer, assign or
otherwise dispose of inventory acquired and held for resale in the
ordinary course of business;
(ii) the Trust and its Subsidiaries may
convey, sell, transfer, assign or otherwise dispose of assets in
accordance with Article V;
(iii) the Trust and its Subsidiaries
may sell or dispose of damaged, worn out or other obsolete property in
the ordinary course of business so long as such property is no longer
necessary for the proper conduct of the business of the Trust or such
Subsidiary, as applicable;
(iv) the Trust and its Subsidiaries may
convey, sell, transfer, assign or otherwise dispose of
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assets to the Trust or any of its other Subsidiaries; and
(v) the Trust may contribute all of the
Equity Interests of all Subsidiaries of the Trust (other than any
Equity Interests of the Subsidiary which is to receive such
contribution from the Trust) to Venture Holdings Corporation or other
successor to the Trust (a "Trust Contribution").
All Net Cash Proceeds from an Event of Loss shall be invested,
used for prepayment of Indebtedness, or used to repurchase Notes, all of the
foregoing within the periods and as otherwise provided above in clause 1(a) or
1(b) of the first paragraph of this covenant.
In addition to the foregoing, the Trust will not, and will not
permit any Subsidiary to, directly or indirectly make any Asset Sale of any of
the Equity Interests of any Subsidiary except:
(i) pursuant to an Asset Sale of all the
Equity Interests of such Subsidiary; or
(ii) pursuant to an Asset Sale of
shares of common stock with no preferences or special rights or
privileges and with no redemption or prepayment provisions, provided
that after such sale the Trust or its Subsidiaries own at least 50.1%
of the voting and economic interests of the Capital Stock of such
Subsidiary.
Notice of an Asset Sale Offer shall be sent, on or prior to
the commencement of the Asset Sale Offer, by first-class mail, by the Issuers to
each Holder at its registered address, with a copy to the Trustee. The Asset
Sale Offer shall remain open for at least 20 Business Days following its
commencement. The notice to the Holders shall contain all information,
instructions and materials required by applicable law or otherwise material to
such Holders' decision to tender Securities pursuant to the Asset Sale Offer.
The notice, which (to the extent consistent with this Indenture) shall govern
the terms of an Asset Sale Offer, shall state:
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(1) that the Asset Sale Offer is being made pursuant to
such notice and this Section 4.13;
(2) the Asset Sale Offer Amount, the Asset Sale Offer
Price (including the amount of accrued but unpaid interest (and
Liquidated Damages, if any)), and the date of purchase;
(3) that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest if interest is
then accruing;
(4) that, unless the Issuers default in depositing cash
with the Paying Agent (which may not for purposes of this Section
4.13, notwithstanding anything in this Indenture to the contrary, be
the Issuers or any of their Affiliates) in accordance with the last
paragraph of this Section 4.13, any Security, or portion thereof,
accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest after the Asset Sale Purchase Date;
(5) that Holders electing to have a Security, or portion
thereof, purchased pursuant to an Asset Sale Offer will be required
to surrender their Security, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Security completed,
to the Paying Agent (which may not for purposes of this Section
4.13, notwithstanding any other provision of this Indenture, be the
Issuers or any of their Affiliates) at the address specified in the
notice;
(6) that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent receives, prior
to the expiration of the Asset Sale Offer, a facsimile transmission
or letter setting forth the name of the Holder, the principal amount
of the Securities the Holder is withdrawing and a statement
containing a facsimile signature and stating that such Holder is
withdrawing his elec-
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tion to have such principal amount of Securities purchased;
(7) that if Securities in a principal amount in excess of
the principal amount of Securities to be acquired pursuant to the
Asset Sale Offer are tendered and not withdrawn, the Issuers shall
purchase Securities on a pro rata basis with Pari Passu Indebtedness
(with such adjustments as may be deemed appropriate by the Issuers
so that only Securities in denominations of $1,000 or integral
multiples of $1,000 shall be acquired);
(8) that Holders whose Securities were purchased only in
part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; and
(9) the circumstances and relevant facts regarding such
Asset Sales.
The Issuers agree that any Asset Sale Offer shall be made in
compliance with all applicable laws, rules, and regulations, including, if
applicable, Regulation 14E of the Exchange Act and the rules and regulations
thereunder and all other applicable Federal and state securities laws. To the
extent that provisions of any securities laws or regulations conflict with the
terms hereof, the Trust shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations hereunder
by virtue thereof.
On or before the date of purchase, the Issuers shall (i)
accept for payment Securities or portions thereof properly tendered pursuant to
the Asset Sale Offer (on a pro rata basis if required pursuant to paragraph (7)
above), (ii) deposit with the Paying Agent cash sufficient to pay the Asset Sale
Offer Price for all Securities or portions thereof so accepted and (iii) deliver
to the Trustee Securities so accepted together with an Officers' Certificate
setting forth the Securities or portions thereof being purchased by the Issuers.
The Paying Agent shall promptly mail or deliver to Holders of Securities so
accepted payment in an amount equal to the Asset Sale Offer Price for such
Securities, and the Trustee shall promptly authenticate and mail
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or deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so accepted
shall be promptly mailed or delivered by the Issuers to the Holder thereof. In
the event the Issuers shall have deposited cash in excess of the Asset Sale
Offer Price for all Securities or portions thereof validly tendered, such excess
shall be promptly returned to the Issuers.
Section 14 Limitation on Lines of Business.
The Issuers and Guarantors will not, and will not permit any
of their Subsidiaries to, directly or indirectly engage to any substantial
extent in any line or lines of business activity other than that which, in the
reasonable good faith judgment of the Board of Directors of the Trust, is a
Related Business.
Section 15 Limitation on Status as Investment Company.
None of the Trust, the Guarantors or any of their and its
Subsidiaries shall become required to be registered as an "investment company"
(as that term is defined in the Investment Company Act of 1940, as amended), or
otherwise become subject to regulation under the Investment Company Act.
Section 16 Future Subsidiary Guarantors.
All future Subsidiaries of the Issuers, other than Foreign
Subsidiaries, may, and after the Issuers' 9-3/4% Senior Subordinated Notes due
2004 are no longer outstanding shall, jointly and severally guarantee,
irrevocably and unconditionally, all principal, premium, if any, and interest
and Liquidated Damages, if any, on the Notes on a senior basis, all in
accordance with Article XI hereof.
Section 17 Payment for Consent.
None of the Issuers, the Guarantors or any of their
Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Indenture, the Notes or the Guarantees unless
such consider-
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ation is offered to be paid or agreed to be paid to all Holders of the Notes who
so consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
Section 18 Corporate Opportunities.
Larry J. Winget agrees pursuant to the Corporate Opportunity
Agreement for the benefit of the Holders of the Notes that if any corporate
opportunity, business opportunity, proposed transaction, acquisition,
disposition, participation, interest, or other opportunity to acquire an
interest in any business or prospect in the same business or in any business
reasonably related to the business of the Trust or any of its Subsidiaries or in
any machinery or equipment useful in the business of the Trust or any of its
Subsidiaries (a "Business Opportunity") comes to his attention or shall be made
available to him or any of his Affiliates, a complete and accurate description
of such Business Opportunity, including all of the terms and conditions thereof
and the identity of all other Persons involved in the Business Opportunity,
shall be promptly presented in writing to the Board of Directors of each of the
Issuers and the Fairness Committee of each of the Issuers and each Issuer shall
be entitled to pursue and take advantage of such Business Opportunity, either
directly or through a wholly owned Subsidiary, and Larry J. Winget shall not,
nor shall any of his Affiliates (other than the Trust or any wholly owned
Subsidiary of the Trust), pursue or take advantage of a Business Opportunity
unless majorities of the Board of Directors of each of the Issuers and the
Fairness Committee of each of the Issuers (including majorities of each Issuer's
disinterested directors, if any, and Independent members of the Fairness
Committee) have determined that it is not in the interests of such Issuer to
pursue or take advantage of such Business Opportunity.
Notwithstanding the foregoing, Business Opportunities (1)
relating to the purchase of machinery and equipment or real estate and not
constituting a business within the meaning of Section 11.01(d) of Regulation S-X
of the Commission or (2) relating to the sale of goods and services by an
Affiliate in the ordinary course of business as conducted as of the Issue Date
shall not be subject to the Corporate Opportunity Agreement.
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Section 19 Limitation on Amendments to Agreements.
The Trust shall not permit to be amended, modified or changed
in any manner the Venture Trust Instrument except that the Trust may make
amendments, modifications or changes which individually or in the aggregate are
not adverse to the interests of the Holders of the Notes. Without limiting the
foregoing, amendments to the Venture Trust Instrument reasonably necessary to
conform to the requirements of Section 1361(c)(2) or 1361(d) of the Code, or
their successors or supplements, shall not be deemed adverse to the interests of
the Holders of the Notes. The Trust will not amend, modify or in any way alter
the Corporate Opportunity Agreement in any manner adverse to the Trust or any of
its Subsidiaries.
ARTICLE V
SUCCESSOR CORPORATION
Section 1 Limitation on Merger, Sale or Consolidation.
The Trust will not consolidate with or merge with or into
another person or sell, lease, convey or transfer all or substantially all of
its assets (computed on a consolidated basis), whether in a single transaction
or a series of related transactions, to another person or group of affiliated
persons or adopt a plan of liquidation, unless (i) either (a) the Trust is the
continuing entity or (b) the resulting, surviving or transferee entity or, in
the case of a plan of liquidation, the entity which receives the greatest value
from such plan of liquidation is a corporation organized under the laws of the
United States, any state thereof or the District of Columbia and expressly
assumes by supplemental indenture all of the obligations of the Trust in
connection with the Notes and the Indenture; (ii) no Default or Event of Default
shall exist or shall occur immediately after giving effect on a pro forma basis
to such transaction; (iii) immediately after giving effect to such transaction
on a pro forma basis, the Consolidated Net Worth of the consolidated surviving
or transferee entity or, in the case of a plan of liquidation, the entity which
receives the greatest value from such plan of liquidation is at least equal to
the Consolidated Net Worth of the Trust immediately prior to such transaction;
and
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(iv) immediately after giving effect to such transaction on a Pro Forma Basis,
the consolidated resulting, surviving or transferee entity or, in the case of a
plan of liquidation, the entity which receives the greatest value from such plan
of liquidation would immediately thereafter be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Debt Incurrence Ratio set forth in
Section 4.10.
Notwithstanding anything contained in this Indenture to the
contrary, the Trust is permitted to contribute all of the Equity Interests of
the Subsidiaries then held by the Trust (other than the Equity Interests of the
Subsidiary which is to receive such contribution from the Trust) to Venture
Holdings Corporation or other successor to the Trust (a "Trust Contribution"),
provided that (A) any successor or surviving corporation is organized and
existing under the laws of the United States, any state thereof or the District
of Columbia, (B) such contribution or reorganization is not materially adverse
to Holders of the Notes; it being understood, however, that such contribution or
reorganization shall not be considered materially adverse to Holders of the
Notes solely because the successor or surviving corporation is subject to income
taxation as a corporate entity, (C) immediately after giving effect to such
transaction, no Default or Event of Default exists, (D) the actions comprising
such contribution or reorganization (e.g., the contribution of stock of the
Subsidiaries, or the issuance of stock of the corporation in exchange for assets
of or Equity Interests in the Trust or in exchange for stock of a corporation
holding such Equity Interests, or the merger or consolidation of such
corporations) will not themselves directly result in material income tax
liability to the successor or surviving corporation, (E) the successor or
surviving corporation has assumed all obligations of the Trust, pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee, under
the Notes and hereunder and (F) Holders of the Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such contribution or
reorganization and will be subject to federal income tax on the same amounts, in
the same manner, and at the same time as would have been the case if such
contribution or reorganization had not occurred. If the successor or surviving
corporation after a Trust Contribution is not a corporation described in Section
1361(a)(1) of the Code, the Trust's ability to make Trust Tax Distributions must
terminate prior to such contribution or
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reorganization (except with respect to tax distributions in respect of taxable
periods ending on or prior to the date such contribution or reorganization is
effective for relevant tax purposes), other than tax distributions in respect of
Beneficiaries' income tax liability that results from the actions comprising
such contribution or reorganization. The Trust shall deliver to the Trustee
prior to such contribution or reorganization an officers' certificate covering
clauses (A) through (F) and the preceding sentence of this paragraph, stating
that such contribution or reorganization and such supplemental indenture comply
with the Indenture, and an opinion of counsel covering clauses (A), (D), (E) and
(F) above and the preceding sentence of this paragraph.
Neither any Guarantor nor any Issuer (other than the Trust)
shall consolidate or merge with or into (whether or not such Guarantor or Issuer
is the surviving person) another person (other than an Issuer or Guarantor)
unless (i), subject to the provisions of Section 11.4, the person formed by or
surviving any such consolidation or merger (if other than such Guarantor or
Issuer) assumes all the obligations of such Guarantor or Issuer pursuant to a
supplemental indenture in form reasonably satisfactory to the Trustee, pursuant
to which such person shall unconditionally guarantee or assume, on a senior
basis, all of such Guarantor's or Issuer's obligations under the Indenture on
the terms set forth in the Indenture; and (ii) immediately before and
immediately after giving effect to such transaction on a pro forma basis, no
Default or Event of Default shall have occurred or be continuing, and, if there
is an incurrence of Indebtedness as a result of such transaction, no Default or
Event of Default shall have occurred on a Pro Forma Basis.
On or prior to the consummation of the proposed transaction,
the Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, conveyance, transfer, lease or disposition and such supplemental
indenture executed in connection therewith comply with this Indenture. The
Trustee shall be entitled to conclusively rely upon such Officers' Certificate
and Opinion of Counsel.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise) of all or substantially all of the
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properties and assets of one or more Subsidiaries, the Trust's interest in which
constitutes all or substantially all of the properties and assets of the Trust
shall be deemed to be the transfer of all or substantially all of the properties
and assets of the Trust.
Section 2 Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Trust or consummation of a plan of
liquidation in accordance with the foregoing, the successor corporation formed
by such consolidation or into which the Trust is merged or to which such
transfer is made or, in the case of a plan of liquidation, the entity which
receives the greatest value from such plan of liquidation shall succeed to, and
be substituted for, and may exercise every right and power of, the Trust under
the Indenture with the same effect as if such successor corporation had been
named therein as an Issuer, and the Trust shall be released from the obligations
under the Notes and the Indenture except with respect to any obligations that
arise from, or are related to, such transaction.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 1 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 caused voluntarily or involuntarily or effected, without limitation, 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) the failure by the Issuers to pay any installment of
interest or Liquidated Damages, if any, on the Notes as and when the same
becomes due and payable and the continuance of any such failure for 30
days,
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(2) the failure by the Issuers to pay all or any part of
the principal, or premium, if any, on the Notes when and as the same
becomes due and payable at maturity, redemption, by acceleration or
otherwise, including, without limitation, payment of the Change of Control
Purchase Price or the Asset Sale Offer Price, or otherwise,
(3) the failure by any Issuer, Guarantor or Subsidiary
to observe or perform any other covenant or agreement contained in the
Notes or the Indenture or by Larry J. Winget to observe and perform any
covenant or agreement contained in the Corporate Opportunity Agreement
and the continuance of such failure for a period of the Trust and the
Trustee by the Holders of at least 25% in aggregate principal amount of
the Notes outstanding,
(4) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudicating any or all of the
Issuers or any of their Material Subsidiaries as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization of any of
the Issuers or any of their Material Subsidiaries under any bankruptcy or
similar law, and such decree or order shall have continued undischarged
and unstayed for a period of 60 consecutive days; or a decree or order of
a court of competent jurisdiction, judgment appointing a receiver,
liquidator, trustee, or assignee in bankruptcy or insolvency for any of
the Issuers, any of their Material Subsidiaries, or any substantial part
of the property of any such person, or for the winding up or liquidation
of the affairs of any such person, shall have been entered, and such
decree, judgment, or order shall have remained in force undischarged and
unstayed for a period of 60 days;
(5) any of the Issuers or any of their Material
Subsidiaries shall institute proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of a bankruptcy proceeding
against
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it, or shall file a petition or answer or consent seeking reorganization
under any bankruptcy or similar law or similar statute, or shall consent
to the filing of any such petition, or shall consent to the appointment of
a Custodian, receiver, liquidator, trustee, or assignee in bankruptcy or
insolvency of it or any substantial part of its assets or property, or
shall make a general assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts as they become due;
(6) a default in Indebtedness of any Issuer, Guarantor
or any of their Subsidiaries with an aggregate principal amount in excess
of $5 million which is either a default in payment of principal or as a
result of which the maturity of such Indebtedness has been accelerated
prior to its stated maturity,
(7) final unsatisfied judgments not covered by insurance
aggregating in excess of $5 million, at any one time rendered against any
Issuer, Guarantor or any of their Subsidiaries and not stayed, bonded or
discharged within 60 days, and
(8) any Guarantee shall for any reason cease to be, or
be asserted in writing by any Material Subsidiary or any Issuer not to be,
in full force and effect, enforceable in accordance with its terms, except
to the extent contemplated by the Indenture.
Section 2 Acceleration of Maturity Date; Rescission and
Annulment.
If an Event of Default occurs and is continuing (other than an
Event of Default specified in clauses (4) and (5), above, relating to the
Issuers or any Material Subsidiary), then in every such case, unless the
principal of all of the Notes shall have already become due and payable, either
the Trustee or the Holders of 25% in aggregate principal amount of the Notes
then outstanding, by notice in writing to the Trust (and to the Trustee if given
by Holders) (an "Acceleration Notice"), may declare all principal and premium,
if any, determined as set
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forth below, and accrued interest and Liquidated Damages, if any thereon to be
due and payable immediately. If an Event of Default specified in clauses (4) and
(5) above, relating to the Trust or any Material Subsidiary occurs, all
principal and premium, if any, and accrued interest and Liquidated Damages, if
any, thereon will be immediately due and payable on all outstanding Notes
without any declaration or other act on the part of the Trustee or the Holders.
In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Issuers
with the principal intention of avoiding payment of the premium that the Issuers
would have had to pay if the Issuers then had elected to redeem the Notes
pursuant to the optional redemption provisions of the Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes. If an Event of Default
occurs prior to July 1, 2001 by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Issuers with the principal intention of
avoiding the prohibition on redemption of the Notes prior to July 1, 2001, then
the premium below (expressed as a percentage principal amount) for each of the
years beginning on July 1, shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the Notes.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1997 114.250%
1998 111.875%
1999 109.500%
2000 107.125%
</TABLE>
At any time after such a declaration of acceleration being
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter provided in this Article VI, the Holders
of a majority in aggregate principal amount of then outstanding Securities, by
written notice to the Issuers and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Issuers have paid or deposited with the Trustee a
sum sufficient to pay
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(A) all overdue interest (and Liquidated Damages,
if any) on all Securities,
(B) the principal of (and premium, if any,
applicable to) any Securities which would become due otherwise
than by such declaration of acceleration, and interest thereon
at the rate borne by the Securities,
(C) to the extent that payment of such interest
is lawful, interest upon overdue interest (and Liquidated
Damages, if any) at the rate borne by the Securities,
(D) all sums paid or advanced by the Trustee
hereunder and the compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and
(2) all Events of Default, other than the non-payment of
amounts which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 6.12.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective for any Event of Default or event which with notice or lapse of time
or both would be an Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the Holder of each
outstanding Security, unless all such affected Holders agree, in writing, to
waive such Event of Default or other event. No such waiver shall cure or waive
any subsequent default or impair any right consequent thereon.
Section 3 Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Issuers covenant that if an Event of Default in payment of
principal, premium, or interest (and Liquidated
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Damages, if any) specified in Section 6.1(1) or (2) occurs and is continuing,
the Issuers shall, 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, premium (if any) and interest (and Liquidated Damages,
if any), and, to the extent that payment of such interest shall be legally
enforceable, interest on any overdue principal (and premium, if any) and on any
overdue interest (and Liquidated Damages, if any), at the rate borne by the
Securities, and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including compensation to, and
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Issuers fail to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust in favor
of the Holders, may institute a judicial proceeding for the collection of the
sums so due and unpaid, may prosecute such proceeding to judgment or final
decree and may enforce the same against the Issuers or any other obligor upon
the Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Issuers or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effective 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 4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Issuers or any other obligor upon the
Securities or the property of the Issuers or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declara-
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tion or otherwise and irrespective of whether the Trustee shall have made any
demand on the Issuers for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise to take
any and all actions under the TIA, including
(i) to file and prove a claim for the
whole amount of principal (and premium, if any) and interest (and
Liquidated Damages, if any) owing and unpaid in respect of the
Securities and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel) and
of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys
or other property payable or deliverable on any such claims and to
distribute the same;
and any custodian, 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 7.7.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment, or composition affecting
the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
Section 5 Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee
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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 in favor of the
Holders, and any recovery of judgment shall, after provision for the payment of
compensation to, and 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 6 Priorities.
Any money collected by the Trustee pursuant to this Article VI
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
premium (if any) or interest (and Liquidated Damages, if any), 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 Trustee in payment of all amounts due
pursuant to Section 7.7;
SECOND: To the Holders in payment of the amounts then due and
unpaid for principal of, premium (if any) and interest (and Liquidated Damages,
if any) 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,
premium (if any) and interest (and Liquidated Damages, if any), respectively;
and
THIRD: To whomsoever may be lawfully entitled thereto, the
remainder, if any.
Section 7 Limitation on Suits.
No Holder of any Security shall have any right to order or
direct the Trustee 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
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(A) such Holder has
previously given written notice to the Trustee of a continuing
Event of Default;
(B) the Holders of not
less than 25% in principal amount of then outstanding
Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(C) such Holder or Holders
have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities to be
incurred or reasonably probable to be incurred in compliance
with such request;
(D) the Trustee for 60
days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
(E) no direction
inconsistent with such written request has been given to the
Trustee during such 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 8 Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision of this Indenture, the
Holder of any Security shall have the right, which is abso-
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lute and unconditional, to receive payment of the principal of, and premium (if
any) and interest (and Liquidated Damages, if any) on, such Security on the
Maturity Dates or Interest Payment Dates, as applicable, of such payments as
expressed in such Security (in the case of redemption, the Redemption Price on
the Redemption Date; in the case of a Change of Control, the Change of Control
Purchase Price, on the Change of Control Purchase Date; and in the case of an
Asset Sale, the Asset Sale Offer Price on the relevant purchase date); and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder (except such Holder's right
to payment under Article X and Section 4.13 may only be impaired in the event of
a waiver pursuant to Article IX by Holders of not less than a majority in
aggregate principal amount of Securities outstanding).
Section 9 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 10 Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any
Security to exercise any right or remedy arising upon any Event of Default shall
impair the exercise of any such right or remedy or constitute a waiver of any
such Event of Default. Every right and remedy given by this Article VI 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.
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Section 11 Control by Holders.
The Holder or Holders of a majority in aggregate principal
amount of then 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 upon the Trustee, provided,
that
(1) such direction shall not be in conflict with any rule
of law or with this Indenture,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Holders not taking part in
such direction, and
(3) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
Section 12 Waiver of Past Default.
Subject to Section 6.8, the Holder or Holders of not less than
a majority in aggregate principal amount of the outstanding Securities may, by
written notice to the Trustee on behalf of all Holders, prior to the declaration
of the maturity of the Securities, waive any past default hereunder and its
consequences, except a default
(A) in the payment of
the principal of, premium, if any, or interest (and Liquidated
Damages, if any) on, any Security as specified in clauses (1)
and (2) of Section 6.1, or
(B) in respect of a
covenant or provision hereof which, under Article IX, 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
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to have been cured, for every purpose of this Indenture; but no such waiver
shall extend to any subsequent or other default or impair the exercise of any
right arising therefrom.
Section 13 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted to be taken by it as Trustee, the filing by
any party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section 6.13 shall not
apply to any suit instituted by the Issuers, to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in aggregate principal amount of the outstanding
Securities, or to any suit instituted by any Holder for enforcement of the
payment of principal of, or premium (if any) or interest (and Liquidated
Damages, if any) on, any Security on or after the Maturity Date of such
Security.
Section 14 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 case, subject to any
determination in such proceeding, the Issuers, the Guarantors, 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.
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ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed.
Section 1 Duties of Trustee.
(a) If a Default or an Event of Default has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default or
an Event of Default:
(1) The Trustee need perform only those duties
as are specifically set forth in this Indenture and no others, and
no covenants or obligations shall be implied in or read into this
Indenture which are adverse to the Trustee.
(2) In the absence of bad faith on its part,
the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture. However, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
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(i) This paragraph does not limit the
effect of subsection (b) of this Section 7.1.
(ii) The Trustee shall not be liable
for any error of judgment made in good faith by a Trust Officer, unless it
is proved that the Trustee was negligent in ascertaining the pertinent
facts.
(iii) The Trustee shall not be liable
with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.12.
(d) No provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or to take or omit
to take any action under this Indenture or at the request, order or direction of
the Holders or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any
way relates to the Trustee is subject to subsections (a), (b), (c) and (d) of
this Section 7.1.
(f) The Trustee shall not be liable for interest
on any assets received by it except as the Trustee may agree in writing with the
Issuers. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
Section 2 Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may conclusively rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
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(b) Before the Trustee acts or refrains from
acting, it may consult with counsel of its selection and may require an
Officers' Certificate or an Opinion of Counsel, which shall conform to Sections
12.4 and 12.5. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or negligence of any
agent appointed with due care.
(d) The Trustee shall not be liable for any
action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers.
(e) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, notice, request, direction, consent, order,
bond, debenture, 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.
(f) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Holders, pursuant to the provisions of
this Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby.
(g) Except with respect to Section 4.1, the
Trustee shall have no duty to inquire as to the performance of the Issuers'
covenants in Article IV hereof. In addition, the Trustee shall not be deemed to
have knowledge of any Default or Event of Default except (i) any Event of
Default occurring pursuant to Sections 6.1(1), 6.1(2) and 4.1, or (ii) any
Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
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Section 3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Issuers, any
Guarantor, any of their respective Subsidiaries, or their respective Affiliates
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights. However, the Trustee must comply with Sections 7.10 and
7.11.
Section 4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities and it shall not be accountable for
the Issuers' use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities (other than the Trustee's
certificate of authentication) or for the use or application of any funds
received by a Paying Agent other than the Trustee.
Section 5 Notice of Default.
If a Default or an Event of Default occurs and is continuing
and if it is actually known to the Trustee, the Trustee shall mail to each
Securityholder notice of the uncured Default or Event of Default within 90 days
after such Default or Event of Default occurs. Except in the case of a Default
or an Event of Default in payment of principal (or premium, if any) of, or
interest (and Liquidated Damages, if any) on, any Security (including the
payment of the Change of Control Purchase Price on the Change of Control
Purchase Date, the Redemption Price on the Redemption Date, and the Asset Sale
Offer Price on the relevant purchase date), the Trustee may withhold the notice
if and so long as a Trust Officer in good faith determines that withholding the
notice is in the interest of the Securityholders.
Section 6 Reports by Trustee to Holders.
If required by law, within 60 days after each January 31
beginning with the January 31 following the date of this Indenture, the Trustee
shall mail to each Securityholder a brief report dated as of such January 31
that complies with TIA
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ss. 313(a). If required by law, the Trustee also shall comply with TIA ss.ss.
313(b) and 313(c).
The Issuers shall promptly notify the Trustee in writing if
the Securities become listed on any stock exchange or automatic quotation
system.
A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Issuers and filed with the SEC and each
stock exchange, if any, on which the Securities are listed.
Section 7 Compensation and Indemnity.
The Issuers shall pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Issuers and the Trustee
for its services. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuers shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by it. Such expenses shall include, except where such expense
arose from negligence, bad faith or willful misconduct of the Trustee and each
of its officers, directors, employees, attorneys-in-fact and agents, the
reasonable compensation, disbursements, fees and expenses of the Trustee's
agents, accountants, experts and counsel.
The Issuers shall indemnify the Trustee (in its capacity as
Trustee, Registrar and Paying Agent) and each of its officers, directors,
employees, attorneys-in-fact and agents for, and hold it harmless against, any
claims, loss, damage, demand, fee, expense (including but not limited to
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel), loss or liability incurred by them without negligence, bad faith or
willful misconduct on its part, arising out of or in connection with the
acceptance or administration of this trust and their rights or duties hereunder
including the reasonable costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. The Trustee shall notify the Issuers promptly of any
claim asserted against the Trustee for which it may seek indemnity. The Issuers
shall defend the claim and the Trustee shall provide reasonable cooperation at
the Issuers'
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expense in the defense. The Trustee may have separate counsel and the Issuers
shall pay the reasonable fees and expenses of such counsel; provided, that the
Issuers will not be required to pay such fees and expenses if they assume the
Trustee's defense and there is no conflict of interest between the Issuers and
the Trustee in connection with such defense. The Issuers need not pay for any
settlement made without their written consent. The Issuers need not reimburse
any expense or indemnify against any loss or liability to the extent incurred by
the Trustee through its negligence, bad faith or willful misconduct.
To secure the Issuers' payment obligations in this Section
7.7, the Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest (and Liquidated
Damages, if any) on particular Securities.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Issuers' obligations under this Section 7.7 and any lien
arising hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Issuers' obligations pursuant to Article VIII of this Indenture
and any rejection or termination of this Indenture under any Bankruptcy Law.
Section 8 Replacement of Trustee.
The Trustee may resign by so notifying the Issuers in writing.
The Holder or Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Issuers and the Trustee in
writing and may appoint a successor trustee with the Issuers' consent. The
Issuers may remove the Trustee if:
(1) the Trustee fails to comply with Section
7.10;
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(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver, Custodian, or other public officer
takes charge of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Issuers shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holder or Holders of a majority in principal amount of the Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Issuers.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 7.7 have
been paid, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided in Section 7.7,
the resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Issuers or the Holder or Holders of at least 10% in principal amount of the
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
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Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
Section 9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
Section 10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA
ss. 310(a)(1) and TIA ss. 310(a)(5). The Trustee shall have a combined capital
and surplus of at least $25,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA ss. 310(b).
Section 11 Preferential Collection of Claims against
Issuers.
The Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 1 Option to Effect Legal Defeasance or Covenant
Defeasance.
The Issuers may, at their option at any time, elect to have
Section 8.2 or Section 8.3 applied to all outstanding Securities upon compliance
with the conditions set forth below in this Article VIII.
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Section 2 Legal Defeasance and Discharge.
Upon the Issuers' exercise under Section 8.1 of the option
applicable to this Section 8.2, the Issuers and the Guarantors shall be deemed
to have been discharged from their respective obligations with respect to all
outstanding Securities on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance
means that the Issuers shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of Section 8.5 and the other
Sections of this Indenture referred to in (a), (b) and (c) below, and to have
satisfied all their other obligations under such Securities and this Indenture
(and the Trustee, on demand of and at the expense of the Issuers, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) rights of
Holders to receive payments in respect of the principal of, premium, if any, and
interest on such Notes when such payments are due from the trust funds; (b) the
Issuers' obligations with respect to such Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes, and
the maintenance of an office or agency for payment and money for security
payments held in trust; (c) the rights, powers, trust, duties, and immunities of
the Trustee, and the Issuers' obligations in connection therewith; and (d) this
Article VIII. Subject to compliance with this Article VIII, the Issuers may
exercise their option under this Section 8.2 notwithstanding the prior exercise
of their option under Section 8.3 with respect to the Securities.
Section 3 Covenant Defeasance.
Upon the Issuers' exercise under Section 8.1 of the option
applicable to this Section 8.3, the Issuers shall be released from their
obligations under the covenants contained in Sections 4.3, 4.6, 4.7, 4.9, 4.10,
4.11, 4.12, 4.13, 4.14, 4.16, 4.18 and 4.19, Article V and Article X with
respect to the outstanding Securities on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"), and the
Securities shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration
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or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Securities, the Issuers need not comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document, but, except as
specified above, the remainder of this Indenture and such Securities shall be
unaffected thereby. In addition, upon the Company's exercise under Section 8.1
of the option applicable to this Section 8.3, Sections 6.1(3), 6.1(6), 6.1(7)
and 6.1(8) shall not constitute Events of Default.
Section 4 Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of
either Section 8.2 or Section 8.3 to the outstanding Securities:
(a) The Issuers shall irrevocably have deposited
or caused to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 who shall agree to comply with the provisions of
this Article VIII 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, and such
Holders must have a valid, perfected, exclusive security interest in such trust
(a) cash 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, cash in an amount, or (c) a combination thereof, in such amounts, as in
each case will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge the principal of, premium, if
any, and interest (and Liquidated Damages, if any) on the outstanding Securities
on the Stated Maturity or on the applicable Redemption Date, as the case may be,
of such principal or installment of principal, premium, if any, or interest (and
Liquidated Damages,
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if any); provided that the Trustee shall have been irrevocably instructed to
apply such cash and the proceeds of such U.S. Government Obligations to said
payments with respect to the Securities.
(b) In the case of an election under Section 8.2,
the Issuers shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably satisfactory to the Trustee confirming that (i) the
Issuers have received from, or there has been published by, the Internal Revenue
Service a ruling or (ii) since the date hereof, there has been a change in the
applicable Federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the outstanding
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such Legal Defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance has not occurred;
(c) In the case of an election under Section 8.3,
the Issuers shall have delivered to the Trustee an Opinion of Counsel in the
United States to the effect that the Holders of the outstanding Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such Covenant Defeasance and will be subject to Federal income tax in the
same amount, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;
(d) No Default or Event of Default with respect
to the Securities shall occur and be continuing on the date of such deposit or,
in so far as Section 6.1(4) or 6.1(5) is concerned, at any time in the period
ending on the 91st day after the date of such deposit;
(e) Such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under,
this Indenture or any other material agreement or instrument to which either of
the Issuers or any of their Subsidiaries is a party or by which either of the
Issuers or any of their Subsidiaries is bound;
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(f) In the case of an election under either
Section 8.2 or 8.3, the Issuers shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Issuers pursuant to its
election under Section 8.2 or 8.3 was not made by the Issuers with the intent of
preferring the Holders over other creditors of the Issuers or with the intent of
defeating, hindering, delaying or defrauding creditors of the Issuers or others;
(g) The Issuers shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel in the United States,
each stating that the conditions precedent provided for, in the case of the
Officers' Certificate, in subsections (a) through (f) of this Section 8.4 and,
in the case of the Opinion of Counsel, subsections (a) (with respect to the
validity and perfection of the security interest), (b), (c) and (e) of this
Section 8.4 have been complied with as contemplated by this Section 8.4.
Section 5 Deposited Cash and U.S. Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.6, all cash and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.5, the
"Trustee") pursuant to Section 8.4 in respect of the outstanding 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 as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest (and Liquidated Damages, if any),
but such money need not be segregated from other funds except to the extent
required by law.
The Issuers 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 8.4 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 outstanding Securities.
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Section 6 Repayment to Issuers.
Anything in this Article VIII to the contrary notwithstanding,
the Trustee shall deliver or pay to the Issuers from time to time upon the
request of the Issuers any cash or U.S. Government Obligations held by it as
provided in Section 8.4 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereto
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a)), are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
For all purposes of this Indenture, any money deposited with
the Trustee or any Paying Agent, or then held by the Issuers, in trust for the
payment of the principal of, premium, if any, or interest (and Liquidated
Damages, if any) on any Security and remaining unclaimed for two years after
such principal, and premium, if any, or interest (and Liquidated Damages, if
any) has become due and payable shall be paid to the Issuers on their request;
and the Holder of such Security shall thereafter look only to the Issuers for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money 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 Issuers cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Issuers.
Section 7 Reinstatement.
(a) If the Trustee or Paying Agent is unable to
apply any cash or U.S. Government Obligations in accordance with Section 8.2 or
8.3, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuers' obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.2 or 8.3 until such time as the Trustee or
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Paying Agent is permitted to apply such money in accordance with Section 8.2 and
8.3, as the case may be; provided, however, that, if the Issuers make any
payment of principal of, premium, if any, or interest (and Liquidated Damages,
if any) on any Security following the reinstatement of its obligations, the
Issuers shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the Cash held by the Trustee or Paying Agent.
(b) If the cash or U.S. Government Obligations
are insufficient to pay, in accordance with Section 8.2 or 8.3, as the case may
be, the principal of premium, if any, and interest (and Liquidated Damages, if
any) on the Notes when due, then the Issuers' obligations under this Indenture
and the Securities shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.2 or 8.3; provided, however, the Issuers will
have five Business Days after notice of the same from the Trustee to make up
such insufficiency before the Indenture will be revived.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 1 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holder, the Issuers or any
Guarantor, when authorized by Board Resolutions, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or
inconsistency, 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 such action
pursuant to this clause (1) shall not adversely affect the interests of
any Holder in any respect;
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(2) to add to the covenants of the Issuers for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Issuers or to make any other change that does not
adversely affect the rights of any Holder; provided, that the Issuers have
delivered to the Trustee an Opinion of Counsel stating that such change
does not adversely affect the rights of any Holder;
(3) to provide for Guarantors of the Securities;
(4) to evidence the succession of another person to any
of the Issuers, and the assumption by any such successor of the
obligations of such Issuer, herein and in the Securities in accordance
with Article V; or
(5) to comply with the TIA.
Section 2 Amendments, Supplemental Indentures and Waivers
with Consent of Holders.
Subject to Section 6.8 and the last sentence of this
paragraph, with the consent of the Holders of not less than a majority in
aggregate principal amount of then outstanding Securities, by written act of
said Holders delivered to the Issuers and the Trustee, the Issuers and any
Guarantor, when authorized by Board Resolutions, and the Trustee may amend or
supplement this Indenture or the Securities or 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
the Securities or of modifying in any manner the rights of the Holders under the
this Indenture or the Securities. Subject to Section 6.8 and the last sentence
of this paragraph, the Holder or Holders of a majority, in principal amount of
then outstanding Securities may waive compliance by the Issuers or any Guarantor
with any provision of this Indenture or the Securities. Notwithstanding the
foregoing provisions of this Section 9.2, without the consent of each Holder
affected thereby, no such amendment, supplemental indenture or waiver shall:
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(1) reduce the percentage of principal amount of
Securities whose Holders must consent to an amendment, supplement or
waiver of any provision of this Indenture or the Securities;
(2) reduce the rate or extend the time for payment of
interest (and Liquidated Damages, if any) on any Security;
(3) reduce the principal amount of any Security, or
reduce the Change of Control Purchase Price or the Asset Sale Offer Price;
(4) change the Stated Maturity of any Security;
(5) alter the redemption provisions of Article III in a
manner adverse to any Holder;
(6) make any changes in the provisions concerning waivers
of Defaults or Events of Default by Holders of the Securities (except to
increase any percentage of Securities required to consent to a waiver or
to provide that certain other provisions of the Indenture cannot be
modified or waived without the consent of the Holder of each outstanding
Security affected thereby) or the rights of Holders to recover the
principal or premium of, interest (and Liquidated Damages, if any) on, or
redemption payment with respect to, any Security;
(7) make any changes in Section 6.8, 6.12 or this third
sentence of this Section 9.2;
(8) make the principal of, or the interest (and
Liquidated Damages, if any) on, any Security payable with anything or at
anywhere other than as provided for in this Indenture and the Securities
as in effect on the date hereof; or
(9) make the Securities or Guarantees subordinated in
right of payment to any extent or under any circumstances to any other
indebtedness.
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It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Issuers shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
After an amendment, supplement or waiver under this Section
9.2 or 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under
this Article IX, the Issuers may, but shall not be obligated to, offer to any
Holder who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
Section 3 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 4 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his Security or portion of his Security by written notice to
the Issuers or the person designated by the Issuers as the person to whom
consents should be sent if such revocation is received by the Issuers or such
person before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities have
consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
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The Issuers may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be the date so fixed by
the Issuers notwithstanding the provisions of the TIA. If a record date is
fixed, then notwithstanding the last sentence of the immediately preceding
paragraph, those persons who were Holders at such record date, and only those
persons (or their duly designated proxies), shall be entitled to revoke any
consent previously given, whether or not such persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder, unless it makes a change described in any of
clauses (1) through (9) of Section 9.2, in which case, the amendment, supplement
or waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided, that any such
waiver shall not impair or affect the right of any Holder to receive payment of
principal and premium of and interest (and Liquidated Damages, if any) on a
Security, (except such Holder's right to payment under Article X and Section
4.13 may only be impaired in the event of a waiver pursuant to Article IX by
Holders of not less than a majority in aggregate principal amount of Securities
outstanding).
Section 5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee or require the Holder to put an appropriate notation on the
Security. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Issuers or
the Trustee so determines, the Issuers in exchange for the Security shall issue,
the Guarantors shall endorse and the Trustee shall authenticate a new Security
that reflects the changed terms. Any failure to make the appropriate notation or
to issue a new Security shall not affect the validity of such amendment,
supplement or waiver.
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Section 6 Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX, provided, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Officers' Certificate and Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article IX is authorized or permitted by this Indenture.
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
Section 1 Repurchase of Securities at Option of the Holder
upon Change of Control.
(a) In the event that a Change of Control has
occurred, each Holder of Notes will have the right, at such Holder's option,
subject to the terms and conditions of this Indenture, to require the Issuers to
repurchase all or any part of such Holder's Notes (provided, that the principal
amount of such Notes must be $1,000 or an integral multiple thereof) on a date
(the "Change of Control Purchase Date") that is no later than 55 Business Days
after the occurrence of such Change of Control, at a cash price equal to 101% of
the principal amount thereof (the "Change of Control Purchase Price"), together
with accrued and unpaid interest and Liquidated Damages, if any, to the Change
of Control Purchase Date.
(b) In the event that, pursuant to this Section
10.1, the Issuers shall be required to commence an offer to purchase Notes (a
"Change of Control Offer"), the Issuers shall follow the procedures set forth in
this Section 10.1 as follows:
(1) the Change of Control Offer shall commence
within 20 Business Days following the Change of Control and shall remain
open for at least 20
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Business Days following its commencement (the "Change of Control Period");
(2) upon expiration of the Change of Control
Period, the Issuers shall promptly purchase all of the Securities properly
tendered at the Change of Control Purchase Price, plus accrued interest
(and Liquidated Damages, if any);
(3) if the Change of Control Purchase Date is on
or after an interest payment record date and on or before the related
interest payment date, any accrued interest (and Liquidated Damages, if
any) will be paid to the Person in whose name a Security is registered at
the close of business on such record date, and no additional interest will
be payable to Securityholders who tender Securities pursuant to the Change
of Control Offer;
(4) the Issuers shall use their best efforts to
provide the Trustee with notice of the Change of Control Offer at least 5
Business Days before the commencement of any Change of Control Offer; and
(5) on or before the commencement of any Change of
Control Offer, the Issuers or the Trustee (upon the request and at the
expense of the Issuers) shall send, by first-class mail, a notice to each
of the Securityholders, which (to the extent consistent with this
Indenture) shall govern the terms of the Change of Control Offer and shall
state:
(i) that the Change of Control Offer is being
made pursuant to this Section 10.1 and that all Securities, or
portions thereof, tendered will be accepted for payment;
(ii) the Change of Control Purchase Price
(including the amount of accrued but unpaid interest (and
Liquidated Damages, if any)) and the Change of Control
Purchase Date;
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(iii) that any Security, or portion thereof, not
tendered or accepted for payment will continue to accrue
interest;
(iv) that, unless the Issuers default in
depositing cash with the Paying Agent in accordance with the
last paragraph of this subsection (b), or such payment is
prevented for any reason, any Security, or portion thereof,
accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control
Purchase Date;
(v) that Holders electing to have a Security,
or portion thereof, purchased pursuant to a Change of Control
Offer will be required to surrender the Security, with the
form entitled "Option of Holder to Elect Purchase" on the
reverse of the Security completed, to the Paying Agent (which
may not for purposes of this Section 10.1, notwithstanding
anything in this Indenture to the contrary, be the Issuers or
any Affiliate of either of the Issuers) at the address
specified in the notice prior to the expiration of the Change
of Control Offer;
(vi) that Holders will be entitled to withdraw
their election, in whole or in part, if the Paying Agent
receives, prior to the expiration of the Change of Control
Offer, a facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Securities the
Holder is withdrawing and a statement containing a facsimile
signature and stating that such Holder is withdrawing his
election to have such principal amount of Securities
purchased; and
(vii) a brief description of the events
resulting in such Change of Control Triggering Event.
Any Change of Control Offer will be made in compliance with
all applicable laws, rules and regulations, including, if
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applicable, Regulation 14E under the Exchange Act and the rules thereunder and
all other applicable Federal and state securities laws. To the extent that the
provisions of any securities laws or regulations conflict with the terms hereof,
the Issuers shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached their obligations hereunder or the Notes by
virtue thereof.
On or before the Change of Control Purchase Date, the Issuers
will (i) accept for payment Notes or portions thereof properly tendered pursuant
to the Change of Control Offer, (ii) deposit with the Paying Agent cash
sufficient to pay the Change of Control Purchase Price (together with accrued
and unpaid interest and Liquidated Damages, if any) of all Notes so tendered and
(iii) deliver to the Trustee Notes so accepted together with an Officers'
Certificate listing the Notes or portions thereof being purchased by the
Issuers. The Paying Agent promptly will pay the Holders of Notes so accepted an
amount equal to the Change of Control Purchase Price (together with accrued and
unpaid interest), and the Trustee promptly will authenticate and deliver to such
Holders a new Note equal in principal amount to any unpurchased portion of the
Note surrendered. Any Notes not so accepted will be delivered promptly by the
Issuers to the Holder thereof. The Issuers publicly will announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Purchase Date. In the event the Issuers shall have deposited cash in
excess of the Change of Control Purchase Price for all Securities or portions
thereof validly tendered, such excess shall be promptly returned to the Issuers.
ARTICLE XI
GUARANTEES
Section 1 Guarantees.
(a) Upon the acquisition by the Issuers or any
Guarantor of the Capital Stock of any person, if, as a result of such
acquisition, such Person becomes a Subsidiary, such Subsidiary (other than
Foreign Subsidiaries) may, and after the Company's 9-3/4% Senior Subordinated
Notes due 2004 are no longer outstanding, shall irrevocably and unconditionally
guarantee,
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jointly and severally, on a senior unsecured basis (the "Guarantee") to each
Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Securities or the obligations of the
Issuers under this Indenture or the Securities, that: (w) the principal and
premium (if any) of and interest (and Liquidated Damages, if any) on the
Securities will be paid in full when due, whether at the maturity or interest
payment date, by acceleration, call for redemption, upon an Change of Control
Offer, an Asset Sale Offer or otherwise; (x) all other obligations of the
Issuers to the Holders or the Trustee under this Indenture or the Securities
will be promptly paid in full or performed, all in accordance with the terms of
this Indenture and the Securities; and (y) in case of any extension of time of
payment or renewal of any Securities or any of such other obligations, they will
be paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at maturity, by acceleration, call for redemption,
upon an Offer to Purchase or otherwise. Failing payment when due of any amount
so guaranteed for whatever reason, each Guarantor shall be obligated to pay the
same before failure so to pay becomes an Event of Default.
Within 10 days of the date of such Acquisition, such
Subsidiary, if it becomes a Guarantor, shall execute and deliver to the Trustee
a supplemental indenture making such Subsidiary a party to this Indenture.
(b) Each Guarantor shall agree by supplemental
indenture that its obligations with regard to this Guarantee shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Securities or this Indenture, the absence of any action to enforce the same, the
recovery of any judgment against the Issuers, any action to enforce the same or
any other circumstances that might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each Guarantor shall waive diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuers, any right to require a proceeding first
against the Issuers or right to require the prior disposition of the assets of
the Issuers to meet its obligations, protest, notice and all demands whatsoever
and covenant that the Guarantee will not be
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discharged except by complete performance of the obligations contained in the
Securities and this Indenture.
(c) If any Holder or the Trustee is required by
any court or otherwise to return to either the Issuers or any Guarantor, or any
Custodian, Trustee, or similar official acting in relation to either the Issuers
or such Guarantor, any amount paid by either the Issuers or such Guarantor to
the Trustee or such Holder, the Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor shall agree by
supplemental indenture that it will not be entitled to any right of subrogation
in relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby. Each Guarantor shall agree
that, as between such Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (i) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Section 6.2 for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration as to the Issuers of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of those obligations as
provided in Section 6.2, those obligations (whether or not due and payable) will
forthwith become due and payable by such Guarantor for the purpose of this
Guarantee.
(d) Each Guarantor shall confirm, and by its
acceptance of a Security issued hereunder each Holder hereby confirms, that it
is the intention of all such parties that the guarantee by such Guarantor set
forth in Section 11.1(a) not constitute a fraudulent transfer or conveyance for
purpose of any Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders irrevocably agree, and such
Guarantor shall agree that the obligations of such Guarantor under its guarantee
set forth in Section 11.1(a) shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to the following paragraph of this
Section 11.1(d), result in the obligations of such Guarantor under such
guarantee not constituting such a fraudulent transfer or conveyance.
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Each Guarantor that makes any payment or distribution under
Section 11.1(a) shall be entitled to a contribution from each other Guarantor
equal to its Pro Rata amount of such payment or distribution so long as the
exercise of such right does not impair the rights of the Holders under the
Guarantees. For purposes of the foregoing, the "Pro Rata amount" of any
Guarantor means the percentage of the net assets of all Guarantors held by such
Guarantor, determined in accordance with GAAP.
Section 2 Execution and Delivery of Guarantee.
To evidence its Guarantee set forth in Section 11.1, a
notation of such Guarantee substantially in the form annexed hereto as Exhibit B
shall be endorsed on each Security authenticated and delivered by the Trustee
issued after such Guarantee, and a supplemental indenture to this Indenture
shall be executed on behalf of such Guarantor by two Officers or an Officer and
a Secretary by manual or facsimile signature.
Each Guarantor shall agree that its Guarantee set forth in
Section 11.1 shall remain in full force and effect and apply to all the
Securities notwithstanding any failure to endorse on each Security a notation of
such Guarantee.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security on which a
Guarantee is endorsed, the Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of each Guarantor.
Section 3 Certain Bankruptcy Events.
Each Guarantor shall covenant and agree by supplemental
indenture that in the event of the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Issuers, such Guarantor shall not file (or
join in any filing of), or otherwise seek to participate in the filing of, any
motion or request seeking to stay or to prohibit (even temporarily) execution on
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the Guarantee and hereby waives and agrees not to take the benefit of any such
stay of execution, whether under Section 362 or 105 of the United States
Bankruptcy Code or otherwise.
Section 4 Release of Guarantors and Certain Issuers.
Notwithstanding Article V, upon the sale or disposition
(whether by merger, stock purchase, asset sale or otherwise) of a Guarantor or
Issuer (other than the Trust) of all or substantially all of its assets to an
entity which is not a Guarantor or Issuer or the designation of a Subsidiary to
become an Unrestricted Subsidiary, which transaction is otherwise in compliance
with the Indenture (including, without limitation, the provisions of Section
4.13), such Guarantor or Issuer will be deemed released from its obligations
under its Guarantee of the Notes or the Notes, as the case may be; provided,
however, that any such termination shall occur only to the extent that all
obligations of such Guarantor or Issuer under all of its guarantees of, and
under all of its pledges of assets or other security interests which secure, any
Indebtedness of the Trust or any other Subsidiary shall also terminate upon
such, sale, disposition or designation.
ARTICLE XII
MISCELLANEOUS
Section 1 TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed by operation of the TIA, the imposed duties,
upon qualification of this Indenture under the TIA, shall control.
Section 2 Notices.
Any notices or other communications to the Issuers, the
Guarantors or the Trustee required or permitted hereunder shall be in writing,
and shall be sufficiently given if made by hand delivery, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
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if to the Issuers or any Guarantor:
VENTURE HOLDINGS TRUST
33662 James J. Pompo Drive
P.O. Box 278
Fraser, MI 48026-0278
Attention: James E. Butler
Telephone: (810) 294-1500
Telecopy: (810) 294-1960
with a copy to:
Paul Lieberman, P.C.
1471 S. Woodward, Suite 250
Bloomfield Hills, MI 48302
Telephone: (248) 335-4000
Telecopy: (248) 335-4689
if to the Trustee:
The Huntington National Bank
41 South High Street
Columbus, OH 43215
Attention: Corporate Trust Administration
Telephone: (614) 480-4897
Telecopy: (614) 480-5223
The Issuers, the Guarantors or the Trustee by notice to each
other party may designate additional or different addresses as shall be
furnished in writing by such party. Any notice or communication to the Issuers,
the Guarantors or the Trustee shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when receipt is acknowledged, if
telecopied; and 5 Business Days after mailing if sent by registered or certified
mail, postage prepaid (except that a notice of change of address shall not be
deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall
be mailed to him by first class mail or other equivalent means at his address as
it appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
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Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders.
Section 3 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Issuers, the Guarantors, the Trustee, the Registrar and any
other person shall have the protection of TIA ss. 312(c).
Section 4 Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Issuers to the Trustee
to take any action under this Indenture, the Issuers shall furnish to the
Trustee:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
Section 5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person
making such certificate or opinion has read such covenant or
condition;
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(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 such person, 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 person, such condition or covenant has
been complied with; provided, however, that with respect to matters of
fact an Opinion of Counsel may rely on an Officers' Certificate or
certificates of public officials.
Section 6 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Paying Agent or Registrar may make reasonable
rules for its functions.
Section 7 Legal Holidays.
A "Legal Holiday" used with respect to a particular place of
payment is a Saturday, a Sunday or a day on which banking institutions in New
York, New York are not required to be open. If a payment date is a Legal Holiday
in New York, New York, payment may be made at such place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
Section 8 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE ISSUERS AND EACH GUARANTOR HEREBY
IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT
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SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE
SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE ISSUERS
AND EACH GUARANTOR IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH THEY MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE ISSUERS OR ANY GUARANTOR IN ANY
OTHER JURISDICTION.
Section 9 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of any of the Issuers, the Guarantors or any of their
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 10 No Recourse Against Others.
Neither the trustee, grantor, Beneficiaries or special
advisors to the Trust, nor any direct or indirect shareholder, employee,
director, officer or agent, (including independent members of the Fairness
Committee) of the Issuers and the Subsidiaries shall have any personal liability
in respect of the obligations of the Issuers and the Subsidiaries under the
Indenture, the Notes or the Guarantees by reason of his, her or its status as
such. Each Holder of a Security by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration for the
issuance of the Securities.
Section 11 Successors.
All agreements of the Issuers and the Guarantors in this
Indenture and the Securities shall bind their successors. All agreements of the
Trustee in this Indenture shall bind its successors.
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Section 12 Duplicate Originals.
All parties may sign any number of copies or counterparts of
this Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
Section 13 Severability.
In case any one or more of the provisions in this Indenture or
in the Securities shall be held invalid, illegal or unenforceable, in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
Section 14 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of
the Articles and the Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof and shall
in no way modify or restrict any of the terms or provisions hereof.
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SIGNATURE
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
VENTURE HOLDINGS TRUST
By:/s/ James E. Butler
-------------------------------------
Name: James E. Butler
Title: Executive Vice President
VEMCO INC.
By: /s/ James E. Butler
-------------------------------------
Name: James E. Butler
Title: Executive Vice President
VEMCO LEASING, INC.
By: /s/ James E. Butler
-------------------------------------
Name: James E. Butler
Title: Executive Vice President
VENTURE INDUSTRIES CORPORATION
By: /s/ James E. Butler
-------------------------------------
Name: James E. Butler
Title: Executive Vice President
<PAGE> 128
VENTURE HOLDINGS CORPORATION
By: /s/ James E. Butler
-------------------------------------
Name: James E. Butler
Title: Executive Vice President
VENTURE LEASING COMPANY
By: /s/ James E. Butler
-------------------------------------
Name: James E. Butler
Title: Executive Vice President
VENTURE MOLD & ENGINEERING
CORPORATION
By: /s/ James E. Butler
-------------------------------------
Name: James E. Butler
Title: Executive Vice President
VENTURE SERVICE COMPANY
By: /s/ James E. Butler
-------------------------------------
Name: James E. Butler
Title: Executive Vice President
THE HUNTINGTON NATIONAL BANK, as
Trustee
By: /s/ Donna L. Shutek
-------------------------------------
Name: Donna L. Shutek
Title: Assistant Vice President
<PAGE> 129
Schedule I
RESTRICTIONS ON DIVIDENDS
1. 9 3/4% Senior Subordinated Note Indenture as in effect on the date
of the Indenture to which this Schedule is attached.
2. Credit Agreement as in effect on the date of the Indenture to which
this Schedule is attached.
<PAGE> 130
EXHIBIT A
[FORM OF NOTE]
VENTURE HOLDINGS TRUST
9 1/2% SENIOR NOTES
DUE 2005
Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the Issuers or their agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or 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.1
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION
5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT
THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES
FOR THE BENEFIT OF
- --------
1 This paragraph should only be added if the Security is issued in
global form.
A-1
<PAGE> 131
THE ISSUERS THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL ACCREDITED
INVESTOR WITHIN THE MEANING OF RULE 501 (A)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE NOTE FOR
ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE HAVING A MINIMUM OF AT LEAST
$100,000 FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (IN THE CASE OF (d) UPON DELIVERY OF A TRANSFEREE LETTER
OF REPRESENTATION AND IN THE CASE OF (b), (c), (d) OR (e) UPON
AN OPINION OF COUNSEL IF THE ISSUERS OR TRUSTEE SO REQUESTS),
(2) TO THE ISSUERS OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
A-2
<PAGE> 132
CUSIP NO.______
No. $
Venture Holdings Trust, a grantor trust organized under the
laws of Michigan (the "Trust"), Vemco, Inc., Vemco Leasing, Inc., Venture
Industries Corporation, Venture Holdings Corporation, Venture Leasing Company,
Venture Mold & Engineering Corporation and Venture Service Company, each a
Michigan Corporation (each an "Issuer" and, together with the Trust, the
"Issuers"), for value received, hereby promise, jointly and severally, to pay to
_____, or registered assigns, the principal sum of _____ Dollars, on July 1,
2005.
Interest Payment Dates: January 1 and July 1.
Record Dates: December 15 and June 15.
Reference is made to the further provisions of this Security
on the reverse side, which will, for all purposes, have the same effect as if
set forth at this place.
A-3
<PAGE> 133
IN WITNESS WHEREOF, the Issuers have caused this Instrument to
be duly executed under its corporate seal.
VENTURE HOLDINGS TRUST
By:
--------------------------------
Name:
Title:
Attest:
------------------
VEMCO NC.
By:
--------------------------------
Name:
Title:
Attest:
------------------
VEMCO LEASING, INC.
By:
--------------------------------
Name:
Title:
Attest:
------------------
VENTURE INDUSTRIES CORPORATION
By:
--------------------------------
Name:
Title:
Attest:
------------------
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<PAGE> 134
VENTURE HOLDINGS CORPORATION
By:
--------------------------------
Name:
Title:
Attest
------------------
VENTURE LEASING COMPANY
By:
--------------------------------
Name:
Title:
Attest:
------------------
VENTURE MOLD & ENGINEERING
CORPORATION
By:
--------------------------------
Name:
Title:
Attest:
------------------
VENTURE SERVICE COMPANY
By:
--------------------------------
Name:
Title:
Attest:
------------------
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<PAGE> 135
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated:
-----------------------------------,
As Trustee
By:
---------------------------------
Authorized Signatory
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<PAGE> 136
VENTURE HOLDINGS TRUST
9 1/2% SENIOR NOTES
DUE 2005
1. Interest.
Venture Holdings Trust, a grantor trust organized under the laws of
Michigan (the "Trust"), Vemco, Inc., Vemco Leasing, Inc., Venture Industries
Corporation, Venture Holdings Corporation, Venture Leasing Company, Venture Mold
& Engineering Corporation and Venture Service Company, each a Michigan
Corporation (each an "Issuer" and, together with the Trust, the "Issuers"),
jointly and severally, promise to pay interest on the principal amount of this
Security at a rate of 9 1/2% per annum. To the extent it is lawful, the Issuers
promise to pay interest on any interest payment due but unpaid on such principal
amount at a rate of 9 1/2% per annum compounded semi-annually.
The Issuers will pay interest semi-annually on January 1 and July 1
of each year (each, an "Interest Payment Date"), commencing January 1, 1998.
Interest on the Securities will accrue from the most recent date to which
interest has been paid on the Securities pursuant to the Indenture or, if no
interest has been paid, from July 9, 1997. Interest will be computed on the
basis of a 360-day year consisting of twelve 30-day months.
2. Method of Payment.
The Issuers shall pay interest (and Liquidated Damages, if any) on
the Securities (except defaulted interest) to the persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date. Holders must surrender Securities to a Paying Agent to
collect principal payments. Except as provided below, the Issuers shall pay
principal and interest (and Liquidated Damages, if any) in such coin or currency
of the United States of America as at the time of payment shall be legal tender
for payment of public and private debts ("Cash"). The Securities will be payable
as to principal,
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<PAGE> 137
premium and interest (and Liquidated Damages, if any) at the office or agency of
the Issuers maintained for such purpose within the City and State of New York
or, at the option of the Issuers, payment of principal, premium and interest
(and Liquidated Damages, if any) may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, and provided that payment
by wire transfer of immediately available funds will be required with respect to
principal of and interest (and Liquidated Damages, if any) and premium on all
Global Securities and all other Securities the Holders of which shall have
provided written wire transfer instructions to the Issuers and the Paying Agent.
3. Paying Agent and Registrar.
Initially, The Huntington National Bank (the "Trustee") will act as
Paying Agent and Registrar. The Issuers may change any Paying Agent, Registrar
or Co-registrar without notice to the Holders. The Issuers or any of their
respective Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or Co-registrar.
4. Indenture.
The Issuers issued the Securities under an Indenture, dated July 1,
1997 (the "Indenture"), between the Issuers and the Trustee. Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act, as in effect on
the date of the Indenture. The Securities are subject to all such terms, and
Holders of Securities are referred to the Indenture and said Act for a statement
of them. The Securities are senior obligations of the Issuers, ranking pari
passu in right of payment with all other senior obligations of the Issuers, and
are limited in aggregate principal amount to $205,000,000. The Securities are
designated "Designated Senior Indebtedness" for all purposes of the indenture
governing the Issuers' 9-3/4% Senior Subordinated Notes due 2004.
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<PAGE> 138
5. Redemption.
Except as provided in this Paragraph 5, the Issuers shall not have
the right to redeem any Securities. The Securities are redeemable in whole or
from time to time in part at any time on or after July 1, 2001, at the option of
the Issuers, at the Redemption Price (expressed as a percentage of principal
amount) set forth below, if redeemed during the 12-month period commencing July
1 of each of the years indicated below, in each case (subject to the right of
Holders of record on the Record Date to receive interest due on an Interest
Payment Date that is on or prior to such Redemption Date), plus any accrued but
unpaid interest (and Liquidated Damages, if any) to the Redemption Date.
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2001............................... 104.750%
2002............................... 102.375%
2003............................... 100.000%
</TABLE>
Until July 1, 2000, upon a Public Equity Offering of Notes, up to
35% of the aggregate principal amount of the Notes may be redeemed at the option
of the Issuers within 120 days of such Public Equity Offering, on not less than
30 days, but not more than 60 days notice to each Holder of the Notes to be
redeemed, with cash from the Net Cash Proceeds of such Public Equity Offering,
at 109.5% of principal (subject to the right of Holders of record on a Record
Date to receive interest due on an Interest Payment Date that is on or prior to
such Redemption Date), together with accrued and unpaid interest (and Liquidated
Damages, if any) to the date of redemption; provided, however, that immediately
following each such redemption not less than 65% of the aggregate principal
amount of the Notes originally issued are outstanding.
Any redemption of the Notes shall comply with Article III of the
Indenture.
6. Notice of Redemption.
Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at his registered address as set forth on the registry
books
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<PAGE> 139
of the Registrar. Securities in denominations larger than $1,000 may be redeemed
in part.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent on such Redemption Date, the
Securities called for redemption will cease to bear interest and the only right
of the Holders of such Securities will be to receive payment of the Redemption
Price, plus any accrued but unpaid interest (and Liquidated Damages, if any) to
the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in fully registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of
it for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Issuers at their written request. After that, all liability of the Trustee
and such Paying Agent(s) with respect to such money shall cease.
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<PAGE> 140
10. Discharge Prior to Redemption or Maturity.
If the Issuers at any time deposit into an irrevocable trust with
the Trustee Cash or U.S. Government Obligations sufficient to pay the principal
of and interest (and Liquidated Damages, if any) on the Securities to redemption
or maturity and comply with the other provisions of the Indenture relating
thereto, the Issuers will be discharged from certain provisions of the Indenture
and the Securities (including the financial covenants, but excluding its
obligation to pay the principal of and interest (and Liquidated Damages, if any)
on the Securities).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may
be amended or supplemented with the written consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding, and any
existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
comply with the TIA or make any other change that does not adversely affect the
rights of any Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Issuers and their respective Subsidiaries to, among other things, incur
additional Indebtedness and Disqualified Capital Stock, make payments in respect
of its Capital Stock, enter into transactions with Affiliates, incur Liens,
merge or consolidate with any other person and sell, lease, transfer or
otherwise dispose of substantially all of its properties or assets. The
limitations are subject to a number of important qualifications and exceptions.
The Issuers must annually report to the Trustee on compliance with such
limitations.
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<PAGE> 141
13. Change of Control.
In the event there shall occur any Change of Control, each Holder of
Securities shall have the right, at such Holder's option but subject to the
limitations and conditions set forth in the Indenture, to require the Issuers to
purchase on the Change of Control Purchase Date in the manner specified in the
Indenture, all or any part (in integral multiples of $1,000) of such Holder's
Securities at a cash price equal to 101% of the principal amount thereof,
together with accrued but unpaid interest (and Liquidated Damages, if any) to
and including the Change of Control Purchase Date.
14. Certain Asset Sales.
The Indenture imposes certain limitations on the ability of the
Issuers to sell assets. In the event the proceeds from a permitted Asset Sale
exceed certain amounts, as specified in the Indenture, the Issuers generally
will be required either to reinvest the proceeds of such Asset Sale in its
business, use such proceeds to retire debt, or to make an asset sale offer to
purchase a certain amount of each Holder's Securities at 100% of the principal
amount thereof, plus accrued interest, if any, to the purchase date, as more
fully set forth in the Indenture
15. Successors.
When a successor assumes all the obligations of its predecessor
under the Securities and the Indenture, the predecessor will be released from
those obligations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the
A-12
<PAGE> 142
Securities then outstanding may direct the Trustee in its exercise of any trust
or power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Issuers or their respective Affiliates, and may otherwise deal with the Issuers
or their Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
Neither the trustee, grantor, beneficiaries or special advisors to
the Trust, nor any direct or indirect shareholder, employee, director, officer
or agent (including independent members of the Fairness Committee) of the
Issuers and the Subsidiaries shall have any personal liability in respect of the
obligations of the Issuers and the Subsidiaries under the Indenture, the Notes
or the Guarantees by reason of his, her or its status as such. Each Holder of a
Security by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the
Securities.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
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<PAGE> 143
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Governing Law.
The Indenture and the Securities shall be governed by and construed
in accordance with the internal laws of the State of New York.
A-14
<PAGE> 144
[FORM OF ASSIGNMENT]
I or we assign this Security to
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of
assignee _________________
and irrevocably appoint ___________ agent to transfer this Security on the books
of the Issuers. The agent may substitute another to act for him.
Dated: ___________ Signed: ____________________________________________________
__________________________________________________________________
(Sign exactly as your name appears on the other side of
this Security)
Signature guarantee: ____________________________
A-15
<PAGE> 145
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.13 or Article X of the Indenture, check the appropriate
box:
[ ] Section 4.13
[ ] Article X
If you want to elect to have only part of this Security purchased by
the Issuers pursuant to the Indenture, state the principal amount you want to
have purchased:
$__________
Date: ________________ Signature: __________________________________
(Sign exactly as your name appears on the other side of this Security)
Signature guarantee: _________________________
A-16
<PAGE> 146
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES2
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Principal Amount of Signature of autho-
Amount of decrease in Amount of increase in this Global Security rized signatory of
Principal Amount of Principal Amount of following such decrease Trustee or
Date of Exchange This Global Security this Global Security (or increase) Securities Custodian
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------------
2 This schedule should only be added if the Security is
issued in global form.
A-17
<PAGE> 147
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
SECURITIES3
Re: 9 1/2% SENIOR NOTES DUE 2005 OF VENTURE HOLDINGS TRUST
This Certificate relates to $______ principal amount of Securities held
in 4 [ ] book-entry or [ ] definitive form by _______ (the "Transferor").
The Transferor:
[ ] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depository a Security or
Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that Transferor is familiar with
the Indenture relating to the above-captioned Securities and as provided in
Section 2.6 of such Indenture, the transfer of this Security does not require
registration under the Securities Act (as defined below) because:5
- --------
3 The following should be included only for Original
Notes.
4 Check applicable box.
A-18
<PAGE> 148
[ ] Such Security is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section 2.6(d)(i)(A) of
the Indenture).
[ ] Such Security is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.6(a)(ii)(B) or Section 2.6(d)(i)(B) of the Indenture).
[ ] Such Security is being transferred in accordance with (i) Rule 144 or
Regulation S under the Securities Act, (ii) pursuant to an effective
registration statement under the Securities Act, (iii) to an "institutional
accredited investor" within the meaning of Rule 501(A)(1), (2), (3) or (7)
under the Securities Act that is acquiring the Security for its own account, or
for the account of such an institutional accredited investor, in each case in
a minimum principal amount of $100,000, not with a view to or for offer or
sale in connection with any distribution in violation of the Securities Act or
(iv) in reliance on another exemption from registration under the Securities
Act (in satisfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the
Indenture). To effect such transfer, the Registrar or the Issuers may require
delivery of an Opinion of Counsel and in case of a transfer pursuant to clause
(iii) above, will require a transferee letter of representation.
---------------------------
[INSERT NAME OF TRANSFEROR]
By:
------------------------
Dated:
---------------------
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<PAGE> 149
EXHIBIT B
FORM OF GUARANTEE
For value received, __________________, a _______________
corporation, hereby irrevocably, unconditionally guarantees on a senior basis to
the Holder of the Security upon which this Guarantee is endorsed the due and
punctual payment, as set forth in the Indenture pursuant to which such Security
and this Guarantee were issued, of the principal of, premium (if any) and
interest (and Liquidated Damages, if any) on such Security when and as the same
shall become due and payable for any reason according to the terms of such
Security and Article XI of the Indenture. The Guarantee of the Security upon
which this Guarantee is endorsed will not become effective until the Trustee
signs the certificate of authentication on such Security. The Guarantee is
designated "Designated Guarantor Senior Indebtedness" for all purposes of the
indenture governing the Issuers' 9-3/4% Senior Subordinated Notes due 2004.
-------------------------------
By:
----------------------------
Attest:
------------------------
B-1
<PAGE> 150
EXHIBIT C-1
[Opinion of Special Tax Counsel]
To the Trustee:
Ladies and Gentlemen:
We have acted as special tax counsel to Venture Holdings Trust, a
grantor trust organized under the laws of Michigan, and its successors (the
"Trust"), Vemco, Inc. ("Vemco"), Venture Industries Corporation ("Industries"),
Venture Mold & Engineering Corporation ("Venture Mold"), Venture Leasing Company
("Venture Leasing"), Vemco Leasing, Inc. ("Vemco Leasing"), Venture Holdings
Corporation ("Venture Holdings") and Venture Service Company ("Venture
Service"), each a Michigan corporation (each an "Issuer" and, together with the
Trust, the "Issuers"), in connection with the execution of the notes (the
"Notes") by the Issuers in an aggregate principal amount of $205,000,000 in
favor of various entities (the "Holders") pursuant to an Indenture (the
"Indenture"), dated as of July 1, 1997, among the Issuers and The Huntington
National Bank, as Trustee. This opinion is delivered pursuant to Section 4.3 of
the Indenture.
We have examined (i) the Venture Trust Agreement (the "Trust
Agreement"), dated as of December 28, 1987, between Citizens Commercial &
Savings Bank, a Michigan corporation, as Trustee, and Larry J. Winget, as
Seller, as amended by First Amendment to Venture Holdings Trust, dated April 5,
1990, as amended by Second Amendment to Venture Holdings Trust, dated October
29, 1993 and as amended and restated in its entirety as of February 16, 1994,
(ii) the Notes, (iii) the Indenture and (iv) such further documents, and made
such further investigations as we deem necessary in order to render the opinion
set forth below. In addition, we have reviewed the pertinent statutes,
regulations, proposed regulations, case law and rulings.
C-1-1
<PAGE> 151
Based upon the foregoing, we are of the opinion that:
1. As of the date hereof, the Trust constitutes a trust described in
Section 1361(c)(2) of the Internal Revenue Code of 1986, as amended (the "Code")
or a corporation described in Section 1361(a)(1) of the Code.
2. Each of Vemco, Industries, Venture Mold, Venture Leasing, Vemco
Leasing and Venture Service are S corporations as defined in Section 1361 of the
Code.
3. The beneficiaries of the Trust, if it constitutes a trust under
Section 1361(c)(2) of the Code, or the shareholders of the Trust, if it
constitutes a corporation under Section 1361(a)(1) of the Code, shall be treated
as the owners of the entire Trust for Federal income tax purposes and shall be
required to include in their taxable income the income, deductions and credits
of the Trust.
C-1-2
<PAGE> 152
EXHIBIT C-2
[Opinion of Special Tax Counsel]
To the Trustee:
Ladies and Gentlemen:
We have acted as special tax counsel to Venture Holdings Trust, a
grantor trust organized under the laws of Michigan, and its successors (the
"Trust"), Vemco, Inc. ("Vemco"), Venture Industries Corporation ("Industries"),
Venture Mold & Engineering Corporation ("Venture Mold"), Venture Leasing Company
("Venture Leasing"), Vemco Leasing, Inc. ("Vemco Leasing"), Venture Holdings
Corporation ("Venture Holdings") and Venture Service Company ("Venture
Service"), each a Michigan corporation (each an "Issuer" and, together with the
Trust, the "Issuers"), in connection with the execution of the notes (the
"Notes") by the Issuers in an aggregate principal amount of $205,000,000 in
favor of various entities (the "Holders") pursuant to an Indenture (the
"Indenture"), dated as of July 1, 1997, among the Issuers and The Huntington
National Bank, as Trustee. This opinion is delivered pursuant to Section 4.3 of
the Indenture.
We have examined (i) the Venture Trust Agreement (the "Trust
Agreement"), dated as of December 28, 1987, between Citizens Commercial &
Savings Bank, a Michigan corporation, as Trustee, and Larry J. Winget, as
Seller, as amended by First Amendment to Venture Holdings Trust, dated April 5,
1990, as amended by Second Amendment to Venture Holdings Trust, dated October
29, 1993 and as amended and restated in its entirety as of February 16, 1994,
(ii) the Notes, (iii) the Indenture and (iv) such further documents, and made
such further investigations as we deem necessary in order to render the opinion
set forth below. In addition, we have reviewed the pertinent statutes,
regulations, proposed regulations, case law and rulings.
C-2-1
<PAGE> 153
Based upon the foregoing, we are of the opinion that:
1. As of the date hereof, the Trust constitutes a trust described in
Section 1361(c)(2) of the Internal Revenue Code of 1986, as amended (the "Code")
or a trust described in Section 1361(d) of the Code or a corporation described
in Section 1361(a)(1) of the Code.
2. Each of Vemco, Industries, Venture Mold, Venture Leasing, Vemco
Leasing and Venture Service are S corporations as defined in Section 1361 of the
Code.
3. For Federal income tax purposes, the beneficiaries of the Trust,
if it constitutes a trust under Section 1361(c)(2) or 1361(d) of the Code, or
the shareholders of the Trust, if it constitutes a corporation under Section
1361(a)(1) of the Code, shall be treated as the owners of the entire portion of
the Trust which consists of the stock of the S corporations listed in 2. above
and shall be required to include in their taxable income the income, deductions
and credits of the Trust attributable to such portion.
C-2-2
<PAGE> 1
EXHIBIT 4.2.1
FIRST SUPPLEMENTAL INDENTURE
First Supplemental Indenture dated as of August 8, 1996, among Venture
Holdings Trust, a grantor trust organized under the laws of Michigan (the
"Trust"), Vemco, Inc., Venture Industries Corporation, Venture Mold &
Engineering Corporation, Venture Leasing Company, Vemco Leasing, Inc., Venture
Holdings Corporation and Venture Service Company, each a Michigan corporation
(each an "Issuer" and together with the Trust, the "Issuers"), Venture
Industries Canada Ltd., an Ontario corporation, as Guarantor, and Comerica
Bank, as trustee (the "Indenture Trustee"), to the Indenture dated as of
February 16, 1994 (the "Indenture") among the Issuers, the Guarantor and the
Indenture Trustee. Capitalized terms not otherwise defined herein shall have
the meanings assigned to such terms in the Indenture.
RECITALS
WHEREAS, the Issuers have executed and delivered the Indenture to the
Indenture Trustee to provide for the issuance of their 9-3/4% Senior
Subordinated Notes due 2004 (the "Securities"); and
WHEREAS, Vemco Acquisition Corp., a Delaware corporation formed by the
Trust ("Acquisition"), has entered into an Agreement and Plan of Merger dated
June 5, 1996 (the "Merger Agreement") with Bailey Corporation, a Delaware
corporation ("Bailey"), pursuant to which Acquisition has or will acquire
Bailey (the "Bailey Acquisition"); and
WHEREAS, pursuant to Section 902 of the Indenture the Holders of at
least a majority in aggregate principal amount of the Outstanding Securities
(the "Requisite Holders") have consented in writing to the execution and
delivery of this First Supplemental Indenture which provides, among other
things, for the amendment of certain provisions of the Indenture and the
consent of such holders to certain transactions in connection with the Bailey
Acquisition; and
WHEREAS, each of the Issuers and the Guarantor severally represents
and warrants that (i) it has the authority to execute and deliver this First
Supplemental Indenture, (ii) the execution of this First Supplemental Indenture
has been duly authorized by it and (iii) all acts necessary to constitute this
First Supplemental Indenture the valid, binding and legal obligation of each of
the Issuers and the Guarantor have been performed and fulfilled;
NOW, THEREFORE, as of the date hereof, it is mutually agreed as
follows:
SECTION 1. Amendments. (a) Section 101 of the Indenture is amended
by adding the following definitions in the proper alphabetical order.
<PAGE> 2
"Acquisition" means Vemco Acquisition Corp., a Delaware, corporation,
or its successor.
"AutoStyle Assets"means the interest of the Issuers and their
Subsidiaries, and related obligations, in certain assets acquired on or after
June 3, 1996 from AutoStyle Plastics, Inc.
"Bailey" means Bailey Corporation, a Delaware corporation.
"Bailey Acquisition" means the acquisition by the Trust of a majority
of the outstanding shares of common stock of Bailey pursuant to an Agreement
and Plan of Merger dated June 5, 1996 between Acquisition and Bailey as the
same may be amended or supplemented.
"Designation" means the designation by the Issuers of Acquisition and
New AutoStyle as Unrestricted Subsidiaries, both of which shall be done on or
before February 15, 1997; provided that as of date of such designation (the
"Designation Date") the following provision is compiled with: the Issuers shall
deliver to the Indenture Trustee and the Holders (i) a calculation of the
Consolidated Fixed Charge Coverage Ratio (the "Ratio"), (ii) the four limited
review reports each in the form as set forth on Schedule A hereto of Issuers'
independent certified public accountants with respect to the financial
statements upon which such calculation is based and (iii) a letter describing
the performance by such accountants of certain procedures as set forth in
Schedule B hereto relating to the Ratio in accordance with Section 6 of the
First Supplemental Indenture. The Ratio shall be based on the actual results of
the Trust for the four full fiscal quarters immediately preceding the
Designation Date as to which financial statements are available and have been
sent to the Holders pursuant to the Indenture, but excluding the results of
Bailey and its subsidiaries and New AutoStyle, and only giving effect to the
Indebtedness which the Issuers and their Subsidiaries are to be liable for
after the Designation.
"Designation Date" has the meaning set forth in the definition of
Designation.
"First Supplemental Indenture" means that certain First Supplemental
Indenture dated August 8, 1996, among the Issuers, the Guarantors and the
Indenture Trustee.
"NBD Debt" means the portion of the Indebtedness of the Issuers under
the Credit Agreement in an aggregate principal amount at any one time
outstanding not to exceed $220 million less any outstanding Indebtedness of
Bailey which is not repaid at or about the date of consummation of the Bailey
Acquisition, provided that such sum is used as is necessary to, among other
things, (i) repay the existing Senior Secured Notes and Indebtedness owed to
NBD Bank, (ii) consummate the Bailey Acquisition, (iii) repay some or all of
Bailey's
<PAGE> 3
outstanding Indebtedness to its existing creditors and (iv) fund the Offer to
Purchase referred to in Section 4 of the First Supplemental Indenture.
"New AutoStyle" means a new corporation to be formed by the Trust as a
Subsidiary which holds the AutoStyle Assets.
"Refinancings" means with respect to any indebtedness, any amendments,
renewals, extensions, substitutions, refinancings, restructurings, replacements
or supplementations or other modifications thereof (including, without
limitation, successive renewals, extensions, substitutions, refinancings,
restructurings, replacements, supplementations or other modifications of any
such Indebtedness).
(b) The definition of Consolidated Non-cash Charges set forth in
Section 101 of the Indenture is amended by adding the following at the and
thereof:
", and including those cash charges incurred in connection
with the repayment of Indebtedness of the Issuers with a
portion of the borrowings under the Credit Agreement and other
cash charges incurred in connection with the Bailey
Acquisition up to a maximum amount of $3 million less the
amount of the gain realized by the Issuers in connection with
the Offer to Purchase referred to in Section 4 of the First
Supplemental Indenture."
(c) Effective on the date of the Bailey Acquisition, the
definition of Credit Agreement set forth in Section 101 of the Indenture is
amended by deleting such definition in its entirety and substituting the
following in lieu thereof:
"Credit Agreement" means the Credit Agreement, to be dated on
or about the date of the Bailey Acquisition, among the Issuers
party thereto, the lenders and other Persons party thereto
from time to time and NBD Bank, as Agent for such lenders,
together with all agreements, documents and instruments from
time to time delivered pursuant them, as such agreement, in
whole or in part, may be amended, renewed, extended,
substituted, refinanced, restructured, replaced, supplemented
or otherwise modified from time to time (including, without
limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replaced,
supplementations or other modifications of the foregoing)."
(d) The definition of Permitted Indebtedness set forth in Section
101 of the Indenture is amended by (x) deleting paragraph (i) therein in its
entirely and substituting the following in lieu thereof:
"(1)Indebtedness of the Issuers in an aggregate principal
amount at any one time outstanding not to exceed the amount of
NBD Debt and its Refinancings and Indebtedness of Bailey and
its Refinancings, permitted under Section 3(e) of the First
Supplemental Indenture;"
<PAGE> 4
and (y) adding at the end of paragraph (viii) thereof the following:
";provided, however, that the provisions of this clause
(viii) shall only apply if Bailey is (x) designated an
Unrestricted Subsidiary, (y) redesignated from an Unrestricted
Subsidiary to a Subsidiary or (iii) permitted to remain a
Subsidiary, all in accordance with the provisions of the First
Supplemental Indenture.
(e) Section 1009(a)(vii)(A) of the Indenture is amended by adding
at the end thereof, ", minus $15 million."
(f) Section 1009(b) of the Indenture is amended by: (i) deleting
the "and," before "(v)" on line four thereof and adding immediately thereafter
" (v)", the following: ", (vi), (vii), (viii), (ix) and (x)" and (ii) adding
at the end thereof the following:
"(vi) The assignment and transfer to the Trust by
the Subsidiaries of an amount in cash not to exceed the lesser
of $13 million and the maximum amount permitted to be paid as
of June 30, 1996 as a Restricted Payment pursuant to Section
1009(a) of the Indenture and the transfer of such sum to
Acquisition, provided that the Bailey Acquisition shall have
occurred simultaneously with or prior to such transfer to
Acquisition;
(vii) The assignment and transfer to the Trust by the
Subsidiaries of their interest in the AutoStyle Assets;
(viii) The assignment and transfer by the Issuers to
New AutoStyle of the AutoStyle Assets and/or the Designation
of New AutoStyle as an Unrestricted Subsidiary on or before
February 15, 1997, provided that the Designation of
Acquisition as an Unrestricted Subsidiary shall occur
simultaneously with or prior to such Designation of New
AutoStyle;
(ix) The Designation of Acquisition as an
Unrestricted Subsidiary (it being understood that if
Acquisition is thereafter redesignated as a Subsidiary, such
redesignation shall have no effect on the calculations set
forth in Section 1009(a) of the Indenture); and
(x) The Issuers, Venture Canada, Acquisition and/or
New AutoStyle incurring the NBD Debt."
(g) Section 1010 shall be amended to add the following introductory
paragraph:
"Except as to (i) the Issuers transferring to the Trust all of their
rights in and to the AutoStyle Assets and related rights and obligations, (ii)
the Trust transferring to New AutoStyle all of its rights in and to the
AutoStyle Assets and related rights and obligations, and/or (iii) on or before
February 15, 1997, the Designation of Acquisition and New AutoStyle as
Unrestricted Subsidiaries:"
<PAGE> 5
(h) Sections 1010(a) and (b) of the Indenture are amended by
deleting such sections in their entirety and substituting the following in lieu
thereof:
"(a) The Trust will not, and will not permit any of its Subsidiaries
to, and, during any period that they are Unrestricted Subsidiaries, as to
transactions between New AutoStyle or Acquisition on the one hand and
Affiliates of theirs (other than transactions benefiting the Trust or its
Subsidiaries) on the other hand, to, directly or indirectly, make any loan,
advance, guarantee or capital contribution to, or for the benefit of, or sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
for the benefit of, or purchase or lease any property or assets from, or enter
into or amend, or increase the payments by the Trust or any of its Subsidiaries
under or otherwise alter the terms of, any contract, agreement or understanding
with, or for the benefit of, any Affiliate of the Trust (including any
Affiliates of such Affiliates) (each, an "Affiliate Transaction") except for
any Affiliate Transaction the terms of which are fair and reasonable to the
Trust or such Subsidiary, as the case may be, and are at least as favorable as
the terms which could be obtained by the Trust or such Subsidiary, as the case
may be, in a comparable transaction made on an arm's-length basis with Persons
who at not such an Affiliate of the Trust; provided, however, that Affiliated
Transactions shall not include (1) any transaction with an officer or member of
the Board of Directors of the Trust or any Subsidiary entered into in the
ordinary course of business (including compensation or employee benefit
arrangements with any officer or member of the Board of Directors of the Trust
or any such Subsidiary, (2) performance of any agreement in existence on the
date of this Indenture in accordance with its terms as in effect on such date
or (3) any Restricted Payment or Permitted Payment permitted under Section
1009.
(b) In addition, the Trust will not, and will not permit any
Subsidiary of the Trust to, and, during any period that they are Unrestricted
Subsidiaries, as to transactions between New AutoStyle or Bailey on the one
hand and Affiliates of theirs (other than transactions benefiting the Trust or
its Subsidiaries) on the other hand, to, enter into an Affiliate Transaction,
or any series of related Affiliate Transactions, unless (i) with respect to
such Transaction or Transactions involving or having a fair value of more than
$250,000 the Trust has (x) obtained the approval of majorities of the Board of
Directors of the Trust (in the case of the Trust and Venture Canada) or such
Subsidiary, as the case may be, and the Fairness Committee of the Trust (in the
case of the Trust and Venture Canada or such Subsidiary, as the case may be, in
the exercise of their fiduciary duties and (y) either (i) obtained the approval
of majorities of the disinterested directors of the Trust (in the case of the
Trust and Venture Canada) or such Subsidiary, as the case may be, if any, and
Independent members of the Fairness Committee or (2) obtained an opinion of a
qualified independent financial advisor to the effect that such Transaction or
Transactions are fair to the Trust or such Subsidiary, as the case may be, from
a financial point of view and (ii) with respect to such Transaction or
Transactions involving or having a fair value of more than $3.0 million, the
Trust has (x) obtained the approval of majorities of the Board of Directors of
the Trust (in the case of the Trust and Venture Canada) or such Subsidiary as
the case may be and the Fairness Committee of the Trust (in the case of the
Trust and Venture Canada) or such Subsidiary as the case may be in the exercise
of their fiduciary duties, including majorities of the disinterested directors
of the Trust (in the case of the Trust and Venture Canada) or such Subsidiary,
as the case may be, if any, and Independent
<PAGE> 6
members of the Fairness Committee, and (y) delivered to the Indenture Trustee
an opinion of a qualified independent financial advisor to the effect that such
Transaction or Transactions are fair to the Trust or such Subsidiary, as the
case may be, from a financial point of view."
(i) Section 1021 of the Indenture is hereby amended by adding at
the end of such Section the following:
"On or prior to 15 days after the Required Filing Date, the
Issuers, at the Issuers' cost, will certify to and provide to the
Indenture Trustee and all Holders quarterly reports and yearly reports
(i) prepared by the Issuers on a basis which is consistent with the
preparation of the reports, required by the first paragraph of this
Section 1021, (ii) which are not reviewed or certified to by any
accounting firm and (iii) which reflect the consolidated financial
statements of the Trust and its subsidiaries, excluding Acquisition
and New AutoStyle prior to the Designation Date and thereafter so long
as Acquisition and New AutoStyle are designated Unrestricted
Subsidiaries."
SECTION 2. Acquisition and Bailey Guarantee. Pursuant to
Section 1013 of the Indenture, by executing this First Supplemental Indenture,
each of Acquisition and, upon its merger into Bailey, Bailey, is hereby deemed
a Guarantor and shall be bound by the provisions of Article Fourteen of the
Indenture so long as Bailey is a Subsidiary of the Trust. The provisions of
Section 1013(c)(ii) shall not apply to such guaranty.
SECTION 3. Consents. The Requisite Holders, by execution of
the consents referred to in the recitals hereto, have consented, and do hereby
consent, to the following:
(a) The assignment and transfer to the Trust by
the Subsidiaries of an amount in cash not to exceed the lesser of $13 million
and the maximum amount permitted to be paid as of June 30, 1996 as a Restricted
Payment pursuant to Section 1009(a) of the Indenture and the transfer of such
sum to Acquisition or its successor, provided that the Bailey Acquisition shall
have occurred simultaneously with or prior to such transfer to Acquisition.
(b) The Subsidiaries transferring to the Trust
all of the Trust's right to the AutoStyle Assets with the same being considered
a Permitted Payment.
(c) The Trust creating New AutoStyle and
transferring to it the AutoStyle Assets.
(d) Subject to the consummation of the Bailey
Acquisition, the Trust offering to each of the Holders (which offer shall be
commenced on or before August 19, 1996), a payment of $950 (maximum,
$20,007,000), plus interest accrued to date, for each $l000 (maximum,
$21,060,000) of principal amount of Securities, pro rata to all tendering
Holders who tender their Securities (the "Offer to Purchase") in accordance
with the procedures set forth in Section 1014 of the Indenture, other than the
time periods set forth in subsection (a) thereof. The Offer to Purchase shall
be consummated no earlier than 20 Business Days and no later than 25 Business
Days after the commencement date of the Offer to Purchase.
<PAGE> 7
(e) Subject to the consummation of the Bailey
Acquisition, the Trust and its Subsidiaries incurring up to $220,000,000 of (i)
NBD Debt, which may be amended, renewed, extended, substituted, refinanced,
restructured, replaced, supplemented or otherwise modified from time to time
(including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplementations or
other modifications of the foregoing), all of which are herein referred to as
the "Refinancings", provided that (y) as to the revolving credit facility of
such NBD Debt, it may not exceed the amount thereof in effect as of the date of
the Credit Agreement, but in no event more than $120 million, and (z) as to the
term facility portion of such NBD Debt, no Refinancing may be in a principal
amount in excess of the then outstanding principal amount thereof, and (ii)
Indebtedness of Bailey and its Refinancings (provided that as to such
Indebtedness of Bailey, no Refinancings may be in a principal amount in excess
of the then outstanding principal amount thereof), provided that such NBD Debt
is used as is necessary to, among other things, (i) repay the existing Senior
Secured Notes and Indebtedness owed to NBD Bank, (ii) consummate the Bailey
Acquisition, (iii) repay some or all of Bailey's outstanding Indebtedness to
its existing creditors and (iv) fund the Offer to Purchase.
(f) The Bailey Acquisition being made by
Acquisition as a Subsidiary of the Trust.
(g) Acquisition being merged into Bailey.
(h) On or before February 15, 1997, the Trust
having the option of making the Designation as to Acquisition and New AutoStyle
and the same shall not be considered a Restricted Payment and they shall
thereafter be deemed Unrestricted Subsidiaries for all purposes of the
Indenture.
SECTION 4. Offer to Purchase. In consideration for the
Requisite Holders consenting to the execution and delivery of this First
Supplemental Indenture and subject to the consummation of the Bailey
Acquisition, on or before August 19, 1996, the Issuers shall commence the Offer
to Purchase in accordance with the provisions of Section 3(d) hereof.
SECTION 5. Recission of Prior Indenture. Effective upon the
date hereof, the Supplemental Indenture dated as of May 29, 1996 among the
Issuers, the Guarantor and the Indenture Trustee is hereby terminated and
rescinded and shall be of no further force and effect.
SECTION 6. Increase in Interest Rate. The interest rate on
the Outstanding securities shall be increased by 2% per annum to 11-3/4% per
annum as of February 15, 1997, unless as of February 15, 1997 (or on the
Designation Date, if earlier), the Trust is able to borrow one additional
dollar of Indebtedness (other than Permitted Indebtedness) under Section 1008
of the Indenture. In performing such calculation, whether or not the
Designation has occurred, the provisions in the definition of Designation with
respect to the calculation of the Ratio shall apply, except that if the
Designation has not occurred on or before February 15, 1997, the actual results
of Bailey and its subsidiaries and New AutoStyle shall not be excluded in
determining the
<PAGE> 8
Ratio.
SECTION 2. Miscellaneous (a) This First Supplemental
Indenture is limited as specified herein and, except as provided herein, shall
not constitute a modification, acceptance or waiver of any other provision of
the Indenture, all of which shall continue to be in full force and effect and
are hereby ratified and confirmed in all respects.
(b) This First Supplemental Indenture may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
(c) From and after the date hereof, all references in the
Indenture to the Indenture shall be deemed to be references to the Indenture as
modified hereby.
(d) This First Supplemental Indenture shall be governed
by, construed and enforced in accordance with the laws of the State of New
York, without regard to the conflict of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed and attested, all as of the day and
year first above written.
VENTURE HOLDINGS TRUST
Attest:. /s/ Larry Winget By: /s/ Michael Torakis
--------------------------- --------------------------
Name: Larry Winget Name: Michael Torakis
Title: CEO Title: President
VEMCO, INC.
Attest: /s / Larry Winget By: /s/ Michael Torakis
--------------------------- --------------------------
Name: Larry Winget Name: Michael Torakis
Title: CEO Title: President
<PAGE> 9
VENTURE INDUSTRIES
CORPORATION
Attest:. /s/ Larry Winget By: /s/ Michael Torakis
--------------------------- --------------------------
Name: Larry Winget Name: Michael Torakis
Title: CEO Title: President
VENTURE MOLD ENGINEERING
CORPORATION
Attest:. /s/ Larry Winget By: /s/ Michael Torakis
--------------------------- --------------------------
Name: Larry Winget Name: Michael Torakis
Title: CEO Title: President
VENTURE LEASING COMPANY
Attest:. /s/ Larry Winget By: /s/ Michael Torakis
--------------------------- --------------------------
Name: Larry Winget Name: Michael Torakis
Title: CEO Title: President
VEMCO LEASING, INC.
Attest:. /s/ Larry Winget By: /s/ Michael Torakis
--------------------------- --------------------------
Name: Larry Winget Name: Michael Torakis
Title: CEO Title: President
<PAGE> 10
VENTURE HOLDINGS
CORPORATION
Attest:. /s/ Larry Winget By: /s/ Michael Torakis
--------------------------- --------------------------
Name: Larry Winget Name: Michael Torakis
Title: CEO Title: President
VENTURE SERVICE COMPANY
Attest:. /s/ Larry Winget By: /s/ Michael Torakis
--------------------------- --------------------------
Name: Larry Winget Name: Michael Torakis
Title: CEO Title: President
VENTURE INDUSTRIES CANADA
LTD., AS GUARANTOR
Attest:. /s/ Larry Winget By: /s/ Michael Torakis
--------------------------- --------------------------
Name: Larry Winget Name: Michael Torakis
Title: CEO Title: President
VEMCO ACQUISITION CORP.
AS GUARANTOR
Attest:. /s/ Larry Winget By: /s/ Michael Torakis
--------------------------- --------------------------
Name: Larry Winget Name: Michael Torakis
Title: CEO Title: President
<PAGE> 11
COMERICA BANK,
AS INDENTURE TRUSTEE
Attest:. /s/ Marilyn A. Karam By: /s/ James Kowalski
--------------------------- --------------------------
Name: Marilyn A. Karam Name: James Kowalski
Title: Vice President Title: Trust Administrator
<PAGE> 1
EXHIBIT 4.2.2
SUPPLEMENTAL INDENTURE OF A SUPPLEMENTAL GUARANTOR
This SUPPLEMENTAL INDENTURE OF A SUPPLEMENTAL GUARANTOR (the "Guarantee")
is executed this day of August, the year 1996, among VENTURE HOLDINGS
TRUST, a grantor trust organized under the laws of Michigan (the "Trust") ,
VEMCO, INC., VENTURE INDUSTRIES CORPORATION, VENTURE MOLD & ENGINEERING
CORPORATION, VENTURE LEASING COMPANY, VEMCO LEASING, INC., VENTURE HOLDINGS
CORPORATION and VENTURE SERVICE COMPANY, each a Michigan corporation (each an
"Issuer" and, together with the Trust, the "Issuers") , VENTURE INDUSTRIES
CANADA, LTD., an Ontario corporation, as a Guarantor ("Venture Canada"), VEMCO
ACQUISITION CORP., a Delaware corporation (the "Supplemental Guarantor") and
COMERICA BANK, as trustee (the "Indenture Trustee");
Whereas, the Issuers, Venture Canada and the Indenture Trustee (the
"Parties") have previously entered into an indenture dated as of February 16,
1994, which together with the First Supplemental Indenture executed August 8,
1996, is herein referred to as the "Indenture" (capitalized terms used herein
unless otherwise defined shall be used as defined in the Indenture);
And Whereas, pursuant to the terms of Section 901(b) of the Indenture, the
Parties desire to supplement such Indenture by the addition of the Supplemental
Guarantor as a Guarantor under the Trust by executing this Guarantee;
NOW THEREFORE, THE PARTIES HERETO AGREE TO THE FOLLOWING:
Sec. 1.1 (a) The Supplemental Guarantor hereby guarantees on a
subordinated basis to the same extent as set forth in the Indenture the payment
of the Securities and waives and agrees not in any manner whatsoever to claim
or take the benefit or advantage of any rights of reimbursement, indemnity or
subrogation or any other rights against the Trust or any other Subsidiary as a
result of any payment by such Supplemental Guarantor under its guarantee.
(b) This Guarantee shall be automatically and unconditionally released and
discharged upon any sale, exchange or transfer, to any Person not an Affiliate
of the Trust, of all of the Trust's Equity Interest in, or all or substantially
all the assets of, such Supplemental Guarantor, which is in compliance with the
Indenture.
(c) This Guarantee shall be automatically and unconditionally released and
discharged upon the Supplemental Guarantor becoming an Unrestricted Subsidiary.
<PAGE> 2
ISSUERS:
VENTURE HOLDINGS TRUST
by: /s/ Michael Torakis
------------------------------
VEMCO, INC.
by: /s/ Michael Torakis
------------------------------
VENTURE INDUSTRIES CORPORATION
by: /s/ Michael Torakis
------------------------------
VENTURE MOLD & ENGINEERING CORPORATION
by: /s/ Michael Torakis
------------------------------
VENTURE LEASING COMPANY
by: /s/ Michael Torakis
------------------------------
VEMCO LEASING, INC.
by: /s/ Michael Torakis
------------------------------
VENTURE HOLDINGS CORPORATION
by: /s/ Michael Torakis
------------------------------
<PAGE> 3
VENTURE SERVICE COMPANY
by: /s/ Michael Torakis
------------------------------
GUARANTOR:
VENTURE INDUSTRIES CANADA, LTD.
by: /s/ Michael Torakis
------------------------------
SUPPLEMENTAL GUARANTOR:
VEMCO ACQUISITION CORP.
by: /s/ Michael Torakis
------------------------------
TRUSTEE:
COMERICA BANK
by: /s/ James Kowalski
------------------------------
<PAGE> 1
EXHIBIT 4.2.3
SUPPLEMENTAL INDENTURE OF A SUPPLEMENTAL GUARANTOR
This SUPPLEMENTAL INDENTURE OF A SUPPLEMENTAL GUARANTOR (the "Guarantee")
is executed this day of August, the year 1996, among VENTURE HOLDINGS
TRUST, a grantor trust organized under the laws of Michigan (the "Trust") ,
VEMCO, INC., VENTURE INDUSTRIES CORPORATION, VENTURE MOLD & ENGINEERING
CORPORATION, VENTURE LEASING COMPANY, VEMCO LEASING, INC.,VENTURE HOLDINGS
CORPORATION and VENTURE SERVICE COMPANY, each a Michigan corporation (each an
"Issuer" and, together with the Trust, the "Issuers") , VENTURE INDUSTRIES
CANADA, LTD., an Ontario corporation, as a Guarantor ("Venture Canada"),
VENTURE GRAND RAPIDS L.L.C., a Michigan limited liability company (the
"Supplemental Guarantor") and COMERICA BANK, as trustee (the "Indenture
Trustee");
Whereas, the Issuers, Venture Canada and the Indenture Trustee (the
"Parties") have previously entered into an indenture dated as of February 16,
1994, which together with the First Supplemental Indenture executed August 8,
1996, is herein referred to as the "Indenture" (capitalized terms used herein
unless otherwise defined shall be used as defined in the Indenture);
And Whereas, pursuant to the terms of Section 901(b) of the Indenture, the
Parties desire to supplement such Indenture by the addition of the Supplemental
Guarantor as a Guarantor under the Trust by executing this Guarantee;
NOW THEREFORE, THE PARTIES HERETO AGREE TO THE FOLLOWING:
Sec. 1.1 (a) The Supplemental Guarantor hereby guarantees on a
subordinated basis to the same extent as set forth in the Indenture the payment
of the Securities and waives and agrees not in any manner whatsoever to claim
or take the benefit or advantage of any rights of reimbursement, indemnity or
subrogation or any other rights against the Trust or any other Subsidiary as a
result of any payment by such Supplemental Guarantor under its guarantee.
(b) This Guarantee shall be automatically and unconditionally released and
discharged upon any sale, exchange or transfer, to any Person not an Affiliate
of the Trust, of all of the Trust's Equity Interest in, or all or substantially
all the assets of, such Supplemental Guarantor, which is in compliance with the
Indenture.
(c) This Guarantee shall be automatically and unconditionally released and
discharged upon the Supplemental Guarantor becoming an Unrestricted Subsidiary.
<PAGE> 2
ISSUERS:
VENTURE HOLDINGS TRUST
by: /s/ Michael Torakis
------------------------------
VEMCO, INC.
by: /s/ Michael Torakis
------------------------------
VENTURE INDUSTRIES CORPORATION
by: /s/ Michael Torakis
------------------------------
VENTURE MOLD & ENGINEERING CORPORATION
by: /s/ Michael Torakis
------------------------------
VENTURE LEASING COMPANY
by: /s/ Michael Torakis
------------------------------
VEMCO LEASING, INC.
by: /s/ Michael Torakis
------------------------------
VENTURE HOLDINGS CORPORATION
by: /s/ Michael Torakis
------------------------------
<PAGE> 3
VENTURE SERVICE COMPANY
by: /s/ Michael Torakis
------------------------------
GUARANTOR:
VENTURE INDUSTRIES CANADA, LTD.
by: /s/ Michael Torakis
------------------------------
SUPPLEMENTAL GUARANTOR:
VENTURE GRAND RAPIDS L.L.C.
by: /s/ Michael Torakis
------------------------------
TRUSTEE:
COMERICA BANK
by: /s/ James Kowalski
------------------------------
<PAGE> 1
EXHIBIT 4.2.4
SUPPLEMENTAL INDENTURE OF A SUPPLEMENTAL GUARANTOR
This SUPPLEMENTAL INDENTURE OF A SUPPLEMENTAL GUARANTOR (the "Guarantee")
is executed this _ day of August, the year 1996, among VENTURE HOLDINGS TRUST,
a grantor trust organized under the laws of Michigan (the "Trust"), VEMCO, INC.
VENTURE INDUSTRIES CORPORATION, VENTURE MOLD & ENGINEERING CORPORATION, VENTURE
LEASING COMPANY, VEMCO LEASING, INC., VENTURE HOLDINGS CORPORATION and VENTURE
SERVICE COMPANY, each a Michigan corporation (each an "Issuer" and, together
with the Trust, the "Issuers"), VENTURE INDUSTRIES CANADA, LTD., an Ontario
corporation, as a Guarantor ("Venture Canada"), VENTURE WESTERN MICHIGAN LTD.,
a Michigan corporation (the "Supplemental Guarantor") and COMERICA BANK, as
trustee (the "Indenture Trustee");
Whereas, the Issuers, Venture Canada and the Indenture Trustee (the
"Parties") have previously entered into an indenture dated as of February 16,
1994, which together with the First Supplemental Indenture executed August 8,
1996, is herein referred to as the "Indenture" (capitalized terms used herein
unless otherwise defined shall be used as defined in the Indenture);
And Whereas, pursuant to the terms of Section 901(b) of the Indenture, the
Parties desire to supplement such indenture by the addition of the Supplemental
Guarantor as a Guarantor under the Trust by executing this Guarantee;
NOW THEREFORE, THE PARTIES HERETO AGREE TO THE FOLLOWING:
Sec. 1.1 (a) The Supplemental Guarantor hereby guarantees on a
subordinated basis to the same extent as set forth in the Indenture the payment
of the Securities and waives and agrees not in any manner whatsoever to claim
or take the benefit or advantage of any rights of reimbursement, indemnity or
subrogation or any other rights against the Trust or any other Subsidiary as a
result of any payment by such Supplemental Guarantor under its guarantee.
(b) This Guarantee shall be automatically and unconditionally released and
discharged upon any sale, exchange or transfer, to any Person not an Affiliate
of the Trust, of all of the Trust's Equity interest in, or all or substantially
all the assets of, such Supplemental Guarantor, which is in compliance with the
Indenture.
(c) This Guarantee shall be automatically and unconditionally released and
discharged upon the Supplemental Guarantor becoming an Unrestricted Subsidiary.
<PAGE> 2
ISSUERS:
VENTURE HOLDINGS TRUST
by: /s/ Michael Torakis
------------------------------
VEMCO, INC.
by: /s/ Michael Torakis
------------------------------
VENTURE INDUSTRIES CORPORATION
by: /s/ Michael Torakis
------------------------------
VENTURE MOLD & ENGINEERING CORPORATION
by: /s/ Michael Torakis
------------------------------
VENTURE LEASING COMPANY
by: /s/ Michael Torakis
------------------------------
VEMCO LEASING, INC.
by: /s/ Michael Torakis
------------------------------
VENTURE HOLDINGS CORPORATION
by: /s/ Michael Torakis
------------------------------
<PAGE> 3
VENTURE SERVICE COMPANY
by: /s/ Michael Torakis
------------------------------
GUARANTOR:
VENTURE INDUSTRIES CANADA, LTD.
by: /s/ Michael Torakis
------------------------------
SUPPLEMENTAL GUARANTOR:
VENTURE WESTERN MICHIGAN LTD.
by: /s/ Michael Torakis
------------------------------
TRUSTEE:
COMERICA BANK
by: /s/ James Kowalski
------------------------------
<PAGE> 1
EXHIBIT 4.2.5
SUPPLEMENTAL INDENTURE OF A SUPPLEMENTAL GUARANTOR
This SUPPLEMENTAL INDENTURE OF A SUPPLEMENTAL GUARANTOR (the "Guarantee")
is executed this day of August, the year 1996, among VENTURE HOLDINGS
TRUST, a grantor trust organized under the laws of Michigan (the "Trust"),
VEMCO, INC., VENTURE INDUSTRIES CORPORATION, VENTURE MOLD & ENGINEERING
CORPORATION, VENTURE LEASING COMPANY, VEMCO LEASING, INC., VENTURE HOLDINGS
CORPORATION and VENTURE SERVICE COMPANY, each a Michigan corporation (each an
"Issuer" and, together with the Trust, the "Issuers"), VENTURE INDUSTRIES
CANADA, LTD., an Ontario corporation, as a Guarantor ("Venture Canada"), BAILEY
CORPORATION, a Delaware corporation (the "Supplemental Guarantor") and
COMERICA BANK, as trustee (the "Indenture Trustee");
Whereas, the Issuers, Venture Canada and the Indenture Trustee (the
"Parties") have previously entered into an indenture dated as of February 16,
1994, which together with the First Supplemental Indenture executed August 8,
1996, is herein referred to as the "Indenture" (capitalized terms used herein
unless otherwise defined shall be used as defined in the Indenture);
And Whereas, pursuant to the terms of Section 901(b) of the Indenture, the
Parties desire to supplement such Indenture by the addition of the Supplemental
Guarantor as a Guarantor under the Trust by executing this Guarantee;
NOW THEREFORE, THE PARTIES HERETO AGREE TO THE FOLLOWING:
Sec. 1.1 (a) The Supplemental Guarantor hereby guarantees on a
subordinated basis to the same extent as set forth in the Indenture the payment
of the Securities and waives and agrees not in any manner whatsoever to claim
or take the benefit or advantage of any rights of reimbursement, indemnity or
subrogation or any other rights against the Trust or any other Subsidiary as a
result of any payment by such Supplemental Guarantor under its guarantee.
(b) This Guarantee shall be automatically and unconditionally released and
discharged upon any sale, exchange or transfer, to any Person not an Affiliate
of the Trust, of all of the Trust's Equity Interest in, or all or substantially
all the assets of, such Supplemental Guarantor, which is in compliance with the
Indenture.
(c) This Guarantee shall be automatically and unconditionally released and
discharged upon the Supplemental Guarantor becoming an Unrestricted Subsidiary.
<PAGE> 2
ISSUERS:
VENTURE HOLDINGS TRUST
by: /s/ Michael Torakis
------------------------------
VEMCO, INC.
by: /s/ Michael Torakis
------------------------------
VENTURE INDUSTRIES CORPORATION
by: /s/ Michael Torakis
------------------------------
VENTURE MOLD & ENGINEERING CORPORATION
by: /s/ Michael Torakis
------------------------------
VENTURE LEASING COMPANY
by: /s/ Michael Torakis
------------------------------
VEMCO LEASING, INC.
by: /s/ Michael Torakis
------------------------------
VENTURE HOLDINGS CORPORATION
by: /s/ Michael Torakis
------------------------------
<PAGE> 3
VENTURE SERVICE COMPANY
by: /s/ Michael Torakis
------------------------------
GUARANTOR:
VENTURE INDUSTRIES CANADA, LTD.
by: /s/ Michael Torakis
------------------------------
SUPPLEMENTAL GUARANTOR:
BAILEY CORPORATION
by: /s/ Michael Torakis
------------------------------
TRUSTEE:
COMERICA BANK
by: /s/ James Kowalski
------------------------------
<PAGE> 1
EXHIBIT 4.2.6
SUPPLEMENTAL INDENTURE OF A SUPPLEMENTAL GUARANTOR
This SUPPLEMENTAL INDENTURE OF A SUPPLEMENTAL GUARANTOR (the "Guarantee")
is executed this _ day of August, the year 1996, among VENTURE HOLDINGS TRUST,
a grantor trust organized under the laws of Michigan (the "Trust"), VEMCO,
INC., VENTURE INDUSTRIES CORPORATION, VENTURE MOLD & ENGINEERING CORPORATION,
VENTURE LEASING COMPANY, VEMCO LEASING, INC., VENTURE HOLDINGS CORPORATION and
VENTURE SERVICE COMPANY, each a Michigan corporation (each an "Issuer" and,
together with the Trust, the "Issuers"), VENTURE INDUSTRIES CANADA, LTD., an
Ontario corporation, as a Guarantor ("Venture Canada"), BAILEY MANUFACTURING
CORPORATION, a Delaware corporation (the "Supplemental Guarantor") and COMERICA
BANK, as trustee (the "Indenture Trustee");
Whereas, the Issuers, Venture Canada and the Indenture Trustee (the
"Parties") have previously entered into an indenture dated as of February 16,
1994, which together with the First Supplemental Indenture executed August 8,
1996, is herein referred to as the "Indenture" (capitalized terms used herein
unless otherwise defined shall be used as defined in the Indenture);
And Whereas, pursuant to the terms of Section 901(b) of the Indenture, the
Parties desire to supplement such Indenture by the addition of the Supplemental
Guarantor as a Guarantor under the Trust by executing this Guarantee;
NOW THEREFORE, THE PARTIES HERETO AGREE TO THE FOLLOWING:
Sec. 1.1 (a) The Supplemental Guarantor hereby guarantees on a
subordinated basis to the same extent as set forth in the Indenture the payment
of the Securities and waives and agrees not in any manner whatsoever to claim
or take the benefit or advantage of any rights of reimbursement, indemnity or
subrogation or any other rights against the Trust or any other Subsidiary as a
result of any payment by such Supplemental Guarantor under its guarantee.
(b) This Guarantee shall be automatically and unconditionally released and
discharged upon any sale, exchange or transfer, to any Person not an Affiliate
of the Trust, of all of the Trust's Equity Interest in, or all or substantially
all the assets of, such Supplemental Guarantor, which is in compliance with the
indenture.
(c) This Guarantee shall be automatically and unconditionally released and
discharged upon the Supplemental Guarantor becoming an Unrestricted Subsidiary.
<PAGE> 2
ISSUERS:
VENTURE HOLDINGS TRUST
by: /s/ Michael Torakis
------------------------------
VEMCO, INC.
by: /s/ Michael Torakis
------------------------------
VENTURE INDUSTRIES CORPORATION
by: /s/ Michael Torakis
------------------------------
VENTURE MOLD & ENGINEERING CORPORATION
by: /s/ Michael Torakis
------------------------------
VENTURE LEASING COMPANY
by: /s/ Michael Torakis
------------------------------
VEMCO LEASING, INC.
by: /s/ Michael Torakis
------------------------------
VENTURE HOLDINGS CORPORATION
by: /s/ Michael Torakis
------------------------------
<PAGE> 3
VENTURE SERVICE COMPANY
by: /s/ Michael Torakis
------------------------------
GUARANTOR:
VENTURE INDUSTRIES CANADA, LTD.
by: /s/ Michael Torakis
------------------------------
SUPPLEMENTAL GUARANTOR:
BAILEY MANUFACTURING CORPORATION
by: /s/ Michael Torakis
------------------------------
TRUSTEE:
COMERICA BANK
by: /s/ James Kowalski
------------------------------
<PAGE> 1
EXHIBIT 4.2.7
SUPPLEMENTAL INDENTURE OF A SUPPLEMENTAL GUARANTOR
This SUPPLEMENTAL INDENTURE OF A SUPPLEMENTAL GUARANTOR (the "Guarantee")
is executed this day of August, the year 1996, among VENTURE HOLDINGS
TRUST, a grantor trust organized under the. laws of Michigan (the "Trust"),
VEMCO, INC., VENTURE INDUSTRIES CORPORATION, VENTURE MOLD & ENGINEERING
CORPORATION, VENTURE LEASING COMPANY, VEMCO LEASING, INC., VENTURE HOLDINGS
CORPORATION and VENTURE SERVICE COMPANY, each a Michigan corporation (each an
"Issuer" and, together with the Trust, the "Issuers"), VENTURE INDUSTRIES
CANADA, LTD., an Ontario corporation, as a Guarantor ("Venture Canada"), BAILEY
TRANSPORTATION PRODUCTS, INC., a Delaware corporation (the "Supplemental
Guarantor") and COMERICA BANK, as trustee (the "Indenture Trustee");
Whereas, the Issuers, Venture Canada and the Indenture Trustee (the
"Parties") have previously entered into an indenture dated as of February 16,
1994, which together with the First Supplemental Indenture executed August 8,
1996, is herein referred to as the "Indenture" (capitalized terms used herein
unless otherwise defined shall be used as defined in the indenture);
And Whereas, pursuant to the terms of Section 901 (b) of the Indenture,
the Parties desire to supplement such Indenture by the addition of the
Supplemental Guarantor as a Guarantor under the Trust by executing this
Guarantee;
NOW THEREFORE, THE PARTIES HERETO AGREE TO THE FOLLOWING:
Sec. 1.1 (a) The Supplemental Guarantor hereby guarantees on a
subordinated basis to the same extent as set forth in the indenture the payment
of the Securities and waives and agrees not in any manner whatsoever to claim
or take the benefit or advantage of any rights of reimbursement, indemnity or
subrogation or any other rights against the Trust or any other Subsidiary as a
result of any payment by such Supplemental Guarantor under its guarantee.
(b) This Guarantee shall be automatically and unconditionally released and
discharged upon any sale, exchange or transfer, to any Person not an Affiliate
of the Trust, of all of the Trust's Equity Interest in, or all or substantially
all the assets of, such Supplemental Guarantor, which is in compliance with the
Indenture.
(c) This Guarantee shall be automatically and unconditionally released and
discharged upon the Supplemental Guarantor becoming an Unrestricted Subsidiary.
<PAGE> 2
ISSUERS:
VENTURE HOLDINGS TRUST
by: /s/ Michael Torakis
------------------------------
VEMCO, INC.
by: /s/ Michael Torakis
------------------------------
VENTURE INDUSTRIES CORPORATION
by: /s/ Michael Torakis
------------------------------
VENTURE MOLD & ENGINEERING CORPORATION
by: /s/ Michael Torakis
------------------------------
VENTURE LEASING COMPANY
by: /s/ Michael Torakis
------------------------------
VEMCO LEASING, INC.
by: /s/ Michael Torakis
------------------------------
VENTURE HOLDINGS CORPORATION
by: /s/ Michael Torakis
------------------------------
<PAGE> 3
VENTURE SERVICE COMPANY
by: /s/ Michael Torakis
------------------------------
GUARANTOR:
VENTURE INDUSTRIES CANADA, LTD.
by: /s/ Michael Torakis
------------------------------
SUPPLEMENTAL GUARANTOR:
BAILEY TRANSPORTATION PRODUCTS, INC.
by: /s/ Michael Torakis
------------------------------
TRUSTEE:
COMERICA BANK
by: /s/ James Kowalski
------------------------------
<PAGE> 1
EXHIBIT 4.3
________________________________________________________________________________
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JULY 9, 1997
AMONG
VENTURE HOLDINGS TRUST,
VEMCO, INC.,
VEMCO LEASING, INC.,
VENTURE INDUSTRIES CORPORATION,
VENTURE HOLDINGS CORPORATION INC.,
VENTURE LEASING COMPANY,
VENTURE MOLD & ENGINEERING CORPORATION
AND
VENTURE SERVICE COMPANY,
AS ISSUERS,
AND
FIRST CHICAGO CAPITAL MARKETS, INC.
AS INITIAL PURCHASER
________________________________________________________________________________
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of July 9, 1997, among Venture Holdings Trust, a grantor
trust organized under the laws of Michigan (the "Trust"), Vemco, Inc., Vemco
Leasing, Inc., Venture Industries Corporation, Venture Holdings Corporation,
Venture Leasing Company, Venture Mold & Engineering Corporation and Venture
Service Company, each a Michigan corporation (each an "Issuer" and, together
with the Trust, the "Issuers"), and First Chicago Capital Markets, Inc. (the
"Initial Purchaser").
This Agreement is made pursuant to the Purchase Agreement,
dated July 2, 1997, among the Issuers and the Initial Purchaser (the "Purchase
Agreement"), which provides for the sale by the Issuers to the Initial
Purchaser of $205,000,000 aggregate principal amount of 9 1/2% Senior Notes due
2005 (the "Securities"). In order to induce the Initial Purchaser to enter
into the Purchase Agreement, the Issuers have agreed to provide to the Initial
Purchaser and its respective direct and indirect transferees, among other
things, the registration rights for the Securities set forth in this Agreement.
The execution of this Agreement is a condition to the closing of the
transactions contemplated by the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings (and, unless otherwise indicated, capitalized terms used
herein without definition shall have the meanings ascribed to them by the
Purchase Agreement):
<PAGE> 3
Advice: See Section 5.
Applicable Period: See Section 2.
Closing Date: The Closing Date as defined in the Purchase
Agreement.
Effectiveness Period: See Section 3.
Effectiveness Target Date: The 120th day following the
Closing Date.
Event Date: See Section 4.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2.
Exchange Offer Registration Statement: See Section 2.
Exchange Securities: See Section 2.
Filing Date: The 60th day after the Closing Date.
Holder: Any holder of Transfer Restricted Securities.
Indenture: The Indenture, dated as of the date hereof, among
the Issuers and The Huntington National Bank, as trustee, pursuant to which the
Securities are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchaser: See the introductory paragraph to this
Agreement.
2
<PAGE> 4
Issuers: See the introductory paragraph of this Agreement.
Liquidated Damages: See Section 4.
Participating Broker-Dealer: See Section 2.
Person: An individual, trustee, corporation, partnership,
joint stock company, trust, limited liability company, unincorporated
association, union, business association, firm or other legal entity.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Exchange Securities and/or the Transfer
Restricted Securities (as applicable) covered by such Registration Statement,
and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Registration Default: See Section 4.
Registration Statement: Any registration statement of the
Issuers, including, but not limited to, the Exchange Offer Registration
Statement or the Shelf Registration, that covers any of the Transfer Restricted
Securities pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such registration statement,
including post-effective amendments, all exhibits, and all material
incorporated
3
<PAGE> 5
by reference or deemed to be incorporated by reference in such registration
statement.
Rule 144: Rule 144 promulgated pursuant to the Securities
Act, as currently in effect, as such rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the SEC.
Rule 144A: Rule 144A promulgated pursuant to the Securities
Act, as currently in effect, as such rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated pursuant to the Securities
Act, as currently in effect, as such rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: See the introductory paragraphs to this
Agreement.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2.
Shelf Registration: See Section 3.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Securities: The Securities upon original
issuance thereof and at all times subsequent thereto, until in the case of any
such Securities (i) a Registration Statement covering such Securities has been
declared effective by the SEC and such Securities
4
<PAGE> 6
have been disposed of in accordance with such effective Registration Statement,
(ii) such Securities are sold in compliance with Rule 144 or (iii) such
Securities cease to be outstanding.
Trustee: The trustee under the Indenture and, if existent,
the trustee under any indenture governing the Exchange Securities.
Underwritten registration or underwritten offering: A
registration in which securities of the Issuers are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
(a) The Issuers agree to file with the SEC as soon as
practicable after the Closing Date, but in no event later than the Filing Date,
an offer to exchange (the "Exchange Offer") any and all of the Transfer
Restricted Securities for a like aggregate principal amount of debt securities
of the Issuers which are substantially identical in all material respects to
the Securities (and which are entitled to the benefits of the Indenture or a
trust indenture which is identical to the Indenture (other than such changes to
the Indenture or any such identical trust indenture as are necessary to comply
with any requirements of the SEC to effect or maintain the qualification
thereof under the TIA) and which, in either case, has been qualified under the
TIA), except that the Exchange Securities shall have been registered pursuant
to an effective Registration Statement in compliance with the Securities Act.
The Exchange Offer will be registered pursuant to the Securities Act on an
appropriate form (the "Exchange Offer Registration Statement") and will comply
with all applicable tender offer rules and regulations promulgated pursuant to
the Exchange Act and shall be duly registered or qualified pursuant to all
applicable state securities or Blue Sky laws. No secu-
5
<PAGE> 7
rities shall be included in the Registration Statement covering the Exchange
Offer other than the Exchange Securities. The Issuers agree to use their best
efforts to (x) cause the Exchange Offer Registration Statement to become
effective pursuant to the Securities Act on or before the Effectiveness Target
Date; (y) keep the Exchange Offer open for not less than 20 business days (or
such longer period required by applicable law) after the commencement of the
Exchange Offer; and (z) consummate the Exchange Offer within 45 days after the
earlier of the effectiveness thereof or the Effectiveness Target Date. Each
Holder who participates in the Exchange Offer will be required to represent
that (i) any Exchange Securities received by it will be acquired in the
ordinary course of its business, (ii) at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Securities, and (iii)
such Holder is not an affiliate of the Issuers within the meaning of Rule 405
of the Securities Act (or that if it is such an affiliate, it will comply with
the registration and prospectus delivery requirements of the Securities Act to
the extent applicable). Each Holder that is not a Participating Broker-Dealer
will be required to represent that it is not engaged in, and does not intend to
engage in, the distribution of the Exchange Securities. Each Holder that (i)
is a Participating Broker-Dealer and (ii) will receive Exchange Notes for its
own account in exchange for the Transfer Restricted Securities that it acquired
as the result of market making or other trading activities will be required to
acknowledge that it will deliver a Prospectus as required by law in connection
with any resale of such Exchange Securities. Upon consummation of the Exchange
Offer in accordance with this Agreement, the Issuers shall have no further
obligation to register Transfer Restricted Securities pursuant to Section 2(c)
and Section 3 of this Agreement.
6
<PAGE> 8
(b) The Issuers shall include within the Prospectus
contained in the Exchange Offer Registration Statement a section entitled "Plan
of Distribution," acceptable to the Initial Purchaser, which shall contain a
summary statement of the positions taken or policies made by the Staff of the
SEC with respect to the potential "underwriter" status of any broker-dealer
that is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act)
of Exchange Securities received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"). Such "Plan of Distribution" section shall also
allow the use of the Prospectus by all Persons subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Securities.
The Issuers shall use their best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein, in order to permit such Prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
Securities Act, for a period of at least 180 days after consummation of the
Exchange Offer (or such longer period if extended pursuant to the last
paragraph of Section 5) (the "Applicable Period").
In connection with the Exchange Offer, the Issuers shall:
(x) mail as promptly as practicable to each Holder a copy of
the Prospectus forming part of the Exchange Offer Registration
Statement, together with an appropriate letter of transmittal and
related documents;
7
<PAGE> 9
(y) utilize the services of a depositary for the Exchange
Offer with an address in the City of New York; and
(z) permit Holders to withdraw tendered Securities at any
time prior to the close of business, New York time, on the last
business day on which the Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer,
the Issuers shall:
(i) accept for exchange all Securities tendered and not
validly withdrawn pursuant to the Exchange Offer;
(ii) deliver to the Trustee for cancellation all Securities
so accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver promptly
to each Holder of Securities, Exchange Securities equal in principal
amount to the Securities of such Holder so accepted for exchange.
(c) If (1) prior to the consummation of the Exchange Offer,
applicable interpretations of the staff of the SEC do not permit the Issuers to
effect the Exchange Offer as contemplated herein, or (2) the Exchange Offer is
not consummated within 165 days of the Closing Date for any reason, then the
Issuers shall promptly deliver to the Holders and the Trustee written notice
thereof (the "Shelf Notice") and the Issuers shall file a Registration
Statement pursuant to Section 3. Following the delivery of a Shelf Notice to
the Holders of Transfer Restricted Securities, the Issuers shall not have any
further obligation to conduct the Exchange Offer pursuant to this Section 2,
provided that the Issuers shall have the right, nonetheless, to proceed to
consummate the Exchange Offer notwithstanding their obligations pursuant
8
<PAGE> 10
to this Section 2(c) (and, upon such consummation, their obligation to
consummate a Shelf Registration pursuant to clause (2) above shall
terminate).
3. Shelf Registration
If the Issuers are required to deliver a Shelf Notice as
contemplated by Section 2(c), then:
(a) Shelf Registration. The Issuers shall prepare and
file with the SEC, as promptly as practicable following the delivery of the
Shelf Notice, a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Transfer Restricted
Securities (the "Shelf Registration"). The Shelf Registration shall be on an
appropriate form which permits registration of such Transfer Restricted
Securities for resale by the Holders in the manner or manners reasonably
designated by them (including, without limitation, one or more underwritten
offerings). The Issuers shall not permit any securities other than the
Transfer Restricted Securities to be included in the Shelf Registration. The
Issuers shall use their best efforts, as described in Section 5(b), to cause
the Shelf Registration to be declared effective pursuant to the Securities Act
as promptly as practicable following the filing thereof and to keep the Shelf
Registration continuously effective under the Securities Act until the earlier
of (i) the date which is 24 months after the Closing Date, (ii) the date that
all Transfer Restricted Securities covered by the Shelf Registration have been
sold in the manner set forth and as contemplated in the Shelf Registration or
(iii) there ceases to be outstanding any Transfer Restricted Securities (the
"Effectiveness Period").
(b) Supplements and Amendments. The Issuers shall use
their best efforts to keep the Shelf Registration continuously effective by
supplementing and amending
9
<PAGE> 11
the Shelf Registration if required by the rules, regulations or instructions
applicable to the registration form used for such Shelf Registration, if
required by the Securities Act, or if reasonably requested by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities
covered by such Registration Statement and by any underwriter of such Transfer
Restricted Securities.
4. Liquidated Damages
(a) The Issuers and the Initial Purchaser agree that the
Holders of Transfer Restricted Securities will suffer damages if the Issuers
fail to fulfill their obligations pursuant to Section 2 or Section 3 hereof and
that it would not be possible to ascertain the extent of such damages.
Accordingly, in the event of such failure by the Issuer to fulfill such
obligations, the Issuers hereby agree to pay liquidated damages ("Liquidated
Damages") to each Holder of Transfer Restricted Securities under the
circumstances and to the extent set forth below:
(i) if neither the Exchange Offer Registration Statement
nor the Shelf Registration has been filed with the SEC on or before
the Filing Date; or
(ii) if neither the Exchange Offer Registration Statement
nor the Shelf Registration is declared effective by the SEC on or
prior to the Effectiveness Target Date; or
(iii) if (A) an Exchange Offer Registration Statement is
declared effective by the SEC, and (B) the Issuers have not exchanged
Exchange Securities for all Securities validly tendered in accordance
with the terms of the Exchange Offer on or prior to 45 days following
the earlier of (i) the effective-
10
<PAGE> 12
ness thereof or (ii) the Effectiveness Target Date; or
(iv) the Shelf Registration has been declared effective by
the SEC and such Shelf Registration ceases to be effective or usable
at any time during the Effectiveness Period, without being succeeded
on the same day immediately by a post-effective amendment to such
Registration Statement that cures such failure and that is itself
immediately declared effective on the same day;
(any of the foregoing, a "Registration Default") then the Issuers shall pay to
each Holder of Transfer Restricted Securities Liquidated Damages in an amount
equal to 0.5% per annum of the principal amount of Transfer Restricted
Securities held by such Holder during the first 90-day period immediately
following the occurrence of such Registration Default. The amount of such
Liquidated Damages will increase by an additional 0.5% per annum of the
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period, until all Registration Defaults have been cured;
provided, however, that Liquidated Damages shall not at any time exceed 2.0%
per annum of the principal amount of Transfer Restricted Securities. Following
the cure of all Registration Defaults relating to any Transfer Restricted
Securities, the accrual of Liquidated Damages with respect to such Transfer
Restricted Securities will cease. A Registration Default under clause (i)
above shall be cured on the date that either the Exchange Offer Registration
Statement or the Shelf Registration is filed with the SEC; a Registration
Default under clause (ii) above shall be cured on the date that either the
Exchange Offer Registration Statement or the Shelf Registration is declared
effective by the SEC; a Registration Default under clause
11
<PAGE> 13
(iii) above shall be cured on the earlier of the date (A) the Exchange Offer is
consummated or (B) a Shelf Registration Statement is declared effective; and a
Registration Default under clause (iv) above shall be cured on the earlier of
(A) the date that the post-effective amendment curing the deficiency in the
Shelf Registration is declared effective or (B) the Effectiveness Period
expires.
(b) The Issuers shall notify the Trustee within one
business day after each and every date on which a Registration Default occurs
(an "Event Date"). Liquidated Damages shall be paid by the Issuers to the
Holders by wire transfer of immediately available funds to the accounts
specified by them or by mailing checks to their registered addresses if no such
accounts have been specified on or before the semiannual interest payment date
provided in the Indenture. Each obligation to pay Liquidated Damages shall be
deemed to commence accruing on the applicable Event Date and to cease accruing
when all Registration Defaults have been cured. In no event shall the Issuers
pay Liquidated Damages in excess of the maximum applicable amount set forth
above, regardless of whether one or multiple Registration Defaults exist.
5. Registration Procedures
In connection with the registration of any Exchange Securities
or Transfer Restricted Securities pursuant to Sections 2 or 3 hereof, the
Issuers shall effect such registration to permit the sale of such Exchange
Securities or Transfer Restricted Securities (as applicable) in accordance with
the intended method or methods of disposition thereof, and pursuant thereto the
Issuers shall:
(a) Prepare and file with the SEC, a Registration
Statement or Registration Statements as prescribed by Section 2 or 3, and to
use their best efforts to cause
12
<PAGE> 14
such Registration Statement(s) to become effective and remain effective as
provided herein; provided that, if (1) such filing is pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, before filing any Registration Statement or Prospectus
or any amendments or supplements thereto, the Issuers shall, if requested,
furnish to and afford the Holders a reasonable opportunity to review copies of
all such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (at least 3
business days prior to such filing, or such later date as is reasonable under
the circumstances) and shall use their best efforts to reflect in each such
document, when so filed with the SEC, such comments as you may reasonably and
timely propose.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange Offer
Registration Statement, as the case may be, as may be necessary to keep such
Registration Statement continuously effective for the periods required by
Section 2 or Section 3, as applicable; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
with respect to the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and with
respect to the subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus; the Issuers shall be deemed not to
have used their best efforts to keep a Registration Statement effective
13
<PAGE> 15
during the Applicable Period if they voluntarily take any action that would
result in selling Holders of the Transfer Restricted Securities covered thereby
or Participating Broker-Dealers seeking to sell Exchange Securities not being
able to sell such Transfer Restricted Securities or such Exchange Securities
during that period, unless (i) such action is required by applicable law, or
(ii) such action is taken by them in good faith and for valid business reasons
(not including avoidance of their obligations hereunder), including the
acquisition or divestiture of assets.
(c) If (1) a Shelf Registration is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, notify the selling Holders of Transfer Restricted Securities,
or each such Participating Broker-Dealer known to the Issuers, as the case may
be, their counsel and the managing underwriters, if any, promptly and confirm
such notice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
(including in such notice a written statement that any Holder may, upon request,
obtain, without charge, one conformed copy of such Registration Statement or
post-effective amendment including financial statements and schedules, documents
incorporated or deemed to be incorporated by reference and exhibits), (ii) of
the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose,
(iii) if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Transfer Restricted Securities the
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<PAGE> 16
representations and warranties of the Issuers contained in any agreement
(including any underwriting agreement) contemplated by Section 5(l) below cease
to be true and correct, (iv) of the receipt by the Issuers of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Transfer Restricted
Securities or the Exchange Securities to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation of any
proceeding for such purpose, (v) of the happening of any event or any
information becoming known that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in such Registration Statement, Prospectus
or documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vi) of the
Issuers' reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a
15
<PAGE> 17
Prospectus or suspending the qualification (or exemption from qualification) of
any of the Transfer Restricted Securities or the Exchange Securities (as
applicable) to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use their reasonable best
efforts to obtain the withdrawal of any such order at the earliest possible
moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, and the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities being sold in
connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, or such Holders or counsel reasonably request to
be included therein, (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as practicable after the
Issuers have received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment, and (iii) supplement or make
amendments to such Registration Statement with such information as the managing
underwriter, if any, and such Holders and counsel reasonably request to be
included therein.
(f) If (1) a Shelf Registration is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, furnish to each selling Holder of Transfer Restricted
Securities and to each such Participating Broker-Dealer who so requests, as the
case may be, their counsel and each managing underwriter, if any, without
charge, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if
16
<PAGE> 18
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, deliver to each selling Holder of Transfer Restricted
Securities pursuant to a Shelf Registration, or each such Participating
Broker-Dealer, as the case may be, their counsel, and the underwriters, if any,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the Issuers
hereby consent to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Transfer Restricted Securities or each
such Participating Broker-Dealer, as the case may be, and the underwriters or
agents, if any, and dealers (if any), in connection with the offering and sale
of the Transfer Restricted Securities covered by or the sale by Participating
Broker-Dealers of the Exchange Securities pursuant to such Prospectus and any
amendment or supplement thereto.
(h) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Transfer Restricted Securities and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company, and enable such Transfer
Restricted Securities to be in such denomi-
17
<PAGE> 19
nations and registered in such names as the managing underwriters, if any, or
Holders may reasonably request.
(i) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker- Dealer who seeks to sell Exchange Securities during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi) above, as promptly as practicable prepare and
(subject to Section 5(a) above) file with the SEC, at the expense of the
Issuers, a supplement or post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Transfer Restricted
Securities being sold thereunder or to the purchasers of the Exchange Securities
to whom such Prospectus will be delivered by a Participating Broker-Dealer, any
such Prospectus 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, in light of the circumstances under which they were made,
not misleading.
(j) Prior to the effective date of the first Registration
Statement relating to the Transfer Restricted Securities, (i) provide the
Trustee with certificates for the Transfer Restricted Securities in a form
eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP
number for the Transfer Restricted Securities.
(k) In connection with an underwritten offering of Transfer
Restricted Securities pursuant to a Shelf Registration, enter into an
underwriting agreement as is customary in underwritten offerings and take all
such
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<PAGE> 20
other actions as are reasonably requested by the managing underwriters in order
to expedite or facilitate the registration or the disposition of such Transfer
Restricted Securities, and in such connection, (i) make such representations
and warranties to the underwriters, with respect to the business of the Issuers
and their subsidiaries and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Issuers and updates thereof in form and substance
reasonably satisfactory to the managing underwriters, addressed to the
underwriters covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
underwriters; (iii) obtain "cold comfort" letters and updates thereof in form
and substance reasonably satisfactory to the managing underwriters from the
independent certified public accountants of the Issuers (and, if necessary, any
other independent certified public accountants of any subsidiary of the Issuers
or of any business acquired by them for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings and such other
matters as are reasonably requested by underwriters as permitted by Statement
on Auditing Standards No. 72; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 7 hereof (or such other provisions
and procedures acceptable to Holders of a majority in aggregate principal
amount of Transfer Restricted Securities covered by such Registration Statement
and the managing underwriters or agents) with respect to all parties to be
indemnified
19
<PAGE> 21
pursuant to said Section. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
(l) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, (i) make available, on a confidential basis and subject to
the last sentence of this paragraph, for inspection by any selling Holder of
such Transfer Restricted Securities being sold, or each such Participating
Broker- Dealer, as the case may be, any underwriter participating in any such
disposition of Transfer Restricted Securities, if any, and any attorney,
accountant or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter (collectively,
the "Inspectors"), at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate documents
and properties of the Issuers and their subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and (ii) cause the officers,
directors and employees of the Issuers and their subsidiaries to supply all
information in each case reasonably requested by any such Inspector in
connection with such Registration Statement. Information supplied pursuant to
clauses (i) and (ii) above is confidential and shall not be disclosed by the
Inspectors, unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction or (iii) the information in such Records has
been made generally available to the public.
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<PAGE> 22
(m) Provide an indenture trustee for the Transfer Restricted
Securities or the Exchange Securities, as the case may be, and cause the
Indenture to be qualified under the TIA not later than the effective date of the
Exchange Offer or the first Registration Statement relating to the Transfer
Restricted Securities; and in connection therewith, cooperate with the trustee
under any such indenture and the holders of the Transfer Restricted Securities,
to effect such changes to such indenture as may be required for such indenture
to be so qualified in accordance with the terms of the TIA; and execute, and use
its best efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable such indenture to be so qualified in a timely
manner.
(n) Comply with all applicable rules and regulations of the SEC
and, as soon as reasonably practicable, make generally available to its security
holders consolidated earnings statements (which need not be audited) of the
Issuers that satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder.
(o) If an Exchange Offer is to be consummated, upon delivery of
the Transfer Restricted Securities by Holders to the Issuers (or to such other
Person as directed by the Issuers) in exchange for the Exchange Securities, the
Issuers shall mark, or cause to be marked, on such Transfer Restricted
Securities that such Transfer Restricted Securities are being cancelled in
exchange for the Exchange Securities; in no event shall such Transfer Restricted
Securities be marked as paid or otherwise satisfied.
(p) Cooperate with each seller of Transfer Restricted Securities
covered by any Registration Statement and each under- writer, if any,
participating in the disp-
21
<PAGE> 23
sition of such Transfer Restricted Securities and their respective counsel in
connection with any filings required to be made with the National Association
of Securities Dealers, Inc. (the "NASD").
(q) Use their best efforts to take all other steps necessary to
effect the registration of the Transfer Restricted Securities or Exchange
Securities, as applicable, covered by a Registration Statement contemplated
hereby.
The Issuers may require each seller of Transfer Restricted Securities
or Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuers such information regarding such seller or Participating
Broker-Dealer and the distribution of such Transfer Restricted Securities or
Exchange Securities to be sold by such Participating Broker-Dealer, as the case
may be, as the Issuers may, from time to time, reasonably request or is required
by the rules of the SEC. The Issuers may exclude from such registration the
Transfer Restricted Securities of any seller or Participating Broker-Dealer who
fails to furnish such information within a reasonable time after receiving such
request and such excluded seller or Participating Brokers shall not be entitled
to Liquidated Damages hereunder.
Each Holder of Transfer Restricted Securities and each Participating
Broker-Dealer agrees by acquisition of such Transfer Restricted Securities or
Exchange Securities to be sold by such Participating Broker-Dealer, as the case
may be, that, upon receipt of any notice from the Issuers of the happening of
any event of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or
5(c)(vi), such Holder will forthwith discontinue disposition of such Transfer
Restricted Securities covered by such Registration Statement or Prospectus or
Exchange Securities to be sold by such Participating Broker-Dealer, as the case
may be, until such Holder's receipt of
22
<PAGE> 24
the copies of the supplemented or amended Prospectus contemplated by Section
5(j), or until it is advised in writing (the "Advice") by the Issuers that the
use of the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto. In the event the Issuers give any notice of
the happening of any event of the kind described in Section 5(c)(ii), 5(c)(iv),
5(c)(v) or 5(c)(vi), the time period for the effectiveness of such Registration
Statement set forth in Section 2 or Section 3 hereof, as applicable, shall be
extended by the number of days from the date of such notice to the date when
each selling Holder covered by such Registration Statement shall have received
copies of the supplemental or amended Prospectus contemplated by Section 5(j)
or shall have received the Advice that the use of the applicable Prospectus may
be resumed.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuers shall be borne by the Issuers,
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Transfer Restricted Securities or Exchange
Securities (x) where the Holders of Transfer Restricted Securities are located,
in the case of the Exchange Securities, or (y) as provided in Section 5(h), in
the case of Transfer Restricted Securities or Exchange Securities to be sold by
a Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Trans-
23
<PAGE> 25
fer Restricted Securities or Exchange Securities in a form eligible for deposit
with The Depository Trust Company and of printing prospectuses if the printing
of prospectuses is requested by the managing underwriters, if any, or, in
respect of Transfer Restricted Securities or Exchange Securities to be sold by
any Participating Broker-Dealer during the Applicable Period, by the Holders of
a majority in aggregate principal amount of the Transfer Restricted Securities
included in any Registration Statement or of such Exchange Securities, as the
case may be), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Issuers, (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(l)(iii)
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) rating
agency fees, (vii) Securities Act liability insurance, if the Issuers desire
such insurance, (viii) fees and expenses of all other Persons retained by the
Issuers, (ix) internal expenses of the Issuers (including, without limitation,
all salaries and expenses of officers and employees of the Issuers performing
legal or accounting duties), (x) the expense of any annual audit, (xi) the fees
and expenses incurred in connection with the listing of the securities to be
registered on any securities exchange and (xii) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, and indentures. Nothing
contained in this Section 6 shall create an obligation on the part of the
Issuers to pay or reimburse any Holder for any underwriting commission or
discount attributable to any such Holder's Transfer Restricted Securities
included in an underwritten offering pursuant to a Registration Statement filed
in accordance with the terms of this Agreement, or to guarantee such Holder any
profit or proceeds from the sale of such Securities.
24
<PAGE> 26
(b) In connection with any Shelf Registration hereunder, the
Issuers shall reimburse the Holders of the Transfer Restricted Securities being
registered in such registration for the reasonable fees and disbursements of not
more than one counsel (in addition to one local counsel in each relevant
jurisdiction) chosen by the Holders of a majority in aggregate principal amount
of the Transfer Restricted Securities to be included in such Registration
Statement and other reasonable out-of-pocket expenses of the Holders of Transfer
Restricted Securities reasonably incurred in connection with the registration of
the Transfer Restricted Securities.
7. Indemnification
Each Issuer agrees, jointly and severally, to indemnify and hold
harmless (i) the Initial Purchaser, each Holder of Transfer Restricted
Securities, each Holder of Exchange Securities, each Participating
Broker-Dealer, (ii) each person, if any, who controls (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) any such
Person (any of the persons referred to in this clause (ii) being hereinafter
referred to as a "controlling person"), and (iii) the respective officers,
directors, partners, employees, representatives and agents of any of such Person
or any controlling person (any person referred to in clause (i), (ii) or (iii)
may hereinafter be referred to as an "Indemnified Person") to the fullest extent
lawful, from and against any and all losses, claims, damages, liabilities,
judgments, actions and expenses (including, without limitation, and as incurred,
reimbursement of all reasonable costs of investigating, preparing, pursuing or
defending any claim or action, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, including the reasonable
fees and expenses of counsel to any Indemnified Person) directly or indirectly
caused by, related to, based upon, arising out of or in connection with any
untrue statement or alleged untrue
25
<PAGE> 27
statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Issuers shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by,
arising out of or based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such losses, claims, damages or liabilities
are caused by (i) any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with information furnished
to the Issuers or any underwriter in writing by such Indemnified Person for use
therein, or (ii) any untrue statement contained in or omission from a
preliminary prospectus if a copy of the Prospectus (as then amended or
supplemented, if the Issuers shall have furnished to or on behalf of the Holder
participating in the distribution relating to the relevant Registration
Statement any amendments or supplements thereto) was not sent or given by or on
behalf of such Holder to the person asserting any such losses, liabilities,
claims, damages or expenses who purchased Securities, if such is required by
law at or prior to the written confirmation of the sale of such Securities to
such person and the untrue statement contained in or omission from such
preliminary prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented). The Issuers shall notify the Trustee promptly of the
institution, threat or assertion of any claim, proceeding (including any
governmental investigation) or litigation of which it or they shall have become
aware in connection with the matters addressed by this Agreement which involves
the Issuers or an Indemnified Person.
In connection with any Registration Statement in which a Holder of
Transfer Restricted Securities is participating, such Holder of Transfer
Restricted Securities agrees, severally and not jointly, to indemnify and
26
<PAGE> 28
hold harmless the Issuers and their directors and officers and each person who
controls the Issuers within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Issuers to each Indemnified Person, but only with reference to
information furnished to the Issuers in writing by such Indemnified Person for
use in any Registration Statement or Prospectus, any amendment or supplement
thereto, or any preliminary prospectus. The liability of any Indemnified
Person pursuant to this paragraph shall in no event exceed the net proceeds
received by such Indemnified Person from sales of Transfer Restricted
Securities giving rise to such obligations.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
person") in writing, and the indemnifying person shall have the right to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the indemnifying person
may reasonably designate in such proceeding and shall pay the reasonable fees
and expenses actually incurred by such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party, unless (i) the indemnifying person and the
indemnified party shall have mutually agreed in writing to the contrary, (ii)
the indemnifying person failed to assume the defense within a reasonable time
after the commencement of the action and employ counsel reasonably satisfactory
to the indemnified party or (iii) the named parties to any such action
(including
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<PAGE> 29
any impleaded parties) include both such indemnified party and the indemnifying
person, or any affiliate of the indemnifying person and such indemnified party
shall have been reasonably advised by counsel in writing that either (x) there
may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying person or such affiliate of
the indemnifying person or (y) a conflict may exist between such indemnified
party and the indemnifying person or such affiliate of the indemnifying person
(in which case the indemnifying person shall not have the right to assume the
defense of such action on behalf of such indemnified party, it being
understood, however, that the indemnifying person shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all such indemnified
parties, which firm shall be designated in writing by indemnified parties who
sold a majority in aggregate principal amount of Transfer Restricted Securities
sold by all such indemnified parties and any such separate firm for the
Issuers, their directors, their officers and such control persons of the
Issuers shall be designated in writing by the Issuers. The indemnifying person
shall not be liable for any settlement of any proceeding effected without its
written consent, which consent shall not be unreasonably withheld, but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying person agrees to indemnify any indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying person shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
28
<PAGE> 30
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in the first and second paragraphs
of this Section 7 is unavailable (other than by reason of the exceptions or
provisions therein) to an indemnified party in respect of any losses, claims,
damages, liabilities, or expenses referred to therein (other than by reason of
the exceptions provided therein), then each indemnifying person under such
paragraphs, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities, or expenses (i) in such proportion
as is appropriate to reflect the relative benefits of the indemnified party on
the one hand and the indemnifying person(s) on the other in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities, or expenses or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the indemnifying person(s) and the indemnified party, as
well as any other relevant equitable considerations. The relative fault of the
indemnifying person(s), on the one hand, and any indemnified parties, on the
other, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying person(s), on the one hand, or by such indemnified parties, on the
other, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were
29
<PAGE> 31
determined by pro rata allocation (even if such indemnified parties were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any reasonable legal or other expenses actually
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 7, in no event shall an indemnified party be required to contribute any
amount in excess of the amount by which proceeds received by such indemnified
party from sales of Transfer Restricted Securities exceeds the amount of any
damages that such indemnified party 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 indemnity and contribution agreements contained in this Section 7
will be in addition to any liability which the indemnifying persons may
otherwise have to the indemnified parties referred to above. The indemnified
parties' obligations to contribute pursuant to Section 7 are several in
proportion to the respective principal amount of Securities sold by each of the
indemnified parties hereunder and not joint.
8. Rules 144 and 144A
The Issuers covenant that they will file the reports required to be
filed by them pursuant to the Securities Act and the Exchange Act and the rules
and
30
<PAGE> 32
regulations adopted by the SEC thereunder in a timely manner and, if at any
time the Issuers are not required to file such reports, they will, upon the
request of any Holder of Transfer Restricted Securities, make available
information required by Rules 144 and 144A under the Securities Act in order to
permit sales pursuant to Rule 144 and Rule 144A.
9. Underwritten Registrations
(a) If any of the Transfer Restricted Securities covered by any
Shelf Registration are to be sold in an underwritten offering, the investment
banker or investment bankers and manager or managers that will manage the
offering will be selected by the Holders of a majority in aggregate principal
amount of such Transfer Restricted Securities included in such offering and
reasonably acceptable to the Issuers.
No Holder of Transfer Restricted Securities may participate in any
underwritten registration hereunder, unless such Holder (i) agrees to sell such
Holder's Transfer Restricted Securities on the basis provided in any customary
underwriting arrangements entered into in connection therewith and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
(b) Each Holder of Transfer Restricted Securities agrees, if
requested (pursuant to a timely written notice) by the managing underwriters in
an underwritten offering or placement agent in a private offering of the
Company's debt securities, not to effect any private sale or distribution
(including a sale pursuant to Rule 144(k) and Rule 144A, but excluding
non-public sales to any of its affiliates, officers, directors, employees and
controlling persons) of any of the Securities except pursuant to an Exchange
Offer, during the period beginning 10
31
<PAGE> 33
days prior to, and ending 90 days after, the closing date of the underwritten
offering.
The foregoing provisions shall not apply to any Holder of Transfer
Restricted Securities if such Holder is prevented by applicable statute or
regulation from entering into any such agreement.
The Issuers agree, without the written consent of the managing
underwriters in an underwritten offering of Transfer Restricted Securities
covered by a Registration Statement filed pursuant to Section 3 hereof, not to
effect any public or private sale or distribution of their respective debt
securities, including a sale pursuant to Regulation D or Rule 144A under the
Securities Act, during the period beginning 10 days prior to, and ending 90 days
after, the closing date of each underwritten offering made pursuant to such
Registration Statement; provided, however, that such period shall be extended by
the number of days from and including the date of the giving of any notice
pursuant to Section 5(c)(v) or 5(c)(vi) hereof to and including the date when
each seller of Transfer Restricted Securities covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 5(j) hereof and provided further, that no
such offering restriction shall apply to more than one such underwritten
offering per twelve-month period.
10. Miscellaneous
(a) Remedies. In the event of a breach by the Issuers of any of
their obligations under this Agreement, each Holder of Transfer Restricted
Securities, in addition to being entitled to exercise all rights provided
herein, in the Indenture or, in the case of the Initial Purchaser, in the
Purchase Agreement, or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.
32
<PAGE> 34
Subject to Section 4, the Issuers agree that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by them of
any of the provisions of this Agreement and hereby further agree that, in the
event of any action for specific performance in respect of such breach, they
shall waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. None of the Issuers will enter
into any agreement with respect to any of their respective securities which will
grant to any Person piggy-back registration rights with respect to an Exchange
Offer Registration Statement or a Shelf Registration.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Issuers have obtained the written consent of
holders of at least a majority of the then outstanding aggregate principal
amount of Transfer Restricted Securities and Exchange Securities held by
Participating Broker-Dealers holding Exchange Securities. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders and Participating
Broker-Dealers holding Exchange Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders and
Participating Broker-Dealers holding Exchange Securities may be given by holders
of at least a majority in aggregate principal amount of the Transfer Restricted
Securities and Exchange Securities held by Participating Broker-Dealers being
sold by such holders pursuant to such Registration Statement; provided that the
provisions of this sentence may not be amended,
33
<PAGE> 35
modified or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(d) Notices. All notices and other communications
(including without limitation any notices or other communications to the
Trustee) provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Transfer Restricted Securities, at the
most current address given by the Trustee to the Issuers; and
(ii) if to the Issuers: James E. Butler, Venture Holdings
Trust, 34501 Harper Clinton Twp., P.O. Box 278, Fraser, Michigan
48026-0278, (Tel: 810-790-2211) (Fax: 810-790-2200), with copies to Dykemma
Gossett PLLC, 400 Renaissance Center, Detroit, Michigan 48234-1668,
Attention Fredrick M. Miller, Esq. (Tel: 313-568-6975) (Fax: 313-568-6915)
and Paul Lieberman, P.C., 1471 S. Woodward Avenue, Suite 250, Bloomfield
Hills, Michigan 48302 (Tel: 248-335-4000)(248-335-4689).
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; ten business
days after being deposited in the mail, postage prepaid, if mailed; three
business days after being timely delivered to a next-day air courier; and when
receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in such Indenture.
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<PAGE> 36
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities. The Issuers
agree that the holders of the Securities shall be third party beneficiaries to
the agreements made hereunder by the Issuers and each holder shall have the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights hereunder.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision,
35
<PAGE> 37
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unen- forceable.
(j) Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their agreement,
and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein.
(k) Securities Held by the Issuers or Their Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Transfer
Restricted Securities is required hereunder, Transfer Restricted Securities held
by the Issuers or any of their affiliates (as such term is defined in Rule 405
under the Securities Act) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
36
<PAGE> 38
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
VENTURE HOLDINGS TRUST
By: /s/ James E. Butler
-------------------------------
Name: James E. Butler
Title: Executive Vice President
VEMCO INC.
By: /s/ James E. Butler
-------------------------------
Name: James E. Butler
Title: Executive Vice President
VEMCO LEASING, INC.
By: /s/ James E. Butler
-------------------------------
Name: James E. Butler
Title: Executive Vice President
VENTURE INDUSTRIES CORPORATION
By: /s/ James E. Butler
-------------------------------
Name: James E. Butler
Title: Executive Vice President
<PAGE> 39
VENTURE HOLDINGS CORPORATION INC.
By: /s/ James E. Butler
-------------------------------
Name: James E. Butler
Title: Executive Vice President
VENTURE LEASING COMPANY
By: /s/ James E. Butler
-------------------------------
Name: James E. Butler
Title: Executive Vice President
VENTURE MOLD & ENGINEERING CORPORATION
By: /s/ James E. Butler
-------------------------------
Name: James E. Butler
Title: Executive Vice President
VENTURE SERVICE COMPANY
By: /s/ James E. Butler
-------------------------------
Name: James E. Butler
Title: Executive Vice President
<PAGE> 40
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first
above written.
FIRST CHICAGO CAPITAL MARKETS, INC.
By:/s/ Robert J. Rischard
------------------------------------
Name: Robert J. Rischard
Title: Director
<PAGE> 1
[DYKEMA GOSSETT LETTERHEAD]
August 27, 1997 EXHIBIT 5.1
Venture Holdings Trust
33662 James J. Pompo Drive
Fraser, Michigan 48026
Re: Registration Statement on Form S-4 in Connection
With the Exchange Offer of Series B 9 1/2% Senior
Notes due 2005 for outstanding 9 1/2% Senior Notes
due 2005
Gentlemen:
We have acted as special counsel for Venture Holdings Trust, a trust
organized under the laws of the State of Michigan (the "Trust"), Vemco, Inc.,
Venture Industries Corporation, Venture Mold & Engineering Corporation, Venture
Leasing Company, Vemco Leasing, Inc., Venture Holdings Corporation and Venture
Service Company, each a Michigan corporation (each an "Issuer" and, together
with the Trust, the "Issuers"), in connection wit the preparation and filing
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended (the "Act"), of a Registration Statement on Form S-4 (the
"Registration Statement") relating to the exchange offer by the Issuers of
$205,000,000 aggregate principal amount of Series B 9 1/2% Senior Notes due
2005 (the "Series B Notes") for outstanding 9 1/2% Senior Notes due 2005 (the
"Exchange Offer"). The Series B Notes are to be issued pursuant to an
Indenture (the "Indenture") by and between the Issuers and The Huntington
National Bank, as trustee (the "Trustee").
In so acting, we have examined and relied upon the originals, or
copies certified or otherwise identified to our satisfaction, of such of the
Issuers' records, documents, certificates and other instruments as in our
judgment are necessary or appropriate to enable us to render the opinions
expressed below.
Based upon the foregoing, we are of the opinion that:
The Series B Notes, when executed and authenticated in
accordance with the terms of the Indenture, and upon issuance
in accordance with the terms of the Exchange Offer in the
prospectus constituting a part of the Registration Statement
(the "Prospectus"), will be valid and binding obligations of
the Issuers, enforceable
<PAGE> 2
[DYKEMA GOSSETT LETTERHEAD]
Venture Holdings Trust
August 27, 1997
Page 2
against the Issuers in accordance with their terms, except as
(a) the enforceability thereof may be limited by or subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization,
arrangement, moratorium, usury or similar laws now or
hereafter affecting creditors' rights generally and (b) rights
or remedies (including, without limitation, acceleration,
specific performance and injunctive relief) may be limited by
equitable principles of general applicability (including,
without limitation, standards of materiality, good faith, fair
dealing and reasonableness) whether such principles are
considered in a proceeding in equity or at law, and may be
subject to the discretion of the court before which any
proceedings therefor may be brought.
We hereby consent to the use of this opinion as Exhibit 5.1 of the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus. In giving such consent, we do not concede
that we are experts within the meaning of the Act or the rules or regulations
thereunder or that this consent is required by Section 7 of the Act.
Very truly yours,
DYKEMA GOSSETT PLLC
/s/ Fredrick M. Miller
Fredrick M. Miller
<PAGE> 1
EXHIBIT 10.1
VENTURE HOLDINGS TRUST
This Trust, originally effective December 28, 1987, is hereby amended and
restated in its entirety effective the 16th day of February, 1994, by and among
LARRY J. WINGET as Settlor, Beneficiary, Special Advisor and Trustee
(hereinafter sometimes referred to as the "Settlor" or "Beneficiary", or, when
acting as such, the "Special Advisor" or "Trustee").
WITNESSETH
Whereas, the Settlor has previously transferred to the Trust, as of
the original effective date of the Trust, all of the Settlor's right, title and
interest in Venture Industries Corporation, Venture Mold & Engineering
Corporation, Venture Industries Canada Ltd., Vemco, Inc., Vemco Leasing, Inc.,
Venture Leasing Company and Venture Holdings Corporation;
And Whereas, the Trustee has acknowledged the receipt of said
property, for the term and upon the conditions hereinafter set forth;
And Whereas, the Settlor intends to transfer to the Trust as of the
effective date of this amended and restated Trust agreement all of the
Settlor's right, title and interest in Venture Service Company;
Now, therefore, it is agreed by and among the Trustee and the Settlor as
follows:
ARTICLE I
FORM
SECTION 1.1 NAME
This Trust shall be named the "VENTURE HOLDINGS TRUST" and may be
referred to as the "Trust", "Venture Holdings Trust" or "Venture Holdings Trust
dated (or effective) December 28, 1987" or "Venture Holdings Trust amended (or
restated) February 16, 1994".
SECTION 1.2 PLACE OF BUSINESS
The principal office and location of the Trust shall be 33662 James J.
Pompo Dr., Fraser, Michigan 48026 or such other place as the Trustee may from
time to time designate.
<PAGE> 2
SECTION 1.3 TERM
The Trust, having commenced on December 28, 1987, and having been amended
and restated on the date above written, shall continue until terminated by the
Special Advisor, but in no case shall the termination occur prior to the
earliest of:
(A) Larry J. Winget's death (at which time, notwithstanding any other
provision herein, but only if any of the Notes (as hereinafter defined) are
still outstanding, the provisions of Section 5.6(E) shall be fully complied
with and the Trust shall then terminate).
(B) The time when none of the following notes are outstanding:
(1) The notes representing $70,000,000 of aggregate principal
indebtedness issued pursuant to that certain First Amended and
Restated Trust Indenture dated as of February 1, 1994 between the
Constituent Companies named therein and NBD Bank, N.A. (formerly, the
National Bank of Detroit), as Trustee (which Trust Indenture, as it
may be hereafter amended or modified, is herein referred to as the
"Senior Trust Indenture"); and
(2) The notes representing $100,000,000 of aggregate principal
indebtedness issued pursuant to that certain Indenture dated as of
February 16, 1994 between the Issuers and Guarantor named therein and
Comerica Bank, as Indenture Trustee (which Indenture, as it may be
hereafter amended or modified, is herein referred to as the
"Subordinated Trust Indenture"),
(3) The note representing up to $25,000,000 of aggregate
principal indebtedness issued pursuant to that certain Amended and
Restated Credit Agreement dated as of December 12, 1991, between the
Borrowers named therein and NBD Bank, N.A., as lender (which Credit
Agreement, as amended from time to time, is herein referred to as the
"Credit Agreement"),
all of which notes (herein sometimes referred to as the "Notes") have been
issued or are to be issued to various holders or lenders (herein sometimes
collectively referred to as the "Note Holders") under and pursuant to certain
instruments, agreements and related collateral documents (all of which
instruments, agreements and documents, including the Notes, are hereinafter
sometimes referred to as the "Loan Documents") as a result of indebtedness
incurred or guaranteed or contemplated to be incurred or guaranteed by the
Trust and Venture Industries Corporation, Venture Mold & Engineering
Corporation, Venture Industries Canada Ltd., Vemco, Inc., Vemco Leasing, Inc.,
Venture Leasing Company, Venture Holdings Corporation and Venture Service
Company (which entities, and any other entities which may from time to time be
contributed to the Trust, are herein sometimes jointly referred to as the
"Subsidiaries").
(C) The provisions of Section 5.6(E) have been fully complied with.
2
<PAGE> 3
SECTION 1.4 PURPOSE
The primary purpose for which the Trust is organized is to create a
single centralized entity to facilitate the borrowing under the Senior Trust
Indenture and Subordinated Trust Indenture including the receipt, disbursement
and repayment of the proceeds therefrom and to guarantee the indebtedness to
NBD Bank, N.A. under the Credit Agreement.
ARTICLE II
TRUST ESTATE AND BENEFICIARY
SECTION 2.1 TRUST PROPERTY
The Trust Estate shall, as of the effective date of this amendment and
restatement, consist of (a) all of the outstanding stock of Venture Industries
Corporation, Venture Mold & Engineering Corporation, Venture Industries Canada
Ltd., Vemco, Inc., Vemco Leasing, Inc., Venture Leasing Company, Venture
Holdings Corporation and Venture Service Company and (b) certain interests in
life insurance policies on the life of Larry J. Winget as have been assigned to
the Trust. The Settlor may from time to time make additional contributions to
the Trust Estate.
SECTION 2.2 BENEFICIARY OF INCOME AND CORPUS
(A) (1) Nothing herein to the contrary withstanding, during the
lifetime of the Beneficiary, Larry J. Winget, he shall be the only
income and corpus beneficiary of the Trust.
(2) Upon the death of Larry J. Winget, the Larry J. Winget
Living Trust, dated the 23rd day of December, 1987, as it may be now
or hereafter amended or supplemented, shall be the beneficiary.
(3) Any other person or entity shall be prohibited from
obtaining a beneficial interest in the Trust Estate prior to the
termination of the Trust.
(B) If and when Larry J. Winget becomes disabled or is unavailable
(as such terms are defined in Section 3.2) (the "S Trust Commencement Date"),
then:
(1) The Trust shall distribute all of its income (as defined
in Section 643(b) of the Internal Revenue Code (the "Code"), or its
successors and supplements, in light of Section 2.3, below) (herein,
its "Income") arising with respect to the period from and after the S
Trust Commencement Date and continuing for the duration of such
disability or unavailability (the "S Trust Period"); provided, that at
any time during the S Trust Period after any of the following events
has occurred, this provision shall not apply:
3
<PAGE> 4
(a) the 30th day after the S Trust Commencement
Date, if the Trust has not made application to the Internal
Revenue Service by such date for a ruling to the effect that
it is a grantor trust as defined in Section 1361 (c)(2)(A)(i)
of the Code, or its successors and supplements, or a trust
under Section 1361(d) of the Code, or its successors and
supplements;
(b) the private ruling request referred to in (a)
has been revoked; or
(c) the Internal Revenue Service has in writing
either (i) determined that the Trust is a grantor trust as
defined in Section 1361(c)(2)(A)(i) of the Code, or its
successors and supplements, or (ii) determined that the Trust
is not a grantor trust as defined in Section 1361(c)(2)(A)(i)
of the Code, or its successors and supplements, and is not a
trust under Section 1361(d) of the Code, or its successors and
supplements.
(2) The Trust shall not take any action or fail to take any
reasonable action that would cause it to have Income for the S Trust
Period in excess of the amount the Trust would be permitted to
distribute in respect of its Equity Interests pursuant to Section 1009
of the Subordinated Trust Indenture and Section 6.15 of the Senior
Trust Indenture; provided however, that if the Trust shall have
received a private letter ruling from the Internal Revenue Service
that it is a grantor trust described in Section 1361(c)(2)(A)(i) of
the Code, or its successors and supplements, the foregoing provisions
of this clause (2) shall not apply for the period such ruling applies
to.
(C) The Income interest of the Beneficiary in the Trust shall
terminate on the earlier of his death or the termination of the Trust.
(D) Nothing herein to the contrary withstanding, upon termination of
the Trust during the life of the Beneficiary and during an S Trust Period and
upon compliance with Section 5.6(E), the Trustee shall distribute all of the
accumulated Income and corpus of the Trust to the Beneficiary.
(E) Upon termination of the Trust due to the death of the Beneficiary,
the Trustee shall act in accordance with Section 5.6(E).
(F) If the Notes are no longer outstanding, the Beneficiary shall
have the power to amend this Trust in order to change the identity of the
recipient, upon the Beneficiary's death, of the income and corpus of the Trust
Estate. The Trustee shall recognize the effectiveness of such amendment upon
the receipt of notice from the Beneficiary that he has exercised this power.
(G) Nothing herein to the contrary withstanding, the Beneficiary
shall not have the power to sell, assign, pledge, or in any other manner
transfer its beneficial interest in the income and corpus of the Trust Estate
except as permitted by Section 5.6(E).
SECTION 2.3 TRUST ACCOUNTING
4
<PAGE> 5
(A) For purposes of this Trust and Section 643(b) of the Code and Act
340 of Michigan Compiled Acts, 1965, or its successors and supplements (the
"Act"), the Income of the Trust shall be determined by:
(1) making all determinations of gross income or receipts on
the cash basis, irrespective of principles of tax accounting or
generally accepted accounting principles; provided, that interest
income on sales of assets held by the Trust shall be allocated to
principal;
(2) expenses and expenditures to be subtracted from gross
income or receipts shall be the sum of (a) all expenses or
expenditures, including the amounts necessary to repay principal,
interest, make whole amount (if any) and other payments on any
indebtedness; but not including the cost (other than compensation of
the Trustee or its advisors and any investment counselor or broker) of
the following charges paid from principal (i) investing and
reinvesting principal, (ii) protecting or determining the amount of or
identity of trust principal, (iii) one half of the cost of protecting
or determining the amount of both the principal and income of the
Trust, (iv) extraordinary expenses incurred in making capital
additions to tangible property (rather than merely repairing or
improving the property with a view towards maintaining its value or
use), and (v) taxes on the sale of principal, in each case determined
on the cash basis, irrespective of principles of tax accounting or
generally accepted accounting principles (all of which are herein
referred to as the "Expenses") and (b) any additional amount necessary
to accrue, under generally accepted principles of accounting, Expenses
for the period in question; provided, all Expenses shall be without
duplication of any Expenses deducted in a prior period;
(3) to the extent not prohibited by law, during the S Trust
Period, Income shall be defined to be and shall be determined
(including, without limitation, the making of elections, allocations
of expenses, and choice of method of accounting) so that the amount of
such Income is not in excess of the amount the Trust would be
permitted to distribute in respect of its Equity Interests pursuant to
Section 1009 of the Subordinated Trust Indenture and Section 6.15 of
the Senior Trust Indenture; provided, however, that if the Trust shall
have received a private letter ruling from the Internal Revenue
Service that it is a grantor trust described in Section
1361(c)(2)(A)(i) of the Code, or its successors and supplements, the
foregoing provisions of this clause (3) shall not apply for the period
such ruling applies to; and
(4) otherwise determining and allocating the Trust's gross
income and receipts and expenses and expenditures to principal and
income in accordance with the "Act".
5
<PAGE> 6
ARTICLE III
SPECIAL ADVISOR
SECTION 3.1 SPECIAL ADVISOR'S(S') POWERS
Subject to the requirement that in no event shall the Special Advisor take any
action or fail to take any reasonable action which would cause the Trust to
violate any term of the Loan Documents:
(A) (1) The Special Advisor shall have the power to exercise the
authority provided to it under the Direction Procedure set forth in
Article IV or as provided in this Article III.
(2) The Trustee shall recognize the effectiveness of the
Special Advisor's(s') actions upon the receipt by the Trustee of
notice from the Special Advisor that the Special Advisor has exercised
this power.
(B) In addition:
(1) The Special Advisor shall have the power to cause the
transfer of shares of the Subsidiaries held by the Trust and all the
other Trust corpus to Venture Holdings Corporation.
(2) The Special Advisor shall have the power to cause this
Trust:
(a) To be converted or reconstituted into an entity
with completely different, substantially different or
substantially similar characteristics, as the Special Advisor
may in its sole discretion determine, and as a result of such
conversion or reconstitution, to cause this Trust to be
liquidated, terminated or frozen. Among other ways, such
conversion or reconstitution may be brought about by the
Special Advisor as part of (i) a merger or consolidation with
another entity, (ii) a sale or transfer of some, substantially
all, or all of the assets of the Trust Estate, or (iii) a
registration pursuant to an Initial Public Offering; and
(b) To sell, issue, convey, transfer, lease or
otherwise dispose of (including, without limitation, by way of
merger, consolidation or sale and leaseback transaction)
(collectively, a "transfer"), directly or indirectly, in one
or a series of related transactions, of (i) any or all equity
interests of any Subsidiary; (ii) all or substantially all of
the properties and assets of any division or line of business
of the Trust or any of its Subsidiaries; or (iii) any other
properties or assets of the Trust;
(C) The Special Advisor (including any member of the Successor Special
Advisor Group succeeding the Special Advisor) shall have the power to assign or
delegate all or any portion of its rights, duties and powers under the terms of
this Trust. An exercise of such power by any member
6
<PAGE> 7
of the Successor Special Advisor Group shall be subject to the approval of all
the other then members of the Successor Special Advisor Group. The Trustee
shall recognize the effectiveness of an assignment or delegation made under
this Sub-Section upon the receipt of notice from the Special Advisor that
it has exercised this power.
(D) The Special Advisor shall have the power to make amendments to this
Trust affecting the identity, rights, duties and powers of the Special Advisor
or members of the Successor Special Advisor Group; provided, however, that only
Larry J. Winget, shall have the power to reduce or inhibit the rights, duties
and powers exercisable by him as Special Advisor or reduce or inhibit his right
under Section 3.2(E) to reassume the position of Special Advisor. An exercise
of the powers given to the Successor Special Advisor Group under this
Sub-Section shall only be by unanimous vote of the Group. The Trustee shall
recognize the effectiveness of amendments made pursuant to this Sub-Section
upon the receipt of notice from the Special Advisor that it has exercised this
power.
(E) The Special Advisor, with the consent of the Trustee, shall have the
power to amend this Trust in any manner or way; provided, however, that only
Larry J. Winget, in his capacity as Special Advisor, shall have the power to
reduce or inhibit any of the rights, duties and powers of the Beneficiary.
SECTION 3.2 DEATH, DISABILITY OR UNAVAILABILITY OF SPECIAL ADVISOR
(A) The rights, duties and powers that Larry J. Winget possesses as the
Special Advisor under this Trust shall be transferred pursuant to the process
set forth in this Section 3.2 if Larry J. Winget dies, becomes disabled through
illness, age or other cause or his whereabouts become unknown.
Any spouse or family member of Larry J. Winget or any executive officer
of a Subsidiary may allege in an affidavit to the Successor Special Advisor
Group (hereinafter defined) that Larry J. Winget is so disabled through
illness, age or other cause, that he is unable to care for his personal
finances. If (1) such affidavit is accompanied by the certification of two
licensed physicians, one of whom is Larry J. Winget's family or attending
physician, if available, that Larry J. Winget is unable to care for his
personal finances, or (2) the Successor Special Advisor Group determines by any
other means that Larry J. Winget is unable to care for his personal finances,
then Sub-Section (B) shall be applicable.
If Larry J. Winget's whereabouts are unknown (hereinafter sometimes
referred to as his "unavailability") to both Alicia Winget and the Boards of
Directors of the Subsidiaries (or only the Boards of Directors, if Alicia
Winget is deceased, disabled, unavailable or no longer married to Larry J.
Winget) and the same is certified by affidavit to the Successor Special Advisor
Group by any two members of the Successor Special Advisor Group, then
Sub-Section (B) shall be applicable.
(B) Upon the death, disability or unavailability of Larry J. Winget as
set forth in Sub-Section (A), the rights, duties and powers he possesses as
the Special Advisor under this Trust shall be assumed by the Successor Special
Advisor Group, subject to the following.
7
<PAGE> 8
The rights, duties and powers of the Special Advisor of this Trust shall
be jointly assumed by four Successor Special Advisors. If a majority are unable
to agree on a matter, Alicia Winget will act in an arbitrator capacity by
agreeing with one of the positions taken by the Successor Special Advisors, but
not by making an independent decision. Collectively, this group is herein
sometimes referred to as the "Successor Special Advisor Group".
(C) Michael Torakis, A. James Schutz, Larry Joseph Winget, Jr. and
Adelicia Jo Jean Tignanelli are hereby appointed to initially serve in the four
Successor Special Advisor positions.
(D) Upon the death, disability, unavailability, unwillingness to serve
or discontinuance of full-time employment with any Subsidiary of Michael
Torakis, A. James Schutz, or one of their successors, he shall be succeeded as
a member of the Successor Special Advisor Group by Joseph Tignanelli if the
same is at the time a full-time employee of any of the Subsidiaries; otherwise,
the Trustee shall choose a Successor from among the non-family members who are
full-time employees of any Subsidiary or Subsidiaries which accounts for at
least twenty percent (20%) of the total gross sales of the Subsidiaries or any
full-time employee of any Subsidiary if there exists no individual who meets
the aforementioned requirements of this paragraph.
Upon the death, disability, unavailability or unwillingness to serve of
Larry Joseph Winget, Jr. or Adelicia Jo Jean Tignanelli, or one of their
successors, the Trustee shall choose as a Successor either Norman Matthew
Winget, Gwendolyn May Winget or, (if she has reached the legal age of majority)
Annalisa Winget.
Upon the death, disability, unavailability or unwillingness to serve of
Alicia Winget, she shall be succeeded by David Howell, C.P.A., or if he is
unavailable or unwilling to serve, by John J. Davey, attorney at law.
For purposes of this Trust, "disability" shall mean that an individual is
so disabled through illness, age or other cause, that he is unable to care for
his personal needs or finances.
For purposes of this Trust, "unavailability" shall mean that an
individual's whereabouts are unknown.
For purposes of this Trust, "unwillingness to serve" shall mean that an
individual has so notified the Trustee or has failed to respond with an answer
(or to request a reasonable extension of time or additional information) within
three (3) working days of any request for action by the Trustee or by one of
the other members of the Successor Special Advisor Group.
(E) Whether or not any person is no longer disabled or unavailable shall
be determined by the same process as that used in Sub-Section (A) for initially
determining disability or unavailability. Upon such determination, said person
shall reassume all the rights, duties and powers that were possessed as the
Special Advisor under the terms of this Trust prior to the disability or
unavailability so long as such person is otherwise permitted to serve by the
terms hereof.
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If the Trustee or Successor Special Advisor Group refuse to permit the
transfer of the Special Advisor's(s') powers, any interested party may petition
a court of competent jurisdiction to make the determination of whether said
power is required to be transferred by the terms hereof.
The Trustee or Successor Special Advisor Group shall not be liable for
any claim whatsoever which may arise as a result of its recognition of the
authority of the Successor Special Advisor Group to exercise the rights, duties
and powers of the Special Advisor or as a result of its recognition of the
right of any person to reassume such rights, duties and powers as long as the
their actions were taken in good faith and in the exercise of due care.
SECTION 3.3 SUCCESSOR SPECIAL ADVISOR GROUP
References to the Special Advisor shall include the Successor Special
Advisor Group. At the time of the Special Advisor's death, disability or
unavailability, if the provisions of Section 3.2 have been complied with the
Successor Special Advisor Group shall succeed to all of the title, powers,
rights, discretion, obligations and immunities of the original Special Advisor
unless expressly set forth otherwise.
SECTION 3.4 VALIDITY OF THE SPECIAL ADVISOR'S(S') ACTS
It shall not be necessary for anyone (including the Trustee) dealing with
the Special Advisor to inquire into the validity of anything the Special
Advisor purports to do or to investigate the application of any money paid or
property transferred to or upon the orders of the Special Advisor.
SECTION 3.5 FEES
The Special Advisor shall be entitled to a reasonable fee for its
services.
SECTION 3.6 LIABILITY
The Special Advisor shall not incur any liability and shall not be deemed
to have violated any of the provisions of this Trust as a result of any
mistakes or errors in judgment made in good faith and in the exercise of due
care in connection with the Trust business.
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ARTICLE IV
DIRECTION PROCEDURE
SECTION 4.1 SPECIAL ADVISOR'S(S') POWERS
The Special Advisor shall have the exclusive power to determine and
direct the timing, manner, conditions and/or substance of the Trustee's
exercise of the powers and duties as set forth in Section 5.6. It shall be a
violation of the Trustee's fiduciary duty to refuse to follow or to ignore such
direction by the Special Advisor.
SECTION 4.2 PROCEDURES
The power set forth in Section 4.1 shall be exercised pursuant to either
(A) or (B) of the following:
(A) Upon the Trustee determining that it may be necessary, convenient or
prudent to exercise any power or duty which is subject to the Direction
Procedures herein set forth, the Trustee shall notify the Special Advisor of
the same. Upon such notification, the Special Advisor shall, if he determines
that the exercise of such power or duty is warranted (such determination being
in the Special Advisor's(s') sole discretion), direct the Trustee in writing
(on a form substantially similar to that set forth in Exhibit A) as to the
specific timing, manner, conditions and substance of the actions to be taken or
refrained from by the Trustee (the provision of such direction herein sometimes
being referred to as a "Direction"). Upon receipt of such Direction, the
Trustee shall carry out its terms and conditions, unless the same shall be
illegal or shall not be reasonably possible under the circumstances. Provided,
however, that nothing herein to the contrary withstanding, the Trustee shall
have no affirmative duty to determine if any action shall be necessary,
convenient or prudent for it to exercise.
(B) Upon the Special Advisor determining that it may be necessary,
convenient or prudent for the Trustee to exercise any power or duty which is
subject to the Direction Procedures herein set forth, the Special Advisor shall
direct the Trustee in writing (on a form substantially similar to that set
forth in Exhibit A) as to the specific timing, manner, conditions and substance
of the actions to be taken or refrained from by the Trustee (the provision of
such direction herein sometimes being referred to as a "Direction"). Upon
receipt of such Direction, the Trustee shall carry out its terms and
conditions, unless the same shall be illegal or shall not be reasonably
possible under the circumstances.
(C) In the event that the Trustee determines that the terms and/or
conditions of any Direction may require illegal or unreasonable action, then
the Trustee shall immediately notify the Special Advisor of the same. Upon
such notification, the Special Advisor shall either re-direct the Trustee in
writing (on a form substantially similar to that set forth in Exhibit A) as to
the specific timing,
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manner, conditions and substance of the actions to be taken or refrained from
by the Trustee (the giving of such re-direction herein sometimes being referred
to as a "Direction") or seek a resolution of the matter through the arbitration
procedure in Article VIII of this Trust. Upon receipt of such re-direction or
notice of the Arbitrator's approval of the Direction, the Trustee shall carry
out its terms and conditions, unless the same shall be illegal or shall not be
reasonably possible under the circumstances.
(D) Unless authority has been expressly granted to the Trustee to take or
refrain from taking any particular actions on a continuing basis, then the
Trustee shall have no right to rely on any Direction to guide or direct the
Trustee as to any course of conduct which it shall take at any future date,
other than as to the specific instance or instances for which such Direction
initially was provided.
ARTICLE V
TRUSTEES
SECTION 5.1 DEATH, RESIGNATIONS AND REMOVAL
(A) If Larry J. Winget shall be acting as Trustee, upon the death,
disability or unavailability of Larry J. Winget (determined by the same method
set forth in Section 3.2(A)) the rights, duties and powers as Trustee under
this Trust shall be assumed by Michael G. Torakis; provided, that Michael G.
Torakis shall not assume such rights, duties and powers (or, if he shall have
already done so, he shall not continue to act as Trustee) if:
(1) Either Alicia Winget or, without the participation of
Michael G. Torakis, the Special Advisor determines that Michael G.
Torakis shall not so act;
(2) Michael G. Torakis dies, becomes disabled or his
whereabouts become unknown (determined by the same method set forth in
Section 3.2(A)).
(B) If Michael G. Torakis, or any successor Trustee, dies, becomes
disabled or his whereabouts become unknown (determined by the same method set
forth in Section 3.2(A)) or discontinues acting as Trustee or, if the Special
Advisor or Alicia Winget shall have objected to Michael G. Torakis assuming the
position of Trustee, a successor Trustee shall be chosen by the Special
Advisor; provided:
(1) such appointment shall not be valid unless the Trustee so
chosen is (i) Alicia Winget or (ii) a commercial banking institution
that is a member of the Federal Reserve System and that has combined
capital and surplus and undivided profits of not less than
$500,000,000, or (iii) two or more of the following persons, Larry
Joseph Winget, Jr., A. James Schutz, Adelicia Jo Jean Tignanelli,
Norman Matthew Winget, Gwendolyn May Winget or, (if she has reached
the legal age of majority) Annalisa Winget; or (iv) any other
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Person who has received the prior approval of the Trustee of the
Subordinated Trust Indenture (if the Subordinated Trust Indenture is
then in full force and effect) and the Trustee of the Senior Trust
Indenture (if the Senior Trust Indenture is then in full force and
effect) and NBD Bank, N.A. (if the Credit Agreement is then in full
force and effect), which approval shall not be unreasonably withheld,
and
(2) the Trustee of the Subordinated Trust Indenture (if the
Subordinated Trust Indenture is then in full force and effect) and of
the Senior Trust Indenture (if the Senior Trust Indenture is then in
full force and effect) and NBD Bank, N.A. (if the Credit Agreement is
then in full force and effect) shall have been notified of the same
and if either shall make a reasonable objection to such appointment,
then they shall each have the right to approve any such successor
Trustee, which approval shall not be unreasonably withheld.
(C) The Trustee of this Trust may resign at any time by delivering
thirty (30) days written notice to that effect to the Special Advisor.
(D) The Special Advisor may at any time remove the Trustee without
cause by an instrument in writing delivered to the Trustee.
(E) If no successor Trustee has been duly appointed upon the Trustee's
resignation, removal or other termination, a Special Advisor, the Trustee of
the Subordinated Trust Indenture (if the Subordinated Trust Indenture is then
in full force and effect), the Trustee of the Senior Trust Indenture (if the
Senior Trust Indenture is then in full force and effect), a Note Holder or NBD
Bank, N.A. (if the Credit Agreement is then in full force and effect) shall
have the right to seek appointment of a successor Trustee in a court of
competent jurisdiction.
SECTION 5.2 SUCCESSOR TRUSTEES
References to the Trustee or Trustees shall include successor Trustees.
A successor Trustee shall succeed to all of the title, powers, rights,
discretion, obligations and immunities of the original Trustee; provided, the
successor Trustee shall not be obligated to accept, ratify or approve of any of
the acts, omissions, or defaults of the Trustee, nor shall it be required to
audit or verify the records of the Trustee. The fact that the successor
Trustee has assumed and carried out its duties without protest or exception
shall not be deemed such an acceptance, ratification or approval. The
successor Trustee shall be entitled to rely upon any statements and records
(which may come into the successor Trustee's possession after a reasonable
search) of the Trustee as to the assets of this Trust and shall have no
responsibility or liability hereunder to any person for the assets of this
Trust until reduced to the possession of the successor Trustee.
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SECTION 5.3 VALIDITY OF TRUSTEE'S ACTS
It shall not be necessary for anyone dealing with the Trustee to inquire
into the validity of anything the Trustee purports to do or to investigate the
application of any money paid or any property transferred to or upon the orders
of the Trustee.
SECTION 5.4 BONDING
No bond shall be required on any Trustee hereunder, or if a bond is
required by law, only a nominal bond shall be required.
SECTION 5.5 ACCOUNTINGS
The Trustee shall not be required to render any accountings to any court,
but it shall render an account at least annually to the Beneficiary. Unless the
Beneficiary shall object in writing within ninety (90) days, all matters and
transactions stated therein shall be final and binding upon all persons
(whether in being or not) who are then or may thereafter become interested in
or entitled to share in, either the income or corpus of the Trust.
SECTION 5.6 DUTIES AND POWERS
(A) The Trustee shall have the following duties, free of any right or
power of the Special Advisor to direct the Trustee as to the timing, manner,
conditions and/or substance of the exercise of such duties:
(1) The duty to receive and hold the Trust corpus and income
as herein set forth, and to do all acts necessary thereto, including,
but not limited to, establishing bank accounts (which may be in the
Trustee's own bank), endorsing checks and other drafts, and arranging
for the transfer of funds.
(2) The duty to promptly invest all collected funds in a money
market fund which invests solely in obligations of the United States
Government (or, if consented to by the Special Advisor, in a Treasury
obligation of specified maturity, in which case the Trustee may charge
its usual transaction fee); provided that such investments are
permitted by the Loan Documents.
(3) The duty to keep full books of account in which all the
banking transactions of the Trust shall be recorded.
(4) The duty to distribute all of the income of the Trust
currently to the Beneficiary to the extent required by Section 2.2(B).
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(B) The Trustee shall have the following powers, free of any right or
power of the Special Advisor to direct the Trustee as to the timing, manner,
conditions and/or substance of the exercise of such powers, provided
that such exercise is in accordance with the terms of the Loan Documents:
(1) The power to hold cash and cash type instruments and to
open and to close checking and savings accounts and/or safety deposit
boxes in banks or similar financial institutions, in the name of the
Trustee or in the name of a nominee, with or without indication of any
fiduciary capacity; to deposit cash in and withdraw cash from such
accounts and/or boxes, with or without indication of any fiduciary
capacity; to hold such accounts and/or securities in bearer form, or
in the name of the Trustee or in the name of a nominee with or without
indication of any fiduciary capacity.
(2) The power to employ investment counsel, brokers,
accountants, attorneys and any other agents to act in the Trust's
behalf, to do any act or thing necessary, incidental or convenient to
the proper administration of the Trust.
(3) The power from time to time to determine the authority of,
appoint and terminate one or more "Attorney(s)-in-fact" for the
Trustee, who shall have the powers and duties set forth in, and act
pursuant to, powers expressly given to such Attorney(s)-in-fact
pursuant to express written powers of attorney of the Trustee from
time to time made; provided that no such Attorney-in-fact shall have
any power or duty which the Trustee could not him/her/itself exercise
at that time.
(C) The Trust, through the Trustee, shall not have the power to:
(1) Engage in the active conduct of any business whatsoever.
(2) Authorize any distribution from any Subsidiary unless
pursuant to a Special Advisor's Direction which Direction shall
certify that the distribution requirements of the Loan Documents have
been complied with.
(D) Nothing herein to the contrary withstanding, other than
Sub-Section (C)(2), if, and only if, the Direction Procedure set forth in
Section 4.2 has been followed, so that the Trustee has received a Direction in
writing (on a form substantially similar to that set forth in Exhibit A), shall
the Trustee then exercise any of the following powers and duties:
(1) (a) The power and duty to borrow on the terms set
forth in the Loan Documents and receive the proceeds which the Loan
Documents contemplate will be paid in connection with the execution of
the Loan Documents and to execute any Loan Documents.
(b) The power and duty to execute any other
documents from time to time as may be reasonably necessary to
establish, continue, renew, extend or expand the
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relationship with the Note Holders or to exercise any of the powers of
the borrower under the Loan Documents.
(c) The power and duty to guarantee to NBD Bank,
N.A., the Twenty-Five Million Dollar ($25,000,000) Credit Agreement,
and its renewal, on the terms permitted by the Loan Documents and
execute said Guaranty and any collateral documents.
(2) The power and duty to determine the authority of, appoint
and terminate a set of "Officers" of the Trust, pursuant to a
Direction of the Special Advisor, such Officers having the powers and
duties set forth in a Direction of the Special Advisor; provided that
no such Officer shall have any power or duty which the Trustee could
not itself exercise.
(3) The power and duty to loan sums of money to the
Subsidiaries.
(4) The power and duty to demand loan repayments from the
Subsidiaries.
(5) The power and duty to negotiate, renegotiate and approve
extensions of credit and investment transactions in addition to those
specifically set forth herein.
(6) The power and duty to vote upon, approve and direct
distributions and liquidations by the Subsidiaries, but not in
violation of Sub-Section (C)(2).
(7) The power and duty to reinvest income and the proceeds from
the sale or hypothecation of Trust assets in new ventures, including
the purchase of shares, obligations or other interests in any entity.
(8) The power and duty to vote stock of the Subsidiaries and
to give general proxies or powers of attorney for voting or acting
with respect to shares, obligations or other interests in entities
which the Trustee shall from time to time have an investment interest
in, which proxies or powers of attorney may be discretionary if the
Special Advisor so provides, and with power of substitution of the
proxy holder.
(9) The power and duty to do all acts reasonably necessary,
including the execution of any and all documents which the Special
Advisor directs the Trustee to execute, in order to accomplish the
conversion or reconstitution, liquidation, termination or freezing of
the Trust pursuant to Section 3.1(B).
(10) The power and duty to deposit shares or securities
with, or transfer them to, protective committees or similar bodies and
join in any reorganization and pay assessments or subscriptions called
for in connection with shares, interests or obligations held by the
Trust.
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(11) The power and duty to make contracts and
guarantees or otherwise incur liabilities, borrow money, issue its
notes, bonds, or other obligations, or secure any of its obligations
by mortgage or pledge of all or any of the Trust's property and
income, in addition to those transactions expressly permitted herein.
(12) The power and duty, in the Trust's name, to adjust,
arbitrate, assign, compromise, sue or defend, release, abandon or
otherwise deal with any and all claims or debts in favor of or against
the Trust; provided, however, that such does not violate, compromise,
extend or reduce any right of a Note Holder under the Loan Documents
unless such affected Note Holder has given its express consent.
(13) The power and duty to purchase, take, receive, lease, or
otherwise acquire, own, hold, improve, use and otherwise deal in and
with, real or tangible personal property, or any interest therein,
wherever situated.
(14) The power and duty to be a partner, member or associate
of any partnership, joint venture or other enterprise.
(15) The power and duty to sell, hypothecate, convey, lease,
exchange, transfer or otherwise dispose of all or any part of the
Trust property and assets.
(16) The power and duty to make payments or distributions as
herein set forth of the Trust property, wholly or partly
in kind.
(17) The power and duty to sell Trust assets.
(18) The power and duty to appoint and terminate members of
the "Fairness Committee".
(19) Any other power or duty that has not been expressly
delegated in this Section 5.6, which the Special Advisor, in its sole
discretion, determines shall be exercised.
(E) If any Notes are outstanding under the Subordinated Trust
Indenture or the Senior Trust Indenture, upon receipt of a Direction from the
Special Advisor or upon the death of the Beneficiary, the Trustee shall join
with all other necessary parties in making a contribution of all their right,
title and interest in and to the corpus of the Trust (except for the shares it
holds of Venture Holdings Corporation) and Income of the Trust to Venture
Holdings Corporation; provided, however, that all Income accumulated during an
S Trust Period shall be distributed to Larry J. Winget. The shares of Venture
Holdings Corporation shall then be distributed to Larry J. Winget (or if the
distribution is occurring upon the death of Larry J. Winget, to the Larry J.
Winget Living Trust dated the 23rd day of December, 1987, as it may be now or
hereafter amended or supplemented) and the Trust shall be terminated. The
assignment to Venture Holdings Corporation shall not be valid unless and until
said corporation expressly assumes the obligations of the Trust. Upon such
assumption and after making
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such distributions, the Trustee shall be discharged from all of its obligations
under the Trust and the Trust shall be terminated.
(F) The Trustee shall not have the responsibility to collect any funds
due, owing or payable to the Trust or to see to the application of any funds
after they have been distributed or paid by the Trust.
SECTION 5.7 ACTIONS
The Trustee shall act promptly in fulfilling its duties under this Trust.
SECTION 5.8 FEES
The Trustee shall be entitled to and shall charge no more than a
reasonable fee for its services. It shall also be entitled to reimbursement
for reasonable expenses including all those incurred pursuant to Section
5.6(B)(2).
SECTION 5.9 INDEMNIFICATION
The Settlor, Beneficiary and Special Advisor hereby covenant to protect,
save and keep harmless the Trustee from and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be
imposed upon, incurred or asserted against the Trustee in any way relating to
or arising out of this Trust or the performance or enforcement of any of its
terms or in any way relating to or arising out of the administration of the
Trust or action or inaction of the Trustee except in the case of willful
misconduct or gross negligence of the Trustee in the performance of its duties.
SECTION 5.10 DISPUTES AS TO TRUSTEE'S LIABILITY
Any dispute which may arise regarding the Trustee's liability for
negligence, failure to perform its duties or otherwise, shall be resolved in a
court of competent jurisdiction.
ARTICLE VI
DIVISION OF MANAGEMENT RESPONSIBILITIES
SECTION 6.1 DIVISION OF MANAGEMENT OF BUSINESS AND AFFAIRS OF THE TRUST
(A) The Trust's management is hereby divided into (i) a Fairness
Committee which, to the extent herein provided, shall review certain
transactions and (ii) the Special Advisor, which shall have the power to
determine all management issues regarding the business and affairs of the
Trust, subject to the approval of the Fairness Committee as herein provided.
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(B) The Fairness Committee shall be established in accordance with the
terms of the Senior Trust Indenture and the Subordinated Trust Indenture and
shall have such rights and duties as set forth therein.
(C) The Fairness Committee shall have such other rights and duties and
shall act by such procedures and in such manner as the Special Advisor shall
determine from time to time, provided that no such determination shall limit or
otherwise interfere with the rights and duties of the Fairness Committee as set
forth in (B), above.
ARTICLE VII
DISSOLUTION AND AMENDMENT
SECTION 7.1 DISSOLUTION
In the event that the Trust shall hereafter be dissolved for any reason
other than by the provisions of Section 5.6(E), a full and general account of
its assets, liabilities and transactions shall at once be taken. Such assets
may be sold and turned into cash as soon as possible and all debts and other
amounts due the Trust collected. The proceeds thereof shall then be applied in
the order set forth below:
(A) The debts and liabilities of the Trust and the expenses of
liquidation shall be discharged; and
(B) The remainder shall be distributed to the Beneficiary.
SECTION 7.2 AMENDMENT
This Trust may be not be amended, except as follows. The Special
Advisor may amend this Trust under the following circumstances:
(A) Amendments may only be made if they would not be in violation of
any Loan Document or other agreement the Trust is subject to at the time of
such amendment.
(B) The Special Advisor may amend this Trust, provided that no such
amendment shall modify or delete the provisions which provide that:
(1) Only Larry J. Winget shall have the power to reduce or
inhibit the rights, duties and powers exercisable by him as Special
Advisor or reduce or inhibit his right under Section 3.2(E) to
reassume the position of Special Advisor.
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(2) Only Larry J. Winget, in his capacity as Special Advisor,
shall have the power to reduce or inhibit any of the rights, duties
and powers of the Beneficiary.
ARTICLE VIII
ARBITRATION
SECTION 8.1 ARBITRATION PROCEDURE
Except as provided for in Section 5.10, upon a dispute arising under this
Trust between or among the parties this Trust agreement, the Settlor,
Beneficiary, any individual Special Advisor or Trustee may cause the resolution
of the same by petitioning for an arbitration of the dispute.
(A) The Arbitrator shall be chosen in the following manner:
(1) The Arbitrator shall be full professor or associate
professor of law from the University of Michigan or Wayne State
University who is either currently teaching or has taught within the
past two calendar years one or more courses substantially covering one
or more of the following subjects: (i) contracts, (ii) trusts, (iii)
business organizations, or (iv) financial instruments.
(2) The party desiring arbitration shall determine (i) the names
of at least three (or such lesser number as may be available)
individuals with the above qualifications who are disinterested and
are available to make such arbitration determination within the time
constraints of the decision in dispute and (ii) the terms and
conditions which they require in order to make such a determination.
If three individuals meeting the above qualifications are not
available from the University of Michigan or Wayne State University,
then the party desiring arbitration shall seek additional available
individuals from the following law schools in the order listed: (a)
Harvard, (b) Yale, (c) Stanford, (d) Chicago, (e) Northwestern, (f)
Columbia, (g) Georgetown.
(3) The names of the potential Arbitrators and the terms and
conditions required by each shall be presented to the other party who
shall choose (within 24 hours of receiving such information) one of
them to make the arbitration decision.
(B) The cost of the arbitration procedure set forth herein shall be paid
by the Trust.
(C) The decision made by the Arbitrator shall be binding on the Settlor,
Beneficiary, Special Advisor and Trustee and shall be enforceable in any court
of competent jurisdiction.
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Provided, however, that nothing herein to the contrary withstanding,
the arbitration procedure shall not affect the authority of any court of
competent jurisdiction to exercise any equitable power of injunction,
restraining order, or specific performance or power to issue an emergency order
either pending the Arbitrator's decision or in lieu of the Arbitrator's
decision, in any question which arises out of or is concerned with the rights,
duties or powers of the Settlor, Beneficiary, Special Advisor or Trustee
hereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 LIABILITY
The Settlor, the Trustee, the individual Special Advisor(s), and the
Beneficiary shall not incur any liability or be deemed to have violated any of
the provisions of this Trust as a result of any mistakes or errors in judgment
made in good faith and in the exercise of due care in connection with the Trust
business.
Each representation, warranty, undertaking and agreement made in the Loan
Documents on the part of the Trust or the Trustee shall be made and intended
not as a personal representation, warranty, undertaking and agreement by or for
the purpose or with the intention of binding the Settlor, the Trustee, any
individual Special Advisor(s), or the Beneficiary personally but is made and
intended for the purpose of binding only the Trust Estate held pursuant to this
Trust and shall be executed and delivered by the Trust and any person acting
for it or pursuant to its terms solely in the exercise of the powers expressly
conferred upon it under this Trust; and, except as specifically set forth in
the Loan Documents, no personal liability or responsibility shall be assumed
thereunder by nor shall the Loan Documents at any time be enforceable against
the Trustee or its successor in trust on account of the Loan Documents or any
representation, warranty, covenant, undertaking or agreement thereunder of the
Trustee, either expressed or implied, all such personal liability, if any,
being expressly waived. All liability thereunder shall be limited solely to
recourse against the assets of the Trust Estate held pursuant to this Trust.
SECTION 9.2 AGREEMENT BINDING
This Agreement shall be binding upon the parties hereto and upon their
heirs, executors, administrators, successors or assigns, and the parties hereto
agree for themselves and their heirs, executors, administrators, successors and
assigns to execute any and all instruments in writing which are or may become
necessary or proper to carry out the purpose and intent of this Agreement.
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SECTION 9.3 TITLES AND SUBTITLES
Titles of the Sections are placed herein for convenient reference only
and shall not to any extent have the effect of modifying, amending or changing
the express terms and provisions of this Trust.
SECTION 9.4 WORDS AND GENDER OR NUMBER
As used herein, unless the context clearly indicates the contrary, the
singular number shall include the plural, the plural the singular, and the use
of any gender shall be applicable to all genders.
SECTION 9.5 APPLICABLE LAW
This Trust shall be subject to and governed by the laws of the State of
Michigan.
SECTION 9.6 REGISTRATION
This Trust need not and shall not be registered with any Court unless the
Special Advisor deems it advisable to do so, or the laws of any State having
jurisdiction thereof do not permit the same to be exempted from registration.
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In witness whereof, this Amended and Restated trust agreement has been
executed as of the 16th day of February, 1994.
In the Presence of: Settlor and Beneficiary:
/s/ Kim McBride /s/ Larry J. Winget
-------------------------- --------------------------
LARRY J. WINGET
/s/ Betty Cormany
--------------------------
Trustee and Special Advisor:
/s/ Kim McBride /s/ Larry J. Winget
-------------------------- --------------------------
LARRY J. WINGET
/s/ Betty Cormany
--------------------------
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EXHIBIT A
TO: THE TRUSTEE OF THE VENTURE HOLDINGS TRUST
FROM: THE SPECIAL ADVISOR
PURSUANT TO THE AUTHORITY INVESTED IN THE UNDERSIGNED BY THE VENTURE HOLDINGS
TRUST, THE UNDERSIGNED HEREBY CERTIFIES THAT HE IS THE SPECIAL ADVISOR OF THE
VENTURE HOLDINGS TRUST AND THAT HAVING DETERMINED THAT IT IS NECESSARY,
CONVENIENT AND/OR PRUDENT FOR THE TRUSTEE TO EXERCISE CERTAIN DUTIES AS
HEREINAFTER SET FORTH, HEREBY DIRECTS THE TRUSTEE UNDER, ON BEHALF OF, AND IN
THE NAME OF THE TRUST TO DO THE FOLLOWING:
1. [SPECIFY]
DATED: the ____ day of ________, 199__.
SIGNED:
____________________________
Special Advisor
DATED: the ____ day of ________, 199__
CERTIFICATION OF THE RECEIPT OF DIRECTION [not required if Larry J. Winget is
Special Advisor]:
The Trustee hereby certifies that it has received the above mentioned
direction:
By:____________________
23
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EXHIBIT 10.2
VENTURE HOLDINGS TRUST
CERTAIN BORROWING SUBSIDIARIES
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JULY 9, 1997
THE LENDERS PARTY HERETO,
NBD BANK, AS AGENT
BHF-BANK AKTIENGESELLSCHAFT, AS CO-AGENT
THE BANK OF NOVA SCOTIA, AS CO-AGENT
THE HUNTINGTON NATIONAL BANK, AS CO-AGENT
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
ARTICLE II THE CREDITS 19
2.1 Revolving Credit Commitment of the Lenders 20
2.2 Facility Letters of Credit 21
2.3 Ratable Loans 26
2.4 Types of Advances 26
2.5 Revolving Credit Commitment Fees, Reductions in Aggregate
Revolving Credit Commitment 26
2.6 Minimum Amount of Each Advance 27
2.7 Principal Payment 27
2.8 Method of Selecting Types and Eurodollar Interest Periods
for New Advances 27
2.9 Conversion and Continuation of Outstanding Advances 27
2.10 Changes in Interest Rate, etc. 28
2.11 Rates Applicable After Default 28
2.12 Method of Payment 29
2.13 Notes Recordation; Telephonic Notices 29
2.14 Interest Payment Dates; Interest and Fee Basis 29
2.15 Notification of Advances, Interest Rates, Prepayments and
Revolving Credit Commitment Reductions 30
2.16 Lending Installations 30
2.17 Non-Receipt of Funds by the Agent 30
2.18 Mandatory Prepayment in the Event of a Change in Control 30
2.19 Obligations Joint and Several 31
2.20 Contribution Among Borrowers and Guarantors 32
2.21 Financial Condition of Borrowers 32
2.22 Collateral Security; Further Assistance 32
2.23 Liability of Grantor, Beneficiary or Trustee 33
2.24 Application of Payments with Respect to Defaulting Lenders 33
ARTICLE III CHANGE IN CIRCUMSTANCES 34
3.1 Yield Protection 34
3.2 Changes in Capital Adequacy Regulations 35
3.3 Availability of Types of Advances 35
3.4 Funding Indemnification 35
3.5 Alternative Lending Installation; Lender Statements;
Survival of Indemnity 35
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ARTICLE IV CONDITIONS PRECEDENT; WITHHOLDING TAX EXEMPTION 36
4.1 Effectiveness of Amendments 36
4.2 Each Advance 39
4.3 Withholding Tax Exemption 39
ARTICLE V REPRESENTATIONS AND WARRANTIES 40
5.1 Corporate Existence and Standing 40
5.2 Authorization and Validity 40
5.3 No Conflict; Government Consent 40
5.4 Financial Statements 40
5.5 Material Adverse Change 41
5.6 Taxes 41
5.7 Litigation and Contingent Obligations 41
5.8 Subsidiaries 41
5.9 ERISA 41
5.10 Accuracy of Information 41
5.11 Regulation U 42
5.12 Material Agreements 42
5.13 Compliance with Laws 42
5.14 Ownership of Properties 42
5.15 Plan Assets; Prohibited Transactions 42
5.16 Environmental Matters 42
5.17 Investment Company Act 42
5.18 Public Utility Holding Company Act 42
5.19 Subordinated Indebtedness 43
5.20 Post-Retirement Benefits 43
5.21 Insurance 43
5.22 Solvency 43
5.23 Labor Controversies 44
5.24 No Adverse Development 44
5.25 Burdensome Obligations 44
5.26 Payment of Wages 44
5.27 Intellectual Property 44
5.28 Other Representations 45
ARTICLE VI COVENANTS 45
6.1 Financial Reporting 47
6.2 Use of Proceeds 47
6.3 Notice of Default 47
6.4 Conduct of Business 47
6.5 Taxes 47
6.6 Insurance 48
6.7 Compliance with Laws 48
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6.8 Maintenance of Properties 48
6.9 Inspection 48
6.10 Dividends 48
6.11 Indebtedness 49
6.12 Merger 49
6.13 Sale of Assets 50
6.14 Investment and Acquisitions 51
6.15 Liens 52
6.16 Affiliates 53
6.17 Modification and Prepayment of Indebtedness 53
6.18 Sale of Accounts 53
6.19 Contingent Obligations and Guarantees 53
6.20 Financial Contracts 54
6.21 Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries 54
6.22 Additional Covenants re Indebtedness 54
6.23 Nature of Business 55
6.24 Permitted Payments 55
6.25 Consolidated Net Worth 55
6.26 Interest Coverage Ratio 55
6.27 Fixed Charge Coverage Ratio 56
6.28 Leverage Ratio 56
ARTICLE VII DEFAULTS 56
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 59
8.1 Acceleration 59
8.2 Amendments 60
8.3 Preservation of Rights 61
ARTICLE IX GENERAL PROVISIONS 61
9.1 Survival of Representations 61
9.2 Governmental Regulation 61
9.3 Taxes 61
9.4 Headings 62
9.5 Entire Agreement 62
9.6 Several Obligations; Benefits of this Agreement 62
9.7 Expenses; Indemnification 62
9.8 Number of Documents 63
9.9 Accounting 63
9.10 Severability of Provisions 63
9.11 Nonliability of Lenders 63
iii
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9.12 Nonreliance 64
9.13 Confidentiality 64
9.14 Limitation of Liabilities 64
iv
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ARTICLE X THE AGENT 65
10.1 Appointment; Nature of Relationship 65
10.2 Powers 65
10.3 General Immunity 65
10.4 No Responsibility for Loans, Recitals, etc. 65
10.5 Action on Instructions of Lenders 66
10.6 Employment of Agents and Counsel 66
10.7 Reliance on Documents; Counsel 66
10.8 Agent's Reimbursement and Indemnification 66
10.9 Notice of Default 67
10.10 Rights as Lender 67
10.11 Lender Credit Decision 67
10.12 Successor Agent 67
10.13 Agent's Fee 68
10.14 Collateral Management 68
10.15 Right to Indemnity 68
10.16 Co-Agents 68
ARTICLE XI SETOFF; RATABLE PAYMENTS 69
11.1 Setoff 69
11.2 Ratable Payments 69
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATION 69
12.1 Successors and Assigns 69
12.2 Participations 70
12.3 Assignments 70
12.4 Dissemination of Information 71
12.5 Tax Treatment 71
ARTICLE XIII NOTICES 72
13.1 Notices 72
13.2 Change of Address 72
ARTICLE XIV CHOICE OF LAW, CONSENT TO JURISDICTION,
WAIVER OF JURY TRIAL 72
14.1 Choice of Law 72
14.2 Consent to Jurisdiction 72
14.3 Waiver of Jury Trial 73
ARTICLE XV THE AMENDMENT AND RESTATEMENT 73
15.1 Relationship of this Agreement to the 1996 Credit Agreement 73
15.2 Execution by Guarantors 73
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15.3 References 74
ARTICLE XVI COUNTERPARTS 74
EXHIBITS
- --------
EXHIBIT A BORROWING BASE CERTIFICATE
EXHIBIT B GUARANTY
EXHIBITS C-1 AND C-2 PLEDGE AGREEMENTS
EXHIBIT D REVOLVING CREDIT NOTE
EXHIBIT E SECURITY AGREEMENTS
EXHIBIT F LEGAL OPINIONS
EXHIBIT G TRANSFER AND FUNDING INSTRUCTIONS
EXHIBIT H COMPLIANCE CERTIFICATE
EXHIBIT I ASSIGNMENT AGREEMENT
EXHIBIT J NOTICE OF ASSIGNMENT
SCHEDULES
- ---------
SCHEDULE 1.1-A PRICING GRID
SCHEDULE 5.6 TAXES
SCHEDULE 5.7 LITIGATION
SCHEDULE 5.8 SUBSIDIARIES
SCHEDULE 5.14 OWNERSHIP OF PROPERTIES EXCEPTIONS
SCHEDULE 5.19 SUPPLEMENTAL INDENTURES
SCHEDULE 5.26 PAYMENT OF WAGES
SCHEDULE 5.27 INTELLECTUAL PROPERTY
SCHEDULE 6.11 PERMITTED INDEBTEDNESS
SCHEDULE 6.14 PERMITTED INVESTMENTS
SCHEDULE 6.15 PERMITTED LIENS
SCHEDULE 6.19 CONTINGENT OBLIGATIONS
SCHEDULE 6.21 SUBSIDIARY DIVIDEND RESTRICTIONS
SCHEDULE 6.22 ADDITIONAL COVENANT EXCLUSION
vi
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AMENDED AND RESTATED CREDIT AGREEMENT
This Agreement, dated as of July 9, 1997, is among the Trust, the
Borrowing Subsidiaries, the Lenders, the Co-Agents and NBD Bank, as Agent. The
parties hereto agree that the 1996 Credit Agreement (as defined herein) is
hereby amended and restated to read in its entirety as set forth in this
Agreement.
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Trust or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or limited liability
company, or division thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority (by percentage
or voting power) of the outstanding ownership interests of a partnership or
limited liability company.
"Advance" means an advance hereunder (or conversion or continuation
thereof) consisting of the aggregate amount of the several Loans or Facility
Letters of Credit made on the same Borrowing Date (or date of conversion or
continuation) by the Lenders to any Borrower of the same Type and, in the case
of Eurodollar Advances, for the same Eurodollar Interest Period.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means NBD Bank in its capacity as agent for the Lenders pursuant
to Article X, and not in its individual capacity as a Lender, and any successor
Agent appointed pursuant to Article X.
"Aggregate Revolving Credit Commitment" means the aggregate of the
Revolving Credit Commitments of all the Lenders, not to exceed $200,000,000, as
reduced from time to time pursuant to the terms hereof.
<PAGE> 9
"Agreement" means this credit agreement, as it may be amended or modified
and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Sections 5.4 and
subject to Section 9.9.
"Alternate Prime Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Prime Rate for such day and (ii) the sum of
Federal Funds Effective Rate for such day plus 1/2% per annum.
"Applicable Margin" is defined on Schedule 1.1-A.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means Larry J. Winget and, subject to the revocation
by either Larry J. Winget or the Special Advisor of the Trust, Michael G.
Torakis or James E. Butler, or any other person designated in writing by the
Special Advisor of the Trust, Larry J. Winget or Michael G. Torakis, or, with
respect to any Borrowing Notice or Conversion/Continuation Notice, the
controller or assistant controller of any Borrower, in each case acting singly.
"Beneficiary" means (i) any beneficiary of the Trust while it is a trust
or (ii) any shareholder of a successor S corporation to the Trust after a Trust
Contribution.
"Borrowers" means, collectively, (i) the Trust and the Borrowing
Subsidiaries and (ii) any future Subsidiary of the Trust which notifies the
Agent of its irrevocable election to become a Borrower for all purposes under
this Agreement, in which case, if such Subsidiary is a Guarantor, such
Guarantor status shall terminate .
"Borrowing Base" means, as of any date, the sum of (a) an amount equal to
85% of the amount of Eligible Accounts Receivable, plus (b) an amount equal to
50% of the amount of Eligible Inventory, plus (c) an amount equal to 50% of the
amount of Eligible Unbilled Receivables.
"Borrowing Base Certificate" for any date means an appropriately completed
report as of such date and substantially in the form of Exhibit A hereto,
certified as true and correct as of such date by an Authorized Officer of each
Borrower.
"Borrowing Date" means a date on which an Advance is made hereunder.
AMENDED AND RESTATED CREDIT AGREEMENT
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"Borrowing Notice" is defined in Section 2.8.
"Borrowing Subsidiaries" means Vemco, Inc., Venture Industries
Corporation, Venture Mold & Engineering Corporation, Venture Leasing Company,
Vemco Leasing, Inc., Venture Holdings Corporation and Venture Service Company
and any Subsidiary of the Trust which becomes a Borrower.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Detroit and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Detroit for the conduct of substantially all of their
commercial lending activities.
"Capital Expenditures" means, without duplication, any expenditures for
any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Trust and its
Subsidiaries prepared in accordance with Agreement Accounting Principles.
"Capital Stock" means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents or interests in (however
designated) corporate stock or other equity participations or ownership
interests or equity participations, including without limitation trust
beneficiary interests.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Change in Control" means (a) the Trust shall cease to own, free and
clear of all Liens or other encumbrances, 100% of the Capital Stock of each
Borrowing Subsidiary and each Guarantor, either directly or through another
Borrowing Subsidiary or Guarantor, (b) Larry J. Winget, his estate, and/or his
wife, their children (and spouses) and grandchildren (and spouses), and/or a
trust or a pass-through entity controlled by one or more of the foregoing,
shall cease to own, free and clear of all Liens or other encumbrances, at least
51% of the beneficial interests of the Trust or shall cease to have the sole
ability to direct the actions of the Trust; provided, however, that as a result
of the death or disability of Larry J. Winget, the Successor Special Advisor
Group, but no other Person,
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 11
may also be in control of the Trust, or (c) a Change in Control as defined in
the Indenture under which the 1997 Senior Unsecured Notes are issued.
"Change in Control Notice" is defined in Section 2.18.
"Co-Agents" means BHF-Bank Aktiengesellschaft, The Bank of Nova Scotia and
The Huntington National Bank.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means all Property of the Borrowers and of the Guarantors.
"Collateral Documents" means, collectively, the Security Agreements, the
Mortgages, the Pledge Agreements and all other agreements granting a Lien in
favor of the Agent for the benefit of the Lenders, as any of the foregoing may
be amended or modified from time to time.
"Collateral Shortfall Amount" is defined in Section 8.1.
"Condemnation" is defined in Section 7.8.
"Consolidated" or "consolidated" shall mean, when used with reference to
any financial term in this Agreement, the aggregate for two or more persons of
the amounts signified by such term for all such persons determined on a
consolidated basis in accordance with Agreement Accounting Principles.
"Consolidated Current Assets" means the consolidated current assets of the
Trust and its Subsidiaries determined in accordance with Agreement Accounting
Principles.
"Consolidated Current Liabilities" means the consolidated current
liabilities of the Trust and its Subsidiaries determined in accordance with
Agreement Accounting Principles.
"Consolidated Interest Expense" means, for any period, total interest and
related expense owed to Persons other than the Borrowers and the Guarantors
(including, without limitation or duplication, that portion of any Capitalized
Lease Obligation attributable to interest expense in conformity with Agreement
Accounting Principles, amortization of debt discount, all capitalized interest,
the interest portion of any deferred payment obligations, all commissions,
discounts and other fees and charges owed with respect to letter of credit and
bankers acceptance financing, the net costs and net payments under any interest
rate hedging, cap or similar agreement or arrangement, agency fees and
capitalized transaction costs allocated to interest expense) paid, payable or
accrued
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 12
during such period, without duplication for any other period, with respect to
all outstanding Indebtedness of the Trust and its Subsidiaries, all as
determined for the Trust and its Subsidiaries on a consolidated basis for such
period in accordance with Agreement Accounting Principles.
"Consolidated Net Income" means, for any period, the net income (or loss)
of the Trust and its Subsidiaries on a consolidated basis for such period taken
as a single accounting period, determined in accordance with Agreement
Accounting Principles; provided that in determining Consolidated Net Income
there shall be excluded, without duplication: (a) the income of any Person
(other than a Subsidiary of the Trust) in which any Person other than the Trust
or any of its Subsidiaries has a joint interest or partnership interest, except
to the extent of the amount of dividends or other distributions actually paid
to the Trust or any of its Subsidiaries by such Person during such period, (b)
the income of any Person accrued prior to the date it becomes a Subsidiary of
the Trust or is merged into or consolidated with the Trust or any of its
Subsidiaries or that Person's assets are acquired by the Trust or any of its
Subsidiaries, (c) the proceeds of any insurance policy, other than business
interruption insurance, (d) gains and losses from the sale, exchange, transfer
or other disposition of property or assets not in the ordinary course of
business of the Trust and its Subsidiaries, and related tax effects in
accordance with Agreement Accounting Principles, (e) any extraordinary or
non-recurring gains and losses, and related tax effects in accordance with
Agreement Accounting Principles, (f) any other income not from the continuing
operations of the Trust or its Subsidiaries, and related tax effects in
accordance with Agreement Accounting Principles, (g) the income of any
Subsidiary of the Trust to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or of any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, and (h) Permitted Tax Distributions
to the extent not already deducted.
"Consolidated Net Worth" means the aggregate amount of trust equity (i.e.,
consolidated trust principal) and common shareholders' equity as determined
from a consolidated balance sheet of the Trust and its Subsidiaries, prepared
in accordance with Agreement Accounting Principles.
"Contingent Obligation" of a Person means, without duplication, any
agreement, undertaking or arrangement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provide funds for the payment of,
or otherwise becomes or is contingently liable upon, the obligation or
liability of any other Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person, or otherwise assures
any creditor of such other Person against loss, including, without limitation,
any comfort letter, operating agreement or take-or-pay contract.
"Conversion/Continuation Notice" is defined in Section 2.9.
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 13
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Trust or any of its Subsidiaries, are treated as a
single employer under Section 414(b) of the Code.
"Default" means an event described in Article VII.
"Defaulting Lender" means any Lender that (i) on any Borrowing Date fails
to make available to the Agent such Lender's Loans required to be made to the
Borrowers on such Borrowing Date, (ii) shall not have made a payment to the
Agent required under Section 2.1(c) or (iii) shall not have made a payment to
the Issuer pursuant to Section 2.2.5(b). Once a Lender becomes a Defaulting
Lender, such Lender shall continue as a Defaulting Lender until such time as
such Defaulting Lender makes available to the Agent, the amount of such
Defaulting Lender's Loans and/or to the Issuer, such payments requested by the
Issuer together with all other amounts required to be paid to the Agent and/or
the Issuer pursuant to this Agreement.
"Disqualified Capital Stock" means (a) with respect to a person, except as
to any Subsidiary of such person, any Equity Interest of such person that, by
its terms or by the terms of any security into which it is convertible,
exercisable or exchangeable, is, or upon the happening of an event or the
passage of time would be, required to be redeemed or repurchased (including at
the option of the holder thereof) by such person or any of its Subsidiaries, in
whole or in part, on or prior to the Termination Date and (b) with respect to
any Subsidiary of such person (including with respect to any Subsidiary of the
Trust), any Equity Interests other than any common equity with no preference,
privileges, or redemption or repayment provisions.
"Dollars" and "$" means the lawful money of the United States of America.
"Domestic Subsidiary" means any Subsidiary which is organized under the
laws of any State of the United States of America.
"EBITDA" means, for any period, Consolidated Net Income for such period
plus all amounts deducted in determining such Consolidated Net Income on
account of (a) Consolidated Interest Expense, (b) income taxes and the State of
Michigan single business tax and, without duplication, Permitted Tax
Distributions, and (c) depreciation expense and non-cash amortization expense,
all as determined for the Trust and its Subsidiaries on a consolidated basis in
accordance with Agreement Accounting Principles.
"EBITDAR" means, for any period, EBITDA for such period plus all amounts
deducted in determining such EBITDA on account of Rentals, all as determined
for the trust and its subsidiaries on a consolidated basis in accordance with
Agreement Accounting Principles.
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 14
"Effective Date" means the date inserted by the Agent in the last
paragraph of this Agreement.
"Eligible Accounts Receivable" means, as of any date, those accounts
receivable owned by any Borrower or any Guarantor which are payable in Dollars
and in which such Borrower or such Guarantor has granted to the Agent, for the
benefit of the Agent and the Lenders, an enforceable, first priority perfected
security interest which is not void or voidable pursuant to a Security
Agreement and all representations and warranties pertaining to such accounts
receivable in such Security Agreement are true and correct, valued at the face
amount thereof less sales, excise or similar taxes outstanding and less
returns, discounts, credits and allowances of any nature at any time claimed in
writing or issued, owing or granted; but shall not include any such account
receivable (a) that is not a bona fide existing obligation created by the sale
and actual delivery of inventory, goods or other property or the furnishing of
services or other good and sufficient consideration to customers of a Borrower
or Guarantor, as the case may be, in the ordinary course of business, (b) that
is outstanding more than 90 days after the earlier of the date of the related
invoice or the date the related goods were shipped or services provided, (c)
that is subject to any dispute, contra-account, defense, offset or counterclaim
or any Lien (except those in favor of the Agent under a Security Agreement), or
the inventory, goods, property, services or other consideration of which such
account receivable constitutes proceeds is subject to any such Lien, (d) in
respect of which the inventory, goods, property, services or other
consideration have been rejected or the amount is in dispute, (e) that is due
from any Affiliate or Subsidiary of any Borrower or any Guarantor, (f) that is
payable by any person located outside the United States (which shall not be
deemed to include any territories of the United States) or Ontario, Canada, (g)
that is payable by the United States or any of its departments, agencies or
instrumentalities or by any state or other governmental entity or by any
foreign government unless such Borrower or such Guarantor, as the case may be,
fully complies with the Federal Assignment of Claims Act and executes all
documents and agreements and causes all documents and agreements to be executed
in connection therewith as requested by the Agent, (h) that is payable by any
person as to which 50% or more of the aggregate amount of such accounts
receivable payable by such person to any Borrower or any Guarantor, as the case
may be, do not otherwise constitute Eligible Accounts Receivable due to clause
(b) of this definition, (i) that are payable by any person that is the subject
of any proceeding seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding up or reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief or protection of debtors or seeking the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property, or that is not generally paying
its debts as they become due or has admitted in writing its inability to pay
its debts generally or has made a general assignment for the benefit of
creditors, (j) which is evidenced by a promissory note or other instrument,
(other than a purchase order or sales agreement or other similar document in
the ordinary course of business), (k) which is deemed to be Eligible Unbilled
Receivables, or (l) that for any other reason is at any time deemed by the
Agent to be ineligible.
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 15
"Eligible Inventory" shall mean, as of any date, that inventory (including
raw materials, work in process and finished goods) owned by any Borrower or any
Guarantor and in which such Borrower or such Guarantor has granted to the
Agent, for the benefit of the Lenders, an enforceable, first priority perfected
security interest which is not void or voidable pursuant to a Security
Agreement and all representations and warranties pertaining to such inventory
in such Security Agreement are true and correct, but shall not include any such
inventory (a) that does not constitute inventory readily salable or usable in
the business of any Borrower or any Guarantor, (b) that is located outside the
United States (which shall not be deemed to include any territories of the
United States) or Ontario, Canada, (c) that is subject to, or any accounts or
other proceeds resulting from the sale or other disposition thereof could be
subject to, any Lien (except those in favor of the Agent under the Security
Agreements), including any sale on approval or sale or return transaction or
any consignment, (d) that is not in the possession of any Borrower or any
Guarantor, (e) that is held for lease or is the subject of any lease, (f) that
is subject to any trademark, trade name or licensing arrangement, or any law,
rules or regulation, that could limit or impair the ability of the Agent to
promptly exercise all rights of the Agent under the Security Agreements, (g) if
such inventory is located on premises not owned by any Borrower or any
Guarantor and the landlord or other owner of such premises has not waived its
distraint, lien and similar rights with respect to such inventory and shall not
have agreed to permit the Agent to enter such premises pursuant to a waiver and
agreement of such person in favor of and in form and substance acceptable to
Agent, (h) with respect to which any insurance proceeds are not payable to the
Agent as a lender loss payee or are payable to any loss payee other than the
Agent, (i) which is deemed to be Eligible Unbilled Receivables or (j) that for
any other reason is at any time deemed by the Agent to be ineligible.
"Eligible Unbilled Receivables" means, as of any date, those obligations
owing to any Borrower or any Guarantor which would constitute an Eligible
Account Receivable but for the fact that an invoice has not been sent by such
Borrower or Guarantor, provided that each of the following conditions is
satisfied for each such obligation: (a) such obligation is covered under a
written work order or other agreement between such Borrower or such Guarantor
and the Person owing such obligation, including price verification, which is
binding and enforceable on such Person to pay such obligation and otherwise
contains such terms satisfactory to the Agent, (b) has not been classified as
an Eligible Unbilled Receivable for more than 180 days and (c) such obligation
is not at any time otherwise deemed by the Agent to be ineligible.
"Environmental Certificate" shall mean an appropriately completed
environmental certificate, substantially in the form approved by the Agent,
delivered by each of the Borrowers and Guarantors, certified as true and
correct as of such date by an Authorized Officer of each Borrower and each
Guarantor.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions,
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 16
permits, concessions, grants, franchises, licenses, agreements and other
governmental restrictions relating to (i) the protection of the environment,
(ii) the effect of the environment on human health, (iii) emissions, discharges
or releases of pollutants, contaminants, hazardous substances or wastes into
surface water, ground water or land, or (iv) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, hazardous substances or wastes or the clean-up or
other remediation thereof.
"Equity Interest" of any person means any shares, interests,
participations or other equivalents (however designated) in such person s
equity (including any trust beneficiary interests), and shall in any event
include any Capital Stock issued by, or partnership or membership interests in,
such person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means an Advance which bears interest at a Eurodollar
Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the rate determined by the Agent to be the
rate at which deposits in dollars are offered to NBD by prime banks in the
London interbank market at approximately 11 a.m. (London time) two Business
Days prior to the first day of such Eurodollar Interest Period, in the
approximate amount of NBD's relevant Eurodollar Loan and having a maturity
approximately equal to such Eurodollar Interest Period.
"Eurodollar Interest Period" means, with respect to a Eurodollar Advance,
a period of one, two, three or six months commencing on a Business Day selected
by the Borrowers pursuant to this Agreement. Such Eurodollar Interest Period
shall end on the day which corresponds numerically to such date one, two,
three, or six months thereafter, provided, however, that if there is no such
numerically corresponding day in such next, second, third or sixth succeeding
month, such Eurodollar Interest Period shall end on the last Business Day of
such next, second, third, or sixth succeeding month. If a Eurodollar Interest
Period would otherwise end on a day which is not a Business Day, such
Eurodollar Interest Period shall end on the next succeeding Business Day,
provided, however, that if said next succeeding Business Day falls in a new
calendar month, such Eurodollar Interest Period shall end on the immediately
preceding Business Day.
"Eurodollar Loan" means a Loan which bears interest at a Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by
(b) one minus the Reserve Requirement (expressed as a
AMENDED AND RESTATED CREDIT AGREEMENT
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decimal) applicable to such Eurodollar Interest Period, plus (ii) the
Applicable Margin. The Eurodollar Rate shall be rounded to the next higher
multiple of 1/16 of 1% if the rate is not such a multiple.
"Facility Letter of Credit" means a Letter of Credit issued by the Issuer
pursuant to Section 2.2.
"Facility Letter of Credit Obligations" means, as at the time of
determination thereof, all liabilities, whether actual or contingent, of the
Borrowers with respect to the Facility Letters of Credit, including the sum of
(a) Reimbursement Obligations and (b) the aggregate undrawn face amount of the
outstanding Facility Letters of Credit.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10 a.m.
(Detroit time) on such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by the Agent in its
sole discretion.
"Financial Contract" of a Person means (i) any exchange-traded or
over-the-counter futures, forward, swap or option contract or other financial
instrument with similar characteristics, and (ii) any agreements, devices or
arrangements providing for payments related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to, interest rate
exchange agreements, forward currency exchange agreements, interest rate cap or
collar protection agreements, forward rate currency or interest rate options.
"Fixed Charges" shall mean, for any period, without duplication, the sum
of the following amounts for such period (i) Consolidated Interest Expense,
(ii) Rentals, (iii) income taxes and the State of Michigan single business tax
payable by the Trust or any of its Subsidiaries and, without duplication, the
amount of Restricted Payments, and (iv) all scheduled principal payments paid
or payable on Indebtedness, all calculated for the Trust and its Subsidiaries
on a consolidated basis in accordance with Agreement Accounting Principles.
"Fixed Charge Coverage Ratio" means, as of the end of any fiscal quarter,
the ratio of (a) EBITDAR minus Capital Expenditures to (b) Fixed Charges, in
each case calculated for the four consecutive fiscal quarters then most
recently ended for the Trust and its Subsidiaries on a consolidated basis in
accordance with Agreement Accounting Principles consistently applied, provided
that for the fiscal quarter ended June 30, 1997, such amount shall be
calculated for the ten
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 18
consecutive months then ending. Any purchase of equipment paid for with the
Net Cash Proceeds from the sale of any other equipment within 360 days of such
sale shall not be considered a Capital Expenditure under this definition to the
extent such Net Cash Proceeds were used for such payment.
"Foreign Subsidiary" means each Subsidiary of the Trust other than a
Domestic Subsidiary.
"Floating Rate" means, for any day, a rate per annum equal to (i) the
Alternate Prime Rate for such day plus (ii) the Applicable Margin, in each case
changing when and as the Alternate Prime Rate changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"Guarantor" means each present and future Subsidiary of the Trust (other
than a Borrowing Subsidiary).
"Guaranty" means, collectively, that certain Guaranty in the form of
Exhibit B hereto, executed by the Guarantors in favor of the Agent, for the
ratable benefit of the Lenders, and any other guaranty executed at any time by
any Guarantor in connection herewith, as any of the foregoing may be amended or
modified from time to time.
"Indebtedness" of a Person means, without duplication, such Person's (i)
obligations for borrowed money or similar monetary obligations, (ii)
obligations representing the deferred purchase price of Property or services
(other than accounts payable arising in the ordinary course of such Person's
business payable on terms customary in the trade), (iii) obligations, whether
or not assumed, secured by Liens or payable out of the proceeds or production
from property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances, bonds, indentures or
other instruments, (v) Capitalized Lease Obligations, (vi) obligations under
Financial Contracts, provided that any obligation under any specific Financial
Contract shall be net of amount owing to such Person under such Financial
Contract, (vii) all reimbursements obligations under outstanding Letters of
Credit in respect of drafts which (A) may be presented or (B) have been
presented and have not yet been paid, and (viii) Contingent Obligations of such
Person for any of the obligations of other Persons of the type described in the
foregoing clauses (i) through (vii).
"Interest Coverage Ratio" shall mean, as of the end of any fiscal quarter,
the ratio of (a) EBITDA for the four fiscal quarters then ending to (b) to the
sum of Consolidated Interest Expense, in each case calculated for the four
consecutive fiscal quarters then most recently ended for the Trust and its
Subsidiaries on a consolidated basis in accordance with Agreement Accounting
Principles consistently applied, provided that for the fiscal quarter ended
June 30, 1997, such amount shall be
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 19
calculated for the ten consecutive months then ended.
"Issuer" means NBD and any other Lender designated at any time in writing
to the parties to the Agreement as an Issuer by the Borrowers and the Agent.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable
arising in the ordinary course of business on terms customary in the trade) or
contribution of capital by such Person; stocks, bonds, mutual funds,
partnership interests, notes, debentures or other securities owned by such
Person; any deposit accounts and certificate of deposit owned by such Person;
and structured notes, derivative financial instruments and other similar
instruments or contracts owned by such Person.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent, any
office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Letter of Credit Collateral Account" is defined in Section 2.2.7.
"Leverage Ratio" means the ratio of consolidated Indebtedness of the Trust
and its Subsidiaries to EBITDA calculated for the four most recently ended
fiscal quarters as of the time of determination and subject to the proviso set
forth in Schedule 1.1-A and Section 6.28.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement benefiting a
third party of any kind or nature whatsoever (including, without limitation,
the interest of a vendor or lessor under any conditional sale, Capitalized
Lease or other title retention agreement).
"Loan" means, with respect to a Lender, such Lender's loan made pursuant
to Article II (or any conversion or continuation thereof), and, with respect to
the Agent, the Swing Loans.
"Loan Documents" means this Agreement, the Notes, the Collateral
Documents, the Guaranty, the Environmental Certificate and all other agreements
and documents contemplated
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 20
hereby or otherwise executed in connection herewith by the Trust, any Borrowing
Subsidiary or any Guarantor.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Trust and its Subsidiaries taken as a whole, (ii) the
ability of the Trust, any Borrowing Subsidiary or any Guarantor to perform its
obligations under the Loan Documents, or (iii) the validity or enforceability
of any of the Loan Documents or the rights or remedies of the Agent or the
Lenders thereunder.
"Mortgages" means each mortgage, deed of trust or similar document
granting a Lien on real property entered into by any Borrower or any Guarantor
for the benefit of the Agent and the Lenders pursuant to this Agreement,
substantially in the forms as approved by the Agent, as amended or modified
from time to time.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Trust or any member
of the Controlled Group is a party to which more than one employer is obligated
to make contributions.
"NBD" means NBD Bank, a Michigan banking corporation, including any of its
branches and affiliates, and its successors and assigns.
"Net Cash Proceeds" means, without duplication (a) in connection with any
sale or other disposition of any asset or any settlement by, or receipt of
payment in respect of, any property insurance claim or condemnation award, the
cash proceeds (including any cash payments received by way of deferred payment
of principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received) of such
sale, settlement or payment, net of reasonable and documented attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted hereunder
on any asset which is the subject of such sale, insurance claim or condemnation
award (other than any Lien in favor of the Agent for the benefit of the Agent
and the Lenders) and other customary fees actually incurred in connection
therewith, taxes paid or reasonably estimated to be payable as a result
thereof, and any cash reserves required to be maintained for liabilities
associated with the sale (provided that such cash reserves shall become Net
Cash Proceeds when no longer required to be held as reserves), and (b) in
connection with any issuance or sale of any equity securities or debt
securities or instruments or the incurrence of loans, the cash proceeds
received from such issuance or incurrence, net of investment banking fees,
reasonable and documented attorneys' fees, accountants' fees, underwriting
discounts and commissions and other reasonable and customary fees and expenses
actually incurred in connection therewith.
"1994 Subordinated Indenture" is defined in the definition of 1994
Subordinated Debt
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 21
Documents.
"1996 Subordinated Supplemental Indenture" is defined in the definition of
1994 Subordinated Debt Documents.
"1994 Subordinated Debt" means all Indebtedness owing pursuant to the 1994
Subordinated Debt Documents.
"1994 Subordinated Debt Documents" means the Indenture dated as of
February 16, 1994 among Venture Holdings Trust, Vemco, Inc., Venture Industries
Corporation, Venture Mold & Engineering Corporation, Venture Leasing Company,
Vemco Leasing, Inc., Venture Holdings Corporation and Venture Service Company,
as Issuers, Venture Industries Canada Ltd., as Guarantor, and Comerica Bank, as
Indenture Trustee, in connection with $100,000,000 9-3/4% Senior Subordinated
Notes due 2004 (as amended by supplemental indentures listed on Schedule 5.19
(collectively, the "1996 Subordinated Supplemental Indenture") between the
Borrowers and Comerica Bank, as Trustee, the "1994 Subordinated Indenture"), of
which $78,940,000 is outstanding, together with all agreements, documents and
instruments executed in connection therewith at any time.
"1996 Credit Agreement" shall mean the Credit Agreement dated as of August
26, 1996, as amended, among the borrowers named therein, the Lenders party
thereto and NBD Bank, as Agent.
"1997 Senior Unsecured Debt Documents" means the Indenture dated as of
July 1, 1997 among the Borrowers, as Issuers, and The Huntington National Bank,
as Indenture Trustee, under which the 1997 Senior Unsecured Notes are to be
issued, together with all agreements, documents and instruments executed in
connection therewith at any time.
"1997 Senior Unsecured Notes" means the $205,000,000 9 1/2% Senior Notes
due 2005 to be issued by the Borrowers on or before the Effective Date.
"Note" means the Swingline Note or any Revolving Credit Note.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means, without duplication, all unpaid principal of and
accrued and unpaid interest on the Notes, all accrued and unpaid fees, all
Facility Letter of Credit Obligations and all other obligations of any of the
Borrowers or Guarantors to the Lenders or to any Lender or the Issuer or the
Agent arising under the Loan Documents, in each case whether now or hereafter
owing.
"Operating Expense or Cost Reduction" means, with respect to the
calculation of any
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 22
financial ratio under this Agreement on a Pro Forma Basis, an operating expense
or cost reduction with respect to an Acquisition, which, in the good faith
estimate of management, will be realized as a result of such Acquisition,
provided that the foregoing eliminations of operating expenses and realizations
of cost reductions shall be of the types permitted to be given effect to in
accordance with Article 11 of Regulation S-X under the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated by the
Securities and Exchange Commission thereunder, as in effect on the Effective
Date and such reduction is subject to negative comfort by the Trust s
independent public accountants.
"Overdue Rate" means (a) in respect of principal of Floating Rate Loans, a
rate per annum that is equal to the sum of three percent (3%) per annum plus
the Floating Rate, (b) in respect of principal of Eurodollar Loans, a rate per
annum that is equal to the sum of three percent (3%) per annum plus the per
annum rate in effect thereon until the end of the then current Eurodollar
Interest Period for such Loan and, thereafter, a rate per annum that is equal
to the sum of three percent (3%) per annum plus the Floating Rate, and (c) in
respect of other amounts payable by the Borrowers hereunder (other than
interest), a per annum rate that is equal to the sum of three percent (3%) per
annum plus the Floating Rate.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last Business Day of each March, June, September
and December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Payments" is defined in Section 6.24.
"Permitted Tax Distributions" is defined in Section 6.10.
"Person" or "person" means any natural person, corporation, firm, joint
venture, partnership, association, enterprise, trust or other entity or
organization, or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Trust or any member of the Controlled Group may have any
liability.
"Pledge Agreements" shall mean each Pledge Agreement entered into by any
Borrower or any Guarantor for the benefit of the Agent and the Lenders pursuant
to this Agreement substantially in the forms attached hereto as Exhibits C-1
and C-2, as amended or modified from time to time.
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 23
"Prime Rate" shall mean the per annum rate announced by the Agent from
time to time as its "prime rate" (it being acknowledged that such announced
rate may not necessarily be the lowest rate charged by the Agent to any of its
customers), which Prime Rate shall change simultaneously with any change in
such announced rate.
"Pro Forma Basis" means, for purposes of calculating compliance with any
financial ratio under this Agreement, giving pro forma effect to certain
transactions such that, (i) Acquisitions which occurred during the four full
fiscal quarters ended immediately preceding any date upon which any
determination is to be made pursuant to this Agreement (the "Reference Period")
or subsequent to the Reference Period and on or prior to the determination date
shall be assumed to have occurred on the first day of the Reference Period and
any Operating Expense or Cost Reduction with respect to such Acquisition shall
be deducted from such calculation, (ii) transactions giving rise to the need to
calculate any financial ratio under this Agreement shall be assumed to have
occurred on the first day of the Reference Period, (iii) the incurrence of any
Indebtedness or issuance of any Disqualified Capital Stock during the Reference
Period or subsequent to the Reference Period and on or prior to the
determination date (and the application of the proceeds therefrom, including to
refinance or retire other Indebtedness) shall be assumed to have occurred on
the first day of such Reference Period (except that, in making such
computation, the amount of Indebtedness under any revolving credit facility
shall be computed based on the average daily balance during the Reference
Period), and (iv) the Consolidated Fixed Charges of such person attributable to
interest on any Indebtedness or dividends on any Disqualified Capital Stock
bearing a floating interest (or dividend) rate shall be computed on a pro forma
basis as if the average rate in effect from the beginning of the Reference
Period to the determination date had been the applicable rate for the entire
period, unless such person or any of its Subsidiaries is a party to any Rate
Hedging Agreement (which shall remain in effect for the 12-month period
immediately following the determination date) that has the effect of fixing the
interest rate on the date of computation, in which case such rate (whether
higher or lower) shall be used.
"Pro Rata Share" means, for each Lender, the ratio such Lender's Revolving
Credit Commitment bears to the Aggregate Revolving Credit Commitment.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased
or operated by such Person.
"Purchasers" is defined in Section 12.3.1.
"Rate Hedging Agreement" means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements,
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 24
forward currency exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options, puts and warrants.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Hedging Agreements, and (ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any Rate Hedging Agreement.
"Reimbursement Obligations" means, at any time, without duplication, the
aggregate of the obligations of any Borrower to the Lenders and the Issuer in
respect of all unreimbursed payments or disbursements made by the Issuer and
the Lenders under or in respect of the Facility Letters of Credit.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or
other regulation or official interpretation of said Board of Governors relating
to reserve requirements applicable to member banks of the Federal Reserve
System.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to
the extension of credit by banks for the purpose of purchasing or carrying
margin stocks applicable to member banks of the Federal Reserve System.
"Rentals" of a Person means, without duplication, the aggregate amounts
payable by such Person under any lease, usage agreement or other similar
agreement for the lease or use in any manner of Property, but does not include
any amounts payable under Capitalized Leases of such Person.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of
the notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least 51% of
the Aggregate Revolving Credit Commitment or, if the Aggregate Revolving Credit
Commitment has been terminated, Lenders in the aggregate holding at least 51%
of the aggregate unpaid principal amount of the outstanding Loans and Facility
Letter of Credit Obligations.
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 25
"Required Revolving Credit Lenders" means Revolving Credit Lenders holding
not less than 51% of the Revolving Credit Commitments (or 51% of the Revolving
Credit Loans and Facility Letters of Credit if the Revolving Credit Commitments
have been terminated).
"Reserve Requirement" means, with respect to a Eurodollar Interest Period,
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on
Eurocurrency liabilities.
"Revolving Credit Commitments" means, with respect to each Lender, the
commitment of each such Lender to make Revolving Credit Loans, and to
participate in Facility Letters of Credit and Swing Loans, in amounts not
exceeding in the aggregate principal or face amount outstanding at any time the
Revolving Credit Commitment amount for such Lender set forth next to the name
of such Lender on the signature pages hereof, or, as to any Lender becoming a
party hereto after the Effective Date, as set forth in the applicable
assignment, in each case as reduced or modified pursuant to this Agreement.
"Revolving Credit Lenders" means those Lenders which have Revolving Credit
Commitments or, if such Revolving Credit Commitments shall have been
terminated, have outstanding Revolving Credit Loans or Facility Letters of
Credit Obligations.
"Revolving Credit Loan" means any borrowing under Section 2.1(a) evidenced
by the Revolving Credit Notes.
"Revolving Credit Notes" means the promissory notes of the Borrowers in
substantially the form of Exhibit D hereto evidencing the Revolving Credit
Loans, respectively, as amended or modified from time to time and together with
any promissory note or notes issued in exchange or replacement therefor.
"Revolving Credit Percentage" shall mean, with respect to any Revolving
Credit Lender at any time, the percentage of the aggregate Revolving Credit
Commitments of all Revolving Credit Lenders then constituted by such Revolving
Credit Lender's Revolving Credit Commitment.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Secured Obligations" means, collectively, (i) the Obligations and (ii)
all Rate Hedging Obligations owing to one or more Lenders.
"Security Agreement" shall mean each security agreement in substantially
the form of Exhibit E hereto entered into by any Borrower or any Guarantor for
the benefit of the Agent and the
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 26
Lenders pursuant to this Agreement, as amended or modified from time to time.
"Single Employer Plan" means a Plan maintained by any Borrower or any
member of the Controlled Group for employees of any Borrower or any member of
the Controlled Group.
"Special Advisor" means Larry J. Winget.
"Subordinated Indebtedness" of a Person means any Indebtedness of such
Person the payment of which is subordinated to payment of the Secured
Obligations to the written satisfaction of the Required Lenders.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, limited liability company, association, joint venture
or similar business organization more than 50% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Trust.
"Substantial Portion" means, with respect to the Property of the Trust and
its Subsidiaries, property which (i) represents more than 5% of the
consolidated assets of the Trust and its Subsidiaries as would be shown in the
consolidated financial statements of the Trust and its Subsidiaries as at the
beginning of the twelve month period ending with the month in which such
determination is made, or (ii) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Trust and its
Subsidiaries as reflected in the financial statements referred to in clause (i)
above.
"Successor Special Advisor Group" means those Persons appointed to such
Group pursuant to the Trust Agreement, provided that (a) no Person or group of
affiliated Persons shall be or become a member of the Successor Special Advisor
Group other than (i) those Persons who are appointed to the Successor Special
Advisor Group pursuant to the Trust Agreement on and as of the Effective Date,
namely (the "incumbent members") or (ii) Persons chosen to replace the
incumbent members who are chosen by the remaining incumbent members; and (b) at
no time shall less than 40% of the members of the Successor Special Advisor
Group be employees of the Borrowers who are not lineal descendants of Larry J.
Winget, the spouse or widow of Larry J. Winget or the spouse or surviving
spouse of any lineal descendant of Larry J. Winget (other than Joseph
Tignanelli).
"Swing Loans" is defined in Section 2.1(c).
"Swingline Note" means the promissory note of the Borrowers evidencing the
Swing Loans,
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 27
in form satisfactory to the Agent, as amended or modified from time to time and
together with any promissory note or notes issued in exchange or replacement
therefor.
"Termination Date" means the earlier to occur of (a) June 30, 2003, and
(b) the date on which the Revolving Credit Commitments shall be terminated
pursuant hereto.
"Transferee" is defined in Section 12.4.
"Trust" means (i) Venture Holdings Trust, a grantor trust organized under
the laws of Michigan, (ii) Venture Holdings Corporation after the occurrence of
a Trust Contribution or (iii) any successor Person to Venture Holdings Trust or
Venture Holdings Corporation (after the occurrence of a Trust Contribution) in
accordance with the provisions of Section 6.12.
"Trust Agreement" means the Agreement, dated December 28, 1987, as
amended, prior to the date hereof, among Larry J. Winget, as trustee (the "VHT
Trustee"), and Larry J. Winget, as Settlor, Beneficiary and Special Advisor, as
such agreement may be amended in a manner acceptable to the Required Lenders
(and it is hereby agreed that the Trust Agreement and any related agreements
will not be amended or otherwise modified in any manner adverse to the Lenders
(as determined by the Required Lenders) without the prior written consent of
the Required Lenders).
"Trust Contribution" is defined in Section 6.12.
"Type" means, with respect to any Advance, its nature as a Floating Rate
Advance or Eurodollar Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"VHT Trustee" means Larry J. Winget, as trustee under the Trust Agreement.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, limited liability
company, association, joint venture or similar business organization 100% of
the ownership interests having
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ordinary voting power of which shall at the time be so owned or controlled.
"Working Capital" means, as of any date, the amount, if any, by which
Consolidated Current Assets exceeds Consolidated Current Liabilities.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1 Revolving Credit Commitments of the Lenders
(a) Revolving Credit Loans. Each Revolving Credit Lender agrees, for
itself only, subject to the terms and conditions of this Agreement, to make
Revolving Credit Loans to any Borrower from time to time from and including the
Effective Date to but excluding the Termination Date, not to exceed in
aggregate principal amount at any time outstanding the amount determined
pursuant to Section 2.1(b).
(b) Limitation on Amount of Advances. Notwithstanding anything in this
Agreement to the contrary, the aggregate principal amount of the Revolving
Credit Loans, the Swing Loans and the Facility Letter of Credit Obligations at
any time outstanding to the Borrowers shall not exceed the lesser of (A) the
amount of the Borrowing Base as of the most recently received Borrowing Base
Certificate and (B) the Aggregate Revolving Credit Commitment as of the date
any such Advance is made, provided, however, that the aggregate Facility Letter
of Credit Obligations at any time shall not exceed $20,000,000 and the
aggregate Swing Loans at any time outstanding shall not exceed $5,000,000.
(c) Swing Loans.
(i) Making of Swing Loans. The Agent may elect in its sole
discretion to make revolving loans (the "Swing Loans") to any Borrower solely
for the Agent's own account, from time to time prior to the Termination Date up
to an aggregate principal amount at any one time outstanding not to exceed the
lesser of (i) $5,000,000 or (ii) the amount allowable under Section 2.1(b).
The Agent may make Swing Loans (provided that the Agent has received a request
in writing or via telephone from an Authorized Officer of a Borrower for
funding of a Swing Loan no later than 12 noon, Detroit time, on the Business
Day on which such Swing Loan is requested to be made. Each outstanding Swing
Loan shall be payable on the Business Day following demand therefor and
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in any event no later than five Business Days after the Borrowing Date for such
Swing Loan, with interest at the Floating Rate accrued thereon, shall be
secured as part of the Secured Obligations by the Collateral and shall
otherwise be subject to all the terms and conditions applicable to Loans,
except that all interest thereon shall be payable to the Agent solely for its
own account. All Swing Loans shall be evidenced by Swingline Note.
(ii) Swing Loan Borrowing Requests. The Borrowers agree to deliver
promptly to the Agent a written confirmation of each telephonic notice for
Swing Loans signed by an Authorized Officer. If the written confirmation
differs in any material respect from the action taken by the Agent, the records
of the Agent shall govern, absent manifest error.
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(iii) Repayment of Swing Loans.
(A) At any time after making a Swing Loan, the Agent may
request the Borrowers to, and upon request by the Agent the Borrowers shall,
promptly request a Revolving Credit Loan from all the Lenders and apply the
proceeds of such Revolving Credit Loan to the repayment of any Swing Loan owing
by the Borrowers not later than the Business Day following the Agent's request.
Notwithstanding the foregoing, upon the earliest to occur of (a) 12 noon,
Detroit time, on the sixth Business Day after a Swing Loan is made, (b) one
Business Day after demand is made by the Agent, and (c) the Termination Date,
each Lender (other than the Agent) shall irrevocably and unconditionally
purchase from the Agent, without recourse or warranty, an undivided interest
and participation in such Swing Loan in an amount equal to such Lender's Pro
Rata Share of such Swing Loan and promptly pay such amount to the Agent in
immediately available funds. Such payment shall be made by the other Lenders
whether or not a Default or Unmatured Default is then continuing or any other
condition precedent set forth in Section 4.2 is then met and whether or not the
Borrowers have then requested an Advance in such amount; and such Swing Loan
shall thereupon be deemed to be a Floating Rate Advance hereunder made on the
date of such purchase (except, as aforesaid, with respect to the existence of
any Default or Unmatured Default or the meeting of any condition precedent
specified in Section 4.2 on such date). If any Lender fails to make available
to the Agent any amounts due to the Agent pursuant to this Section, the Agent
shall be entitled to recover such amount, together with interest thereon at the
Federal Funds Effective Rate for the first three Business Days after such
Lender receives notice of such required purchase and thereafter, at the
Floating Rate, payable (i) on demand, (ii) by setoff against any payments made
to the Agent for the account of such Lender or (iii) by payment to the Agent by
the Agent of amounts otherwise payable to such Lender under this Agreement. The
failure of any Lender to make available to the Agent its Pro Rata Share of any
unpaid Swing Loan shall not relieve any other Lender of its obligation
hereunder to make available to the Agent its Pro Rata Share of any unpaid Swing
Loan on the date such payment is to be made, but no Lender shall be responsible
for the failure of any other Lender to make available to the Agent its Pro Rata
Share of any unpaid Swing Loan.
(B) Upon the making of any Advance, any Swing Loan then
outstanding shall be repaid in full, and the Borrowers hereby irrevocably
authorize the Agent to apply all or any necessary portion of the proceeds of
any such Advance to the repayment of any Swing Loan then outstanding.
2.2. Facility Letters of Credit.
2.2.1. Obligation to Issue. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the
Borrowers and the Guarantors in the Loan Documents, the Issuer hereby agrees to
issue for the account of the Borrowers through such of the
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Issuer's Lending Installations or Affiliates as the Issuer and any Borrower may
jointly agree, one or more Facility Letters of Credit in accordance with this
Section 2.2, from time to time during the period, commencing on the Effective
Date and ending on the Business Day prior to the Termination Date.
2.2.2. Conditions for Issuance. In addition to being subject to the
satisfaction of the conditions contained in Section 4.2, the obligation of the
Issuer to issue any Facility Letter of Credit is subject to the satisfaction in
full of the following conditions:
(i) the aggregate maximum amount then available for drawing under
Letters of Credit issued by the Issuer, after giving effect to the Facility
Letter of Credit requested hereunder, shall not exceed any limit imposed by law
or regulation upon the Issuer;
(ii) after giving effect to the requested issuance of any Facility
Letter of Credit, the sum of (a) the Facility Letter of Credit Obligations and
(b) the total aggregate unpaid principal balance of the Revolving Credit Loans
does not exceed the amount permitted under 2.1(b).
(iii) the requested Letter of Credit has an expiration date prior to the
earlier of the Termination Date or the date one year after the issuance of such
Letter of Credit;
(iv) the Borrowers shall have delivered to the Issuer at such times and
in such manner as the Issuer may reasonably prescribe such documents and
materials as may be required pursuant to the terms of the proposed Letter of
Credit and the proposed Letter of Credit shall be reasonably satisfactory to
the Issuer as to form and content; and
(v) as of the date of issuance, no order, judgment or decree of any
court, arbitrator or governmental authority shall purport by its terms to
enjoin or restrain the Issuer from issuing the Facility Letter of Credit and no
law, rule or regulation applicable to the Issuer and no request or directive
(whether or not having the force of law) from any governmental authority with
jurisdiction over the Issuer shall prohibit or request that the Issuer refrain
from the issuance of Letters of Credit generally or the issuance of that
Facility Letter of Credit.
2.2.3. Procedure for Issuance of Facility Letters of Credit. (a) The
Borrowers shall give the Issuer two Business Day's prior written notice of any
requested issuance of a Facility Letter of Credit under this Agreement (except
that, in lieu of such written notice, the Borrowers may give the Issuer (x)
notice of such request by tested telex or other tested arrangement satisfactory
to the Issuer or (y) telephonic notice of such request if confirmed in writing
by delivery to the Issuer (i) immediately (A) of a telecopy of the written
notice required hereunder which has been signed by an Authorized Officer of the
Borrowers or (B) of a telex containing all information required to be contained
in such written notice and (ii) promptly (but in no event later than the
requested time of issuance) of a copy
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of the written notice required hereunder containing the original signature of
an Authorized Officer of the Borrowers); such notice shall be irrevocable and
shall specify the stated amount of the Facility Letter of Credit requested, the
effective date (which day shall be a Business Day) of issuance of such
requested Facility Letter of Credit, the date on which such requested Facility
Letter of Credit is to expire (which date shall be a Business Day and shall in
no event be later than the earlier of Termination Date or the date one year
after the issuance of such Letter of Credit), the purpose for which such
Facility Letter of Credit is to be issued, and the Person for whose benefit the
requested Facility Letter of Credit is to be issued. At the time such request
is made, the Borrowers shall also provide the Issuer with a copy of the form of
the Facility Letter of Credit it is requesting be issued. Such notice, to be
effective, must be received by the Issuer not later than 2:00 p.m. (Detroit
time) or the time agreed upon by the Issuer and the Borrowers on the last
Business Day on which notice can be given under this Section 2.2.3(a). The
Issuer shall promptly forward to the Lenders a copy of the Borrowers' request
for the issuance of a Letter of Credit hereunder.
(b) Subject to the terms and conditions of this Section 2.2.3 and
provided that the applicable conditions set forth in Sections 4.2 and 2.2.2
hereof have been satisfied, the Issuer shall, on the requested date, issue a
Facility Letter of Credit on behalf of the Borrowers in accordance with the
Issuer's usual and customary business practices.
(c) The Issuer shall not extend or amend any Facility Letter of Credit
unless the requirements of this Section 2.2.3 are met as though a new Facility
Letter of Credit was being requested and issued.
2.2.4. Reimbursement Obligations.
(a) The Borrowers agree to pay to the Agent the amount of all
Reimbursement Obligations, interest and other amounts payable to the Agent
under or in connection with any Facility Letter of Credit immediately when due,
irrespective of any claim, set-off, defense or other right which the Borrowers
or any Subsidiary may have at any time against the Issuer or any other Person,
under all circumstances, including without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or any of the
other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right which the
Trust or any Subsidiary may have at any time against a beneficiary named in a
Facility Letter of Credit or any transferee of any Facility Letter of Credit
(or any Person for whom any such transferee may be acting), the Issuer, any
Lender, or any other Person, whether in connection with this Agreement, any
Facility Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions between the Trust
or any Subsidiary and the beneficiary
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named in any Facility Letter of Credit);
(iii) any draft, certificate or any other document presented under the
Facility Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect (provided that, if all Reimbursement Obligations have been paid
in full and there is no Default or Unmatured Default, the Issuer shall assign,
without recourse, representation or warranty, to the Borrowers any claim, if
any, it may have against any person that has drawn on a Facility Letter of
Credit pursuant to a draft, certificate or other document which was forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being true or inaccurate in any respect pursuant to such Facility Letter of
Credit);
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents;
(v) the occurrence of any Default or Unmatured Default.
(b) The Issuer shall promptly notify the Borrowers of any draw under a
Facility Letter of Credit. The Borrowers shall reimburse the Issuer for
drawings under a Facility Letter of Credit issued by it no later than the
Business Day after the payment by the Issuer. Any Reimbursement Obligation
with respect to any Facility Letter of Credit shall bear interest from the date
of the relevant drawings under the pertinent Facility Letter of Credit until
paid at the Overdue Rate.
2.2.5. Participation. (a) Immediately upon issuance by the Issuer of any
Facility Letter of Credit in accordance with the procedures set forth in
Section 2.2.3 each Revolving Credit Lender shall be deemed to have irrevocably
and unconditionally purchased and received from the Issuer, without recourse or
warranty, an undivided interest and participation equal to its Pro Rata Share
in such Facility Letter of Credit (including, without limitation, all
obligations of the Borrowers with respect thereto) and any security therefor or
guaranty pertaining thereto; provided, that a Letter of Credit issued by the
Issuer shall not be deemed to be a Facility Letter of Credit for purposes of
this Section 2.2.5 if the Issuer shall have received written notice from any
Revolving Credit Lender on or before one Business Day prior to the date of its
issuance of such Letter of Credit that one or more of the conditions contained
in Section 4.2 is not then satisfied, and, in the event the Issuer receives
such a notice, it shall have no further obligation to issue any Letter of
Credit until such notice is withdrawn by that Revolving Credit Lender or such
condition has been effectively waived in accordance with the provisions of this
Agreement.
(b) In the event that the Issuer makes any payment under any Facility
Letter of Credit and the Borrowers shall not have repaid such amount to the
Issuer pursuant to Section 2.2.4, the Issuer shall promptly notify each
Revolving Credit Lender of such failure, and each Revolving Credit Lender shall
promptly and unconditionally pay to the Agent for the account of the Issuer the
amount
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of such Revolving Credit Lender's Pro Rata Share of the unreimbursed amount of
any such payment. If any Revolving Credit Lender fails to make available to
the Issuer, any amounts due to the Issuer pursuant to this Section 2.2.5(b),
the Issuer shall be entitled to recover such amount, together with interest
thereon at the Federal Funds Effective Rate, for the first three Business Days
after such Revolving Credit Lender receives such notice and thereafter, at the
Floating Rate, payable (i) on demand, (ii) by setoff against any payments made
to the Issuer for the account of such Revolving Credit Lender or (iii) by
payment to the Issuer by the Agent of amounts otherwise payable to such
Revolving Credit Lender under this Agreement. The failure of any Revolving
Credit Lender to make available to the Agent its Pro Rata Share of the
unreimbursed amount of any such payment shall not relieve any other Revolving
Credit Lender of its obligation hereunder to make available to the Agent its
Pro Rata Share of the unreimbursed amount of any payment on the date such
payment is to be made, but no Revolving Credit Lender shall be responsible for
the failure of any other Revolving Credit Lender to make available to the Agent
its Pro Rata Share of the unreimbursed amount of any payment on the date such
payment is to be made.
(c) Whenever the Issuer receives a payment on account of a Reimbursement
Obligation, including any interest thereon, it shall promptly pay to each
Revolving Credit Lender which has funded its participating interest therein, in
immediately available funds, an amount equal to such Revolving Credit Lender's
Pro Rata Share thereof.
(d) The obligations of a Revolving Credit Lender to make payments to the
Agent with respect to a Facility Letter of Credit shall be absolute,
unconditional and irrevocable, not subject to any counterclaim, set-off,
qualification or exception whatsoever and shall be made in accordance with the
terms and conditions of this Agreement under all circumstances.
(e) In the event any payment by the Borrowers or any Subsidiary received
by the Agent with respect to a Facility Letter of Credit and distributed by the
Agent to the Revolving Credit Lenders on account of their participations is
thereafter set aside, avoided or recovered from the Agent in connection with
any receivership, liquidation, reorganization or bankruptcy proceeding, each
Revolving Credit Lender which received such distribution shall, upon demand by
the Agent, contribute such Revolving Credit Lender's Pro Rata Share of the
amount set aside, avoided or recovered together with interest at the rate
required to be paid by the Agent upon the amount required to be repaid by it.
2.2.6. Compensation for Facility Letters of Credit. (a) The Issuer shall
have the right to receive, solely for its own account, an issuance fee of 0.25%
per annum on the average daily undrawn amount under each Facility Letter of
Credit issued by it as well as the Issuer's reasonable and customary costs of
issuing and servicing the Facility Letters of Credit.
(b) The Borrowers shall pay to the Agent, for the benefit of the
Revolving Credit
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Lenders, a fee computed at the Applicable Margin calculated on the maximum
amount available to be drawn from time to time under each Facility Letter or
Credit, which fee shall be paid annually in advance at the time each Facility
Letter of Credit is issued for the period from and including the date of
issuance thereof to and including the stated expiry date thereof.
2.2.7. Letter of Credit Collateral Account. The Borrowers hereby agree
that they will, until the final expiration date of any Facility Letter of
Credit and thereafter as long as any amount is payable to the Lenders in
respect of any Facility Letter of Credit, maintain a special collateral account
(the "Letter of Credit Collateral Account") at the Agent's office at the
address specified pursuant to Article XIII, in the name of the Borrowers but
under the sole dominion and control of the Agent, for the benefit of the
Lenders and in which the Borrowers shall have no interest other than as set
forth in Section 8.1. The Borrowers are not required by this Section 2.2.7 to
deposit any funds in the Letter of Credit Collateral Account, and the
obligation to make deposits into the Letter of Credit Collateral Account are
described in Section 8.1. The Agent will invest any funds on deposit from time
to time in the Letter of Credit Collateral Account in certificates of deposit
of the Agent having a maturity not exceeding 30 days. Nothing in this Section
2.2.7 shall either obligate the Agent to require the Borrowers to deposit any
funds in the Letter of Credit Collateral Account or limit the right of the
Agent to release any funds held in the Letter of Credit Collateral Account
other than as required by Section 8.1.
2.2.8. Nature of Obligations. (a) As among the Borrowers, the Issuer and
the Lenders, the Borrowers assumes all risks of the acts and omissions of, or
misuse of the Facility Letters of Credit by, the respective beneficiaries of
the Facility Letters of Credit. In furtherance and not in limitation of the
foregoing, the Issuer and the Lenders shall not be responsible for (i) the
forms, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of any Facility Letter of Credit, even if it should in fact prove to
be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (ii) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer of assign a Facility Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason; (iii) failure of
the beneficiary of a Facility Letter of Credit to comply fully with conditions
required in order to draw upon such Facility Letter of Credit; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise; (v) errors in interpretation of
technical terms; (vi) misapplication by the beneficiary of a Facility Letter of
Credit of the proceeds of any drawing under such Facility Letter of Credit;
(vii) any consequences arising from causes beyond the control of the Issuer or
the Lenders.
(b) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuer or
any Lender under or in connection with the Facility Letters of Credit or any
related certificates, if taken or omitted in good faith, shall not put
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the Issuer or such Lender under any resulting liability to the Borrowers or
relieve the Borrowers of any of their obligations hereunder to the Issuer, the
Agent or any Lender.
2.3. Ratable Loans. Each Advance hereunder shall consist of Loans made
from the several Lenders ratably in proportion to the ratio that their
respective Revolving Credit Commitments for such Loan bear to the Aggregate
Revolving Credit Commitment for such Loan.
2.4. Types of Advances. The Advances may be Floating Rate Advances or
Eurodollar Advances, or a combination thereof, selected by the Borrowers in
accordance with Sections 2.8 and 2.9.
2.5. Revolving Credit Commitment Fee; Reductions in Aggregate Revolving
Credit Commitment. The Borrowers agree to pay to the Agent for the account of
each Revolving Credit Lender a commitment fee at the rate of the Applicable
Margin on the daily unborrowed portion of such Lender's Revolving Credit
Commitment from the date hereof to and including the Termination Date, payable
on each Payment Date hereafter and on the Termination Date. The Borrowers may
permanently reduce the Aggregate Revolving Credit Commitment in whole, or in
part ratably among the Lenders in amounts of not less than $5,000,000 and
integral multiples of $1,000,000 thereafter, upon at least one Business Days'
written notice to the Agent, which notice shall specify the amount of any such
reduction, provided, however, that the amount of the Aggregate Revolving Credit
Commitment may not be reduced below the aggregate principal amount of the
outstanding Revolving Credit Loans and Facility Letters of Credit. All accrued
commitment fees shall be payable on the effective date of any termination of
the obligations of the Revolving Credit Lenders to make Revolving Credit Loans
hereunder.
2.6. Minimum Amount of Each Advance. Each Eurodollar Advance shall be in
the minimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess
thereof), and each Floating Rate Advance shall be in the minimum amount of
$5,000,000 (and in multiples of $1,000,000 if in excess thereof), provided,
however, that any Floating Rate Advance may be in the amount of the unused
Aggregate Revolving Credit Commitment.
2.7. Principal Payments. Unless earlier payment is required under this
Agreement, the Borrowers shall pay to the Revolving Credit Lenders on the
Termination Date the entire outstanding principal amount of the Revolving
Credit Loans and Facility Letters of Credit outstanding to it. If the
Revolving Credit Loans and Facility Letters of Credit at any time exceed the
amount allowed pursuant to Section 2.1(b), the Borrowers shall prepay the
Revolving Credit Loans and Facility Letters of Credit by an amount equal to or
greater than such excess.
2.8. Method of Selecting Types and Eurodollar Interest Periods for New
Advances. The Borrowers shall select the Type of Advance and, in the case of
each Eurodollar Advance, the
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Eurodollar Interest Period applicable to each Advance from time to time. The
Borrowers shall give the Agent irrevocable notice (a "Borrowing Notice") not
later than 10:00 a.m. (Detroit time) at least one Business Day before the
Borrowing Date of each Floating Rate Advance and three Business Days before the
Borrowing Date for each Eurodollar Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Eurodollar Interest
Period applicable thereto.
Not later than noon (Detroit time) on each Borrowing Date, each Lender shall
make available its Loan or Loans, in funds immediately available in Detroit to
the Agent at its address specified pursuant to Article XIII. The Agent will
make the funds so received from the Lenders available to the Borrowers at the
Agent's aforesaid address. Notwithstanding anything herein to the contrary,
the Borrowers acknowledge and agree that they may not elect the Eurodollar Rate
for any Loan prior to the date ninety (90) days after the Effective Date,
provided that NBD shall consider alternative interest rates during such ninety
(90) days as agreed upon between NBD and the Borrowers.
2.9. Conversion and Continuation of Outstanding Advances. Floating Rate
Advances shall continue as Floating Rate Advances unless and until such
Floating Rate Advances are converted into Eurodollar Advances. Each Eurodollar
Advance shall continue as a Eurodollar Advance until the end of the then
applicable Eurodollar Interest Period therefor, at which time such Eurodollar
Advance shall be automatically converted into a Floating Rate Advance unless
the Borrowers shall have given the Agent a Conversion/Continuation Notice
requesting that, at the end of such Eurodollar Interest Period, such Eurodollar
Advance either continue as a Eurodollar Advance for the same or another
Eurodollar Interest Period or be converted into an Advance of another Type.
Subject to the terms of Section 2.6, the Borrowers may elect from time to time
to convert all or any part of an Advance of any Type into any other Type or
Types of Advances; provided that any conversion of any Eurodollar Advance shall
be made on, and only on, the last day of the Eurodollar Interest Period
applicable thereto. The Borrowers shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of an Advance or
continuation of a Eurodollar Advance not later than 10:00 a.m. (Detroit time)
at least one Business Day, in the case of a conversion into a Floating Rate
Advance or three Business Days, in the case of a conversion into or
continuation of a Eurodollar Advance, prior to the date of the requested
conversion or continuation, specifying:
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(i) the requested date which shall be a Business Day, of such conversion
or continuation,
(ii) the aggregate amount and Type of the Advance which is to be converted
or continued, and
(iii) the amount and Type(s) of Advance(s) into which such Advance is to
be converted or continued and, in the case of a conversion into or continuation
of a Eurodollar Advance, the duration of the Eurodollar Interest Period
applicable thereto.
2.10. Changes in Interest Rate, etc. Each Floating Rate Advance shall bear
interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is converted from a Eurodollar
Advance into a Floating Rate Advance pursuant to Section 2.9 to but excluding
the date it becomes due or is converted into a Eurodollar Advance pursuant to
Section 2.9 hereof, at a rate per annum equal to the Floating Rate for such
day. Changes in the rate of interest on that portion of any Advance maintained
as a Floating Rate Advance will take effect simultaneously with each change in
the Alternate Prime Rate. Each Eurodollar Advance shall bear interest on the
outstanding principal amount thereof from and including the first day of the
Eurodollar Interest Period applicable thereto to (but not including) the last
day of such Eurodollar Interest Period at the interest rate determined as
applicable to such Eurodollar Advance. No Eurodollar Interest Period may end
after, with respect to any Revolving Credit Loan, the Termination Date.
2.11. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.8 or 2.9, during the continuance of a Default
or Unmatured Default the Required Lenders may, at their option, by notice to
the Borrowers (which notice may be revoked at the option of the Required
Lenders notwithstanding any provision of Section 8.2 requiring unanimous
consent of the Lenders to changes in interest rates), declare that no Advance
may be made as, converted into or continued as a Eurodollar Advance. During
the continuance of a Default the Required Lenders may, at their option, by
notice to the Borrowers (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that
each Advance shall bear interest at the Overdue Rate.
2.12. Method of Payment. All payments of the Obligations hereunder shall
be made, without setoff, deduction, or counterclaim, in immediately available
funds to the Agent at the Agent's address specified pursuant to Article XIII,
or at any other Lending Installation of the Agent specified in writing by the
Agent to the Borrowers, by noon (local time) on the date when due and shall be
applied ratably by the Agent among the Lenders. Each payment delivered to the
Agent for the account of any Lender shall be delivered promptly by the Agent to
such Lender in the same type of funds that the Agent received at its address
specified pursuant to Article XIII or at any Lending
AMENDED AND RESTATED CREDIT AGREEMENT
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Installation specified in a notice received by the Agent from such Lender. The
Agent is hereby authorized to charge the account of any Borrower maintained
with NBD for each payment of principal, interest and fees as it becomes due
hereunder.
2.13. Notes Recordation; Telephonic Notices. Each Lender is hereby
authorized to record the principal amount of each of its Loans and each
repayment on the schedule attached to its Note, provided, however, that neither
the failure to so record nor any error in such recordation shall affect the
Borrowers' obligations under such Note. The Borrowers hereby authorize the
Lenders and the Agent to extend, convert or continue Advances, effect
selections of Types of Advances and to transfer funds based on telephonic or
facsimile notices made by any person or persons the Agent or any Lender in good
faith believes to be an Authorized Officer or authorized to act on behalf of an
Authorized Officer. The Borrowers agree to deliver promptly to the Agent a
written confirmation, if such confirmation is requested by the Agent or any
Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Agent and the Lenders, the records of the Agent and the Lenders shall
govern absent manifest error.
2.14. Interest Payment Dates; Interest and Fee Basis. Interest accrued on
each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, on any date on which
the Floating Rate Advance is prepaid, whether due to acceleration or otherwise,
and at maturity. Interest accrued on that portion of the outstanding principal
amount of any Floating Rate Advance converted into a Eurodollar Advance on a
day other than a Payment Date shall be payable on the date of conversion.
Interest accrued on each Eurodollar Advance shall be payable on the last day of
its applicable Eurodollar Interest Period, on any date on which the Eurodollar
Advance is prepaid, whether by acceleration or otherwise, and at maturity.
Interest accrued on each Eurodollar Advance having an Eurodollar Interest
Period longer than three months shall also be payable on the last day of each
three-month interval during such Eurodollar Interest Period. Interest and
commitment fees shall be calculated for actual days elapsed on the basis of a
360-day year. Interest shall be payable for the day an Advance is made but not
for the day of any payment on the amount paid if payment is received prior to
noon(local time) at the place of payment. If any payment of principal of or
interest on an Advance shall become due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day and, in the case
of a principal payment, such extension of time shall be included in computing
interest in connection with such payment.
2.15. Notification of Advances, Interest Rates, Prepayments and Revolving
Credit Commitment Reductions. Promptly after receipt thereof, the Agent will
notify each Lender of the contents of each Aggregate Revolving Credit
Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice,
and repayment notice received by it hereunder. The Agent will notify each
Lender of the interest rate applicable to each Eurodollar Advance promptly upon
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determination of such interest rate and will give each Lender prompt notice of
each change in the Alternate Prime Rate.
2.16. Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Agent and the Borrowers, designate a Lending Installation through
which Loans will be made by it and for whose account Loan payments are to be
made.
2.17. Non-Receipt of Funds by the Agent. Unless the Borrowers or a
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrowers, a payment of
principal, interest or fees to the Agent for the account of the Lenders, that
it does not intend to make such payment, the Agent may assume that such payment
has been made. The Agent may, but shall not be obligated to, make the amount
of such payment available to the intended recipient in reliance upon such
assumption. If such Lender or the Borrowers, as the case may be, has not in
fact made such payment to the Agent, the recipient of such payment shall, on
demand by the Agent, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period commencing on
the date such amount was so made available by the Agent until the date the
Agent recovers such amount at a rate per annum equal to (i) in the case of
payment by a Lender, the Federal Funds Effective Rate for such day or (ii) in
the case of payment by the Borrowers, the interest rate applicable to the
relevant Loan.
2.18. Mandatory Prepayment in the Event of a Change in Control. Within
30 Business Days prior to the consummation of any transaction which would cause
a Change in Control, the Borrowers shall notify (a "Change in Control Notice")
the Agent and each Lender of such expected transaction, including within such
Change in Control Notice the expected closing date of such transaction. Within
15 Business Days of receipt of such Change in Control Notice by any Lender,
such Lender may, at its option, give notice to the Agent and the Borrowers that
such Lender elects to terminate its Revolving Credit Commitments hereunder.
Unless an earlier date is otherwise agreed upon between the Borrowers, the
Agent and the terminating Lender, such Lender's Revolving Credit Commitments
shall terminate simultaneously with the closing of such transaction and the
Borrowers shall repay at such time all of such Lender's outstanding Loans,
together with accrued interest thereon, any accrued fees with respect to such
Lender's Revolving Credit Commitment, any costs, losses or expenses incurred by
such Lender in connection with such prepayment payable by the Borrower pursuant
to Section 3.4 and any other obligations of the Borrowers to such Lender
hereunder. In the event any of the Lenders do not elect to terminate their
respective Revolving Credit Commitments hereunder, the Borrowers may,
notwithstanding any provision herein to the contrary, make any mandatory
prepayments required under the 1994 Subordinated Debt Documents
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and the 1997 Senior Unsecured Debt Documents so long as such payments would not
cause a Default or Unmatured Default under this Agreement (other than a Default
under Section 6.17 or 6.24).
2.19 Obligations Joint and Several. Anything herein to the contrary
notwithstanding, each Borrower hereby agrees and acknowledges that the
obligation of each Borrower for payment of the Obligations shall be joint and
several with the obligations of each other Borrower hereunder regardless of
which Borrower actually receives the proceeds of any Borrowing. Without
limiting the generality of the foregoing, each Borrower agrees and acknowledges
that it is jointly and severally liable for all Obligations of each Borrower
under the Revolving Credit Commitments even though such Borrower itself may not
borrow for its own account thereunder.
Each Borrower agrees that its joint and several obligation to pay all
Obligations hereunder is irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than the indefeasible
payment in full of the Obligations, and the liability of each Borrower with
respect to the Obligations shall not be affected, reduced or impaired by (i)
consideration of the amount of proceeds of the Loans received by any Borrower
relative to the aggregate amount of the Loans, (ii) consideration of the face
amount of Letters of Credit issued for the account of any Borrower relative to
the aggregate face amount of all Letters of Credit issued hereunder, (iii) the
dissolution or termination of or any increase, decrease or change in personnel
of, any other Borrower, (iv) the insolvency or business failure of, or any
assignment for the benefit of creditors by, or the commencement of any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceedings by or against any other Borrower or (v) the appointment of a
receiver for, or the attachment, restraint of or making or levying of any order
of court or legal process affecting, the property of any other Borrower. Each
Borrower agrees that a separate action or actions may be brought and prosecuted
against such Borrower whether or not action is brought against any other
Borrower and whether or not any other Borrower is joined in any such action or
actions. Any Borrower's payment of a portion, but not all, of the Obligations
shall in no way limit, affect, modify or abridge such Borrower's liability for
that portion of the Obligations which is not paid.
Each Borrower hereby waives any right to require the Agent or any Lender,
as a condition of payment or performance of the Obligations by such Borrower,
to proceed against any other Borrower or any other Person, to exhaust any
security held from any Borrower, or pursue any other remedy in the power of the
Agent or any Lender. Each Borrower hereby waives any defense arising by reason
of incapacity, lack of authority or any disability or other defense or benefits
that may be derived or afforded by law which would limit the liability of or
exonerate any guarantor or surety with respect to the Obligations, or which may
conflict with the terms and provisions of this Agreement.
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Any indebtedness of a Borrower now or hereafter held by any other Borrower
is hereby subordinated in right of payment to the Obligations, and any such
indebtedness of a Borrower to any other Borrower collected or received by such
other Borrower after an Event of Default has occurred and is continuing shall
be held in trust for the Agent on behalf of the Lenders and shall forthwith be
paid over to the Agent for the benefit of the Lenders to be credited and
applied against the Obligations but without affecting, impairing or limiting in
any manner the liability of such other Borrower under any other provision of
this Agreement.
2.20 Contribution Among Borrowers and Guarantors. In order to provide for
just and equitable contribution among the Borrowers and the Guarantors, the
Borrowers and the Guarantors shall execute a subrogation and contribution
agreement (which shall be deemed a Loan Document) in form and substance
satisfactory to the Required Lenders.
2.21. Financial Condition of Borrowers. Neither the Agent nor any Lender
shall have any obligation to any Borrower or any Guarantor to disclose or
discuss with such Borrower or any Guarantor the Agent or any Lender's
assessment of the financial condition of any Borrower or any Guarantor, and
each Borrower and each Guarantor hereby waives any obligation of any Lender to
disclose any matter, fact or thing relating to the business, operations or
conditions of any Borrower or any Guarantor now or hereafter known by the Agent
or any Lender. Each Borrower and each Guarantor assumes the responsibility for
being and keeping informed of the financial condition of each other Borrower
and each Guarantor and of all circumstances bearing upon the risk of nonpayment
of the Secured Obligations by any other Borrower. No Lender shall have any
obligation to any Borrower or any Guarantor arising from any Lender's
assessment of, or failure to assess, any Borrower's or any Guarantor's
financial condition in connection with the granting of any Loans or other
extensions of credit hereunder.
2.22. Collateral Security; Further Assistance. (a) As security for the
payment of the Obligations, the Borrowers shall cause to be granted to the
Agent, for the ratable benefit of the Lenders, a Lien on and security interest
in all of the following, whether now or hereafter existing or acquired: (i)
all of the shares of capital stock of each Domestic Subsidiary now or hereafter
owned by any Borrower or any Guarantor and all proceeds thereof, all as more
specifically described in the Pledge Agreement; and (ii) not less than 65% (or
100% if requested by the Agent) of the outstanding shares of capital stock of
each Foreign Subsidiary now or hereafter directly owned by any Borrower or any
Guarantor and all proceeds thereof, all as more specifically described in the
Pledge Agreements; and all other Property now or hereafter owned by any
Borrower or any Guarantor and all proceeds thereof, all as more specifically
described in the Collateral Documents.
(b) Concurrently with the consummation of any Acquisition or the
formation of any new Subsidiary of any Borrower which is permitted hereunder,
the Borrowers shall:
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(i) in the case of an Acquisition of stock by any Borrower or a
Subsidiary or the formation of a new Subsidiary: (A) deliver or cause to be
delivered to the Agent, for the ratable benefit of the Lenders, (I) in the case
of the Acquisition of the stock of a Domestic Subsidiary or the formation of a
Domestic Subsidiary, all of the certificates representing the capital stock (or
other instruments or securities evidencing ownership) of such new Domestic
Subsidiary which is being acquired or formed, and (II) in the case of the
Acquisition of the stock of a Foreign Subsidiary or the formation of a Foreign
Subsidiary, all of the certificates representing not less than 65% (or 100% if
requested by the Agent) of the outstanding capital stock (or other instruments
or securities evidencing ownership) of such new Foreign Subsidiary which is
being acquired or formed, as additional collateral for the Obligations, to be
held by the Agent; (B) cause each new Domestic Subsidiary and, if requested by
the Agent, each Foreign Subsidiary which is being acquired or formed to deliver
to the Agent a Guaranty and Collateral Documents, granting to the Agent, for
the ratable benefit of the Lenders, a Lien on and security interest in all of
the Property now or hereafter owned by such new Subsidiary; and (C) deliver to
the Agent such other documents as the Agent, individually or on behalf of the
Lenders, may have reasonably requested;
(ii) in any case, provide such other documentation to the Agent,
including, without limitation, one or more opinions of counsel satisfactory to
the Agent, environmental surveys, articles of incorporation, by-laws and
resolutions, which in the reasonable opinion of the Agent is necessary or
advisable in connection with such Acquisition or formation of such new
Subsidiary.
2.23. Liability of Grantor, Beneficiary or Trustee. The grantor or
Beneficiary or the Special Advisor of the Trust shall not be subject to any
personal liability whatsoever under the Loan Documents. The Loan Documents and
each representation, warranty, undertaking and agreement herein made on the
part of the Trust is made and intended not as a personal representation,
warranty, undertaking and agreement by the VHT Trustee or for the purpose or
with the intention of binding the VHT Trustee personally but is made and
intended for the purpose of binding only the trust estate held pursuant to the
Trust Agreement and this Agreement is executed and delivered by the VHT Trustee
solely in the exercise of the powers expressly conferred upon it as VHT
Trustee; and no personal liability or responsibility is assumed hereunder by
nor shall this Agreement at any time be enforceable against the VHT Trustee or
its successor in trust on account of this Agreement or any representation,
warranty, covenant, undertaking or agreement hereunder of the VHT Trustee,
either express or implied, all such personal liability, if any, being expressly
waived. Except as expressly provided in the preceding sentence, all liability
hereunder of the Trust shall be limited solely to recourse against the assets
of the trust estate held pursuant to the Trust Agreement or otherwise of the
Trust.
2.24. Application of Payments with Respect to Defaulting Lenders. No
payments of principal, interest or fees delivered to the Agent for the account
of any Defaulting Lender shall be delivered by the Agent to such Defaulting
Lender. Instead, such payments shall, for so long as such
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Defaulting Lender shall be a Defaulting Lender, be held by the Agent, and the
Agent is hereby authorized and directed by all parties hereto to hold such
funds in escrow and apply such funds as follows:
(i) First, if applicable to any payments due to the Agent pursuant to
Section 2.1(c) and to the Issuer under Section 2.2.5; and
(ii) Second, to Loans required to be made by such Defaulting Lender on any
Borrowing Date to the extent such Defaulting Lender fails to make such Loans.
Notwithstanding the foregoing, upon the termination of the Aggregate Revolving
Credit Commitment and the payment and performance of all of the Obligations
(other than those owing to a Defaulting Lender), any funds then held in escrow
by the Agent pursuant to the preceding sentence shall be distributed to each
Defaulting Lender, pro rata in proportion to amounts that would be due to each
Defaulting Lender but for the fact that it is a Defaulting Lender.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the compliance
of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation to any
tax, duty, charge or withholding on or from payments due from the Borrowers
(excluding federal taxation of the overall net income of any Lender or
applicable Lending Installation), or changes the basis of taxation of payments
to any Lender in respect of its Loans or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurodollar Advances), or
(iii) imposes any other condition the result of which is to increase the
cost to any Lender or any applicable Lending Installation of making, funding or
maintaining loans or reduces any amount receivable by any Lender or any
applicable Lending Installation in connection with loans, or requires any
Lender or any applicable Lending Installation to make any payment calculated by
reference to the amount of loans held or interest received by it, by an amount
deemed material by
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such Lender,
then, within 15 days of demand by such Lender, the Borrowers shall pay such
Lender that portion of such increased expense incurred or reduction in an
amount received, without duplication of any other amount claimed pursuant to
this Section 3.1, which such Lender determines is attributable to making,
funding and maintaining its Loans and its Revolving Credit Commitments.
3.2. Changes in Capital Adequacy Regulations. If a Lender determines the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrowers shall pay such Lender the amount necessary, without
duplication of any other amount claimed pursuant to this Section 3.2, to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans or its obligation to make Loans hereunder (after taking
into account such Lender's policies as to capital adequacy). "Change" means
(i) any change after the date of this Agreement in the Risk-Based Capital
Guidelines or (ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (i) the
risk-based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (ii) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
3.3. Availability of Types of Advances. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (i) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available or (ii) the interest rate applicable to a Type of Advance does not
accurately reflect the cost of making or maintaining such Advance, then the
Agent shall suspend the availability of the affected Type of Advance and
require any Eurodollar Advances of the affected Type to be repaid.
3.4. Funding Indemnification. If any payment of a Eurodollar Advance
occurs on a date which is not the last day of the applicable Eurodollar
Interest Period, whether because of acceleration, prepayment or otherwise, or a
Eurodollar Advance is not made on the date specified by the Borrowers for any
reason other than default by the Lenders, the Borrowers will indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any
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loss or cost in liquidating or employing deposits acquired to fund or maintain
the Eurodollar Advance.
3.5. Alternative Lending Installation; Lender Statements; Survival of
Indemnity. To the extent reasonably possible, each Lender shall designate an
alternate Lending Installation with respect to its Eurodollar Loans to reduce
any liability of the Borrowers to such Lender under Sections 3.1 and 3.2 or to
avoid the unavailability of a Type of Advance under Section 3.3, so long as
such designation is not disadvantageous to such Lender. Each Lender shall
deliver a written statement of such Lender to the Borrowers (with a copy to the
Agent) as to the amount due, if any, under Section 3.1, 3.2 or 3.4. Such
written statement shall set forth in reasonable detail the calculations upon
which such Lender determined such amount and shall be final, conclusive and
binding on the Borrowers in the absence of manifest error. Determination of
amounts payable under such Sections in connection with a Eurodollar Loan shall
be calculated as though each Lender funded its Eurodollar Loan through the
purchase of a deposit of the type and maturity corresponding to the deposit
used as a reference in determining the Eurodollar Rate applicable to such Loan,
whether in fact that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement of any Lender shall be payable on
demand after receipt by the Borrowers of such written statement. The
obligations of the Borrowers under Sections 3.1, 3.2 and 3.4 shall survive
payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT; WITHHOLDING TAX EXEMPTION
4.1. Effectiveness of Amendments. The amendments to the 1996 Credit
Agreement embodied in this Agreement shall become effective only upon receipt
by the Agent of all of the documents and other materials described below, with
sufficient copies for the Lenders, and satisfaction of all of the other
conditions set forth below, to wit:
(a) Copies of the articles of incorporation of each Borrower, and a
certificate of good standing, both certified by the appropriate governmental
officer in its jurisdiction of incorporation.
(b) Copies, certified by the Secretary or Assistant Secretary of each
Borrower, of its by-laws and of its Board of Directors' resolutions (and
resolutions of other bodies, if any are deemed necessary by counsel for any
Lender) authorizing the execution of the Loan Documents.
(c) An incumbency certificate, executed by the Secretary or Assistant
Secretary of each Borrower, which shall identify by name and title and bear the
signature of the officers of each Borrower authorized to sign the Loan
Documents and to make borrowings hereunder, upon which
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certificate the Agent and the Lenders shall be entitled to rely until informed
of any change in writing by such Borrower.
(d) A certificate, signed by the chief financial officer of each Borrower,
stating that on the Effective Date no Default or Unmatured Default has occurred
and is continuing.
(e) A written opinion of the Borrowers' counsel, addressed to the Lenders,
in substantially the form of Exhibit F hereto.
(f) Notes payable to the order of each of the Lenders.
(g) Written money transfer instructions, in substantially the form of
Exhibit G hereto (to the extent required by the Agent), addressed to the Agent
and signed by an Authorized Officer, together with such other related money
transfer authorizations as the Agent may have reasonably requested.
(h) The Collateral Documents duly executed on behalf of the Borrowers, as
the case may be, or amendments thereto, confirming the continuing effectiveness
of such documents, granting to the Lenders and the Agent the collateral and
security intended to be provided pursuant to Section 2.22, together with (to
the extent not previously delivered in connection with the 1996 Credit
Agreement):
(i) Recordation, filing and other action (including payment of any
applicable taxes or fees) in such jurisdictions as the Lenders or the Agent may
deem necessary or appropriate with respect to the Security Documents, including
the filing of financing statements and similar documents which the Lenders or
the Agent may deem necessary or appropriate to create, preserve or perfect the
liens, security interests and other rights intended to be granted to the
Lenders or the Agent thereunder, together with Uniform Commercial Code record
searches in such offices as the Lenders or the Agent may request;
(ii) Policies of mortgage title insurance issued by an insurer and in
amounts satisfactory to the Lenders and the Agent, insuring the interest of the
Lenders and the Agent under the Mortgages without standard exceptions and
without any special exceptions not acceptable to the Lenders and the Agent and
containing such further endorsements, affirmative coverage and other terms as
the Lenders and the Agent may request;
(iii) Surveys of the property subject to the Mortgages made by a land
surveyor licensed in the State in which such property is located and acceptable
to the Lenders and the Agent complying with the Minimum Standard Detail
Requirements for Land Title Surveys as adopted by the American Title
Association and the American Congress on Surveying and Mapping and showing
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such details as the Lenders and the Agent may request, certified to the Lenders
and the Agent and the issuer of such mortgage title insurance policy in form
acceptable to the Lenders and the Agent, or such surveys recertified by such a
surveyor sufficient to permit the issuers of all mortgage title insurance
policies to remove their standard exceptions;
(iv) A schedule setting forth all real property leased by each
Borrower, together with copies of the related leases, certified as true and
correct as of the Effective Date by a duly authorized officer of such Borrower,
and an agreement of each landlord under such leases, in form and substance
acceptable to the Lenders and the Agent, waiving its distraint, lien and
similar rights with respect to any property subject to the Security Documents
and agreeing to permit the Lenders and the Agent to enter such premises in
connection therewith;
(v) Evidence that the casualty and other insurance required pursuant
to the Loan Documents is in full force and effect; and
(vi) Appraisals of all real Property and equipment, in form reasonably
satisfactory to the Agent, performed by an appraiser approved by the Agent and
conforming to the requirements of the Financial Institutions Reform, Recovery
and Enforcement Act.
(i) The terms and provisions of the 1997 Senior Unsecured Notes and of the
other 1997 Senior Unsecured Debt Documents shall have been approved by the
Agent and the Lenders, which approval shall be deemed given upon delivery of
such Lender's signature page to this Agreement.
(j) The 1997 Senior Unsecured Debt Documents shall have been executed and
delivered by all parties thereto and shall be in full force and effect, the
Borrowers shall have issued and sold the 1997 Senior Unsecured Notes and
received not less than $205,000,000 less the amount of all fees and costs in
connection with such issuance and sale, and the Term Notes outstanding under
the 1996 Credit Agreement shall have been paid in full.
(k) Copies of all opinions delivered to or for the benefit of the holders
of the 1997 Senior Unsecured Notes or the Trustee under the Indenture pursuant
to which such Notes are issued.
(l) Copies of all governmental and nongovernmental consents, approvals,
authorizations, declarations, registrations or filings required on the part of
any Borrower in connection with the execution, delivery and performance of the
Loan Documents, or the transactions contemplated hereby or thereby or as a
condition to the legality, validity or enforceability of the Loan Documents,
certified as true and correct in full force and effect as of the Effective Date
by a duly authorized officer of the Borrowers, or if none are required, a
certificate of such officer to that effect;
(m) Payment of all fees owing by the Borrowers as of the Effective Date.
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(n) An Environmental Certificate executed by each Borrower together with
all environmental audits and reports required by the Agent.
(o) Evidence satisfactory to the Required Lenders that no Material
Adverse Effect has occurred since March 31, 1997.
(p) Delivery of such other agreements and documents, and the
satisfaction of such other conditions as may be required by the Agent,
including without limitation a subrogation and contribution agreement executed
by the Borrowers, such funding instructions, sources and uses certificate and
other certificates required by the Agent and such evidence of the perfection
and priority of all liens and security interests as required by the Agent.
4.2. Each Advance. The Lenders shall not be required to make any Advance
unless on the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V of this
Agreement and the other representations and warranties contained in the Loan
Documents are true and correct as of such Borrowing Date except to the extent
any such representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty shall be true and correct
on and as of such earlier date.
(iii) All legal matters incident to the making of such Advance shall be
satisfactory to the Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance shall constitute a
representation and warranty by the Borrowers that the conditions contained in
Sections 4.2(i) and (ii) have been satisfied. Any Lender may require a duly
completed compliance certificate in substantially the form of Exhibit H hereto
as a condition to making an Advance.
4.3. Withholding Tax Exemption. At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to the Trust
and the Agent two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or their equivalents, certifying in either case that
such Lender is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes.
Each Lender which so delivers a Form 1001 or 4224 or their equivalents further
undertakes to deliver to the Trust and the Agent two additional copies of such
form (or a successor form) on or before the date that such form expires
(currently, three successive
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calendar years for Form 1001 and one calendar year for Form 4224 or their
equivalents) or becomes obsolete or after the occurrence of any event requiring
a change in the most recent forms so delivered by it, and such amendments
thereto or extensions or renewals thereof as may be reasonably requested by the
Borrower or the Agent, in each case certifying that such Lender is entitled to
receive payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender advises the Trust and the Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income
tax.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Lenders that:
5.1. Corporate Existence and Standing. Each of the Trust and its
Subsidiaries is a corporation or trust duly incorporated or organized as the
case may be, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted.
5.2. Authorization and Validity. The Borrowers and each Guarantor has the
corporate and trust power, as the case may be, and authority and legal right to
execute and deliver the Loan Documents and to perform its obligations
thereunder. The execution and delivery by each Borrower and each Guarantor of
the Loan Documents to which it is a party and the performance of its
obligations thereunder have been duly authorized by proper corporate or trust
proceedings, and the Loan Documents constitute legal, valid and binding
obligations of each Borrower and each Guarantor enforceable against each
Borrower and each Guarantor in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
5.3. No Conflict; Government Consent. Neither the execution and delivery
by each Borrower and each Guarantor of the Loan Documents to which it is a
party, nor the consummation of the transactions therein contemplated, nor
compliance with the provisions thereof will violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on the Trust or any
of its Subsidiaries or the Trust's or any Subsidiary's articles of
incorporation or by-laws or Trust Agreement or the provisions of any indenture,
instrument or agreement to which the Trust or any
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of its Subsidiaries is a party or is subject, or by which it, or its Property,
is bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien in, of or on the Property of the Trust or
its Subsidiary pursuant to the terms of any such indenture, instrument or
agreement. No order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by, or other action
in respect of any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, any of the Loan Documents.
5.4. Financial Statements. The December 31, 1996 and the March 31, 1997
consolidated financial statements of the Trust and its Subsidiaries heretofore
delivered to the Lenders were prepared in accordance with generally accepted
accounting principles in effect on the date such statements were prepared and
fairly present the consolidated financial condition and operations of the Trust
and its Subsidiaries at such date and the consolidated results of their
operations for the period then ended.
5.5. Material Adverse Change. Since March 31, 1997, there has been no
change in the business, Property, prospects, condition (financial or otherwise)
or results of operations of the Trust and its Subsidiaries which could have a
Material Adverse Effect.
5.6. Taxes. The Trust and its Subsidiaries have filed all United States
federal tax returns and all other tax returns which are required to be filed
and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Trust or any of its Subsidiaries, except such taxes,
if any, as are being contested in good faith and as to which adequate reserves
have been provided in accordance with Agreement Accounting Principles and as to
which no Lien exists. The United States income tax returns of the Trust and
its Subsidiaries have been audited by the Internal Revenue Service as shown on
Schedule 5.6. No tax liens have been filed and no claims are being asserted
with respect to any such taxes. The charges, accruals and reserves on the
books of the Trust and its Subsidiaries in respect of any taxes or other
governmental charges are adequate.
5.7. Litigation and Contingent Obligations. Other than as set forth on
Schedule 5.7, there is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the knowledge of any of their officers,
threatened against or affecting the Trust or any of its Subsidiaries which
could have a Material Adverse Effect or which seeks to prevent, enjoin or delay
the making of the Loans or Advances or which seeks to declare a default or
enforce any remedies under the 1994 Subordinated Debt Documents, and there is
no basis for any of the foregoing. The Trust and its Subsidiaries have no
material contingent obligations not provided for or disclosed in the financial
statements referred to in Section 5.4.
5.8. Subsidiaries. Schedule 5.8 hereto contains an accurate list of all
Subsidiaries of the
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Trust as of the date of this Agreement, setting forth their respective
jurisdictions of incorporation and the percentage of their respective capital
stock owned by the Trust or other Subsidiaries. All of the issued and
outstanding shares of capital stock of such Subsidiaries have been duly
authorized and issued and are fully paid and non-assessable.
5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do not
in the aggregate exceed $4,000,000 at any time within 10 days after the
Borrowers know of the amount of such Unfunded Liabilities. Neither the Trust
nor any other member of the Controlled Group has incurred, or is reasonably
expected to incur, any withdrawal liability to Multiemployer Plans. Each Plan
complies in all material respects with all applicable requirements of law and
regulations, no Reportable Event has occurred with respect to any Plan, neither
the Trust nor any other members of the Controlled Group has withdrawn from any
Plan or initiated steps to do so, and no steps have been taken to reorganize or
terminate any Plan.
5.10. Accuracy of Information. No information, exhibit or report
furnished by the Trust or any of its Subsidiaries to the Agent or to any Lender
in connection with the negotiation of, or compliance with, the Loan Documents
contained any material misstatement of fact or omitted to state a material fact
or any fact necessary to make the statements contained therein not misleading.
5.11. Regulation U. Margin stock (as defined in Regulation U) constitutes
less than 25% of those assets of the Trust and its Subsidiaries which are
subject to any limitation on sale, pledge, or other restriction hereunder.
5.12. Material Agreements. Neither the Trust nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which could have a Material Adverse Effect. Neither the
Trust nor any Subsidiary is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in (i)
any agreement to which it is a party, which default could have a Material
Adverse Effect or (ii) any agreement or instrument evidencing or governing
Indebtedness.
5.13. Compliance With Laws. Other than with respect to Environmental Laws
(which is addressed in Section 5.16), the Trust and its Subsidiaries have
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property if failure to comply
could reasonably be expected to have a Material Adverse Effect.
5.14. Ownership of Properties. Except as set forth on Schedule 5.14
hereto, on the date of this Agreement, the Trust and its Subsidiaries will have
good title, free of all Liens other than those permitted by Section 6.15, to
all of the Property and assets reflected in the financial statements as
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owned by it.
5.15. Plan Assets; Prohibited Transactions. The Trust is not an entity
deemed to hold "plan assets" within the meaning of 29 C.F.R. 2510.3-101 of an
employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to
Title I of ERISA or any plan (within the meaning of Section 4975 of the Code);
and neither the execution of this Agreement and the making of Loans hereunder
do not give rise to a prohibited transaction within the meaning of Section 406
of ERISA or Section 4975 of the Code.
5.16. Environmental Matters. All representations and warranties contained
in the Environmental Certificate are true and correct.
5.17. Investment Company Act. Neither the Trust nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Trust Act of 1940, as amended.
5.18. Public Utility Holding Company Act. Neither the Trust nor any
Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
5.19. Subordinated Indebtedness. The Secured Obligations constitute
Senior Indebtedness, Permitted Indebtedness and Designated Senior Indebtedness
(and is hereby specifically designated as such) under the 1994 Subordinated
Debt Documents, and are entitled to all of the benefits of the subordination
provisions of the 1994 Subordinated Debt Documents. The incurrence of the
Secured Obligations is, and will at all times be incurred, in full compliance
with the 1994 Subordinated Debt Documents and the 1997 Senior Unsecured Debt
Documents and does not result in any event of default under the 1994
Subordinated Debt Documents or the 1997 Senior Unsecured Debt Documents, or any
event or condition which could result in such an event of default. Other than
the Secured Obligations and the 1997 Senior Unsecured Notes, there is no other
Designated Senior Indebtedness under the 1994 Subordinated Debt Documents.
Attached hereto as Schedule 5.19 is a true, correct and complete copy of the
1996 Subordinated Supplemental Indenture and any agreements executed in
connection therewith. The 1996 Subordinated Supplemental Indenture has not
been amended or modified and is in full force and effect and is binding upon
all holders of the 1994 Subordinated Debt. No Event of Default has occurred
and is continuing under the 1994 Subordinated Debt Documents or any event or
condition which could result in such an Event of Default.
5.20. Post-Retirement Benefits. The present value of the expected cost of
post-retirement medical and insurance benefits payable by the Trust and its
Subsidiaries to its employees and former
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employees, as estimated by the Trust in accordance with procedures and
assumptions deemed reasonable by the Required Lenders, does not exceed
$1,000,000.
5.21. Insurance. The certificate signed by the President or Chief
Financial Officer of the Trust, that attests to the existence and adequacy of,
and summarizes, the property and casualty insurance program carried by the
Trust and its Subsidiaries and that has been furnished by the Trust to the
Agent and the Lenders, is complete and accurate. This summary includes the
insurer's or insurers' name(s), policy number(s), expiration date(s), amount(s)
of coverage, type(s) of coverage, exclusion(s), and deductibles. This summary
also includes similar information, and describes any reserves, relating to any
self-insurance program that is in effect.
5.22. Solvency. (i) Immediately after the consummation of the
transactions to occur on the date hereof and immediately following the making
of each Loan, if any, made on the date hereof and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
the Trust and the Subsidiaries on a consolidated basis, at a fair valuation,
will exceed the debts and liabilities, subordinated, contingent or otherwise,
of the Trust and the Subsidiaries on a consolidated basis; (b) the present fair
saleable value of the property of the Trust and the Subsidiaries on a
consolidated basis will be greater than the amount that will be required to pay
the probable liability of the Trust and the Subsidiaries on a consolidated
basis on their debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (c)
the Trust and the Subsidiaries on a consolidated basis will be able to pay
their debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) the Trust and the
Subsidiaries on a consolidated basis will not have unreasonably small capital
with which to conduct the businesses in which they are engaged as such
businesses are now conducted and are proposed to be conducted after the date
hereof.
(ii) The Trust does not intend to, or to permit any of its Subsidiaries
to, and does not believe that it or any of its Subsidiaries will, incur debts
beyond its ability to pay such debts as they mature, taking into account the
timing of and amounts of cash to be received by it or any such Subsidiary and
the timing of the amounts of cash to be payable on or in respect of its
Indebtedness or the Indebtedness of any such Subsidiary.
5.23 Labor Controversies. There are no labor controversies pending or, to
the best of the Trust's knowledge, threatened against the Trust or any
Subsidiary, which could have a Material Adverse Effect.
5.24 No Adverse Development. Since March 31, 1997, neither the
consolidated financial position nor the business as a whole of the Trust and
its Subsidiaries nor any substantial portion of the properties and assets of
the Trust and its Subsidiaries has been materially adversely affected as a
result of any legislative or regulatory change or of any fire, explosion, tidal
wave, flood,
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windstorm, earthquake, landslide, land subsidence, accident, condemnation or
governmental intervention, order of any court or governmental agency or
commission, technological development in the industries in which the company
and subpatent or patent license, act of God or of the public enemy or of armed
forces, rebellion, strike, labor disturbance or embargo, or otherwise, whether
or not insured against, which in the judgment of the Required Lenders might
impair materially the ability of the Borrowers to fulfill punctually its
obligations under this Agreement.
5.25 Burdensome Obligations. Neither the Trust nor any Subsidiary is a
party to or is bound by any agreement, deed, lease, or other instrument, or
subject to any charter, by-law or other corporate restriction which, in the
opinion of the management of the Trust, is so unusual or burdensome as in the
foreseeable future might cause a Material Adverse Effect. The Trust does not
presently anticipate that future expenditures needed to meet the provisions of
federal or state statutes, orders, rules or regulations will be so burdensome
as to affect or impair in a materially adverse manner the consolidated
financial condition, business, operations or property of the Trust.
5.26 Payment of Wages. Except as disclosed in Schedule 5.26 hereto, the
Trust and its Subsidiaries are in substantial compliance in all material
respects with the Fair Labor Standards Act, as amended, and have paid all
minimum and overtime wages required by law to be paid to its employees.
5.27 Intellectual Property. Set forth on Schedule 5.27 is a complete and
accurate list of all patents, trademarks, trade names, service marks and
copyrights, and all applications therefor and licenses (other than those
licenses implicit in purchase orders and supply agreements of customers and
suppliers) thereof, of the Trust and each of its Subsidiaries showing as of the
Effective Date the jurisdiction in which registered, the registration number
and the date of registration. The Trust and each of its Subsidiaries owns, or
is licensed to use, all trademarks, tradenames, service marks, copyrights,
technology, know-how and processes necessary for the conduct of its business as
currently conducted (the "Intellectual Property") except for those the failure
to own or licenses which could not be reasonably be expected to have a Material
Adverse Effect. No claim has been asserted and is pending by any person
challenging or questioning the use by the Trust or any of its Subsidiaries of
any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does the Trust or any of its Subsidiaries know of
any valid basis for any such claim, the use of such Intellectual Property by
the Trust and each of its Subsidiaries does not infringe on the rights of any
Person, and, to the knowledge of the Trust, no such Intellectual Property of
the Trust and its Subsidiaries has been infringed, misappropriated or diluted
by any other Person except for such claims, infringements, misappropriation and
dissolution that, in the aggregate, could not have a Material Adverse Effect.
5.28 Other Representations. All representations and warranties contained
in the 1994 Subordinated Debt Documents and all representations and warranties
contained in the 1997 Senior
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Unsecured Debt Documents are true and correct except as disclosed on the
Schedules to this Agreement.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial Reporting. The Trust will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with generally accepted accounting principles, and furnish to the Lenders:
(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by independent certified public accountants,
acceptable to the Lenders, prepared in accordance with Agreement Accounting
Principles on a consolidated basis for itself and the Subsidiaries, including
balance sheets as of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of cash flows,
accompanied by (a) any management letter prepared by said accountants, and (b)
a certificate of said accountants that, in the course of their examination
necessary for their certification of the foregoing, they have obtained no
knowledge of any Default or Unmatured Default, or if, in the opinion of such
accountants, any Default or Unmatured Default shall exist, stating the nature
and status thereof.
(ii) Within 45 days after the close of the first three quarterly periods
of each of its fiscal years, for itself and the Subsidiaries, consolidated
unaudited balance sheets as at the close of each such period and consolidated
unaudited profit and loss and unaudited reconciliation of surplus statements
and an unaudited statement of cash flows for the period from the beginning of
such fiscal year to the end of such quarter, all certified by its chief
financial officer.
(iii) Within 10 Business Days after the close of each fiscal month end, a
Borrowing Base Certificate prepared as of the close of business on the last day
of each month and such supporting schedules requested by the Agent, certified
as true and correct by an authorized officer of the Trust.
(iv) Upon request of the Agent, as soon as available and in any event
within 30 days after the end of each month, a report containing an aging as of
the end of the preceding month of accounts receivable and accounts payable of
the Trust and its Subsidiaries, in a form satisfactory to the Required Lenders,
and a report identifying the inventory of the Trust and its Subsidiaries, and
the cost and location thereof as of the end of the preceding month, in form
satisfactory to the Required
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Lenders.
(v) Promptly and in any event within 10 days after receipt, a copy of
any management letter or comparable analysis prepared by the auditors for the
Trust and its Subsidiaries.
(vi) Together with the financial statements required under Sections 6.1
(i) and (ii), a compliance certificate in substantially the form of Exhibit K
hereto signed by an authorized officer showing the calculations necessary to
determine compliance with this Agreement and stating that no Default or
Unmatured Default exists, or if any Default or Unmatured Default exists,
stating the nature and status thereof.
(vii) Within 270 days after the close of each fiscal year, a statement of
the Unfunded Liabilities of each Single Employer Plan, certified as correct by
an actuary enrolled under ERISA.
(viii) As soon as possible and in any event within 10 days after the Trust
or any Subsidiary knows that any Reportable Event has occurred with respect to
any Plan, a statement, signed by the chief financial officer of the Trust,
describing said Reportable Event and the action which the Trust proposes to
take with respect thereto.
(ix) As soon as possible and in any event within 10 days after receipt by
the Trust or any Subsidiary, a copy of (a) any notice or claim to the effect
that the Trust or any of its Subsidiaries is or may be liable to any Person as
a result of the release by the Trust, any of its Subsidiaries, or any other
Person of any toxic or hazardous waste or substance into the environment, and
(b) any notice alleging any violation of any federal, state or local
environmental, health or safety law or regulation by the Trust or any of its
Subsidiaries, which, in either case, could have a Material Adverse Effect.
(x) Promptly upon the furnishing thereof to the shareholders or
Beneficiary or trustees of the Trust or any holder of the 1994 Subordinated
Debt or the 1997 Senior Unsecured Notes or trustee therefor, copies of all
financial statements, reports, proxy statements and other documents so
furnished.
(xi) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports which the
Trust or any of its Subsidiaries files with the Securities and Exchange
Commission.
(xii) Promptly and in any event within three calendar days after becoming
aware of the occurrence of a Default or an Unmatured Default, a certificate of
the chief financial officer of the Trust stating the nature and status thereof.
(xiii) Such other information (including non-financial information) as the
Agent or any
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Lender may from time to time reasonably request.
6.2. Use of Proceeds. The Trust will, and will cause each Subsidiary to,
use the proceeds of the Revolving Credit Loans for working capital and other
corporate purposes. The Trust will not, nor will it permit any Subsidiary to,
use any of the proceeds of the Advances to purchase or carry any "margin stock"
(as defined in Regulation U).
6.3. Notice of Default. The Trust will, and will cause each Subsidiary
to, give prompt notice in writing to the Lenders of the occurrence of any
Default or Unmatured Default and of any other development, financial or
otherwise, which could have a Material Adverse Effect.
6.4. Conduct of Business. The Trust will, and will cause each Subsidiary
to, carry on and conduct its business in substantially the same fields of
enterprise as it is presently conducted and to do all things necessary to
remain duly incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted; provided, however, that any Domestic subsidiary may transfer its
jurisdiction of incorporation to another State of the United States of America.
6.5. Taxes. The Trust will, and will cause each Subsidiary to, timely
file complete and correct United States federal and applicable foreign, state
and local tax returns required by law and pay when due all taxes, assessments
and governmental charges and levies upon it or its income, profits or Property,
except those which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves have been set aside in accordance
with Agreement Accounting Principles.
6.6. Insurance. The Trust will maintain fire and extended coverage
insurance on its and each Domestic Subsidiary's equipment and inventory
containing a lender's loss payable and breach of warranty clause in favor of
the Agent and providing that said insurance will not be terminated except after
at least 30 days' written notice from the insurance company to the Agent. The
certificate signed by the President or Chief Financial Officer of the Trust,
that attests to the existence and adequacy of (as comparable to insurance
customarily maintained by similar companies in the Trust's line of business),
and summarizes, the Property and casualty insurance program carried by the
Trust and that has been furnished by the Trust to the Agent and the Lenders, is
complete and accurate. This summary includes the insurer's or insurers'
name(s), policy number(s), expiration date(s), amount(s) of coverage, type(s)
of coverage, exclusion(s), and deductibles. This summary also includes similar
information, and describes any reserves, relating to any self-insurance program
that is in effect.
6.7. Compliance with Laws. The Trust will, and will cause each Subsidiary
to, comply
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with all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject.
6.8. Maintenance of Properties. Except as to Property which is obsolete
or is not being used in the business or is to be replaced, the Trust will, and
will cause each Subsidiary to, do all things necessary to maintain, preserve,
protect and keep its Property in good repair, working order and condition, and
make all necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times.
6.9. Inspection. The Trust will, and will cause each Subsidiary to,
permit the Agent and the Lenders, by their respective representatives and
agents, to inspect any of the Property, corporate books and financial records
of the Trust and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Trust and each Subsidiary, and to
discuss the affairs, finances and accounts of the Trust and each Subsidiary
with, and to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Lenders may designate.
6.10. Dividends. The Trust will not, nor will it permit any Subsidiary
to, declare or pay any dividends or make any distributions of any kind
(including without limitation any distribution of assets) on its Capital Stock
(other than dividends payable in its own Capital Stock) or redeem, repurchase
or otherwise acquire or retire any of its Capital Stock at any time
outstanding, except that (i) any Subsidiary may declare and pay dividends or
make distributions to the Trust or to a Wholly-Owned Subsidiary, and (ii) the
Trust may make distributions to any Beneficiary of the Trust required to pay
the aggregate federal, state and local income and intangibles tax liability of
such Beneficiary attributable solely to earnings of the Trust, provided that
such amounts shall be paid only so long as the Trust is an entity described in
Section 1361(a)(1), 1361(c)(2) or 1361(d) of the Code and such distributions
may be made only as and when such tax liability of the Beneficiary is due (the
"Permitted Tax Distributions).
6.11. Indebtedness. The Trust will not, nor will it permit any Subsidiary
to, create, incur or suffer to exist any Indebtedness, except:
(i) The Loans and Facility Letters of Credit.
(ii) Indebtedness existing on the date hereof and described in Schedule
6.11 hereto, but no increase in the amount thereof, as reduced from time to
time.
(iii) Indebtedness arising under Rate Hedging Agreements with Lenders.
(iv) Indebtedness incurred solely to refinance or replace any then
existing Indebtedness permitted hereunder, provided that such Indebtedness does
not in any case exceed the amount of
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existing Indebtedness refinanced or replaced and such existing Indebtedness is
paid and discharged to the extent of the new Indebtedness incurred.
(v) Indebtedness owing between Borrowers, between Guarantors and between
Borrowers and Guarantors, provided that such Indebtedness is evidenced by a
promissory note in form and substance satisfactory to the Agent and the Agent
has a first priority, perfected and enforceable lien and security interest in
such promissory note.
(vi) Indebtedness which is secured by Liens permitted pursuant to Section
6.15(vii).
(vii) Other Indebtedness in an aggregate amount at any one time
outstanding not to exceed $10,000,000.
6.12. Merger. The Trust will not, nor will it permit any Subsidiary to,
merge or consolidate with or into any other Person, except that a Subsidiary
may merge into the Trust or a Wholly-Owned Subsidiary.
Notwithstanding anything contained in this Agreement to the
contrary, the Trust is permitted to contribute all of the Equity Interests of
the Subsidiaries then held by the Trust (other than the Equity Interests of the
Subsidiary which is to receive such contribution from the Trust) to Venture
Holdings Corporation or any other successor to the Trust (as "Trust
Contribution") provided that (A) any successor or surviving corporation is
organized and existing under the laws of the United States, any state thereof
or the District of Columbia, (B) such contribution or reorganization is not
materially adverse to the Lenders; it being understood, however, that such
contribution or reorganization shall not be considered materially adverse to
the Lenders solely because the successor or surviving corporation is subject to
income taxation as a corporate entity, (C) immediately after giving effect to
such transaction, no Default of Unmatured Default exists, (D) the actions
comprising such contribution or reorganization (e.g., the contribution of stock
of the subsidiaries, or the issuance of stock of the corporation in exchange
for assets of or Equity Interests in the Trust or in exchange for stock of a
corporation holding such Equity Interests, or the merger or consolidation of
such corporations) will not themselves directly result in material income tax
liability to the successor or surviving corporation, (E) the successor or
surviving corporation has assumed all obligations of the Trust, pursuant to
agreements in a form reasonably satisfactory to the Agent and the lenders and
(F) the Lenders will not recognize income, gain or loss for federal or income
tax purposes as a result of such contribution or reorganization and will be
subject to federal income tax on the same amounts, in the same manner, and at
the same time as would have been the case if such contribution or
reorganization had not occurred. If the successor or surviving corporation
after a Trust Contribution is not a corporation described in Section 1361(a)(1)
of the Code, the Trust's ability to make Permitted Tax Distributions terminates
(except with respect to tax distributions in respect of taxable periods ending
on or prior to the date such contribution or reorganization is effective for
relevant tax
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purposes), other than tax distributions in respect of beneficiaries' income tax
liability that results from the actions comprising such contribution or
reorganization. The Trust shall deliver to the Agent prior to such
contribution or reorganization an officers' certificate covering paragraphs (A)
through (F) and the preceding sentence of this paragraph, stating that such
contribution or reorganization and such agreements comply with this Agreement,
and an opinion of counsel covering paragraphs (A), (D), (E) and (F) above and
the preceding sentence of this paragraph.
6.13. Sale of Assets. The Trust will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property to any other
Person, except:
(i) Sales of inventory in the ordinary course of business and the sales
of obsolete material or equipment in the ordinary course of business.
(ii) Sales of equipment if 100% of the Net Cash Proceeds from the sale of
any such equipment are used within 360 days of such sale to purchase equipment
of comparable or greater value which is subject to the lien and security
interest of the Agent or are used to repay the Loans or, if there are no Loans
outstanding, to repay amounts outstanding under the 1997 Senior Unsecured Notes
(and such payment shall not be considered a Default under Section 6.17), and
permanently reduce the Revolving Credit Commitments by such amounts.
(iii) Transfers of assets between Borrowers, between Guarantors and
between Borrowers and Guarantors of assets.
(iv) Leases, sales or other dispositions of its Property that, together
with all other Property of the Trust and its Subsidiaries previously leased,
sold or disposed of (other than inventory in the ordinary course of business)
as permitted by this Section during the twelve-month period ending with the
month in which any such lease, sale or other disposition occurs, does not
exceed $10,000,000 in aggregate amount, provided that no such lease, sale or
other disposition may be made if any Default or Unmatured Default exists or
would be caused thereby.
(v) Any sale of assets by a Subsidiary if at least 85% of the total
consideration received for the sale consists of cash or its equivalent or a
like-kind exchange, and the Net Cash Proceeds of the sale are used within 360
days of such sale to purchase replacement assets of comparable or greater value
which are subject to the lien and security interest of the Agent or are used to
repay the Loans or, if there are no Loans outstanding to repay amounts
outstanding under the 1997 Senior Unsecured Notes (and such payment shall not
be considered a Default under Section 6.17), and permanently reduce the
Revolving Credit Commitments by such amounts.
6.14. Investments and Acquisitions. The Trust will not, nor will it
permit any Subsidiary to, make or suffer to exist any Investments (including
without limitation, loans and advances to, and
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other Investments in, Subsidiaries), or commitments therefor, or to create any
Subsidiary or to become or remain a partner in any partnership or joint
venture, or to make any Acquisition of any Person, except:
(i) Short-term obligations of, or fully guaranteed by, the United States
of America.
(ii) Commercial paper rated A-l or better by Standard and Poor's Ratings
Group, a division of McGraw Hill, Inc. or P-l or better by Moody's Investors
Service, Inc.
(iii) Demand deposit accounts maintained in the ordinary course of
business.
(iv) Certificates of deposit issued by and time deposits with commercial
banks (whether domestic or foreign) having capital and surplus in excess of
$100,000,000.
(v) Existing Investments in Subsidiaries and other Investments in
existence on the date hereof and described in Schedule 6.14 hereto.
(vi) Advances of Loans between Borrowers, between Guarantors and between
Borrowers and Guarantors, subject to the requirements of Section 6.11(v).
(vii) Capital contributions and loans by any of the Borrowers or
Guarantors to one or more of the other Borrowers or Guarantors.
(viii) Acquisitions of any Persons (including Investments made to
accomplish such Acquisitions) if (a) as of the end of the fiscal quarter of the
Trust immediately preceding any Acquisition and on a Pro Forma Basis,
satisfactory to the Agent, giving effect to the Acquisition, the Borrowers are
in compliance with all covenants contained in this Agreement and no Default or
Unmatured Default then exists, (b) the total consideration for the Acquisition
(including all indebtedness assumed) does not exceed $50,000,000 and (c) on a
Pro Forma Basis, satisfactory to the Agent, giving effect to the Acquisition,
the Borrowing Base exceeds all Indebtedness of the Borrowers outstanding under
this Agreement by not less than $15,000,000.
6.15. Liens. The Trust will not, nor will it permit any Subsidiary to,
create, incur, or suffer to exist any Lien in, of or on the Property of the
Trust or any of its Subsidiaries, except:
(i) Liens for taxes, assessments, judgments or governmental charges or
levies on its Property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good faith
and by appropriate proceedings and for which adequate reserves in accordance
with generally accepted principles of accounting shall have been set aside on
its books.
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(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its books.
(iii) Liens arising out of pledges or deposits under worker's compensation
laws, unemployment insurance, old age pensions, or other social security or
retirement benefits, or similar legislation.
(iv) Utility easements, building restrictions and such other encumbrances
or charges against real property as are of a nature generally existing with
respect to properties of a similar character and which do not in any material
way affect the marketability of the same or interfere with the use thereof in
the business of the Trust or the Subsidiaries.
(v) Liens existing on the date hereof and described in Schedule 6.15
hereto but no increase in the amount secured thereby, as reduced from time to
time, and Liens granted in connection with any refinancing of such indebtedness
provided that the Liens are on the same assets and the indebtedness secured is
not increased.
(vi) Liens in favor of the Agent, for the benefit of the Lenders, granted
pursuant to any Collateral Document.
(vii) Any Lien to secure payment of a portion of the purchase price of any
tangible fixed asset acquired by any Borrower or any Guarantor may be created
or suffer to exist upon such fixed asset if the outstanding principal amount of
the Indebtedness is secured by such Lien does not at any time exceed the
purchase price paid for such fixed asset, provided that such Lien does not
encumber any other asset at any time owned by any Borrower or any Guarantor,
and provided, further, that not more than one such Lien shall encumber such
fixed asset at any one time.
6.16. Affiliates. Section 4.9 of the Indenture executed in connection
with the 1997 Senior Unsecured Debt Documents is hereby incorporated by
reference, including definitions of defined terms used in Section 4.9 of the
Indenture and definitions of defined terms used within such definitions, and
made a part of this Agreement to the same extent as if set forth fully herein
except that (i) references therein to "Issuers" shall be deemed references to
"Borrowers" as defined herein, (ii) references therein to "Guarantor" and
"Subsidiary" shall be deemed references to those terms as defined herein, and
(iii) reference to "Issue Date" shall be deemed references to "Effective Date".
6.17. Modification and Prepayment of Indebtedness. The Trust will not,
and will not permit any Subsidiary to, make any amendment or modification to
the indenture, note or other agreement evidencing or governing any Subordinated
Indebtedness, including without limitation any
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1994 Subordinated Debt Document, or any 1997 Senior Unsecured Debt Document or
any Indebtedness described in Schedule 6.11, which in any case would be adverse
to the Lenders or materially more burdensome to the Borrowers, or directly or
indirectly voluntarily prepay, defease or in substance defease, purchase,
redeem, retire or otherwise acquire, any Subordinated Indebtedness, including
without limitation the 1994 Subordinated Debt, or the 1997 Unsecured Notes, or
any Indebtedness described on Schedule 6.11; provided, however, that the
Borrowers may use the proceeds of Revolving Credit Loans to prepay the 1994
Senior Subordinated Debt Documents and the 1997 Senior Unsecured Debt Documents
if (i) no Default or Unmatured Default then exists or would be caused thereby,
as determined on a Pro Forma Basis acceptable to the Agent, and (ii) either (a)
the amount of the prepayment, together with all other prepayments of
Subordinated Debt subsequent to the Effective Date, does not exceed
$50,000,000, or (b) the Leverage Ratio as of the end of the last fiscal quarter
immediately preceding the date of such prepayment, and on the date of the
prepayment, does not exceed 3.25 to 1.0 and the amount of the prepayment,
together with all other prepayments of Subordinated Debt subsequent to the
Effective Date, does not exceed $100,000,000.
6.18. Sale of Accounts. The Trust will not, nor will it permit any
Subsidiary to, sell or otherwise dispose of any notes receivable or accounts
receivable, with or without recourse, other than a sale by the Trust to a
Wholly-Owned Subsidiary or by any Wholly-Owned Subsidiary to the Trust or to
another Wholly-Owned Subsidiary.
6.19. Contingent Obligations and Guarantees. The Trust will not, nor will
it permit any Subsidiary to, make or suffer to exist any Contingent Obligation
(including, without limitation, any Contingent Obligation with respect to the
obligations of a Subsidiary), except (i) by endorsement of instruments for
deposit or collection in the ordinary course of business, (ii) any Guaranty and
any guaranty by the Trust or any of its Subsidiaries of Indebtedness of the
Trust or any of its Subsidiaries and (iii) Contingent Obligations described on
Schedule 6.19, but no increase in the amount thereof, as such amount is reduced
from time to time.
6.20. Financial Contracts. The Trust will not, nor will it permit any
Subsidiary to, enter into or remain liable upon any Financial Contract, except
Rate Hedging Agreements permitted under Section 6.11 and any other Financial
Contract not entered into for purpose of market speculation.
6.21. Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Trust will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create, assume or suffer to exist any consensual
restriction on the ability of any Subsidiary of the Trust to pay dividends or
make other distributions to or on behalf of, or to pay any obligation to or on
behalf of, or otherwise to transfer assets or property to or on behalf of, or
make or pay loans or advances to or on behalf of, the Trust or any Subsidiary
of the Trust, except (a) restrictions imposed by this Agreement, (b)
restrictions imposed by applicable law, (c) existing restrictions under
Indebtedness outstanding on
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the Effective Date specified on Schedule 6.21, (d) restrictions under any
acquired Indebtedness not incurred in violation of this Agreement or any
agreement relating to any property, asset, or business acquired by the Trust or
any of its Subsidiaries, which restrictions in each case existed at the time of
an Acquisition, were not put in place in connection with or in anticipation of
such Acquisition and are not applicable to any person, other than the person
acquired, or to any property, asset or business, other than the property,
assets and business so acquired, (e) any such restriction or requirement
imposed by Indebtedness incurred under the 1994 Subordinated Debt Documents or
the 1997 Senior Unsecured Debt Documents provided such restriction or
requirement is not materially less favorable than that imposed by this
Agreement, (f) restrictions with respect solely to a Subsidiary of the Trust
imposed pursuant to a binding agreement which has been entered into for the
sale or disposition of all or substantially all of the Equity Interests or
assets of such Subsidiary, provided such restrictions apply solely to the
Equity Interests or assets of such Subsidiary, which are being sold, and (g) in
connection with and pursuant to permitted refinancing Indebtedness,
replacements of restrictions imposed pursuant to clauses (a), (c), (d) or (e)
of this paragraph that are not materially less favorable than those being
replaced and do not apply to any other person or assets than those that would
have been covered by the restrictions in the Indebtedness so refinanced.
Notwithstanding the foregoing, customary provisions restricting subletting or
assignment of any lease entered into in the ordinary course of business,
consistent with industry practice shall not in and of themselves be considered
a restriction on the ability of the applicable Subsidiary to transfer such
agreement or assets, as the case may be.
6.22. Additional Covenants re: Indebtedness. Except for the agreements and
instruments described in Schedule 6.22, at any time any Borrower or any
Guarantor have or shall enter into or have or shall be a party to any
instrument or agreement, including all such instruments or agreements in
existence as of the date hereof and all such instruments or agreements entered
into after the date hereof, relating to or amending any terms or conditions
applicable to any of its Indebtedness which includes covenants, terms,
conditions or defaults not substantially provided for in this Agreement or more
favorable to the lender or lenders thereunder than those provided for in this
Agreement, then the Borrowers shall promptly so advise the Agent and the
Lenders. Thereupon, if the Agent shall request, upon notice to the Borrowers,
the Agent and the Lenders shall enter into an amendment to this Agreement or an
additional agreement (as the Agent may request), providing for substantially
the same covenants, terms, conditions and defaults as those provided for in
such instrument or agreement to the extent required and as may be selected by
the Agents. In addition to the foregoing, any covenants, terms, conditions or
defaults in the 1994 Subordinated Debt Documents or the 1997 Senior Unsecured
Debt Documents not substantially provided for in this Agreement, or more
favorable to the holders of the 1994 Subordinated Debt or the holders of the
1997 Senior Unsecured Notes, are hereby incorporated by reference into this
Agreement to the same extent as if set forth fully herein, and no subsequent
amendment waiver or modification thereof shall affect any such covenants,
terms, conditions or defaults as incorporated herein.
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6.23. Nature of Business. The Borrower will not, and will not permit any
of the Subsidiaries, to make or suffer any change in the nature of its business
from that engaged in on the Effective Date or engage in any other businesses
other than those in which it is engaged on the Effective Date.
6.24 Permitted Payments. Notwithstanding anything to the contrary in
Sections 6.10, 6.14, 6.17 and 6.19, the Trust and its Subsidiaries shall be
permitted to make any of the following "Permitted Payments", provided, that
they do not in the aggregate exceed the sum of (x) 50% of Consolidated Net
Income for the period commencing July 1, 1997 and ending on the last day of the
fiscal quarter of the Trust immediately preceding the transaction in question,
plus (y) $10,000,000:
(i) dividends or distributions by the Trust or its Subsidiaries in excess
of those otherwise permitted by Section 6.10;
(ii) Investments not otherwise permitted by Section 6.14;
(iii) prepayments of Indebtedness otherwise prohibited by Section 6.17
(other than mandatory prepayments caused by a Change of Control and permitted
pursuant to Section 2.18 and other than prepayments required by Section 6.13);
and
(iv) Contingent Obligations otherwise prohibited by Section 6.19.
6.25. Consolidated Net Worth. The Borrowers will maintain Consolidated
Net Worth at all times of not less than the sum of $51,000,000 plus 75% of the
consolidated net income (after taxes) of the Trust and its Subsidiaries, as
determined in accordance with the Agreement Accounting Principles, such 75% of
Consolidated Net Income to be added as of the end of each fiscal year of the
Trust, provided that if such income is negative in any fiscal year, the amount
added for such fiscal year shall be zero and it shall not reduce the amount to
be added for any other fiscal year.
6.26. Interest Coverage Ratio. The Borrowers will maintain an Interest
Coverage Ratio of at least (a) 2.25 to 1.0 as of June 30, 1997 and as of the
end of each fiscal quarter thereafter through the fiscal quarter ending
September 30, 1999, and (b) 2.50 to 1.0 as of December 31, 1999 and as of the
end of each fiscal quarter thereafter.
6.27. Fixed Charge Coverage Ratio. The Borrowers will maintain a Fixed
Charge Coverage Ratio of at least (a) 1.15 to 1.0 as of the end of each fiscal
quarter ending in 1997 and 1998, (b) 1.20 to 1.0 as of the end of each fiscal
quarter ending in 1999 and 2000 and (c) 1.25 to 1.0 as of the end of each
fiscal quarter thereafter.
6.28. Leverage Ratio. The Borrowers will maintain a ratio of consolidated
Indebtedness
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of the Trust and its Subsidiaries at such time to EBITDA, as calculated for the
four most recently ended quarters as of such time (provided that for the fiscal
quarter ended June 30, 1997, such EBITDA shall equal the product of EBITDA for
the ten consecutive months then ending times 1.2), of not more than (i) 4.25 to
1.0 at any time from and including the Effective Date to and including December
30, 1999, (ii) 4.0 to 1.0 at any time from and including December 31, 1999 to
and including December 30, 2001, and (iii) 3.75 to 1.0 on December 31, 2001,
and at any time thereafter.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
7.1. Any representation or warranty made or deemed made by or on behalf of
the Trust or any of its Subsidiaries to the Lenders or the Agent under or in
connection with this Agreement, any Loan, any Facility Letter of Credit, or any
certificate or information delivered in connection with this Agreement or any
other Loan Document shall be materially false on the date as of which made.
7.2. Nonpayment of principal of any Note when due, or nonpayment of
interest upon any Note or of any commitment fee or other obligations under any
of the Loan Documents within five days after the same becomes due.
7.3. The breach by the Trust or any of its Subsidiaries of any of the
terms or provisions of Article VI, other than Sections 6.1, 6.5, 6.7, 6.8, 6.15
and 6.22.
7.4. The breach by the Trust or any Subsidiary (other than a breach which
constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or
provisions of this Agreement which is not remedied within ten days after
written notice from the Agent.
7.5. Failure of the Trust or any of its Subsidiaries to pay when due any
Indebtedness aggregating in excess of $5,000,000 ("Material Indebtedness"); or
the default by the Trust or any of its Subsidiaries in the performance of any
term, provision or condition contained in any agreement under which any such
Material Indebtedness was created or is governed, or any other event shall
occur or condition exist, the effect of which is to cause, or to permit the
holder or holders of such Material Indebtedness to cause, such Material
Indebtedness to become due prior to its stated maturity; or any Material
Indebtedness of the Trust or any of its Subsidiaries shall be declared in
default or declared to be due and payable or required to be prepaid or
repurchased (other than by a regularly scheduled payment) prior to the stated
maturity thereof; or the Trust or any of its Subsidiaries shall not pay, or
admit in writing its inability to pay, its debts generally as they become
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due.
7.6. The Trust or any of its Subsidiaries shall (i) have an order for
relief entered with respect to it under the Federal bankruptcy laws as now or
hereafter in effect, (ii) make an assignment for the benefit of creditors,
(iii) apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator or similar official for it
or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (v) take any corporate action to authorize or
effect any of the foregoing actions set forth in this Section 7.6 or (vi) fail
to contest in good faith any appointment or proceeding described in Section
7.7.
7.7. Without the application, approval or consent of the Trust or any of
its Subsidiaries, a receiver, trustee, examiner, liquidator or similar official
shall be appointed for the Trust or any of its Subsidiaries or any material
portion of its Property, or a proceeding described in Section 7.6(iv) shall be
instituted against the Trust or any of its Subsidiaries and such appointment
continues undischarged or such proceeding continues undismissed or unstayed for
a period of 30 consecutive days.
7.8. Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of (each a "Condemnation"),
all or any portion of the Property of the Trust and its Subsidiaries which,
when taken together with all other Property of the Trust and its Subsidiaries
so condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such Condemnation
occurs, constitutes a Substantial Portion.
7.9. The Trust or any of its Subsidiaries shall fail within 30 days to
pay, bond or otherwise discharge any judgment or order for the payment of money
in excess of $5,000,000, which is not stayed on appeal or otherwise being
appropriately contested in good faith.
7.10. The Unfunded Liabilities of all Single Employer Plans shall exceed
in the aggregate $4,000,000 or any Reportable Event shall occur in connection
with any Plan, in each case which is not remedied within ten days after written
notice from the Agent.
7.11. The Trust or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be paid to
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Multiemployer Plans by the Trust or any other member of the Controlled Group as
withdrawal liability (determined as of the date of such notification), exceeds
$1,000,000 or requires payments exceeding $1,000,000 per annum.
7.12. The Trust or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of Title
IV of ERISA, if as a result of such reorganization or termination the aggregate
annual contributions of the Trust and the other members of the Controlled Group
(taken as a whole) to all Multiemployer Plans which are then in reorganization
or being terminated have been or will be increased over the amounts contributed
to such Multiemployer Plans for the respective plan years of each such
Multiemployer Plan immediately preceding the plan year in which the
reorganization or termination occurs by an amount exceeding $1,000,000.
7.13. The Trust or any of its Subsidiaries shall be the subject of any
proceeding or investigation pertaining to the release by the Trust or any of
its Subsidiaries, or any other Person of any toxic or hazardous waste or
substance into the environment, or any violation of any federal, state or local
environmental, health or safety law or regulation, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
7.14. The occurrence of any "default", as defined in any Loan Document
(other than this Agreement or the Notes) or the breach of any of the terms or
provisions of any Loan Document (other than this Agreement or the Notes), which
default or breach continues beyond any period of grace therein provided.
7.15. Except as otherwise permitted hereunder, any Guaranty shall fail to
remain in full force or effect or any action shall be taken to discontinue or
to assert the invalidity or unenforceability of any Guaranty, or any Guarantor
shall fail to comply with any of the terms or provisions of any Guaranty to
which it is a party, or any Guarantor denies that it has any further liability
under any Guaranty to which it is a party, or gives notice to such effect.
7.16. Any Collateral Document shall for any reason fail to create a valid
and perfected first priority security interest in any collateral purported to
be covered thereby, except as permitted by the terms of any Collateral
Document, or any Collateral Document shall fail to remain in full force or
effect or any action shall be taken to discontinue or to assert the invalidity
or unenforceability of any Collateral Document, or the Trust or any Subsidiary
shall fail to comply with any of the terms or provisions of any Collateral
Document.
7.17. The representations and warranties set forth in "Section 5.15 Plan
Assets; Prohibited Transactions" shall at any time not be true and correct.
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7.18. The Trust or any Subsidiary shall fail to pay when due any amount
due under, or the breach by the Trust or any Subsidiary of any term, provision
or condition contained in, any Rate Hedging Obligation, operating lease Letter
of Credit, obligation under sale and leaseback transaction or Contingent
Obligation.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration.
(a) If any Default described in Section 7.6 or 7.7 occurs, (i) the
Revolving Credit Commitment shall automatically terminate and the Obligations
shall immediately become due and payable without presentment, demand, protest
or notice of any kind, all of which each Borrower hereby expressly waives and
without any election or action on the part of the Agent or any Lender and (ii)
each Borrower will be and become thereby unconditionally obligated, without the
need for demand or the necessity of any act or evidence, to deliver to the
Agent, at its address specified pursuant to Article XIII, for deposit into the
Letter of Credit Collateral Account, an amount (the "Collateral Shortfall
Amount") equal to the excess, if any, of
(A) 100% of the sum of the aggregate maximum amount remaining
available to be drawn under the Facility Letters of Credit (assuming compliance
with all conditions for drawing thereunder) issued by Issuer outstanding as of
such time, over
(B) the amount on deposit in the Letter of Credit Collateral
Account at such time that is free and clear of all rights and claims of third
parties and that has not been applied by the Lenders against the Obligations.
(b) If any Default occurs and is continuing (other than a Default
described in Section 7.6 or 7.7), (i) the Required Revolving Credit Lenders may
terminate or suspend the Revolving Credit Commitments or (ii) the Required
Lenders may declare the Obligations to be due and payable, whereupon the
Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which each Borrower hereby
expressly waives and (iii) the Required Lenders may, upon notice delivered to
the Borrowers and in addition to the continuing right to demand payment of all
amounts payable under this Agreement, make demand on the Borrowers to deliver
(and the Borrowers will, forthwith upon demand by the Required Lenders and
without necessity of further act or evidence, be and become thereby
unconditionally obligated to deliver), to the Agent, at its address specified
pursuant to Article XIII, for deposit into the Letter of Credit Collateral
Account an amount equal to the Collateral Shortfall Amount.
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(c) If at any time while any Default is continuing, the Agent determines
that the Collateral Shortfall Amount at such time is greater than zero, the
Agent may make demand on the Borrowers to deliver (and the Borrowers will,
forthwith upon demand by the Agent and without necessity of further act or
evidence, be and become thereby unconditionally obligated to deliver), to the
Agent as additional funds to be deposited and held in the Letter of Credit
Collateral Account an amount equal to such Collateral Shortfall Amount at such
time.
(d) The Agent may at any time or from time to time after funds are
deposited in the Letter of Credit Collateral Account, apply such funds to the
payment of the Obligations and any other amounts as shall from time to time
have become due and payable by the Borrowers to the Lenders under the Loan
Documents.
(e) Neither any Borrower nor any Person claiming on behalf of or through
any Borrower shall have any right to withdraw any of the funds held in the
Letter of Credit Collateral Account. After all of the Obligations have been
indefeasibly paid in full, any funds remaining in the Letter of Credit
Collateral Account shall be returned by the Agent to the Borrowers or paid to
whoever may be legally entitled thereto at such time.
(f) The Agent shall exercise reasonable care in the custody and
preservation of any funds held in the Letter of Credit Collateral Account and
shall be deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which the Agent accords its own
property, it being understood that the Agent shall not have any responsibility
for taking any necessary steps to preserve rights against any Persons with
respect to any such funds.
8.2. Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrowers may enter into agreements supplemental hereto for
the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or any Borrower hereunder or
waiving any Default hereunder; provided, however, (a) no such supplemental
agreement shall, without the consent of the Required Revolving Credit Lenders,
allow any Borrower to obtain a Revolving Credit Loan or Facility Letter of
Credit if it would otherwise be unable to absent such supplemental agreement,
and (b) prior to any Lender other than NBD being a Lender hereunder, the
Borrowers will not unreasonably withhold their consent to any amendment to this
Agreement or any Loan Documents determined by the Agent as necessary to
syndicate a portion of the Revolving Credit Commitments and Advances hereunder
to additional Lenders, and provided, further, that no such supplemental
agreement shall, without the consent of each Lender affected thereby:
(i) Extend the maturity of any Loan or any Note or postpone any regularly
scheduled payment of principal of any Loan or forgive all or any portion of the
principal amount thereof, or reduce the rate or extend the time of payment of
interest or fees thereon.
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(ii) Reduce the percentage specified in the definition of Required Lenders
or Required Revolving Credit Lenders.
(iii) Extend the Termination Date or increase the amount of the Revolving
Credit Commitment of any Lender hereunder, or permit any Borrower to assign its
rights under this Agreement.
(iv) Amend this Section 8.2.
(v) Release any Borrower or any Guarantor or, except as provided in the
Collateral Documents, release all or substantially all of the Collateral.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive
payment of the fee required under Section 12.3.2 without obtaining the consent
of any other party to this Agreement. Notwithstanding anything herein to the
contrary, any Defaulting Lender shall not be entitled to vote (whether to
consent or to withhold its consent) with respect to any amendment,
modification, termination or waiver and, for purposes of the determining the
Required Lenders, the Revolving Credit Commitments and the Loans of such
Defaulting Lender shall be disregarded and the Agent shall have the ability,
but not the obligation, to replace any such Defaulting Lender with another
lender or lenders.
8.3. Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
any Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 8.2, and then
only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Agent and the Lenders until the Obligations have been
paid in full.
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ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and warranties of
each Borrower and each Guarantor contained in this Agreement shall survive
delivery of the Notes and the making of the Loans herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to any
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. Taxes. Any taxes (excluding federal and state income taxes on the
overall net income of any Lender and intangible taxes) or other similar
assessments or charges made by any governmental or revenue authority in respect
of the Loan Documents shall be paid by any Borrower, together with interest and
penalties, if any.
9.4. Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
9.5. Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrowers, the Guarantors, the Agent and the Lenders
and supersede all prior agreements and understandings among the Borrowers, the
Guarantors, the Agent and the Lenders relating to the subject matter thereof
other than any fee agreement described in Section 10.13.
9.6. Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any
of its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement
and their respective successors and assigns.
9.7. Expenses; Indemnification. The Borrowers shall reimburse (i) the
Agent for any costs, internal charges and reasonable and documented
out-of-pocket expenses (including reasonable attorneys' fees and time charges
of attorneys for the Agent, which attorneys may be employees of the Agent) paid
or incurred by the Agent in connection with the preparation, review, execution,
delivery, amendment, modification and administration of the Loan Documents and
(ii) the Agent, the Issuer and the Lenders for any costs, internal charges and
reasonable and documented out-of-pocket expenses (including attorneys' fees and
time charges of attorneys for the Agent, the
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Issuer and the Lenders, which attorneys may be employees of the Agent, the
Issuer or the Lenders) paid or incurred by the Agent, the Issuer or any Lender
in connection with the collection and enforcement of the Loan Documents, any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or any insolvency or bankruptcy
proceedings in respect of the Trust or any Subsidiary. Expenses being
reimbursed by the Borrowers under this Section include, without limitation, the
cost and expense of obtaining an appraisal of each parcel of real Property or
interest in real Property described in the relevant Collateral Documents, which
appraisal shall be in conformity with the applicable requirements of any law or
any governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, including, without
limitation, the provisions of Title XI of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, reformed or otherwise
modified from time to time, and any rules promulgated to implement such
provisions. The Borrowers further agree to indemnify and hold harmless the
Agent, the Issuer, each Lender and their respective directors, officers and
employees against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent or any Lender is a
party thereto) arising at any time, and including without limitation due to any
actions or omissions before, on or after the Effective Date, which any of them
may pay or incur arising out of or relating to this Agreement, the other Loan
Documents, the Bailey Acquisition, the Bailey Acquisition Documents, any other
Acquisition, any matters relating to any Environmental Laws with respect to any
property of any Borrower or any Guarantor, the transactions contemplated hereby
or thereby, or the direct or indirect application or proposed application of
the proceeds of any Advance hereunder, excluding any such losses, claims,
damages, penalties, judgments, liabilities and expenses which result from the
gross negligence or willful misconduct of the Agent, the Issuer or any Lender
as finally determined by a court of competent jurisdiction. The obligations of
the Borrowers under this Section shall survive the termination of this
Agreement.
9.8. Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
9.9. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles, except that any calculation or determination which is to be made on
a consolidated basis shall be made for the Trust and all its Subsidiaries,
including those Subsidiaries, if any, which are unconsolidated on the Trust's
audited financial statements. In the event that the Borrowers or the Required
Lenders believe that there has been a change in generally accepted accounting
principles from those utilized in preparing the financial statements referred
to in Section 5.4 which materially affect (whether favorably or adversely)
compliance under Article VI of this Agreement, each of the Lenders and the
Borrowers agree to negotiate an amendment to
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this Agreement to bring the Borrowers into substantially the same compliance
with respect to Article VII immediately preceding such change in generally
accepted accounting principles. If no resolution of such item or items of
compliance is effected, the Borrowers and the Lenders agree, for the purposes
of the disputed item or items only, to determine compliance by using Agreement
Accounting Principles. The Trust will not change its fiscal year.
9.10. Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.11. Nonliability of Lenders. The relationship between the Borrowers and
the Lenders and the Agent shall be solely that of borrower and lender. Neither
the Agent nor any Lender shall have any fiduciary responsibilities to the
Borrowers. Neither the Agent nor any Lender undertakes any responsibility to
the Borrowers to review or inform the Borrowers of any matter in connection
with any phase of any Borrower's business or operations. Each Borrower and
each Guarantor agree that neither the Agent nor any Lender shall have liability
to any Borrower or any Guarantor (whether sounding in tort, contract or
otherwise) for losses suffered by any Borrower or any Guarantor in connection
with, arising out of, or in any way related to, the transactions contemplated
and the relationship established by the Loan Documents, or any act, omission or
event occurring in connection therewith, unless it is determined by a court of
competent jurisdiction in a final and non-appealable order that such losses
resulted from the gross negligence or willful misconduct of the party from
which recovery is sought. Neither the Agent nor any Lender shall have any
liability with respect to, and each Borrower and each Guarantor hereby waives,
releases and agrees not to sue for, any special, indirect or consequential
damages suffered by any Borrower or any Guarantor in connection with, arising
out of, or in any way related to the Loan Documents or the transactions
contemplated thereby.
9.12. Nonreliance. Each Lender hereby represents that it is not relying
on or looking to any margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) for the repayment of the Loans
provided for herein.
9.13. Confidentiality. Each of the Lenders and the Agent hereby agrees
that it will use reasonable efforts (e.g., procedures substantially comparable
to those applied by such Lender and the Agent in respect of non-public
information as to the business of such Lender or the Agent) to keep
confidential any financial reports and other information previously or from
time to time supplied to it by the Borrowers hereunder to the extent that such
information is not and does not become publicly available through or with the
consent or acquiescence of the Borrowers and will use such financial reports
and other information only in connection with the transactions contemplated by
this Agreement and for no other purpose, provided that nothing herein shall
affect
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the disclosure of any such information (i) by the Agent to any Lender,
(ii) to the extent required by law (including statute, rule, regulation or
judicial process), (iii) to counsel for any Lender, the Agent or to their
respective accountants, each of whom shall also be bound by the confidentiality
obligations set forth herein, (iv) to bank examiners and auditors and
appropriate government examining authorities, (v) to any Agent or to any other
Lender, (vi) to the extent necessary or appropriate in connection with any
litigation to which any Lender or the Agent is a party. A determination by a
Lender or the Agent as to the application of the circumstances described in the
foregoing clauses (i)-(v) shall be conclusive if made in good faith.
9.14 Limitation of Liabilities. Each Borrower (i) agrees that neither the
Agent nor any Lender shall have any liability to any Borrower or any of its
Subsidiaries (whether sounding in tort, contract or otherwise) for losses
suffered by any Borrower or any of its Subsidiaries in connection with, arising
out of, or in any way related to, the transactions contemplated and the
relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith, unless it is determined by a judgment of a
court that is binding on the Agent, or such Lender, and that is final and not
subject to review on appeal, that such losses were the result of acts or
omissions on the part of the Agent or such Lender, as the case may be,
constituting gross negligence, willful misconduct or knowing violations of law
and (ii) waives, releases and agrees not to sue upon any claim against the
Agent or any Lender (whether sounding in tort, contract or otherwise) except a
claim based upon gross negligence, willful misconduct or knowing violations of
law. Whether or not such damages are related to a claim that is subject to the
waiver effected above and whether or not such waiver is effective, neither the
Agent nor any Lender shall have any liability with respect to, and each
Borrower and each of its Subsidiaries hereby waives, releases and agrees not to
sue upon any claim for, any special, indirect or consequential damages suffered
by each Borrower or any of its Subsidiaries in connection with, arising out of,
or in any way related to the transactions contemplated or the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith.
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ARTICLE X
THE AGENT
10.1. Appointment; Nature of Relationship. NBD is hereby appointed by the
Lenders as the Agent hereunder and under each other Loan Document, and each of
the Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this
Article X. Notwithstanding the use of the defined term "Agent," it is
expressly understood and agreed that the Agent shall have not have any
fiduciary responsibilities to any Lender by reason of this Agreement or any
other Loan Document and that the Agent is merely acting as the representative
of the Lenders with only those duties as are expressly set forth in this
Agreement and the other Loan Documents. In its capacity as the Lenders'
contractual representative, the Agent (i) does not hereby assume any fiduciary
duties to any of the Lenders, (ii) is a "representative" of the Lenders within
the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting
as an independent contractor, the rights and duties of which are limited to
those expressly set forth in this Agreement and the other Loan Documents. Each
of the Lenders hereby agrees to assert no claim against the Agent on any agency
theory or any other theory of liability for breach of fiduciary duty, all of
which claims each Lender hereby waives.
10.2. Powers. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided
by the Loan Documents to be taken by the Agent.
10.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrowers, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
for its or their own gross negligence or willful misconduct.
10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (i) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent; (iv) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other
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instrument or writing furnished in connection therewith; or (v) the value,
sufficiency, creation, perfection or priority of any interest in any collateral
security. The Agent shall have no duty to disclose to the Lenders information
that is not required to be furnished by any Borrower or any Guarantor to the
Agent at such time, but is voluntarily furnished by any Borrower to the Agent
(either in its capacity as Agent or in its individual capacity).
10.5. Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under
any other Loan Document in accordance with written instructions signed by the
Required Lenders or the Required Revolving Credit Lenders, as the case may be,
and such instructions and any action taken or failure to act pursuant thereto
shall be binding on all of the Lenders and on all holders of Notes. The
Lenders hereby acknowledge that the Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement or any other Loan Document unless it shall be requested in
writing to do so by the Required Lenders or the Required Revolving Credit
lenders, as the case may be. The Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Loan Document unless
it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.
10.6. Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Revolving Credit Commitments (or, if the Revolving Credit Commitments have been
terminated, in proportion to their Revolving Credit Commitments immediately
prior to such termination) (i) for any amounts not reimbursed by the Borrowers
for which the Agent is entitled to reimbursement by the Borrowers under the
Loan Documents, (ii) for any other expenses incurred by the Agent on behalf of
the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents
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and (iii) for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of the Loan Documents or any other
document delivered in connection therewith or the transactions contemplated
thereby, or the enforcement of any of the terms thereof or of any such other
documents, provided that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
Agent. The obligations of the Lenders under this Section 10.8 shall survive
payment of the Obligations and termination of this Agreement.
10.9. Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Unmatured Default hereunder
unless the Agent has received written notice from a Lender or a Trust referring
to this Agreement describing such Default or Unmatured Default and stating that
such notice is a "notice of default". In the event that the Agent receives
such a notice, the Agent shall give prompt notice thereof to the Lenders.
10.10. Rights as a Lender. In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is
a Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Trust or any of its Subsidiaries in which the Trust or such Subsidiary
is not restricted hereby from engaging with any other Person. The Agent, in
its individual capacity, is not obligated to remain a Lender.
10.11. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrowers and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement and the other Loan
Documents.
10.12. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrowers, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of
its intention to resign. Upon any such resignation, the Required Lenders shall
have the right to appoint, on behalf of the Borrowers and the Lenders, a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders within thirty days after the resigning
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Agent's giving notice of its intention to resign, then the resigning Agent may
appoint, on behalf of the Borrowers and the Lenders, a successor Agent. If the
Agent has resigned and no successor Agent has been appointed, the Lenders may
perform all the duties of the Agent hereunder and the Borrowers shall make all
payments in respect of the Obligations to the applicable Lender and for all
other purposes shall deal directly with the Lenders. No successor Agent shall
be deemed to be appointed hereunder until such successor Agent has accepted the
appointment. Any such successor Agent shall be a commercial bank having capital
and retained earnings of at least $50,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the resigning Agent. Upon the effectiveness of the resignation
of the Agent, the resigning Agent shall be discharged from its duties and
obligations hereunder and under the Loan Documents. After the effectiveness of
the resignation of an Agent, the provisions of this Article X shall continue in
effect for the benefit of such Agent in respect of any actions taken or omitted
to be taken by it while it was acting as the Agent hereunder and under the
other Loan Documents.
10.13. Agent's Fee. The Borrowers agree to pay to the Agent, for its own
account, the fees agreed to by the Borrowers and the Agent from time to time.
10.14. Collateral Management. The Agent is hereby authorized on behalf of
all of the Lenders, without the necessity of any further consent from any
Lender, from time to time prior to an Event of Default, to take any action with
respect to the Collateral or the Collateral Documents which may be necessary
(i) to perfect and maintain perfected the security interest in and liens upon
the Collateral granted pursuant to the Security Agreement and the other
Collateral Documents; and (ii) to release portions of the Collateral from the
security interests and liens imposed by the Collateral Documents in connection
with any dispositions of such portions of the Collateral permitted hereby. In
the event that the Borrowers or Guarantors desire to sell or otherwise dispose
of any assets and such sale or disposition is permitted hereby, the Agent
shall, upon timely notice from the Borrowers, release such portions of the
Collateral from the security interests and liens imposed by the Collateral
Documents as may be specified by the Borrowers or Guarantors in order for the
relevant Borrower or Guarantor to consummate such proposed sale or disposition,
provided that at or prior to the time of such proposed sale or disposition no
Default or Unmatured Default shall have occurred and be continuing, including,
without limitation, any Unmatured Default or Default that would arise upon
consummation of such sale or disposition. For purposes of the preceding
sentence, the Borrowers shall give timely notice if, not less than two Business
Days prior to the date of such proposed sale or disposition, it shall furnish
to the Agent an officers' certificate setting forth in reasonable detail the
circumstances of such proposed sale or disposition.
10.15. Right to Indemnity. The Agent shall be fully justified in failing
or refusing to take any action hereunder unless it shall first be indemnified
to its satisfaction by the Lenders pro rata against any and all liability and
expense which may be incurred by it by reason of taking or
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continuing to take any such action.
10.16 Co-Agents. Each Co-Agent shall have all of the duties which may be
agreed upon or assigned to it from time to time by the Agent. In the event any
such duties are assigned to any Co-Agent, such Co-Agent shall be entitled to
the same indemnifications and other protections and held to the same standard
of care as provided in this Article X for the Agent.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if any Borrower or any Guarantor becomes
insolvent, however evidenced, or any Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or
not collected or available) and any other Indebtedness at any time held or
owing by any Lender to or for the credit or account of each Borrower and each
Guarantor may be offset and applied toward the payment of the Obligations owing
to such Lender, whether or not the Obligations, or any part hereof, shall then
be due.
11.2. Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
Section 3.1, 3.2 or 3.4) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion
of the Loans held by the other Lenders so that after such purchase each Lender
will hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its Obligations or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loans. In case any
such payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrowers and
the Lenders and their respective successors and assigns, except that (i) no
Borrower shall have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in
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compliance with Section 12.3. Notwithstanding clause (ii) of this Section, any
Lender may at any time, without the consent of the Borrowers or the Agent,
assign all or any portion of its rights under this Agreement and its Notes to a
Federal Reserve Bank; provided, however, that no such assignment to a Federal
Reserve Bank shall release the transferor Lender from its obligations
hereunder. The Agent may treat the payee of any Note as the owner thereof for
all purposes hereof unless and until such payee complies with Section 12.3 in
the case of an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with the Agent. Any assignee or
transferee of a Note agrees by acceptance thereof to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
12.2. Participations.
12.2.1 Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Note held by such Lender, any
Revolving Credit Commitment of such Lender or any other interest of such Lender
under the Loan Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under the
Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the Borrowers under
this Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrowers and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights
and obligations under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
modification or waiver with respect to any Loan or Revolving Credit Commitment
in which such Participant has an interest which forgives principal, interest or
fees or reduces the interest rate or fees payable with respect to any such Loan
or Revolving Credit Commitment, postpones any date fixed for any
regularly-scheduled payment of principal of, or interest or fees on, any such
Loan or Revolving Credit Commitment, releases any guarantor of any such Loan or
releases any substantial portion of collateral, if any, securing any such Loan.
12.2.3. Benefit of Setoff. Each Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in Section
11.1 in respect of its participating interest in
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amounts owing under the Loan Documents to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of setoff provided
in Section 11.1 with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.1, agrees
to share with each Lender, any amount received pursuant to the exercise of its
right of setoff, such amounts to be shared in accordance with Section 11.2 as
if each Participant were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time
assign to one or more banks or other entities ("Purchasers") all or any part of
its rights and obligations under the Loan Documents. Such assignment shall be
substantially in the form of Exhibit I hereto or in such other form as may be
agreed to by the parties thereto. The consent of the Agent shall be required
prior to an assignment becoming effective with respect to a Purchaser which is
not a Lender or an Affiliate thereof. Each such assignment shall be in an
amount not less than the lesser of (i) $5,000,000 or (ii) the remaining amount
of the assigning Lender's Revolving Credit Commitments (calculated as at the
date of such assignment) or such other amount agreed to by the Agent and, with
the consent of the Agent, such assignments may be of any one or more of the
Revolving Credit Commitments of any Lender.
12.3.2. Effect; Effective Date. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as Exhibit J hereto (a
"Notice of Assignment"), together with any consents required by Section 12.3.1,
and (ii) payment of a $4,500 fee to the Agent for processing such assignment,
such assignment shall become effective on the effective date specified in such
Notice of Assignment. The Notice of Assignment shall contain a representation
by the Purchaser to the effect that none of the consideration used to make the
purchase of the Revolving Credit Commitment and Loans under the applicable
assignment agreement are "plan assets" as defined under ERISA and that the
rights and interests of the Purchaser in and under the Loan Documents will not
be "plan assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and shall have
all the rights and obligations of a Lender under the Loan Documents, to the
same extent as if it were an original party hereto, and no further consent or
action by the Borrowers, the Lenders or the Agent shall be required to release
the transferor Lender with respect to the percentage of the Aggregate Revolving
Credit Commitment and Loans assigned to such Purchaser. Upon the consummation
of any assignment to a Purchaser pursuant to this Section 12.3.2, the
transferor Lender, the Agent and the Borrowers shall make appropriate
arrangements so that replacement Notes are issued to such transferor Lender and
new Notes or, as appropriate, replacement Notes, are issued to such Purchaser,
in each case in principal amounts reflecting their Revolving Credit Commitment,
and in exchange for the existing Notes
AMENDED AND RESTATED CREDIT AGREEMENT
- -76-
<PAGE> 84
which are being replaced, as adjusted pursuant to such assignment.
12.4. Dissemination of Information. Each Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and
any prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Trust and its Subsidiaries; provided
that each Transferee and prospective Transferee agrees to be bound by Section
9.13 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to
comply with the provisions of Section 4.3.
ARTICLE XIII
NOTICES
13.1. Notices. Except as otherwise permitted by Section 2.13 with respect
to borrowing notices, all notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of any Borrower or the Agent, at its address or facsimile number set forth
on the signature pages hereof, (y) in the case of any Lender, at its address or
facsimile number set forth below its signature hereto or (z) in the case of any
party, such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the Agent and the Borrowers. Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Agent under Article II shall not be effective until received.
13.2. Change of Address. Any Borrower, the Agent and any Lender may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
AMENDED AND RESTATED CREDIT AGREEMENT
- -77-
<PAGE> 85
ARTICLE XIV
CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL
14.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF MICHIGAN.
14.2. CONSENT TO JURISDICTION. EACH BORROWER AND EACH GUARANTOR HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR MICHIGAN STATE COURT SITTING IN DETROIT IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE ANY OBJECTION
THEY MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWERS OR ANY GUARANTOR IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY BORROWER OR ANY GUARANTOR AGAINST
THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN DETROIT,
MICHIGAN.
14.3. WAIVER OF JURY TRIAL. EACH BORROWER, EACH GUARANTOR, THE AGENT AND
EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
ARTICLE XV
THE AMENDMENT AND RESTATEMENT
The following terms, conditions and covenants relate to this amendment and
restatement of
AMENDED AND RESTATED CREDIT AGREEMENT
- -78-
<PAGE> 86
the Credit Agreement:
15.1 Relationship of this Agreement to the 1996 Credit Agreement. This
Agreement shall become effective on the Effective Date. On the Effective Date,
the outstanding Advances shall be considered a part of the Advances under this
Agreement for all purposes, as if made in accordance with and pursuant to the
terms of this Agreement; provided; however, that Term Loan A and Term Loan B
outstanding under the 1996 Credit Agreement including all principal and accrued
interest, shall be paid in full on the Effective Date. On and after the
Effective Date, (i) no further fees shall accrue to the Agent or Lenders under
the 1996 Credit Agreement and all fees accrued to (but excluding) the Effective
Date under such agreement shall constitute accrued fees hereunder and be
payable in accordance with the terms hereof and (ii) the rights and obligations
of the parties hereto shall be governed solely by this Agreement, except in
respect of any rights or obligations arising prior to the Effective Date which
shall survive the Effective Date. All of the Advances and other Obligations
are a continuation of, or replace and refund, as the case may be, the
"Advances" and other "Obligations" under and as defined in the 1996 Credit
Agreement, and all Advances and other Obligations shall be entitled to, and are
secured by, the same Collateral with the same priority, as the "Advances" and
other "Obligations" under and as defined in the 1996 Credit Agreement. This
Agreement amends and restates in full the terms and provisions of the 1996
Credit Agreement and is not intended to constitute a novation or satisfaction
of or a renunciation or cancellation or other discharge or the indebtedness and
other liabilities and obligations created under and evidenced by the 1996
Credit Agreement.
15.2 Execution by Guarantors. The Guarantors, if any, are joining in the
execution of this Agreement for the purpose of acknowledging and agreeing to
the terms hereof and confirming the continued effect of the Guaranty with
respect to all of the Secured Obligations (including the additions thereto
pursuant to the amendments to the Credit Agreement incorporated herein), and
all other obligations to be observed or performed by the Guarantor in
connection with this Agreement.
15.3 References. Whenever the 1996 Credit Agreement is referred to in any
note, certificate, instrument or other document executed and delivered in
connection with the Credit Agreement, it shall be deemed to mean the Credit
Agreement as hereby amended and restated. In all other respects, the Credit
Agreement (as hereby amended and restated) and all notes, certificates,
instruments and other documents executed pursuant thereto shall remain in full
force and effect.
ARTICLE XVI
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall
AMENDED AND RESTATED CREDIT AGREEMENT
- -79-
<PAGE> 87
constitute one agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart. This Agreement shall be effective
when it has been executed by each Borrower, the Agent and Lenders and each
party has notified the Agent by telex or telephone, that it has taken such
action. Upon receipt of such notification by each of the other parties, the
Agent shall insert the Effective Date in the final paragraph of this Agreement.
AMENDED AND RESTATED CREDIT AGREEMENT
- -80-
<PAGE> 88
IN WITNESS WHEREOF, the Borrowers, the Lenders and the Agent have executed
this Agreement as of July __, 1997 which shall be the Effective Date.
VENTURE HOLDINGS TRUST
VEMCO, INC.
VENTURE INDUSTRIES CORPORATION
VENTURE MOLD & ENGINEERING
CORPORATION
VENTURE LEASING COMPANY
VEMCO LEASING, INC.
VENTURE HOLDINGS CORPORATION
VENTURE SERVICE COMPANY
By: /s/ James E. Butler
Print Name: James E. Butler
Title: Executive Vice President
of each of the above
listed entities
Address for notices for the Trust
and each other Borrower:
33662 James J. Pompo Dr.
Fraser, Michigan 48026
Attention: President
Telephone:(810) 294-1500
Telecopy:(810) 294-1960
AMENDED AND RESTATED CREDIT AGREEMENT
- -81-
<PAGE> 89
Revolving Credit Commitment NBD BANK, as a Lender and as Agent
$25,000,000
By: /s/ Erik W. Bakker
Print Name: Erik W. Bakker
Title: VP
611 Woodward Avenue
Detroit, Michigan 48226
Attention:
Telephone:(313) 225-2979
Telecopy:(313) 225-2290
AMENDED AND RESTATED CREDIT AGREEMENT
- -82-
<PAGE> 90
Revolving Credit Commitment THE FIRST NATIONAL BANK OF
$22,500,000 CHICAGO
By: /s/ Richard T. Jones
Print Name: Richard T. Jones
Title: Authorized Agent
One First National Plaza
Chicago, Illinois 60670-0429
Attention: Kenneth Selle
Telephone:(312) 732-9524
Telecopy:(312) 732-7455
AMENDED AND RESTATED CREDIT AGREEMENT
- -83-
<PAGE> 91
Revolving Credit Commitment BHF-BANK AKTIENGESELLSCHAFT,
$22,500,000 as a Lender and as a Co-Agent
By: /s/ Linda Pace /s/ Paul Traupis
Print Name: Linda Pace Paul Traupis
Title: Vice President Vice President
590 Madison Avenue, 30th Floor
New York, New York 10022
Attention: John Sykes
Telephone:(212) 756-5543
Telecopy:(212) 756-5536
AMENDED AND RESTATED CREDIT AGREEMENT
- -84-
<PAGE> 92
Revolving Credit Commitment THE BANK OF NOVA SCOTIA,
$22,500,000 as a Lender and as a Co-Agent
By: /s/ N.D. Smith
Print Name: N.D. Smith
Title: Agent Operations
Attention: P.L. Jackson
Sr. Loan Operations Officer
Telephone: (404)877-1539
Telecopy: (404)888-8998
AMENDED AND RESTATED CREDIT AGREEMENT
- -85-
<PAGE> 93
Revolving Credit Commitment THE HUNTINGTON NATIONAL BANK,
$22,500,000 as a Lender and as a Co-Agent
By: /s/ Robert Michael Prescott
Print Name: Robert Michael Prescott
Title: Vice President
41 S. High Street
Columbus, Ohio 43287
Attention: R. Michael Prescott
Telephone:(614) 480-4039
Telecopy:(614) 480-3698
AMENDED AND RESTATED CREDIT AGREEMENT
- -86-
<PAGE> 94
Revolving Credit Commitment NATIONAL BANK OF CANADA
$15,000,000
By: /s/ Duane K. Bedard
Print Name: Duane K. Bedard
Title: Vice President
Attention: R. Kim Fir
Vice President
Telephone: (248) 354-4800
Telecopy: (248) 354-1768
AMENDED AND RESTATED CREDIT AGREEMENT
- -87-
<PAGE> 95
Revolving Credit Commitment THE MITSUBISHI TRUST AND
$15,000,000 BANKING CORP., CHICAGO BRANCH
By: /s/ Aaki Yamagishi
Print Name: Mr. Aaki Yamagishi
Title: Chief Manager
311 S. Wacker Drive, Suite 6300
Chicago, Illinois 60606
Attention: Mr. Chris Strike
Telephone: (312) 408-6015
Telecopy: (312) 663-0863
AMENDED AND RESTATED CREDIT AGREEMENT
- -88-
<PAGE> 96
Revolving Credit Commitment THE LONG-TERM CREDIT BANK OF
$15,000,000 JAPAN, LTD.
By: /s/ Mark A. Thompson
Print Name: Mark A. Thompson
Title: Vice President & Deputy
General Manager
190 S. LaSalle Street, Suite 800
Chicago, Illinois 60603
Attention:
Telephone: (312) 704-5459
Telecopy: (312) 704-8505
AMENDED AND RESTATED CREDIT AGREEMENT
- -89-
<PAGE> 97
Revolving Credit Commitment BANK OF TOKYO-MITSUBISHI TRUST
$15,000,000 COMPANY
By: /s/ Nicholas J. Campbell, Jr.
Print Name: Nicholas J. Campbell, Jr.
Title: Vice President
1251 Avenue of the Americas, 12th Floor
New York, New York 10020-1104
Attention: Nicholas J. Campbell, Jr.
Telephone: (212) 782-4265
Telecopy: (212) 782-4981
AMENDED AND RESTATED CREDIT AGREEMENT
- -90-
<PAGE> 98
Revolving Credit Commitment BANQUE FRANCAISE DU COMMERCE
$10,000,000 EXTERIEUR
By: /s/ Evan Kraus /s/ Kevin Dooley
Print Name: Evan Kraus Kevin Dooley
Title: Associate Vice President
645 Fifth Avenue, 20th Floor
New York, New York 10022
Attention: Evan Kraus
Telephone:(212) 872-5118
Telecopy:(212) 872-5045
AMENDED AND RESTATED CREDIT AGREEMENT
- -91-
<PAGE> 99
Revolving Credit Commitment IMPERIAL BANK
$10,000,000
By: /s/ Ray Vadalma
Print Name: Ray Vadalma
Title: Senior Vice President
9920 South LaCienega Blvd., Suite 1015
Inglewood, California 90301
Attention: John Farrace
Telephone:(310) 417-5676
Telecopy:(310) 417-5997
AMENDED AND RESTATED CREDIT AGREEMENT
- -92-
<PAGE> 100
Revolving Credit Commitment CITY NATIONAL BANK
$5,000,000
By: /s/ George Hayrapetian
Print Name: George Hayrapetian
Title: Vice President
Attention: George Hayrapetian
Telephone: (310)888-6114
Telecopy: (310)888-6152
AMENDED AND RESTATED CREDIT AGREEMENT
- -93-
<PAGE> 1
EXHIBIT 10.3
CORPORATE OPPORTUNITY AGREEMENT
CORPORATE OPPORTUNITY AGREEMENT made and entered into this 16th day of
February, 1994 (the "Agreement"), by and between Larry J. Winget ("Winget") and
Comerica Bank, as Indenture Trustee ("Comerica").
WHEREAS, Venture Holdings Trust (the "Trust"), Vemco, Inc., Venture
Industries Corporation, Venture Mold and Engineering Corporation, Venture
Leasing Company, Vemco Leasing, Inc., Venture Holdings Corporation and Venture
Service (each an "Issuer" and together with the Trust, the "Issuers"), Venture
Industries Canada Ltd. and Comerica have entered into an Indenture (the
"Indenture"), dated as of February 16, 1994; and
WHEREAS, in connection with the execution of the Indenture and the
issuance of the 9-3/4% Senior Subordinated Notes due 2004 (the "Securities")
thereunder, Winget has agreed to enter into this Agreement for the benefit of
the Holders.
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. Covenant Of Winget. Winget agrees that if any corporate
opportunity, business opportunity, proposed transaction, acquisition,
disposition, participation, interest, or other opportunity to acquire an
interest in any business or prospect in the same business or in any business
reasonably related to the business of the Trust or any of its Subsidiaries or
in any machinery or equipment useful in the business of the Trust or any of its
Subsidiaries (a "Business Opportunity") comes to his attention or shall be made
available to him or any of his Affiliates, a complete and accurate description
of such Business Opportunity, including all of the terms and conditions thereof
and the identity of all other Persons involved in the Business Opportunity,
shall be promptly presented in writing to the Board of Directors of each of the
Issuers and the Fairness Committee of each of the Issuers and each Issuer shall
be entitled to pursue and take advantage of such Business Opportunity, either
directly or through a Wholly Owned Subsidiary, and Winget shall not, nor shall
any of his Affiliates (other than the Trust or any Wholly Owned Subsidiary of
the Trust), pursue or take advantage of a Business Opportunity unless
majorities of the Board of Directors of each of the Issuers and the Fairness
Committee of each of the Issuers (including
<PAGE> 2
majorities of each Issuer's disinterested directors, if any, and Independent
members of the Fairness Committee) have determined that it is not in the
interests of such Issuer to pursue or take advantage of such Business
Opportunity; provided, however, that (1) a Business Opportunity may be made
available to Nova Corporation ("Nova") prior to and to the exclusion of its
being made available to the Trust if the Issuers shall have delivered to the
Indenture Trustee an opinion of independent counsel in the United States to the
effect that making such Business Opportunity available to the Trust prior to
its being made available to Nova would be illegal and (2) this Agreement shall
not restrict Nova's ability to compete with the Trust for a Business
Opportunity if the Issuers shall have delivered to the Indenture Trustee an
opinion of independent counsel in the United States to the effect that such
restriction would be illegal. Notwithstanding the foregoing, Business
Opportunities (1) relating to the purchase of machinery and equipment or real
estate and not constituting a business within the meaning of Section 11-01(d)
of Regulation S-X of the Commission or (2) relating to the sale of goods and
services by an Affiliate in the ordinary course of its business as conducted as
of the date of the Indenture shall not be subject to the Corporate Opportunity
Agreement.
2. Amending Agreement. This Agreement shall not be amended, modified
or in any way altered without the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Securities, by Act of
said Holders delivered to the Issuers, each Guarantor, if any, and the
Indenture Trustee.
3. Construction. All capitalized terms used herein that are defined
in, or by reference in, the Indenture, shall have the meanings assigned to such
terms therein, or by reference therein, unless otherwise defined.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have signed and executed this Agreement
on the date(s) written below.
LARRY J. WINGET
By: /s/Larry J. Winget
--------------------------
COMERICA BANK,
as Indenture Trustee
By: /s/ James Kowalski
--------------------------
Name: James Kowalski
Title: Trust Administrator
3
<PAGE> 1
EXHIBIT 10.3.1
July 9, 1997
The Huntington National Bank
41 S. High Street, HC 1112
Columbus, Ohio 43215
Ladies and Gentlemen:
Reference is made to the Corporate Opportunity Agreement (the
"Agreement"), dated February 16, 1994, between me and Comerica Bank, as
trustee, for the benefit of the holders of the 9-3/4% Senior Subordinated Notes
due 2004 (the "Existing Notes") of Venture Holdings Trust and the other Issuers
thereof. The Agreement is attached hereto.
I agree to be bound to by terms of the Agreement for the benefit of
the Holders of the Issuers' 9 1/2% Senior Notes due 2005 (the "Notes"), issued
pursuant to an Indenture dated as of July 1, 1997 between you and the Issuers,
for so long as any of the Notes remain outstanding, regardless of whether any
of the Existing Notes remain outstanding. I agree not to amend, modify or
alter the terms of this letter or the Agreement without the consent of a
majority in aggregate principal amount of the Notes then outstanding.
Very truly yours,
/s/ Larry Winget
Larry J. Winget
<PAGE> 1
EXHIBIT 10.23
VENTURE REAL ESTATE ACQUISITION COMPANY -
VENTURE INDUSTRIES CORPORATION
USAGE AGREEMENT
WHEREAS VENTURE REAL ESTATE ACQUISITION COMPANY and VENTURE INDUSTRIES
CORPORATION (the "Parties") desire to enter into a Usage Agreement (the
"Agreement") concerning the real estate located at 17085 Masonic, Fraser,
Michigan (the "Property") for a usage fee as set forth herein in more detail;
AND WHEREAS the Parties have agreed to the following terms;
NOW THEREFORE, THIS USAGE AGREEMENT is hereby made and entered into as of
February ___, 1995 (hereinafter sometimes referred to as the "Commencement
Date"), by and between VENTURE REAL ESTATE ACQUISITION COMPANY (hereinafter
together with its successors and assigns, referred to as "Owner"), and VENTURE
INDUSTRIES CORPORATION (hereinafter referred to as "User"), who hereby amend, as
of the effective date, all other agreements, if any, by and between the parties
concerning the rental or usage of the Property as follows:
<PAGE> 2
1. USAGE FEE PAYABLE BY USER. (A) User, in consideration and in respect
of the right granted by Owner to use the Property, shall pay to Owner for any
one month a sum equal to an allocated share of Owner's total daily costs related
to the Property for such month (the "Total Daily Costs"). Such allocated share
of Total Daily Costs shall be calculated based on the number of days the
Property is used or reserved by User during the month in question.
(B) Initially, under this Usage Agreement, the Total Daily Costs shall be
determined to be _________________________ Dollars ($______) per day (the "Daily
Charge"); provided that:
(i) if User only uses or reserves a portion of the Property during
any one day, then the Daily Charge shall be prorated to reflect the value of the
Property so used or reserved relative to the value of all of the Property;
(ii) if Owner and User use or reserve the Property during the same
day, User's share of the Daily Charge shall be calculated based upon the
relative use for such day;
(iii) in addition, the Daily Charge shall be adjusted from time to
time by agreement of the parties to reflect the relative costs of any additions
to or deletions to the Property.
(C) if Owner utilizes any of User's employees, there shall be a credit to
User for each hour of such use calculated based on the cost of such labor,
including wages, benefits, payroll taxes, and such employee's fair share of the
overhead.
(D) Said sum shall be payable monthly at Owner's place of business or such
other place as Owner shall direct in writing.
(E) The due date of the first payment shall be the date in the next
calender month which numerically corresponds to the Effective Date (or if there
is no such date in the next calender month,
<PAGE> 3
the last date of such month) [such period being herein considered a "month"],
with subsequent payments being due at one month intervals.
(F) Nothing herein to the contrary withstanding, User shall not be liable
for any payments to Owner accrued after this Agreement has been terminated.
2. USAGE RIGHT. (A) In consideration of the payment of Usage Fees, Owner
hereby agrees to make available for use on Owner's premises, on an as is, where
is basis, and (ii) grants to User the right, subject to paragraph 2(B) and
Section 4, to use the Property during the period from the Effective Date to the
date of termination of this Agreement.
(B) Owner shall be permitted to use any of the Property and any of User's
employees not being utilized by User (User shall receive a credit against any
Usage Fees owed under paragraph 1(A), for the out-of-pocket cost of any such
labor), subject to the following conditions. At any time that Owner desires
that itself or a third party use such Property (or any portion thereof) or any
of User's employees, (i) Owner shall give User not less than ten (10) days prior
notice of the dates of intended use, and (ii) the scheduling of such use shall
not unreasonably interfere with the requirements of User's business.
3. TERMINATION. (A) Owner shall have the option to terminate this
Agreement (i) on or after the eleventh (11th) anniversary of the Effective Date;
(ii) if both the Senior Secured Notes, Series A, due March 15, 2000 and the
Senior Subordinated Notes, due April 1, 2004, are fully paid, redeemed or
defeased in accordance with their terms, or (iii) as to any portion of the
Property, if (a) User shall fail to use or reserve such Property for at least
thirty (30) days in any sixty (60)
3
<PAGE> 4
consecutive day period (the "Minimum Amount"), (b) following such failure,
Owner shall give User a written notice of termination which shall state that
such Property shall cease to be subject to this Agreement and that such
termination will occur on a date specified in such notice which shall be not
earlier than twenty (20) days from the date of such notice (the "Termination
Date") unless prior thereto User pays Owner an amount, which when added to the
amount already paid pursuant to paragraph 1(A), would equal the sum which would
have been paid if such Property had been used the Minimum Amount during such
period and (c) User shall fail to pay such additional amount for the period in
question to Owner prior to the Termination Date.
4
<PAGE> 5
4. CONTINUOUS OWNER ACCESS. Owner shall have reasonable access to the
Property subject to the convenience and requirements of User's business and upon
not less than two (2) days prior written notice in order to (i) make repairs and
(ii) do testing.
5. CARE AND REPAIR OF PROPERTY. Except as provided in Section 6, Owner
shall keep the Property in good repair, condition, and working order, and shall
furnish any and all parts and labor required for that purpose.
6. LOSS. User shall utilize the Property in a careful and proper manner
which reasonably follows the common methods of usage of such Property, and in a
manner fit for the usages which the Property itself is customarily used, and in
compliance with all applicable laws, ordinances and regulations.
User shall be liable to Owner for any loss or damage to the Property which
results from User's negligence or misuse of the Property. Otherwise, Owner,
subject to User's obligation to insure the Property in accordance with Section
9, shall bear the entire risk of loss of and damage to the Property.
User shall be liable for any loss, damage or liability to third parties,
including User's invitees, employees, agents and sub-contractors as a result of
the use of such Property by User, its employees, agents, sub-contractors (other
than Owner and its agents) and invitees.
5
<PAGE> 6
7. ALTERATIONS AND IMPROVEMENTS TO THE PROPERTY. Provided that permission
of Owner is first obtained, User may, at its sole cost and expense, modernize,
add to and improve the Property from time to time. Upon the termination of the
right of User to such any particular piece of Property or all of the Property,
User shall, at its own expense, have the right to remove from such Property any
such modernization, addition or improvement if User has first given Owner thirty
(30) day's written notice of User's unexpensed or unamortized cost basis in such
modernization, addition or improvement and Owner has not tendered the same.
8. INSURANCE. User shall maintain, and provide Owner with a copy thereof,
a liability policy which shall name Owner as an additional insured party, and
shall provide (a) comprehensive insurance against risk of loss and damage to the
Property and (b) comprehensive general liability insurance, including blanket
contractual coverage against claims for, or arising out of, bodily injury,
death, or property damage from the Property. The initial limits of coverage
shall be, if dual limits are provided, not less than FIVE MILLION DOLLARS
($5,000,000.00) with respect to injury or death of a single person and not less
than TEN MILLION DOLLARS ($10,000,000.00) with respect to any one occurrence;
and not less than FIVE MILLION DOLLARS ($5,000,000.00) with respect to any one
occurrence of property damage.
9. ASSIGNMENT. The rights of Owner and User hereunder shall not be
assigned, pledged, transferred or otherwise disposed of without the prior
written consent of the other party, which consent shall not be unreasonably
withheld.
6
<PAGE> 7
10. EVENTS OF DEFAULT AND REMEDIES THEREFOR. An event of default shall
occur and be continuing, and Owner shall have the right to terminate this
Agreement at any time thereafter (whether or not said Owner is deemed to have
waived its right to so terminate) and pursue any remedy available to Owner at
law or equity, if User (a) ceases to do business as a going concern, makes an
assignment for the benefit of creditors, admits in writing its inability to pay
its debts as they become due, or files a voluntary petition in bankruptcy; or
(b) within sixty (60) days after the commencement of any proceedings seeking
reorganization, arrangement, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law of regulation, such proceeding
shall not have been dismissed, or if within sixty (60) days after the
appointment without consent or acquiescence of any trustee, receiver or
liquidator of it or of all or any substantial part of its assets and properties,
such appointment shall not be vacated; provided, that if the Owner of the
Property is no longer Venture Real Estate Acquisition Company or an affiliate of
Venture Real Estate Acquisition Company, or Larry J. Winget or an affiliate of
Larry J. Winget and such Owner did not acquire its rights hereunder in breach of
Section 9 and is not otherwise in breach of this Agreement, an additional event
of default shall occur if User fails to perform any material provision of this
Agreement and such failure continues for a period of thirty (30) days after
notice thereof, time being of the essence.
11. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of Michigan.
7
<PAGE> 8
12. INTEGRATION. This writing constitutes the entire agreement between the
parties as to the matter set forth herein and shall supersede all previous or
contemporaneous negotiations, commitments, and writings with respect to the
matters set forth herein.
13. MODIFICATION. The parties may, by written instrument, amend, modify or
extend this Agreement. This Agreement may only be so amended, modified or
extended by a writing signed by authorized representatives of both parties. The
terms and provisions of this Agreement shall prevail over any conflicting,
additional, or other terms appearing in any notice, request, instruction,
invoice, or other writing submitted by either party under this Agreement at any
time.
14. WAIVER. No waiver of any provision or breach of this Agreement shall be
construed as a continuing waiver, or shall constitute a waiver of such
provisions or breach, or of any other provision or breach.
15. HEADINGS, INTERPRETATION. The paragraph headings herein are included
solely for convenience and shall in no event affect or be used in connection
with the interpretation of this Agreement. Each separate provision of this
Agreement shall be treated as severable, to the end that if any one or more such
provisions shall be adjudged or declared illegal, invalid, or unenforceable,
this Agreement shall be interpreted and shall remain in full force and effect,
as though such provision or provisions had never been contained in this
Agreement.
8
<PAGE> 9
16. NOTICES. Any notice, demand, delivery, invoice, or other writing
required or desired to be given or made pursuant to this Usage Agreement shall
be in writing, and shall be deemed to have been given and received, and to be
effective for all purposes, the third business mail day after having been mailed
via the United States Postal Service in an envelope properly stamped and
addressed to the proper party at the address (or such other address as the
recipient shall have designated in writing) that follows:
9
<PAGE> 10
If to Owner: VENTURE REAL ESTATE ACQUISITION COMPANY
33662 James J. Pompo Drive
Fraser, Michigan 48026
If to User: VENTURE INDUSTRIES CORPORATION
33662 James J. Pompo Dr.
Fraser, Michigan 48026
IN WITNESS WHEREOF, the Owner and User have executed this Usage Agreement
as of the Commencement Date.
OWNER:
VENTURE REAL ESTATE ACQUISITION COMPANY, a
Michigan Corporation
By: /s/ Michael G. Torakis
----------------------------
MICHAEL G. TORAKIS,
its Vice President
USER:
VENTURE INDUSTRIES CORPORATION, a Michigan
Corporation
By: /s/ Michael G. Torakis,
----------------------------
MICHAEL G. TORAKIS,
its Vice President
10
<PAGE> 11
VENTURE REAL ESTATE ACQUISITION COMPANY -
VENTURE INDUSTRIES CORPORATION
ADDENDUM TO USAGE AGREEMENT
WHEREAS VENTURE REAL ESTATE ACQUISITION COMPANY and VENTURE INDUSTRIES
CORPORATION (the "Parties") are entering into a Usage Agreement (the
"Agreement") concerning the real estate located at 17085 Masonic, Fraser,
Michigan (the "Property") for a usage fee (the "Daily Charge") set forth
therein;
NOW THEREFORE, in order to induce VENTURE INDUSTRIES CORPORATION to enter
into such Agreement, the Parties hereby agree that VENTURE INDUSTRIES
CORPORATION shall receive six (6) months of free rent, beginning with the first
month such Agreement is in effect.
OWNER:
VENTURE REAL ESTATE ACQUISITION COMPANY, a
Michigan Corporation
By: /s/ Michael G. Torakis
----------------------------
MICHAEL G. TORAKIS,
its Vice President
USER:
VENTURE INDUSTRIES CORPORATION, a Michigan
Corporation
By: /s/ Michael G. Torakis
----------------------------
MICHAEL G. TORAKIS,
its Vice President
11
<PAGE> 1
EXHIBIT 10.24
VENTURE EQUIPMENT ACQUISITION COMPANY -
VENTURE INDUSTRIES CORPORATION
MACHINERY USAGE AGREEMENT
WHEREAS VENTURE EQUIPMENT ACQUISITION COMPANY and VENTURE INDUSTRIES
CORPORATION (the "Parties") desire to enter into a Machinery and Equipment Usage
Agreement (the "Agreement") concerning the machinery and equipment set forth in
SCHEDULE A attached hereto and made a part hereof (presently located at 17085
Masonic, Fraser, Michigan) for a usage fee equal to the lesser of: (i) the
monthly rate, or (ii) the daily rate for the total number of Usage Days in any
one month, all of which is set forth on a per machine basis in Schedule A;
AND WHEREAS the Parties have agreed to the following terms;
NOW THEREFORE, THIS MACHINERY AND EQUIPMENT USAGE AGREEMENT is hereby made
and entered into as of the 15th day of February, 1995 (hereinafter sometimes
referred to as the "Commencement Date"), by and between VENTURE EQUIPMENT
ACQUISITION COMPANY (hereinafter together with its successors and assigns,
referred to as "Owner"), and VENTURE INDUSTRIES CORPORATION (hereinafter
referred to as "User"), who hereby amend, as of the effective date, all other
agreements, if any, by and between the parties concerning the rental or usage of
the equipment listed on Schedule A (the "Equipment") as follows:
<PAGE> 2
1. USAGE FEE PAYABLE BY USER. (A) User, in consideration and in respect of
the right granted by Owner to use the Equipment, shall pay to Owner for any one
month a sum (prorated for the value of each piece of Equipment subject to this
Usage Agreement as initially set forth on Schedule A and as the parties shall
from time to time reasonably agree upon) equal to the lesser of:
(i) SIXTY FIVE THOUSAND EIGHT HUNDRED SIXTY FIVE DOLLARS ($65,865) per
month (the "Monthly Rate"); or
(ii) THREE THOUSAND TWO HUNDRED NINETY THREE AND TWENTY FIVE ONE
HUNDREDTHS DOLLARS ($3,293.25) per Usage Day (the "Daily Rate"); provided, that
at each anniversary of the Effective Date of this Agreement, the daily rate and
the monthly rate shall be prospectively adjusted to reflect the rate of
inflation (as measured by the Revised Consumer Price Index - All Items figured
for All Urban Consumers, published by the United States Department of Labor,
Bureau of Labor Statistics, or, if such index is not published, a comparable
index selected by the parties) from the Effective Date to said anniversary date.
A "Usage Day" shall mean a day during the month in question the User
actually uses the Equipment (it being hereby agreed that any use during any
calendar day shall be considered one full day of usage for purposes of the fee
owed to Owner by User).
(B) Said sum shall be payable monthly at Owner's place of business or such
other place as Owner shall direct in writing.
(C) The due date of the first payment shall be the date in the next
calender month which numerically corresponds to the Effective Date (or if there
is no such date in the next calender month, the last date of such month) [such
period being herein considered a "month"], with subsequent payments being due at
one month intervals.
2
<PAGE> 3
(D) Nothing herein to the contrary withstanding, User shall not be liable
for any payments to Owner accrued after this Agreement has been terminated.
2. USAGE RIGHT. (A) In consideration of the payment of Usage Fees, Owner
hereby (i) agrees to make available for pick-up by User or use on Owner's
premises, on an as is, where is basis, and (ii) grants to User the right,
subject to paragraph 2(B) and Section 4, to use the Equipment during the period
from the Effective Date to the date of termination of this Agreement.
(B) Owner shall be permitted to use the Equipment when not in use by User,
subject to the following conditions. At any time that Owner desires that itself
or a third party use such Equipment (or any portion thereof) which is on User's
premises, (i) Owner shall give User not less than ten (10) days prior notice of
the dates of intended use, (ii) the scheduling of such use shall not
unreasonably interfere with the requirements of User's business and (iii)(x)
Owner shall arrange on terms reasonably satisfactory to User for Owner or any
third party user to fully indemnify and hold User harmless from any damage,
liability or other cost which is the result of any negligence or intentional
harm caused by them or their invitees, employees, agents or sub-contractors to
the extent to which such damage, liability or other cost is not recoverable from
User's insurance carrier and (y) during any period that Owner or such third
party is using such Equipment, Owner or such third party user shall reimburse
User for any electrical charges or other variable costs of User which User
incurs as a result of the access permitted above.
(C) Nothing herein to the contrary withstanding, under no circumstances or
condition shall any act or omission, including the affixing of such Equipment to
the premises, result in Owner losing any right of ownership to the Equipment and
to this end Owner shall have the right to, and User shall
3
<PAGE> 4
cooperate in aiding Owner, enter into a security agreement with User or file
any UCC statement required or reasonable convenient to protecting Owner's
rights in this regard.
3. TERMINATION. (A) Owner shall have the option to terminate this
Agreement (i) on or after the eleventh (11th) anniversary of the Effective Date;
(ii) if both the Senior Secured Notes, Series A, due March 15, 2000 and the
Senior Subordinated Notes, due April 1, 2004, are fully paid, redeemed or
defeased in accordance with their terms, or (iii) as to any particular piece of
Equipment if (a) User shall fail to pay for the usage of such piece of Equipment
for at least thirty (30) days in any sixty (60) consecutive day period (the
"Minimum Amount"), (b) following such failure, Owner shall give User a written
notice of termination which shall state that such piece of Equipment shall cease
to be subject to this Agreement and that such termination will occur on a date
specified in such notice which shall be not earlier than twenty (20) days from
the date of such notice (the "Termination Date") unless prior thereto User pays
Owner that portion of the Minimum Amount not yet paid for the period in question
and (c) User shall fail to pay that portion of the Minimum Amount not yet paid
for the period in question to Owner prior to the Termination Date.
4. CONTINUOUS OWNER ACCESS. Owner shall have reasonable access to the
Equipment at User's premises subject to the convenience and requirements of
User's business and upon not less than two (2) days prior written notice in
order to (i) make repairs and (ii) do testing; provided, that Owner shall (and
Owner hereby agrees to do so) fully indemnify and hold User harmless from any
damage, liability or cost which is the result of any negligence or intentional
harm by Owner or its invitees, employees, agents or sub-contractors to the
extent to which such damage,
4
<PAGE> 5
liability or other cost is not recoverable from User's insurance carrier or
third party's insurance carrier.
5. CARE AND REPAIR OF PROPERTY. Except as provided in Section 6, Owner
shall keep the Equipment in good repair, condition, and working order, and shall
furnish any and all parts and labor required for that purpose.
6. LOSS. User shall utilize the Equipment in a careful and proper manner
which reasonably follows the common methods of usage of such Equipment, and in a
manner fit for the usages which the Equipment itself is customarily used, and in
compliance with all applicable laws, ordinances and regulations.
User shall be liable to Owner for any loss or damage to the Equipment which
results from User's negligence or misuse of the Equipment. Otherwise, Owner,
subject to User's obligation to insure the Equipment in accordance with Section
9, shall bear the entire risk of loss of and damage to the Equipment.
User shall be liable for any loss, damage or liability to third parties,
including User's invitees, employees, agents and sub-contractors as a result of
the use of such Equipment by User, its employees, agents, sub-contractors (other
than Owner and its agents) and invitees.
7. REMOVAL UPON TERMINATION. Whether or not the same has attached to the
premises or otherwise become a fixture, upon termination of this Agreement, or
User's right to use any particular piece of Equipment, or upon it being
necessary for the repair of the Equipment that
5
<PAGE> 6
Owner temporarily remove the same from User's premises, Owner shall be
permitted to remove such Equipment and shall have full right of access to the
premises in order to enable it to remove such Equipment from User's premises
during normal business hours or such other hours as User shall reasonably
specify; provided, that Owner shall not unduly interfere with the right of User
to conduct its business and that Owner shall fully indemnify User regarding any
damage, liability or other cost which is the result of any negligence or
intentional harm caused by User or its agents in removing such Equipment, to
the extent to which such damage, liability or other cost is not recoverable
from User's insurance carrier.
8. ALTERATIONS AND IMPROVEMENTS TO THE EQUIPMENT. Provided that either (i)
the same does not materially reduce the value of the Equipment or (ii)
permission of Owner is first obtained, User may, at its sole cost and expense,
modernize, add to and improve the Equipment from time to time. Upon the
termination of the right of User to such any particular piece of Equipment or
all of the Equipment, User shall, at its own expense, have the right to remove
from such Equipment any such modernization, addition or improvement if User has
first given Owner thirty (30) day's written notice of User's unexpensed or
unamortized cost basis in such modernization, addition or improvement and Owner
has not tendered the same.
9. INSURANCE. User shall maintain, and provide Owner with a copy thereof,
a liability policy which shall name Owner as an additional insured party, and
shall provide (a) comprehensive insurance against risk of loss and damage to the
Equipment and (b) comprehensive general liability insurance, including blanket
contractual coverage against claims for, or arising out of, bodily injury,
6
<PAGE> 7
death, or property damage from the Equipment. The initial limits of coverage
shall be, if dual limits are provided, not less than FIVE MILLION DOLLARS
($5,000,000.00) with respect to injury or death of a single person and not less
than TEN MILLION DOLLARS ($10,000,000.00) with respect to any one occurrence;
and not less than FIVE MILLION DOLLARS ($5,000,000.00) with respect to any one
occurrence of property damage.
10. ASSIGNMENT. The rights of Owner and User hereunder shall not be
assigned, pledged, transferred or otherwise disposed of without the prior
written consent of the other party, which consent shall not be unreasonably
withheld.
11. EVENTS OF DEFAULT AND REMEDIES THEREFOR. An event of default shall
occur and be continuing, and Owner shall have the right to terminate this
Agreement at any time thereafter (whether or not said Owner is deemed to have
waived its right to so terminate) and pursue any remedy available to Owner at
law or equity, if User (a) ceases to do business as a going concern, makes an
assignment for the benefit of creditors, admits in writing its inability to pay
its debts as they become due, or files a voluntary petition in bankruptcy; or
(b) within sixty (60) days after the commencement of any proceedings seeking
reorganization, arrangement, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law of regulation, such proceeding
shall not have been dismissed, or if within sixty (60) days after the
appointment without consent or acquiescence of any trustee, receiver or
liquidator of it or of all or any substantial part of its assets and properties,
such appointment shall not be vacated; provided, that if the Owner of the
Equipment is no longer Venture Equipment Acquisition Company or an affiliate of
Venture Equipment
7
<PAGE> 8
Acquisition Company, or Larry J. Winget or an affiliate of Larry J. Winget, and
such Owner did not acquire its rights hereunder in breach of Section 10 and is
not otherwise in breach of this Agreement, an additional event of default shall
occur if User fails to perform any material provision of this Agreement and
such failure continues for a period of thirty (30) days after notice thereof,
time being of the essence.
12. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of Michigan.
13. INTEGRATION. This writing constitutes the entire agreement between the
parties as to the matter set forth herein and shall supersede all previous or
contemporaneous negotiations, commitments, and writings with respect to the
matters set forth herein.
14. MODIFICATION. The parties may, by written instrument, amend, modify or
extend this Agreement. This Agreement may only be so amended, modified or
extended by a writing signed by authorized representatives of both parties. The
terms and provisions of this Agreement shall prevail over any conflicting,
additional, or other terms appearing in any notice, request, instruction,
invoice, or other writing submitted by either party under this Agreement at any
time.
15. WAIVER. No waiver of any provision or breach of this Agreement shall be
construed as a continuing waiver, or shall constitute a waiver of such
provisions or breach, or of any other provision or breach.
8
<PAGE> 9
16. HEADINGS, INTERPRETATION. The paragraph headings herein are included
solely for convenience and shall in no event affect or be used in connection
with the interpretation of this Agreement. Each separate provision of this
Agreement shall be treated as severable, to the end that if any one or more such
provisions shall be adjudged or declared illegal, invalid, or unenforceable,
this Agreement shall be interpreted and shall remain in full force and effect,
as though such provision or provisions had never been contained in this
Agreement.
17. NOTICES. Any notice, demand, delivery, invoice, or other writing
required or desired to be given or made pursuant to this Usage Agreement shall
be in writing, and shall be deemed to have been given and received, and to be
effective for all purposes, the third business mail day after having been mailed
via the United States Postal Service in an envelope properly stamped and
addressed to the proper party at the address (or such other address as the
recipient shall have designated in writing) that follows:
If to Owner: VENTURE EQUIPMENT ACQUISITION COMPANY
33662 James J. Pompo Dr.
Fraser, Michigan 48026
If to User: VENTURE INDUSTRIES CORPORATION
33662 James J. Pompo Dr.
Fraser, Michigan 48026
IN WITNESS WHEREOF, the Owner and User have executed this Usage Agreement
as of the Commencement Date.
OWNER:
VENTURE EQUIPMENT ACQUISITION COMPANY
9
<PAGE> 10
BY: /s/ Michael G. Torakis
-------------------------
MICHAEL G. TORAKIS,
VICE PRESIDENT
USER:
VENTURE INDUSTRIES CORPORATION
BY: /s/ Michael G. Torakis
----------------------------
MICHAEL G. TORAKIS,
VICE PRESIDENT
10
<PAGE> 1
EXHIBIT 10.25
LEASE
between the
DIRECTOR OF DEVELOPMENT
OF THE STATE OF OHIO
and
BAILEY TRANSPORTATION PRODUCTS, INC.
Dated
as of
July 1, 1992
(OHIO ENTERPRISE BOND FUND PROGRAM)
<PAGE> 2
LEASE
THIS LEASE made and entered into as of July 1, 1992 between the Director
of Development of the State of Ohio (the "Director"), and Bailey Transportation
Products, Inc., a corporation organized under the laws of the State of Delaware
and qualified to do business in the State of Ohio (the "Company"), under the
circumstances summarized in the following recitals (the capitalized terms used
in the recitals being used therein as defined in Article I hereof):
A. Pursuant to the Act, the Director is authorized, among other things, to
acquire property, and convey property so acquired, by lease, lease purchase or
other disposition, upon such terms and conditions as the Director determines to
be appropriate to satisfy the objectives of the Act.
B. The Company has requested that the Director provide financial
assistance for the Project by acquiring the Project, leasing the Project to the
Company and conveying the Project to the Company upon termination of the Lease
Term, all subject to and in accordance with the terms of this Lease.
C. The Director has determined that the Project constitutes an Eligible
Project and that the financial assistance to be provided pursuant to this Lease
and under the Loan Agreement is appropriate under the Act and will be in
furtherance and in implementation of the public policy set forth in the Act.
D. The financial assistance to be provided pursuant to this Lease and
under the Loan Agreement has been reviewed and approved by the Development
Financing Advisory Board and the Controlling Board, pursuant to the Act.
NOW, THEREFORE, in consideration of the premises and the representations
and agreements hereinafter contained, the Director and the Company agree as
follows (provided, that any obligation of the Director created by or arising
out of this Lease shall not be a general debt on the part of the Director or
the State but shall be payable solely out of the rentals, revenues and other
income, charges and moneys realized from the use, lease, sale or other
disposition of the Project and any insurance and condemnation awards as herein
provided):
ARTICLE I
DEFINITIONS
Section 1.1 Use of Defined Terms. In addition to the words and terms
elsewhere defined in this Lease or by reference to other instruments, the words
and terms set forth in Section 1.2 hereof shall have the meanings therein set
forth unless the context or use expressly indicates a different meaning or
intent. Such definitions shall be equally applicable to both the singular and
plural forms of any of the words and terms therein defined.
Section 1.2 Definitions. As used herein:
"Act" means Chapter 166, Ohio Revised Code, as from time to time
enacted and amended.
<PAGE> 3
"Additional Rent" means the additional rent specified in Section 4.3 of
this Lease.
"Allowable Costs" means "allowable costs" of the Project within the
meaning of the Act.
"Application" means the Application of the Company, dated April _,
1992, submitted to the Director requesting assistance under the Act.
"Approved Letter of Credit" means an irrevocable letter of credit, in
form satisfactory to the Trustee, issued by a commercial bank organized
under the laws of the United States of America or any state thereof and
acceptable to the Director, which letter of credit may be drawn upon by
the Trustee to provide funds for the Primary Reserve Account pursuant to
Section 4.5 of this Lease. An Approved Letter of Credit must permit
drawings thereunder for a period of not less than one (1) year or until
fifteen (15) days after the final maturity of the Bonds, whichever first
occurs.
"Authorized Company Representative" means the persons at the time
designated to act on behalf of the Company by written certificate
furnished to the Director and the Trustee, containing the specimen
signature of such person and signed on behalf of the Company by the Vice
President of the Company. Such certificate may designate an alternate
or alternates. In the absence of an effective certificate designating
the Authorized Company Representative, any officer of the Company may
act as the Authorized Company Representative.
"Bonds" means the State of Ohio State Economic Development Revenue
Bonds (Ohio Enterprise Bond Fund), Series 1992-3 (Bailey Transportation
Products, Inc. Project) (Taxable Bonds) authorized by the General Bond
Order and the Series Bond Order.
"Collateral Proceeds Account" means the Series 1992-3 Collateral
Proceeds Account, established pursuant to the General Bond Order and the
Series Bond order, in the Economic Development Bond Service Fund.
"Commitment" means the letter from the Director to the Company, dated
June 10, 1992, pursuant to which the Director, on behalf of the State,
agrees to provide assistance under the Act for the Project.
"Company" means Bailey Transportation Products, Inc., a corporation
organized under the laws of the State of Delaware and qualified to do
business in the State of Ohio.
"Completion Date" means the date of completion of the Project, as
certified by the Company pursuant to Section 3.4 hereof.
2
<PAGE> 4
"Construction Period" means the period between the commencement of
construction or acquisition of the Project or the date on which this
Lease is delivered to the Director, whichever is earlier, and the
Completion Date.
"Controlling Board" means the Controlling Board of the State.
"Cost Certification" means a certification of the Company, as of a
specified date, setting forth in reasonable detail the costs incurred
and, if appropriate, to be incurred in completing the Provision of the
Project, including a detailed listing, by category, of all Allowable
Costs.
"Debt Service Account" means the Debt Service Account, established
pursuant to the General Bond order, in the Economic Development Bond
Service Fund.
"Development Financing Advisory Board" means the Development Financing
Advisory Board of the State.
"Director" means the officer of the State, appointed pursuant to
Section 121.03 of the Ohio Revised Code, who administers and is the
executive head of the Department of Development of the State, the
officer who by law performs the functions of that office, and any person
acting on behalf of the Director of Development of the State pursuant to
any delegation permitted by law.
"Economic Development Bond Service Fund" means the Economic Development
Bond Service Fund created by Section 166.08(S) of the Ohio Revised Code.
"Eligible Project" means an "eligible project" within the meaning of
the Act.
"Eligible Investments" means Eligible Investments as defined in the
Trust Agreement.
"Event of Default" means any of the events described as an event of
default in Section 9.1 hereof.
"Facilities Establishment Fund" means the Facilities Establishment Fund
created by Section 166.03 of the Ohio Revised Code.
"General Bond Order" means the General Bond Order of the Treasurer,
dated April 11, 1988, as the same may be amended from time to time in
accordance with its provisions or the provisions of the Trust Agreement.
"Governing Instruments" means the certificate of incorporation and
By-Laws of the Company.
3
<PAGE> 5
"Governmental Authority" means, collectively, the State, any political
subdivision thereof, any municipality, and any agency, department,
commission, board or bureau of any of the foregoing having jurisdiction
over the Project.
"Guarantors" means Bailey Corporation, a Delaware corporation of which
the Company is a wholly-owned subsidiary, and the Company, joint and
severally.
"Guaranty" means the guaranty agreement of even date herewith between
the Guarantors and the Trustee.
"Independent Engineer" means an engineer or engineering firm or an
architect or architectural firm qualified to practice the profession of
engineering or architecture under the laws of the State and who or which
is not an officer or a full time employee of the Company or any
sublessee of the Project.
"Interest Rate For Advances" means (a) the interest rate borne by the
Bonds, or (b) a rate which is one percent in excess of the prime or base
interest rate then charged by the Trustee in its lending capacity as a
bank, whichever is greater and lawfully chargeable.
"Issuance Expense Account" means the Series 1992-3 Issuance Expense
Account created in the Series Bond Order.
"Lease" means this Lease, as from time to time amended or supplemented.
"Lease Approval Documents" means, with respect to the Lease, the
Recommendation of the Director to the Development Financing Advisory
Board dated April 30, 1992, the Resolution of the Development Financing
Advisory Board dated April 30, 1992, the Approval of the Controlling
Board dated May 18, 1992, and the Commitment.
"Lease Pro Rata Share" means the amount derived by multiplying an
amount of money to be distributed pursuant to Sections 11.2 and 11.3
hereof by a fraction the numerator of which is the outstanding balance
hereunder (exclusive of amounts due pursuant to Section 4.3(e) hereof)
and the denominator of which is the aggregate of the outstanding
balances hereunder (exclusive of amounts due pursuant to Section 4.3(e)
hereof) and under the Loan Agreement.
"Lease Term" or "Term" means the duration of the leasehold estate
created in this Lease as specified in Section 4.2 hereof.
"Loan" means the loan by the Director to the Company in the original
principal amount of One Million Dollars ($1,000,000) as evidenced by the
Note of the Company to the Director issued pursuant to the Loan
Agreement the proceeds of which Loan were part of the
4
<PAGE> 6
consideration for the transfer of the Project to the Director and were used
to pay Allowable Costs. The Loan is secured by the Project.
"Loan Agreement" means the Loan Agreement, dated as of July 29, 1992,
between the Director and the Company, as amended and supplemented from time
to time.
"Loan Pro Rata Share" means the amount derived by multiplying the amount of
money to be distributed pursuant to Sections 11.2 and 11.3 hereof by a
fraction the numerator of which is the outstanding balance under the Loan
Agreement and the denominator of which is the aggregate of the outstanding
balances hereunder (exclusive of amounts due pursuant to Section 4.3(e)
hereof) and under the Loan Agreement.
"Net Proceeds," when used with respect to any insurance or condemnation
award, means the gross proceeds from the insurance or condemnation award
with respect to which that term is used remaining after payment of all
expenses incurred in the collection of such gross proceeds.
"Notice Address" means:
(a) As to the Director: Department of Development
P.O. Box 1001
Columbus, Ohio 43266-0101
Attn: Director
Facsimile No. 614-644-1789
and
Calfee, Halter & Griswold
Suite 1800
800 Superior Avenue, N.E.
Cleveland, Ohio 44114
Attention: Virginia D. Benjamin
Facsimile No. (216) 241-0816
(b) As to the Company: Bailey Transportation Products, Inc.
333 Gore Road
Conneaut, Ohio 44030
Attention: President
Facsimile No. (216) 599-7870
and
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Sheehan, Phinney, Bass & Green 1000
Elm Street
P.O. Box 3701
Manchester, NH 03105-3701 Attn:
Alan L. Reische, Esq.
Facsimile No. (603) 627-8121
(c) As to the Trustee: The Provident Bank
One East Fourth Street
Cincinnati, Ohio 45269
Attn: Corporate Trust Dept.
Facsimile No. (513) 579-2850
or such additional or different address, notice of which is given under Section
12.3 hereof.
"Original Deposit" means Three Hundred Seventeen Thousand Dollars
($317,000), which amount is to be deposited in the Primary Reserve Account
upon delivery of this Lease, in accordance with Section 4.5 hereof.
"Permitted Encumbrances" means this Lease and those liens, charges,
easements, conditions, restrictions and encumbrances with respect to the
Project as described on Exhibit D attached hereto.
"Plans and Specifications" means the plans and specifications or other
appropriate documents describing the Project prepared by or at the
direction of the Company.
"Primary Reserve Account" means the Series 1992-3 Primary Reserve Account,
established pursuant to the General Bond Order and the Series Bond Order,
in the Economic Development Bond Service Fund.
"Project" means the Project Site and the buildings and improvements
thereon, the Project Facilities and the Project Equipment, together
constituting an Eligible Project.
"Project Equipment" means the equipment, machinery and other personal
property described on Exhibit C attached hereto.
"Project Facilities" means the buildings, structures, additions and
improvements described in Exhibit B attached hereto.
"Project Fund" means the Series 1992-3 Project Fund, established pursuant
to the Series Bond Order.
"Project Purposes" means the manufacture of molded plastic components for
automobiles and other industrial uses.
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"Project Site" means the real estate described in Exhibit A attached
hereto.
"Provision" means, as applicable, the acquiring, constructing,
reconstructing, rehabilitating, renovating, enlarging, improving, equipping
or furnishing of the Project.
"Series Bond Order" means Series Bond Order No. R3-92 of the Treasurer,
dated July 27, 1992, as the same may be amended from time to time in
accordance with its provisions or the provisions of the Trust Agreement.
"State" means the State of Ohio.
"Supplement" means the Twenty-Eighth Supplemental Trust Agreement, dated as
of July 1, 1992, between the Treasurer and the Trustee, of which the Series
Bond Order is a part.
"Terms and Conditions to Disbursement" means the terms and conditions which
must be satisfied by the Company with respect to each request for
disbursement of moneys from the Project Fund in order to obtain the
Director's approval of such request for disbursement, which terms and
conditions are set forth on Exhibit E attached hereto.
"Treasurer" means the Treasurer of State of the State, or the officer who
by law performs the functions of that office.
"Trustee" means the trustee at the time serving as such under the Trust
Agreement, initially The Provident Bank, Cincinnati, Ohio.
"Trust Agreement" means the Trust Agreement, dated as of April 1, 1988,
between the Treasurer and the Trustee, of which the General Bond Order is a
part, as the same may be amended, modified or supplemented by any
amendments or modifications thereof and any supplements thereto (including,
but not limited to, the Supplement) entered into in accordance with the
provisions thereof.
Section 1.3 Certain Words and References. Any reference herein to the
Director shall include those succeeding to his functions, duties or
responsibilities pursuant to or by operation of law or lawfully performing such
functions. Any reference to a section or provision of the Constitution of the
State or to the Act or to a section, provision or chapter of the Ohio Revised
Code shall include such section, provision or chapter as from time to time
amended, modified, revised, supplemented or superseded; provided, that no
amendment, modification, supplement, revision or superseding section, provision
or chapter shall be applicable solely by reason of this paragraph if it
constitutes in any way an impairment of the rights or obligations of the State,
the owners of the Bonds, the Company or the Trustee under this Lease or any
instrument or document entered into in connection therewith.
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The terms "hereof," "hereby," "herein," "hereto," "hereunder" and similar
terms refer to this Lease; and the term "heretofore" means before, and the term
"hereafter" means after, the date of delivery of this Lease.
ARTICLE II
DETERMINATION AND REPRESENTATIONS
Section 2.1 Determinations of the Director. Pursuant to the Act and on the
basis of the representations and other information provided by the Company, the
Director has heretofore made certain determinations, as set forth in the Lease
Approval Documents, which are hereby confirmed, and the Director hereby
determines that the financial assistance to be provided by the State pursuant to
this Lease will conform to the requirements of the Act, including Section 166.02
thereof, and will further implement the purposes of the Act by creating new jobs
or preserving existing jobs and employment opportunities and improving the
economic welfare of the people of the State.
Section 2.2. Representations of the Company. The Company hereby represents
and warrants that:
(a) It is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and is qualified to do business in
the State of Ohio.
(b) It has full power and authority to execute, deliver and perform this
Lease and to enter into and carry out the transactions contemplated
hereby. Such execution, delivery and performance do not, and will not,
violate any provision of law applicable to the Company or the Governing
Instruments of the Company and do not, and will not, conflict with or
result in a default under any agreement or instrument to which the Company
is a party or by which it or any of its property or assets is or may be
bound immediately following the consummation of the transactions
contemplated hereby. This Lease has, by proper action, been duly
authorized, executed and delivered and all necessary actions have been
taken to constitute this Lease a legal, valid and binding obligation of
the Company.
(c) The provision of financial assistance pursuant to the Lease Approval
Documents and this Lease induced the Company to provide the Project,
thereby creating new jobs or preserving existing jobs and employment
opportunities and improving the economic welfare of the people of the
State.
(d) It presently intends that the Project will be used and operated in a
manner consistent with the Project Purposes until the end of the Lease
Term, and the Company knows of no reason why the Project will not be so
operated.
(e) Except as disclosed on Exhibit F attached hereto, there are no actions,
suits or proceedings pending or threatened against or affecting the
Company or the Project which, if adversely
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determined, would individually or in the aggregate materially impair the
ability of the Company to perform any of its obligations under this Lease
or materially adversely affect the financial condition of the Company.
(f) The Company is not in default under this Lease or in the payment of any
indebtedness for borrowed money or under any agreement or instrument
evidencing any such indebtedness, and no event has occurred which by
notice, the passage of time or otherwise would constitute any such event
of default.
(g) Zoning regulations applicable to the Project Site permit the Provision of
the Project thereon in accordance with the Plans and Specifications and
the operation of the Company's business thereon; and all utilities,
including water, storm and sanitary sewer, gas, electric and telephone,
and rights of access to public ways are available to the Project Site in
sufficient locations and capacities to meet the requirements of operating
the Project and of any applicable Governmental Authority.
(h) Except as disclosed on Exhibit G, prior to June 10, 1992, the Company
made no contract or arrangement of any kind, other than this Lease, which
has given rise to or the performance of which by the other party thereto
would give rise to a lien or claim of lien on the Project or other
collateral covered by this Lease, and no materials or labor have, prior to
June 10, 1992, been supplied to or performed in connection with the
Project.
(i) No representation or warranty of the Company contained in any of the
Lease Approval Documents or this Lease, and no statement contained in any
certificate, schedule, list, financial statement or other instrument
furnished to the Director by or on behalf of the Company (including,
without limitation, the Application) contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements contained herein or therein not misleading. To the extent that
any of the foregoing consist of projections the Company acknowledges that
such projections were prepared in good faith and the Company believes that
the projections and the assumptions on which they are based were
reasonable when made and continue to be reasonable as of the date hereof
but the Company does not warrant that the results set forth in any
projection can be achieved or that the assumptions on which the
projections were based will in fact prove to be accurate.
(j) The financial statements of the Company heretofore delivered to the
Director are true and correct, in all material respects, have been
prepared in accordance with generally accepted accounting principles
consistently applied, and fairly present the financial condition and the
results of operation of the Company as of the dates thereof. No
materially adverse change has occurred in the financial condition of the
Company since the respective dates thereof.
(k) The Company will convey, or cause to be conveyed, at the Closing, to the
Director good and marketable title to a fee simple interest in the Project
Site and Project Facilities and to such portion, if any, of the Project
Equipment heretofore owned by the Company, subject in all
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cases to no lien, charge, easement, condition, restriction or encumbrance
except as created by this Lease and except for Permitted Encumbrances.
(1) Except as disclosed on Exhibit D to this Lease, there are no other
easements or agreements, including, without limitation, parking
agreements, encroachment agreements, access easements, service agreements,
real estate tax abatement agreements and other similar agreements
affecting the Project.
(m) The Project Site has never, and does not currently contain, nor is it
contaminated by, any hazardous or toxic waste materials in violation of
any applicable environmental laws or regulations, including, but not
limited to, Section 103 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 USC 9601 et sea, and Chapter 3734 of
the Ohio Revised Code; and no "clean-up" of the Project Site has occurred
pursuant to any applicable federal or state environmental laws or
regulations which would give rise to (i) liability on the part of any
person, entity or association to reimburse any governmental authority for
the costs of any such "clean-up," or (ii) a lien or encumbrance on the
Project Site.
ARTICLE III
COMMENCEMENT AND COMPLETION OF THE PROJECT
Section 3.1 Provision of the Project. The Director agrees that it
will cause the Provision of the Project on the Project site. The Director
further agrees that it will timely enter into, or accept the assignment of, such
contracts as the Company may request in order to effectuate the purposes of this
Section.
The Director hereby makes, constitutes and appoints the Company as its true
and lawful agent, with full power of substitution in the premises and the
Company hereby accepts such agency, (a) to cause the Provision of the Project,
(b) to make, execute, acknowledge and deliver any contracts, orders, receipts,
writings and instructions, either in the name of the Company solely or as the
stated agent for the Director, with any other persons, firms or corporations,
and in general to do all things which may be requisite or proper, all for
acquiring the Project, with the same powers and with the same validity as the
Director could do if acting in its own behalf, (c) pursuant to the provisions of
this Lease, to pay all Allowable Costs incurred in the acquisition of the
Project from funds made available therefor in accordance with this Lease and (d)
to ask, demand, sue for, levy, recover and receive all such sums of money,
debts, dues and other demands whatsoever which may be due, owing and payable to
the Director under the terms of any contract, order, receipt, writing and
instruction in connection with Provision of the Project and to enforce the
provisions of any contract, agreement, obligation, bond or other performance
security. So long as the Company is not in default under any of the provisions
of this Lease, this appointment of the Company to act as agent and all authority
hereby conferred is granted and conferred irrevocably until all activities in
connection with the Provision of the Project shall have been completed, and
shall not be terminated prior thereto by
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<PAGE> 12
act of the Director or the Company or by operation of law.
The Director and the Company each agree that the Provision of the Project
shall proceed with all reasonable dispatch.
The Company agrees that all wages paid to laborers and mechanics employed
on the Project by the Company or its contractors or subcontractors shall be paid
at the prevailing rates of wages of laborers and mechanics for the class of work
called for by the Project, which wages shall be determined in accordance with
the requirements of Chapter 4115 of the Ohio Revised Code for determination of
prevailing wage rates.
Section 3.2 Deposits to the Project Fund and the Issuance-Expense Account.
In order to provide funds for payment of the Allowable Costs of the Project, the
Director, upon delivery of this Lease, shall cause to be transferred from the
Facilities Establishment Fund to the Project Fund the sum of Two Million Seven
Hundred Fifty Thousand Three Hundred Fifty-Five Dollars ($2,750,355). In order
to provide funds for payment of costs of issuance of the Bonds, the amount of
Bond proceeds deposited in the Issuance Expense Account shall be One Hundred Two
Thousand Six Hundred Forty-Five Dollars ($102,645).
Section 3.3 Disbursements from the Project Fund. The Treasurer has, in
the Supplement, authorized and directed the Trustee to disburse the moneys in
the Project Fund for Allowable Costs of the Project. Except as otherwise
provided in this Lease, each payment from the Project Fund shall be made only
upon (A) the written direction of the Authorized Company Representative, who
shall certify with respect to each such payment: (i) that each item for which
payment is requested is an Allowable Cost properly payable out of the Project
Fund in accordance with the terms and conditions of this Lease and none of the
items for which the payment is proposed to be made has formed the basis for any
payment theretofore made from the Project Fund, (ii) that each item for which
payment is proposed to be made is or was necessary in connection with the
Project and (iii) that the Company has received from each payee or
contemporaneously with the making of payment will receive from each payee
appropriate waivers of any mechanics' or other liens (or has provided
indemnification in lieu thereof satisfactory to the Director) and (B) the
written approval of the Director. The Director shall not be required to approve
any request for disbursement of moneys from the Project Fund unless the Company
has complied with all of the Terms and Conditions to Disbursement. The Trustee
shall be allowed a reasonable time, not to exceed fifteen (15) days, in view of
the character of any investment or investments required to be liquidated for the
purpose, for the making of any disbursement from the Project Fund authorized by
this Section.
Section 3.4 Establishment of Completion Date. The Company covenants that
the Completion Date shall occur not later than July 31, 1993. The Completion
Date shall be evidenced to the Director and to the Trustee by a certificate
signed by the Authorized Company Representative stating that, except for amounts
retained by the Trustee in the Project Fund for Allowable Costs of the Project
not then due and payable, (i) Provision of the Project has been completed in
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accordance with the Plans and Specifications and all labor, services, materials
and supplies used in such acquisition, construction, renovation and
installation have been paid for, (ii) all other facilities necessary in
connection with the Project have been constructed, acquired and installed in
accordance with the plans and specifications therefor and all costs and
expenses incurred in connection therewith have been paid, (iii) the Project and
all other facilities necessary in connection with the Project have been
constructed or installed, as the case may be, in such manner as to conform to
all applicable zoning, planning, building, environmental and other regulations
of the Governmental Authorities having jurisdiction of the Project; provided
that if any part of the construction or installation does not conform to such
regulations, the certificate shall describe any such nonconformities and the
actions being taken to remedy them, (iv) the Project Equipment, if any, (which
shall be described in an exhibit attached to said certificate) has been
installed to his satisfaction, and as so installed is suitable and sufficient
for the efficient operation of the Project for the Project Purposes, and (v)
all materially significant disputes, controversies or claims arising out of or
in connection with the acquisition, construction, renovation and installation
of the Project have been resolved, satisfied or paid in full, as the case may
be. Notwithstanding the foregoing, such certificate shall state that it is
given without prejudice to any rights against third parties which exist at the
date of such certificate or which may subsequently come into being. The
Company shall also deliver to the Director and to the Trustee a Cost
Certification. Any amount remaining in the Project Fund on the Completion
Date, except for amounts which the Authorized Company Representative certifies
to the Trustee as being required to pay Allowable Costs of the Project not then
due and payable, shall be transferred by the Trustee to the Collateral Proceeds
Account.
Section 3.5 Company Required to Pay Costs in Event Project Fund
Insufficient. In the event the moneys in the Project Fund available for payment
of costs of the Project should not be sufficient to pay the costs thereof in
full, the Company agrees for the benefit of the Director, to complete the
Project and to pay all the portion of the costs of the Project as may be in
excess of the moneys available therefor in the Project Fund. THE DIRECTOR DOES
NOT MAKE ANY WARRANTY, EITHER EXPRESS OR IMPLIED, THAT THE MONEYS WHICH WILL BE
PAID INTO THE PROJECT FUND AND WHICH UNDER THE PROVISIONS OF THIS LEASE WILL BE
AVAILABLE FOR PAYMENT OF THE ALLOWABLE COSTS OF THE PROJECT WILL BE SUFFICIENT
TO PAY ALL THE COSTS WHICH WILL BE INCURRED IN THAT CONNECTION. The Company
agrees that if after exhaustion of the moneys in the Project Fund the Company
should pay any portion of the said costs of the Project pursuant to the
provisions of this Section, it shall not be entitled to any reimbursement
therefor from the Director or the Trustee, nor shall it be entitled to any
diminution in or postponement of the rents payable under Section 4.3 hereof.
Section 3.6 Remedies to Be Pursued Against Contractors and
Subcontractors and their Sureties. In the event of default of any contractor or
subcontractor under any contract made by it in connection with the Project or in
the event of a breach of warranty with respect to any materials, workmanship, or
performance guaranty, the Company will promptly proceed, either separately or in
conjunction with others, to exhaust the remedies of the Company against the
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contractor or subcontractor so in default and against each such surety for the
performance of such contract. The Lease Pro Rata Share of any amounts received
by way of damages, refunds, adjustments or otherwise in connection with the
foregoing, after deduction of expenses incurred in such recovery, prior to the
Completion Date shall be paid into the Project Fund or, if recovered after the
Completion Date and full disposition of the Project Fund in accordance with
Section 3.4 hereof, shall be paid to the Trustee for deposit in the Collateral
Proceeds Account and the Loan Pro Rata Share of any such amount shall be
applied as provided in the Loan Agreement.
Section 3.7 Investment of Project Fund, Primary Reserve Account or
Collateral Proceeds Account. Any moneys held as part of the Project Fund, the
Primary Reserve Account or the Collateral Proceeds Account shall be invested by
the Trustee, upon the written or oral direction (but if oral, confirmed promptly
in writing) of the Authorized Company Representative, in Eligible Investments.
Section 3.8 Lease as Security Agreement. This Lease is intended to
create and does create in the Director a security interest in the Project, and
in each part thereof, under the Ohio Uniform Commercial Code (Chapters 1301 to
1309, inclusive, of the Ohio Revised Code) as security for the payment of rent
required by Section 4.3 hereof.
Section 3.9 Plans and Specifications; Inspections. At his option, the
Director may retain, at the Company's expense, an architect, engineer, appraiser
or other consultant for the purpose of approving the Plans and Specifications,
verifying costs and performing inspections as Provision of the Project
progresses. Such inspections or approvals of Plans and Specifications or the
Project shall impose no responsibility or liability of any nature upon the
Director, the State, their agents, representatives or designees nor, without
limitation, carry any warranty or representation as to the adequacy or safety of
the structures or any of their component parts or any other physical condition
or feature pertaining to the Project. The Company shall, at the request of the
Director, make periodic reports (including, if required, submission of updated
Cost Certifications) to the Director concerning the status of completion of the
Project and the expenditure of costs in respect thereof.
The Company may revise the Plans and Specifications from time to time;
provided that no revision shall be made (a) which would change the Project
Purposes to purposes other than those permitted by the Act; (b) without
obtaining, to the extent required by law, the approval of any applicable
Governmental Authority; and (c) without the prior written approval of the
Director if such revision would change the amounts set forth in the most
recently furnished Cost Certification. In any event, all revisions to the Plans
and Specifications shall be promptly filed with the Director.
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ARTICLE IV
LEASE OF PROJECT, LEASE TERM AND RENTAL
Section 4. 1 Lease of Project. The Director, as lessor hereunder, in
consideration of the rents, covenants and agreements herein stated, agrees to,
and does hereby lease to the Company, as lessee hereunder, and the Company
agrees to, and does hereby lease from the Director, subject to the provisions of
this Lease, the Project for the Lease Term.
Section 4.2 Lease Term and Possession. The Lease Term shall commence on
the date of delivery of this Lease and, subject to earlier termination as
provided herein, shall end on September 2, 2002. The Director agrees to deliver
to the Company full possession of the Project (subject to Section 7.2 hereof) at
the commencement of the Lease Term and the Company agrees to accept possession
of the Project upon such delivery. The Director covenants and agrees that it
will not take any action, other than pursuant to Article IX of this Lease, to
prevent the Company from having quiet and peaceable possession and enjoyment of
the Project during the Lease Term and will, at the request of the Company, and
at the Company's cost, cooperate with the Company in order that the Company may
have quiet and peaceable possession and enjoyment of the Project. This
provision shall not be construed to require cooperation by the Director with the
Company in any labor dispute.
Section 4.3 Rents and Other Amounts Payable. Not later than the
fifteenth (15th) day of each month commencing September 15, 1992 and continuing
thereafter until the principal of and interest on the Bonds shall have been
fully paid or provision for the payment thereof shall have been made in
accordance with the Trust Agreement, the Company shall pay to the Trustee as
rent an amount equal to the sum of (i) one third (1/3) of the amount of interest
on the Bonds which will be payable on the next succeeding date on which such
interest is due to be paid, and (ii) one third (1/3) of the amount of principal
of the Bonds which will be payable (whether at stated maturity or by mandatory
sinking fund redemption) on the next succeeding date on which such principal is
due to be paid. The Company shall receive a credit against the rent payment due
in the month of February of each year to the extent and in the manner provided
in the General Bond Order and the Series Bond Order. If the Company fails to
make any payment required by this paragraph on the due date thereof, the Trustee
shall, to the extent that funds are available therefor, transfer to the Debt
Service Account an amount equal to such payment from the Collateral Proceeds
Account and, if the balance in the Collateral Proceeds Account is insufficient,
from the Primary Reserve Account.
(b) If moneys are transferred from the Primary Reserve Account or the
Collateral Proceeds Account to the Debt Service Account pursuant to the
provisions of Section 14 of the General Bond Order, and if no Event of Default
is then existing, the Company shall receive a credit against rental payments
payable under subparagraph (a) of this Section, in inverse order of their
maturity, in an amount equal to the amount so transferred.
(c) If no Event of Default is then existing and if the balance in the
Primary Reserve Account is greater than or equal to the aggregate amount of
rental payments to become due and
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payable during the remaining term of this Lease pursuant to subparagraph (a) of
this Section 4.3, the Company may direct the Trustee to apply monies in the
Primary Reserve Account to monthly rental payments as they become due and, in
such case and notwithstanding the provisions of Section 4.5 hereof, the Company
shall not be required to deliver moneys to the Trustee to restore the balance
in the Primary Reserve Account to an amount equal to the Original Deposit.
(d) Not later than the fifteenth (15th) day of each month, commencing
September 15, 1992, the Company shall pay to the Trustee (i) an amount equal to
one twelfth (1/12) of the Trustee's annual administrative fee (which annual
administrative fee shall be calculated at a rate equal to the sum of (A) $1,200
per million dollars for each million dollars or any part thereof of the first
five million dollars of outstanding principal amount of Bonds, and (B) $700 per
million dollars for each million dollars or any part thereof of the next five
million dollars of outstanding principal amount of Bonds, and (C) $600 per
million dollars for each million dollars or any part thereof of outstanding
principal amount of Bonds in excess of ten million dollars), constituting the
fee of the Trustee in connection with its administration of the Project Fund,
the Primary Reserve Account and the Collateral Proceeds Account, and (ii) an
amount equal to .0104167% of the outstanding principal amount of the Bonds
("Additional Rent"). The Company and the Director acknowledge and agree that
the Additional Rent is intended to reimburse the Department of Development for a
portion of the cost of administering the Ohio Enterprise Bond Fund program. Each
calculation of the Trustee's annual administrative fee and the Additional Rent
shall be made based on the outstanding principal amount of Bonds as of the most
recent preceding March 2, June 2, September 2 or December 2, as applicable.
(e) The Company also agrees to pay as rent to the Director the amounts
due under the Loan Agreement, including but not limited to, the principal sum of
the Note of the Company to the Director in the amount of One Million Dollars
($1,000,000) with interest on the amount of the principal balance thereof from
time to time outstanding from the Disbursement Date (as defined in the Loan
Agreement) at the rate of Three Percent (3%) per annum until paid plus a monthly
service fee equal to one-twelfth (1/12) of one-fourth of one percent (0.25%) of
such principal balance from time to time outstanding from such Disbursement Date
until paid; such amounts were partial consideration for the Provision of the
Project to the Director and for purposes hereof all such amounts shall be deemed
rent and shall be applied to reduce amounts due to the Director under the Note
and the Loan Agreement.
(f) The Company also agrees to pay to the Director reasonable expenses
of the Director related to the Project and requested by the Company or required
by this Lease or the Trust Agreement, or incurred in enforcing the provisions of
this Lease or the Trust Agreement and which are not otherwise required to be
paid by the Company under the terms of this Lease.
(g) In the event the Company should fail to make any of the payments
required in this Section 4.3 (except for payments required by subparagraph
4.3(e)), the item or installment so in default shall continue as an obligation
of the Company until the amount in default shall have been fully paid, and the
Company agrees to pay the same with interest thereon at the rate of the Interest
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Rate for Advances. If any payment required by subparagraph (a) of this Section
4.3 is not made by the first day of the month following the month in which such
payment is due, the Company shall pay, in addition to such payment, a late
payment charge of five percent (5%) of the amount of such payment.
Section 4.4 Place of Payments. The rent provided for in subparagraph
(a) of Section 4.3 hereof and the late payment charge provided for in
subparagraph (g) of Section 4.3 hereof shall be paid directly to the Trustee at
its principal corporate trust office for the account of the Director, and the
Trustee shall deposit such payments in the Debt Service Account. Additional
Rent shall be paid to the Trustee, who shall pay such amounts to the Director,
not less frequently than monthly, for deposit in the First Half Account (if
received by the Director between January 1 and June 30) or the Second Half
Account (if received by the Director between July 1 and December 31) created in
the Trust Agreement. The additional payments to be made to the Director under
Section 4.3(f) hereof shall be paid directly to the Director for use as provided
in such Section. Amounts paid pursuant to section 4.3(e) hereof shall be paid
to the Director and applied as provided in the Note and Loan Agreement.
Section 4.5 Primary Reserve Account. Upon delivery of this Lease and in
accordance with the General Bond Order and the Series Bond Order, the Company
shall deliver or cause to be delivered to the Trustee for deposit or credit to
the Primary Reserve Account a sum of money equal to the Original Deposit (which
sum may, to the extent provided for in the Series Bond Order, be derived from
proceeds of the sale of the Bonds). In accordance with the provisions of the
General Bond Order and the Series Bond order, the Trustee shall transfer moneys
from the Primary Reserve Account to the Debt Service Account if (a) the Company
shall have failed to make a rent payment required by the subparagraph (a) of
Section 4.3 hereof, and (b) the balance in the Collateral Proceeds Account is
insufficient to provide funds for such transfer.
If, as a result of a transfer described in the immediately preceding
paragraph, the balance in the Primary Reserve Account is less than the original
Deposit, the Trustee shall promptly notify the Company, by telephone and
confirmed in writing, of the amount of such deficiency, and the Company shall,
not later than ten (10) days after receipt of such notice, deliver to the
Trustee for deposit or credit to the Primary Reserve Account moneys or an
Approved Letter of Credit in the amount of such deficiency.
Pursuant to Section 14 of the General Bond Order, the Trustee shall, under
the circumstances described in said Section 14, transfer moneys from the Primary
Reserve Account to the Debt Service Account, in order to obtain moneys to make
such transfer.
Section 4.6 Obligations of the Company Hereunder Unconditional. The
obligations of the Company to make the payments required in Section 4.3 and
Section 4.5 hereof and to perform and observe the other agreements on its part
contained herein shall be absolute and unconditional and until such time as the
principal of and interest and premium, if any, on the Bonds shall have been
fully paid or provision for the payment thereof shall have been made in
accordance with the Trust
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Agreement and all payments under the Loan Agreement and the Note shall have
been made in accordance with the terms thereof, the Company (i) will not,
subject to the provisions of Section 8.6 hereof, suspend or discontinue any
payments provided for in Section 4.3 or Section 4.5 hereof, (ii) will perform
and observe all of its other agreements contained in this Lease, and (iii)
except as provided in Article X hereof, will not terminate the Lease for any
cause including, without limiting the generality of the foregoing, failure to
complete the Project, any acts or circumstances that may constitute failure of
consideration, destruction of or damage to the Project, commercial frustration
of purpose, any change in the tax or other laws or administrative rulings of or
administrative actions by the United States of America or the State or any
political subdivision of either, or any failure of the Director to perform and
observe any agreement, whether expressed or implied, or any duty, liability or
obligation arising out of or connected with this Lease, the Loan Agreement, the
Note, or the Trust Agreement. Nothing contained in this Section shall be
construed to release the Director from the performance of any of the agreements
on its part contained in this Lease, the Loan Agreement or the Note; and in the
event the Director should fail to perform any such agreement on its part, the
Company may institute such action against the Director as the Company may deem
necessary to compel performance or recover its damages for nonperformance so
long as such action shall not impair the agreements on the part of the Company
contained in the next preceding sentence. The Company may, however, at its own
cost and expense and in its own name or in the name of the Director, prosecute
or defend any action or proceeding or take any other action involving third
persons which the Company deems reasonably necessary in order to secure or
protect its right of possession, occupancy and use hereunder, and in such event
the Director hereby agrees to cooperate fully with the Company and to take all
action necessary to effect the substitution of the Company for the Director in
any such action or proceeding if the Company shall so request. This provision
shall not be construed to require cooperation by the Director with the Company
in any labor dispute.
ARTICLE V
MAINTENANCE, TAXES AND INSURANCE
Section 5.1 Maintenance and Modifications of Project by the Company. The
Company agrees that during the Lease Term it will keep the Project including all
appurtenances thereto and the equipment and machinery therein in good repair and
good operating condition at its own cost.
The Company shall have the privilege of remodeling or making additions,
modifications or improvements to the Project from time to time as it, in its
discretion, may deem to be desirable for its uses and purposes, the cost of
which remodeling, additions, modifications and improvements shall be paid by the
Company, and the same (except any machinery, equipment or furniture installed
pursuant to Section 8.7 hereof) shall be the property of the Director and be
included under the terms of this Lease as part of the Project.
Section 5.2 Removal of Project Equipment. The Company shall not be
under any obligation to renew, repair or replace any inadequate, obsolete, worn
out, unsuitable, undesirable or
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unnecessary Project Equipment. The Company shall have the privilege from time
to time of substituting machinery, equipment and related property for any
Project Equipment; provided that the machinery and equipment so substituted
shall be of a value not less than the value of the machinery or equipment
replaced at the time of replacement and shall not make the Project unsuitable
for the Project Purposes. Any such substitute machinery and equipment shall
become the property of the Director and be included under the terms of this
Lease, and the replaced Project Equipment shall become the property of the
Company. The Company shall promptly notify the Director and the Trustee of any
substitutions of machinery or equipment, which notice shall include a
description of the substituted machinery or equipment. The Company shall also
have the privilege of removing any Project Equipment, without substitution
therefor; provided, that the Company pays to the Director a sum equal to the
then value of said Project Equipment, as determined by an Independent Engineer
or appraiser selected by the Company and acceptable to the Director, and so
long as any of the Bonds remain outstanding or amounts remain outstanding under
the Loan Agreement and the Note, the Company shall pay such amounts directly to
the Trustee for deposit of the Lease Pro Rata Share of such amounts in the
Collateral Proceeds Account and payment of the Loan Pro Rata Share to the
Director for application in accordance with the Loan Agreement and shall
deliver to the Director and the Trustee a certificate signed by said
Independent Engineer or appraiser setting forth the value of said Project
Equipment and stating that the removal of such equipment will not make the
Project unsuitable for the Project Purposes.
The Company may at any time while it is not in default under this Lease
remove from the Project any machinery or equipment purchased and installed by it
pursuant to Section 8.7 of this Lease and not included as Project Equipment.
In the event any removal of machinery or equipment under this Section or
Section 8.7 causes damage to existing buildings or structures, the Company shall
restore the same or repair such damage at its sole expense.
The Director agrees to execute and deliver such documents as the Company
may properly request in connection with any action taken by the Company in
conformity with this Section 5.2. The removal from the Project of any portion of
the Project Equipment pursuant to the provisions of this Section shall not
entitle the Company to any abatement or diminution of the rents payable under
Section 4.3 hereof.
Section 5.3 Indemnification by the Company. The Company shall indemnify
and hold the Director, the Treasurer and the Trustee (including any member,
officer, director or employee thereof) (collectively, the "Indemnified Parties")
harmless against any and all claims, asserted by or on behalf of any person,
firm or corporation, private or public, arising or resulting from, or in any way
connected with (i) financing, installation, operation, use or maintenance of the
Project (including, but not limited to, claims relating to compliance with
Chapter 4115, Ohio Revised Code), (ii) any act, failure to act or
misrepresentation by any person, firm, corporation or governmental authority in
connection with the issuance, sale or delivery of the Bonds, and (iii) any act,
failure to act or misrepresentation by any other Indemnified Party in connection
with, or in the performance
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of any obligation related to the issuance, sale and delivery of the Bonds or
under this Lease or the Trust Agreement, including all liabilities, costs and
expenses, including reasonable counsel fees, incurred in any action or
proceeding brought by reason of any such claim. In the event any action or
proceeding is brought against any Indemnified Party by reason of any such
claim, such Indemnified Party will promptly give written notice thereof to the
Company. In case such notice shall be so given, the Company shall be entitled
to participate at its own expense in the defense or, if it so elects, to assume
at its own expense the defense of such claim, suit, action or proceeding, in
which event such defense shall be conducted by counsel chosen by the Company
and reasonably satisfactory to such Indemnified Party against whom such action
or proceeding is pending; but if the Company shall elect not to assume such
defense, it shall reimburse such Indemnified Party for the reasonable fees and
expenses of any counsel retained by such Indemnified Party. If at any time the
Indemnified Party becomes dissatisfied in good faith with the selection of
counsel by the Company, a new mutually agreeable counsel shall be retained at
the expense of the Company. Each Indemnified Party agrees that the Company
shall have the sole right to compromise, settle or conclude any claim, suit,
action or proceeding against any of the Indemnified Parties. Notwithstanding
the foregoing, each Indemnified Party shall have the right to employ counsel in
any such action at its own expense; and provided further that such Indemnified
Party shall have the right to employ counsel in any such action and the
reasonable fees and expenses of such counsel shall be at the expense of the
Company if: (i) the employment of counsel by such Indemnified Party has been
authorized by the Company, (ii) there reasonably appears that there is a
conflict of interest between the Company and the Indemnified Party in the
conduct of the defense of such action (in which case the Company shall not have
the right to direct the defense of such action on behalf of the Indemnified
Party) or (iii) the Company shall not in fact have employed counsel to assume
the defense of such action. The Company shall also indemnify the Indemnified
Parties from and against all reasonable costs and expenses, including
reasonable counsel fees, lawfully incurred in enforcing any obligations of the
Company under this Lease. Anything herein to the contrary notwithstanding, the
foregoing agreements by the Company to indemnify any Indemnified Party shall
not apply to grossly negligent acts or omissions or acts or omissions of
willful misconduct on the part of such Indemnified Party. The Company shall
not be liable for any settlement of any action or claim effected without its
consent. The obligations of the Company under this Section shall survive the
termination of this Lease and shall be in addition to any other rights,
including without limitation, rights to indemnity which any Indemnified Party
may have at law, in equity, by contract or otherwise.
Section 5.4 Taxes, Other Governmental Charges and Utility Charges. The
Company will pay, as the same respectively become due, all taxes, assessments,
whether general or special, and governmental charges of any kind whatsoever that
may at any time be lawfully assessed or levied against or with respect to the
Project or any machinery, equipment or other property installed or brought by
the Company therein or thereon (including, without limiting the generality of
the foregoing, any taxes levied upon or with respect to the receipts, income or
profits of the Director from the Project which, if not paid, may become or be
made a lien on the Project or a charge on the revenues and receipts therefrom),
and all utility and other charges incurred in the operation, maintenance, use,
occupancy and upkeep of the Project, provided, that with respect to special
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assessments or other governmental charges that may lawfully be paid in
installments over a period of years, the Company shall be obligated to pay only
such installments as are required to be paid during the Lease Term. Nothing in
this Section shall require the Company to pay or discharge any such tax,
assessment, governmental charge or levy so long as the validity thereof shall
be contested in good faith and by appropriate legal proceedings, provided that
the Company shall have delivered to the Director and the Trustee an opinion of
counsel, selected by the Company and reasonably acceptable to the Director and
the Trustee, to the effect that nonpayment of any such items during the
pendency of such contest will not adversely affect the Director's right, title
or interest in the Project.
Section 5.5 Insurance Required. The Company shall insure the Project
Facilities and the Project Equipment in an aggregate amount equal to the
replacement cost of the Project, but in any event not less than the principal
amount of Bonds outstanding from time to time, against loss or damage by fire,
boiler explosion, as well as such other risks as are covered by the endorsement
commonly known as "extended coverage", plus vandalism and malicious mischief, in
insurance companies authorized to issue such policies in the State. Any
insurance policy maintained by the Company pursuant to this Section 5.5 may
provide that the policy does not cover the first $15,000 or less of loss, or
such greater amount as may (with due regard to insurance practices from time to
time current with respect to buildings and equipment similar to the Project
Facilities and the Project Equipment) be approved in writing by the Director,
with the result that the Company is its own insurer to that extent. Any return
of insurance premium or dividends based upon such premium shall be due and
payable solely to the Company unless such premium shall have been paid by the
Director or Trustee.
As an alternative to the above, the Company may insure such property under
a blanket insurance policy or policies which cover not only such property but
other properties.
During the Construction Period, the Company shall carry, or cause the
contractor or contractors for the Project to carry, builders' risk insurance of
such character and in such amount as is customarily carried on similar projects
in the State.
Section 5.6 Additional Provisions Respecting Insurance. Any
insurance policy issued pursuant to Section 5.5 hereof shall be so written or
endorsed as to make losses, if any, adjustable by the Company and payable to the
Company and the Trustee, for the account of the Director; provided, any such
insurance policy may be so written or endorsed as to make losses not in excess
of $50,000 for each occurrence payable directly to the Company as hereinafter
provided in Section 6.1. Each insurance policy provided for in Section 5.5 and
Section 5.8 hereof shall contain a provision to the effect that the insurance
company shall not cancel the same without first giving written notice thereof to
the Director and the Trustee at least thirty (30) days in advance of such
cancellation, and the Company shall deliver to the Director and the Trustee
duplicate copies or certificates of insurance pertaining to each such policy of
insurance procured by the Company and shall keep such duplicate copies or
certificates up to date.
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Section 5.7 Application of Net Proceeds of Insurance. Net Proceeds of
the insurance carried pursuant to the provisions of this Lease shall be applied
as follows: (i) the Net Proceeds of the insurance required in Section 5.5
hereof determined in accordance with Section 11.2 hereof shall be applied as
provided in Section 6.1 hereof, and (ii) the Net Proceeds of the insurance
required in Section 5.8 hereof shall be applied toward extinguishment or
satisfaction of the liability with respect to which such insurance proceeds may
be paid.
Section 5.8 Public Liability Insurance. The Company agrees that it
will carry public liability insurance with reference to its operations at the
Project with one or more reputable insurance companies duly qualified to do
business in the State, in minimum amounts of $1,000,000 for the death of or
personal injury to one person and $3,000,000 for personal injury or death for
each occurrence in connection with the Project and $500,000 for property damage
of any occurrence in connection with the Project, with a deductible not to
exceed $15,000. The Director and the Trustee shall be made additional insureds
under such policies. The insurance provided by this Section 5.8 may be by
blanket insurance policy or policies.
Section 5.9 Advances. In the event the Company shall fail to maintain
the full insurance coverage required by this Lease or shall fail to keep the
Project in good repair and operating condition, the Director or the Trustee may
(but shall be under no obligation to) take out the required policies of
insurance and pay the premiums on the same or may make such repairs or
replacements as are necessary and provide for payment thereof; and all amounts
so advanced therefor by the Director or the Trustee shall become an additional
obligation of the Company to the Director or the Trustee, respectively, which
amounts, together with interest thereon at the Interest Rate for Advances from
the date thereof, the Company agrees to pay on demand.
ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 6.1 Damage and Destruction. If prior to full payment of the
Bonds (or provision for payment thereof having been made in accordance with the
provisions of the Trust Agreement) and of all amounts due under the Loan
Agreement and the Note, the Project Facilities or Project Equipment shall be
damaged or partially or totally destroyed by fire, flood, windstorm, or other
casualty at any time during the Lease Term, there shall be no abatement or
reduction in the rent payable by the Company under this Lease including amounts
payable under Section 4.3(e) hereof, and, to the extent that the claim for loss
resulting from such damage or destruction is not greater than $50,000 the
Company (i) will promptly repair, rebuild or restore the property damaged or
destroyed with such changes, alterations and modifications (including the
substitution and addition of other property) as may be desired by the Company
and as will not make the Project unsuitable for the Project Purposes, and (ii)
will apply for such purpose so much as may be necessary of any Net Proceeds of
insurance policies resulting from claims for such losses not in excess of
$50,000 as well
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as any additional moneys of the Company necessary therefor. All Net Proceeds
of insurance resulting from claims for any such loss not in excess of $50,000
shall be paid to the Company.
If prior to full payment of the Bonds (or provision for payment thereof
having been made in accordance with the provisions of the Trust Agreement) and
of all amounts due under the Loan Agreement and the Note, the Project Facilities
or the Project Equipment shall be destroyed (in whole or in part) or damaged by
fire, flood, windstorm or other casualty to such extent that the claim for loss
resulting from such destruction or damage is in excess of $50,000 the Company
shall promptly give written notice thereof to the Director and the Trustee. The
Lease Pro Rata Share of all Net Proceeds of insurance policies resulting from
claims for such losses in excess of $50,000 shall be paid to and held by the
Trustee in the Collateral Proceeds Account, whereupon, unless the Company shall
have elected to exercise its option to purchase the Project pursuant to the
provisions of Section 10.2(a) of this Lease, (i) the Company will proceed to
repair, rebuild or restore the property damaged or destroyed with such changes,
alterations and modifications (including the substitution and addition of other
property) as may be desired by the Company and as will not make the Project
unsuitable for the Project Purposes, and (ii) the Trustee will disburse moneys
in the Collateral Proceeds Account to or upon the direction of the Company for
payment of the costs of such repair, rebuilding or restoration, either on
completion thereof or, if the Company shall so request, as the work progresses.
Any such disbursements shall be made pursuant to the procedures set forth in
Section 3.3 of this Lease for disbursement of moneys in the Project Fund,
including, but not limited to, the requirement that the Company obtain the
written approval of the Director with respect to each disbursement. The Loan
Pro Rata Share of all Net Proceeds of insurance policies resulting from claims
for such losses in excess of $50,000 shall be paid and applied as provided in
the Loan Agreement. In the event the moneys in the Collateral Proceeds Account
and moneys available pursuant to the terms of the Loan Agreement and Note, if
any, are not sufficient to pay in full the costs of such repair, rebuilding or
restoration, the Company nonetheless will complete the work and pay the costs
thereof from its own resources. The Company shall not, by reason of the payment
of such excess costs, be entitled to any reimbursement from the Director or any
diminution in or postponement of the rents payable under Section 4.3 of this
Lease.
Section 6.2. Eminent Domain. In the event that title to or the
temporary use of the Project, or any part thereof, shall be taken under the
exercise of the power of eminent domain by any governmental body or by any
person, firm, or corporation acting under governmental authority, there shall be
no abatement or reduction in the rent payable by the Company under this Lease
during the balance of the Lease Term, and the Lease Pro Rata Share of any Net
Proceeds received from any award made in such eminent domain proceedings shall
be paid to and deposited by the Trustee in the Collateral Proceeds Account and
shall be applied by the Director or the Company in one or more of the following
ways as shall be directed in writing by the Authorized Company Representative:
(a) to the restoration of the improvements located on
the Project Site to substantially the same condition as they
existed prior to the exercise of said power of eminent
domain;
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(b) to the acquisition, by construction or otherwise,
by the Director or the Company of other improvements
suitable f or the Company's operation at the Project
(which improvements shall be deemed a part of the
Project and available for use and occupancy by the
Company without the payment of any rent other than
herein provided, to the same extent as if such other
improvements were specifically described herein and
demised hereby); or
(c) to the redemption of all of the Bonds pursuant to
the Trust Agreement, together with accrued interest
thereon to the date of redemption upon exercise of the
option to purchase authorized by Section 10.2(b) of this
Lease.
Within ninety (90) days from the date of entry of a final order in an eminent
domain proceeding granting condemnation, the Authorized Company Representative
shall direct the Director and the Trustee in writing as to which of the ways
specified in this Section the Company elects to have the Lease Pro Rata of any
Net Proceeds of the condemnation award applied. Any balance of the Lease Pro
Rata Share of any Net Proceeds remaining after such application shall be
retained in the Collateral Proceeds Account. The Loan Pro Rata Share of all
Net Proceeds received from any award made in such eminent domain proceedings
shall be paid and applied as provided in the Loan Agreement.
The Director shall cooperate fully with the Company in the handling and
conduct of any prospective or pending condemnation proceeding with respect to
the Project or any part thereof and, to the extent it may lawfully do so, will
permit the Company to litigate in any such proceeding in its own name or in the
name and on behalf of the Director (except as such proceedings are instigated by
the Director, in which event the Company shall have the right to proceed as if
it were the owner of the Project). In no event will the Director voluntarily
settle or consent to the settlement of any prospective or pending condemnation
proceeding with respect to the Project or any part thereof without the written
consent of the Company.
Section 6.3 Condemnation of Company Owned Property. The Company shall
be entitled to the Net Proceeds of any condemnation award or portion thereof
made for damages to or taking of its own property.
ARTICLE VII
SPECIAL COVENANTS
Section 7.1 NO WARRANTY OF CONDITION OR SUITABILITY. THE DIRECTOR DOES
NOT MAKE ANY WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE CONDITION,
WORKMANSHIP, MERCHANTABILITY OR CAPACITY OF THE PROJECT OR ANY PART THEREOF OR
AS TO ITS OR ANY PART'S SUITABILITY OR OPERATION FOR THE PROJECT PURPOSES.
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At any time, upon request of the Company, so long as it is not in default
hereunder, the Director will assign to the Company all warranties and guarantees
of all contractors, subcontractors, manufacturers, suppliers and engineers for
the furnishing of labor, materials, supervision or design in connection with the
Project and any rights or causes of action against any of the foregoing.
Section 7.2 Right of Access to the Project. The Company agrees that the
Director and any of the Director's duly authorized agents shall have the right
at all reasonable times to enter upon the Project and to examine and inspect the
same. The Company further agrees that the Director and the Director's duly
authorized agents upon prior written notice to the Company shall have such
rights of access to the Project as may be reasonably necessary to cause to be
completed the Provision of the Project provided for in Section 3.1 hereof, and
thereafter for the proper maintenance of the Project in the event of failure by
the Company to perform its obligations under Sections 3.1 or 5.1 hereof.
Section 7.3 Granting Easements. If the Company is not in default under
this Lease, the Director at the request of the Company shall grant easements,
licenses, rights-of-way (including the dedication of public highways) and other
rights or privileges in the nature of easements with respect to the Project
Site, or may release existing easements, licenses, rights-of-way and other
rights or privileges with or without consideration, and the Director agrees that
it shall execute and deliver any instrument necessary or appropriate to grant or
release any such easement, license, right-of-way or other right or privilege
upon receipt of: (a) a copy of the instrument of grant or release; (b) a
written application signed by the Authorized Company Representative requesting
such instrument; and (c) a certificate executed by an Independent Engineer that
in his opinion such grant or release will not make the Project unsuitable for
the Project Purposes.
Section 7.4 No Abatement or Diminution of Rent. No release or grant
effected under the provisions of Section 7.3 of this Lease shall entitle the
Company to any abatement or diminution of the rents payable under Section 4.3
hereof.
Section 7.5 Deposit of Moneys. The Lease Pro Rata Share of any moneys
received by the Director pursuant to Section 7.3 of this Lease shall immediately
be paid to the Trustee for deposit in the Collateral Proceeds Account. The Loan
Pro Rata Share of any moneys received by the Director pursuant to this Lease
shall be applied as provided in the Loan Agreement.
Section 7.6 Information Concerning Operations. At the request of the
Director and, in any event, within seventy-five (75) days after the last day of
each fiscal year of the Company beginning with the fiscal year in which the
Completion Date occurs, the Company shall furnish to the Director a report on
Project operations, setting forth the total number of employees then employed on
the Project and such other employment, economic and statistical data concerning
the Project as may reasonably be requested by the Director.
Section 7.7 Affirmative Covenants of the Company. Throughout the Term
of this Lease, the Company shall:
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(a) Taxes and Assessments. Pay and discharge promptly, or cause to
be paid and discharged promptly, when due and payable, all taxes,
assessments and governmental charges or levies imposed upon it, its
income or any of its property, or upon any part thereof, as well as
all claims of any kind (including claims for labor, materials and
supplies) which, if unpaid, might by law become a lien or charge upon
its property. Nothing in this Section shall require the Company to
pay or discharge any such tax, assessment, governmental charge or
levy so long as the validity thereof shall be contested in good
faith and by appropriate legal proceedings, provided that the
Company shall have delivered to the Director an opinion of counsel,
selected by the Company and reasonably acceptable to the Director,
to the effect that nonpayment of any such items during the pendency
of such contest will not adversely affect the Director's right,
title or interest in the Project.
(b) Maintain Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect its
existence and its material rights and franchises.
(c) Maintain Property. Maintain and keep its property in good
repair, working order and condition, ordinary wear and tear
excepted, and from time to time make all repairs, renewals and
replacements which, in the opinion of the Company, are necessary and
proper so that the business carried on in connection therewith may
be conducted at all times in a fashion Project Purposes; provided,
however, that nothing in this subsection (c) shall prevent the
Company from selling or otherwise disposing of any property
whenever, in the good faith judgment of the Company, such property
is obsolete, worn out, without economic value or unnecessary for the
conduct of the business of the Company.
(d) Maintain Insurance. Keep all of its insurable property
insured against loss or damage by fire and other risks, maintain
public liability insurance against claims for personal injury,
death, or property damage suffered by others upon, in or about any
premises occupied by the Company; maintain insurance on the life of
Anthony A. Martino in the amount of $500,000, with the beneficiary
of such policy being the Director for the benefit of the holders of
the Bonds; and maintain all such worker's compensation or similar
insurance as may be required under the laws of any state or
jurisdiction in which it may be engaged in business. All insurance
for which provision has been made in this subsection (d) shall be
maintained against such risks and in at least such amounts (but
subject to such deductibles) as such insurance is usually carried by
persons engaged in the same or similar businesses, and all insurance
herein provided for shall be effected and maintained in force under
a policy or policies issued by insurers of recognized
responsibility, except that it may effect worker's compensation or
similar insurance in respect of operations in any state or other
jurisdiction either through an insurance fund operated by such state
or other jurisdiction or by causing to be maintained a system or
systems of self-insurance which is in accordance with applicable
law.
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(e) Furnish Information.
(i) Furnish or cause the Guarantor to furnish to the
Director the financial statements and information
required by the Guaranty.
(ii) Certificate; No Default. With the financial reports
required to be furnished under this Section, a
certificate of the Company's chief executive officer or
chief financial officer stating that (a) no Event of
Default has occurred and is continuing and no event or
circumstance which would constitute an Event of Default,
but for the requirement that notice be given or time elapse
or both, has occurred and is continuing, or, if such an
Event of Default or such event or circumstance has occurred
and is continuing, a statement as to the nature thereof and
the action which the Company proposes to take with respect
thereto, and that (b) no action, suit or proceeding by it
or against it at law or in equity, or before any
governmental instrumentality or agency, is pending or
threatened, which, if adversely determined, would
materially impair the right or ability of the Company to
carry on the business which is contemplated in connection
with the Project or would materially impair the right or
ability of the Company to perform the transactions
contemplated by this Lease or would materially and
adversely affect its business, operations, assets or
condition, all as of the date of such certificate, except
as disclosed in such certificate; and
(iii) Other Information. Such other information
respecting the business, properties or the condition or
operations, financial or otherwise, of the Company as the
Director may reasonably request, provided that reasonable
provision is made for protecting proprietary information of
the Company.
(f) Deliver Notice. Forthwith upon learning of any of the following,
deliver written notice thereof to the Director, describing the same and the
steps being taken by the Company with respect thereto:
(i) the occurrence of an Event of Default or an event
or circumstance which would constitute an Event of
Default, but for the requirement that notice be given or
time elapse or both, or
(ii) any action, suit or proceeding by it or against
it at law or in equity, or before any governmental
instrumentality or agency, instituted or threatened which,
if adversely determined, would materially impair the right
or ability of the Company to carry on the business which is
contemplated in connection with the Project or would
materially impair the right or ability of the Company to
perform the transactions contemplated by this Lease, or
would materially and adversely affect its business,
operations, assets or condition, or
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(iii) the occurrence of a Reportable Event, as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
under, or the institution of steps by the Company to withdraw
from, or the institution of any steps to terminate, any employee
benefit plan as to which the Company may have liability.
(g) Inspection Rights. At any reasonable time and from time to time
upon reasonable advance notice, permit the Director, or any agents or
representatives thereof, to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of,
the Company and discuss the general business affairs of the Company
with any of its officers; provided, however, that the Company reserves
the right to restrict access to any of its facilities in accordance
with reasonably adopted procedures relating to safety and security.
(h) Zoning, Planning and Environmental Regulations. The Provision
of the Project will be completed and the Project will be operated and
maintained in such manner as to conform with all applicable zoning,
planning, building, environmental and other applicable governmental
regulations (or variances therefrom) imposed by any Governmental
Authority and as to be consistent with the purposes of the Act.
(i) Use of Project Fund Moneys. All moneys disbursed from the Project
Fund (except for any amounts transferred to the Collateral Proceeds
Account pursuant to the terms of this Lease) shall be used for the
payment of Allowable Costs relating to Provision of the Project. No
part of any such moneys shall be knowingly paid to or retained by the
Company or any partner, officer, shareholder, director or employee of
the Company as a fee, kick-back or consideration of any type. The
Company has no identity of interest with, or interest in, the general
contractor or any architect, subcontractor, laborer or materialman
performing work or services of supplying materials in connection with
the Provision of the Project.
Section 7.8 Negative Covenants of the Company. Throughout the Lease
Term, the Company shall not without the prior written consent of the Director:
(a) Maintain Existence. Sell, transfer or otherwise dispose of
all, or substantially all, of its assets, consolidate with or merge
into any other entity, or permit one or more entities to consolidate
with or merge into it; provided, however, that the Company may,
without violating the agreement contained in this subsection (a),
consolidate with or merge into another entity, or permit one or more
other entities to consolidate with or merge into it, or sell,
transfer or otherwise dispose of all, or substantially all, of its
assets as an entirety and thereafter dissolve if: (i) the prior
written consent of the Director is obtained; or (ii) (A) the
surviving, resulting or transferee entity, as the case may be,
assumes in writing all of the obligations of the Company hereunder
(if such surviving, resulting or transferee entity is other than the
Company) ; and (B) the
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surviving, resulting or transferee entity, as the case may be,
is an entity duly organized and validly existing under the laws of
the State or duly qualified to do business therein, and has a net
worth of not less than that of the Company immediately prior to such
disposition, consolidation or merger, transfer or change of form.
(b) ERISA. Voluntarily terminate any employee benefit plan or
other plan (a "Plan") maintained for employees of the Company and
covered by Title IV of ERISA, so as to result in any material
liability of the Company to the Pension Benefit Guaranty Corporation
("PBGC"), enter into any Prohibited Transaction (as defined in
Section 4975 of the Internal Revenue Code of 1986, as amended, and
in ERISA) involving any Plan which results in any material liability
of the Company to the PBGC, cause any occurrence of any Reportable
Event (as defined in Title IV of ERISA) which results in any
material liability of it to the PBGC, or allow or suffer to exist
any other event or condition which results in any material liability
of the Company to the PBGC.
(c) Agreements. Enter into any agreement containing any
provision which would be violated or breached by the performance of
its obligations hereunder or under any instrument or document
delivered or to be delivered by it hereunder or in connection
herewith.
(d) Other Covenants.
(i) Suspension of operation. Suspend or discontinue operation of
the Project.
(ii) Encumber Assets. Pledge, assign, sell-leaseback,
hypothecate or in any manner encumber any of the Project
assets, except as otherwise expressly permitted by this Lease.
(iii) Removal of Assets. Remove, transfer or transport any
of the Project assets from the Project Site other than
the operation of motor vehicles, the shipment of goods in the
ordinary course of business or as otherwise permitted by the
terms hereof.
(iv) Maintain Additional Reserve. Maintain at all times
while the Bonds are outstanding an Additional Reserve
in the amount of $500,000, which Additional Reserve shall
consist of, either (A) a letter of credit issued by a bank or
trust company reasonably satisfactory to the Director in favor
of the Trustee (the "Letter of Credit"), or (B) cash deposited
with the Trustee and held in a separate account, which account
may be invested by the Trustee, upon the written or oral
direction (but if oral, confirmed promptly in writing) of the
Authorized Company Representative in Eligible Investments.
The Company may at any time cause the release of cash held by
the Trustee upon
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delivery to the Trustee of the Letter of Credit or cause
release of the Letter of Credit upon delivery of cash. Any
investment income shall be paid to the Company upon delivery
of a Letter of Credit or on September 15 of each year
commencing September 15, 1993, whichever is earlier. Upon
the failure of the Company to make rental payments pursuant
to Section 4.3 hereof (other than Section 4.3(e)), the
Trustee may apply all or a portion of the Additional Reserve
to the payment of such rental payments and the Company shall
deposit cash or an additional Letter of Credit so that the
Additional Reserve is at all times equal to $500,000.
Section 7.9 Mechanics' and Other Liens. The Company shall not suffer or
permit any mechanics' or other liens to be filed or exist against the Project
nor any part thereof, nor against the Company's leasehold interest in the
Project, nor against the Project Fund or the Collateral Proceeds Account, by
reason of work, labor, services, or materials supplied or claimed to have been
supplied to, for, or in connection with, the Project or any part thereof or to
the Director or the Company or anyone holding the Project or any part thereof
through or under the Company. Nothing in this Section shall require the Company
to pay or discharge any such lien so long as the validity thereof shall be
contested in good faith and by appropriate legal proceedings, provided that the
Company shall have delivered to the Director an opinion of counsel, selected by
the Company and reasonably acceptable to the Director, to the effect that
nonpayment of any such lien during the pendency of such contest will not
adversely affect the Director's right, title or interest in the Project. If any
such liens shall at any time be filed, the Company shall, within one hundred
twenty (120) days after notice of the filing thereof but subject to the right to
contest set forth in the immediately preceding sentence, cause the same to be
discharged of record by payment, deposit, bond, order of a court of competent
jurisdiction or otherwise. If the Company shall fail to cause such lien to be
discharged, or to contest the validity or amount thereof, within the period
aforesaid, then, in addition to any other right or remedy of the Director, the
Director may, but shall not be obligated to, discharge the same either by paying
the amount claimed to be due or by procuring the discharge of such lien by
deposit or by bonding. Any amount paid by the Director shall be reimbursed by
the Company to the Director on demand, and if not so reimbursed on demand shall
be paid by the Company with interest thereof at the Interest Rate for Advances
from the date of payment by the Director, which amounts the Company agrees to
pay.
ARTICLE VIII
ASSIGNMENT, SUBLEASING AND SELLING;
REDEMPTION; RENT PREPAYMENT AND ABATEMENT
Section 8.1 Assignment and Subleasing by the Lessee. Except as expressly
permitted by Section 7. 8 (a) hereof in connection with the consolidation or
merger of the Company into another entity, this Lease may not be assigned in
whole or in part, nor may the Project be subleased as a whole or in part, by
the Company without the prior written consent of the Director.
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Section 8.2 Pledge by the Director. The Director has pledged any moneys
receivable under or pursuant to this Lease except for amounts due pursuant to
Section 4.3(e) hereof and the Loan Pro Rata share of amounts received pursuant
to Sections 11.2 and 11.3 hereof (except for reimbursement of expenses and
indemnification by the Company) to the Trustee pursuant to the Trust Agreement.
The Company hereby consents to such assignment and pledge.
Section 8.3 Restrictions on Transfer and Encumbrance of Project by the
Director. The Director agrees that, except as otherwise provided in this Lease,
it will not sell, assign, transfer, convey or otherwise dispose of the Project
or any portion thereof during the Lease Term and that it will not, to the extent
permitted by law, take any action which may reasonably be construed as tending
to cause or induce the levy of special assessments by others against the Project
Site without the written consent of the Company, nor will it create or suffer to
be created any debt, lien or charge thereon or make any pledge or assignment of
or create any lien or encumbrance upon the rents, revenues and receipts derived
from the sale, lease or other disposition of the Project other than as provided
in Section 8.2 hereof.
Section 8.4 Redemption of Bonds. The Director, at the written request
at any time of the Company if the Bonds are then callable, shall forthwith take
all steps that may be necessary under the applicable redemption provisions of
the Trust Agreement to effect redemption of all or part of the then outstanding
Bonds, as may be specified by the Company, on the earliest redemption date on
which such redemption may be made under such applicable provisions, if the
Company shall then have deposited with the Trustee moneys sufficient to pay the
principal of and premium, if any, and interest due or to become due on such
redemption date with respect to the Bonds as to which such request is made.
Section 8.5 Prepayment of Rents. There is expressly reserved to the
Company the right, and the Company is authorized and permitted, at any time it
may choose, to prepay all or any part of the rents payable under Section 4.3
hereof, and the Director agrees that the Trustee may accept such prepayment of
rents when the same are tendered by the Company. Notwithstanding the provisions
of Section 4.4 of this Lease, all prepaid rent (except for rent payments
pursuant to Section 4.3(e) of the Lease) shall be deposited to the Collateral
Proceeds Account and transferred to the Debt Service Account as rental payments
in the amounts and on the dates specified for rental payments pursuant to
Section 4.3 of this Lease. Prepayments of rent pursuant to Section 4.3(e) shall
be applied by the Director as provided in the Loan Agreement.
Section 8.6 Lessee Entitled to Certain Rent Abatements if Bonds Paid
Prior to Maturity and Loan Prepaid. If at any time during the Lease Term there
shall be no Bonds outstanding within the meaning of the Trust Agreement and the
Loan is paid in full, and if the Company is not at the time in default
hereunder, the Company shall be entitled to use and occupy the Project from such
time to the termination of the Lease, without the payment of the rent (but
otherwise on the terms and conditions hereof).
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Section 8.7 Installation of the Company's Own Machinery and Equipment.
In addition to the Project Facilities and Project Equipment, the Company may
from time to time, in its sole discretion and at its own expense, install
additional movable personal property, machinery, equipment, furniture or
fixtures in the Project Facilities or on the Project Site. All such property so
installed by the Company shall remain the sole property of the Company in which
the Director shall have no interest, and may be modified or removed at any time
while the Company is not in default hereunder. Nothing contained in the
preceding provisions of this Section shall prevent the Company from purchasing,
after delivery of this Lease, movable personal property, machinery, equipment,
furniture or fixtures, not constituting Project Equipment, on conditional sale
contract or lease sale contract, or subject to vendor's lien or security
agreement, as security for the unpaid portion of the purchase price thereof;
provided no such lien or security interest shall attach to any part of the
Project.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1 Event of Default. Each of the following shall be an "Event of
Default":
(a) The Company shall fail to pay any amount payable
pursuant to this Lease or the Loan Agreement on the date on
which such payment is due and payable or within any applicable
period of grace or cure; or
(b) The Company shall fail to observe and perform any
agreement, term or condition contained in this Lease or the
Loan Agreement other than as required pursuant to subsection
(a) above, and such failure continues for a period of thirty
(30) days after notice of such failure is given to the Company
by the Director, or for such longer period as the Director may
agree to in writing; provided, that if the failure is of such
nature that it can be corrected but not within the applicable
period, such failure shall not constitute an Event of Default
so long as the Company institutes curative action within the
applicable period and diligently pursues such action to
completion; or
(c) Any representation or warranty made by the
Company (or any of its officers) herein or in any Lease
Approval Document or in connection herewith or therewith shall
prove to have been incorrect in any material respect when
made; or
(d) The Company shall fail to pay any material
indebtedness of the Company, or any interest or premium
thereon, when due (whether by scheduled maturity, required
prepayment, by acceleration, on demand or otherwise) and such
failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such
indebtedness; or any other default
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under any agreement or instrument relating to any such
indebtedness, or any other event, shall occur and shall
continue after the applicable grace period, if any, specified
in such agreement or instrument and as a result the holder of
such indebtedness elects to accelerate the maturity of such
indebtedness; or any such indebtedness shall be declared to
be due and payable, or required to be prepaid (other than by
a regularly scheduled required prepayment), prior to the
stated maturity thereof; or
(e) The Company commences a voluntary case concerning
it under titles of the United States Code entitled
"Bankruptcy" as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against the Company under the Bankruptcy Code and
relief is ordered against the Company, or the petition is
controverted but is not dismissed within sixty (60) days after
the commencement of the case; or the Company is not generally
paying its debts as such debts become due; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of the
Company; or the Company commences any other proceeding under
any reorganization, arrangement, readjustment of debt, relief
of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect; or
there is commenced against the Company any such proceeding
which remains undismissed for a period of sixty (60) days; or
the Company is adjudicated insolvent or bankrupt; or the
Company fails to controvert in a timely manner any such case
under the Bankruptcy Code or any such proceeding or any order
of relief or other order approving any such case or proceeding
or in the appointment of any custodian or the like of or for
it or any substantial part of its property or suffers any such
appointment to continue undischarged or unstayed for a period
of sixty (60) days; or the Company makes a general assignment
for the benefit of creditors; or any action is taken by the
Company for the purpose of effecting any of the foregoing; or
a receiver or trustee or any other officer or representative
of the court or of creditors, take and hold possession of any
substantial part of the property or assets of the Company for
a period in excess of sixty (60) days; or
(f) A judgment or order for the payment of money in
excess of Fifty Thousand Dollars ($50,000) shall be rendered
against the Company and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment
or order or (ii) there shall be any period of thirty (30)
consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
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(g) Any default under the Guaranty or Loan Agreement shall
have occurred and be continuing; or
(h) The Company fails to meet its minimum
funding requirements under Section 301 et seq. of
ERISA, with respect to any of its Plans.
Section 9.2 Remedies on Default. Whenever an Event of Default shall have
happened and be subsisting beyond any applicable period of grace or cure, any
one or more of the following remedial steps may be taken:
(a) The Director may at its option declare all
installments of rent payable under Section 4.3 hereof for the
remainder of the Lease Term to be immediately due and payable,
whereupon the same shall become immediately due and payable.
(b) The Director may reenter and take possession of
the Project without terminating this Lease, and sublease the
Project for the account of the Company, holding the Company
liable for the difference between the rent and other amounts
payable by such sublessee in such subleasing and the rents and
other amounts payable by the Company hereunder.
(c) The Director may terminate the Lease Term, exclude
the Company from possession of the Project and use its best
efforts to lease or sell the Project to another, but holding
the Company liable for all rent and other payments due up to
the effective date of such leasing.
(d) The Director may direct the Trustee, in writing, to
transfer any amounts remaining in the Project Fund to the
Collateral Proceeds Account.
(e) The Director may take whatever action at law or in
equity as may appear necessary or desirable to collect the rent
then due and thereafter to become due, or to enforce
performance and observance of any obligation, agreement or
covenant of the Company under this Lease.
(f) The Director may take all actions permitted under
Section 11.1 of this Lease.
Any amounts collected pursuant to action taken under this Section shall be
allocated as provided in Section 11.3 of this Lease, and the Lease Pro Rata
Share of such amounts shall be paid into the Collateral Proceeds Account and
applied in accordance with the provisions of the Trust Agreement or, if the
Bonds have been fully paid (or provision for payment thereof has been made in
accordance with the provisions of the Trust Agreement) and all other amounts
payable thereunder and hereunder have been paid, as directed by the Company.
The Loan Pro Rata Share of such amounts shall be applied by the Director as
provided in the Loan Agreement.
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Section 9.3 No Remedy Exclusive. No remedy conferred upon or reserved
to the Director by this Lease is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Lease or now or hereafter
existing at law or in equity or by statute. No delay or omission to exercise
any right or power accruing upon any default shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right and power
may be exercised from time to time and as often as may be deemed expedient. In
order to entitle the Director to exercise any remedy reserved to it in this
Article, it shall not be necessary to give any notice, other than such notice as
may be herein expressly required.
Section 9.4 Agreement to Pay Attorneys' Fees and Expenses. In the event
the Company should default under any of the provisions of this Lease and the
Director should employ attorneys or incur other expenses for the collection of
rent or the enforcement of performance or observance of any obligation or
agreement on the part of the Company contained in this Lease, the Company agrees
that it will on demand therefor reimburse the reasonable fees of such attorneys
and such other expenses so incurred. If any such fees and expenses are not so
reimbursed, the amount thereof, together with interest thereon from the date of
demand for payment at the Interest Rate for Advances, shall, to the extent
permitted by law, constitute indebtedness secured hereby and by the Trust
Agreement, and in any action brought to collect such indebtedness, the Director
shall be entitled to seek the recovery of such fees and expenses in such action
except as limited by law or by judicial order or decision entered in such
proceedings.
Section 9.5 No Additional Waiver Implied by One Waiver. In the event
any agreement contained in this Lease should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
Section 9.6 Waiver of Appraisement, Valuation, Etc. In the event the
Company should default under any of the provisions of this Lease, the Company
agrees to waive, to the extent it may lawfully do so, the benefit of all
appraisement, valuation, stay, extension or redemption laws now or hereafter in
force, and all right of appraisement and redemption to which it may be entitled.
Section 9.7 Reinstatement. Notwithstanding any termination of this
Lease in accordance with the provisions of Section 9.2 hereof, unless and until
the Director shall have entered into a valid and binding agreement providing for
the reletting of the Project, the Company may at any time after such termination
pay all accrued unpaid rent and any other amounts due and payable under the Loan
Agreement plus any costs to the Director and the Trustee (including, but not
limited to, fees and expenses) occasioned by the default and fully cure all
other defaults then capable of being cured. Upon such payment and cure, this
Lease shall be fully reinstated, as if it had never been terminated, and the
Company shall be restored to the use, occupancy and possession of the Project.
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ARTICLE X
OPTIONS AND OBLIGATIONS TO PURCHASE PROJECT
Section 10.1 Option to Terminate. The Company shall have the option to
cancel or terminate the term of this Lease at any time when all the Bonds shall
be deemed to have been paid and discharged under the provisions of the Trust
Agreement and all amounts payable by the company hereunder and under the Loan
Agreement shall have been paid. Such option shall be exercised by giving the
Director notice in writing of such cancellation or termination and such
cancellation and termination shall forthwith become effective.
Section 10.2 Option to Purchase Project Prior to Payment of the Bonds
and the Loan. The Company shall have, and is hereby granted, the option to
purchase the Project prior to the expiration of the Lease and prior to the full
payment of the Bonds (or provision for payment thereof having been made in
accordance with the provisions of the Trust Agreement) and of the Loan, if any
of the following shall have occurred:
(a) The Project Facilities or the Project Equipment
shall have been damaged or destroyed as set forth in Section
6.1 hereof (i) to such extent that they cannot be reasonably
restored within a period of six months to the condition
thereof immediately preceding such damage or destruction, or
(ii) to such extent that the Company is thereby prevented
from carrying on its normal operations for a period of six
consecutive months.
(b) Title to, or the temporary use of, all or
substantially all of the Project shall have been taken under
the exercise of the power of eminent domain by any
governmental authority, or person, firm or corporation acting
under governmental authority (including such a taking or
taking as results in the Company being thereby prevented from
carrying on its normal operations therein for a period of six
consecutive months).
(c) As a result of any changes in the Constitution of the
State of Ohio or the Constitution of the United States of
America or of legislative or administrative action (whether
state or federal) or by final decree, judgment or order of
any court or administrative body (whether state or federal)
entered after the contest thereof by the Director in good
faith, this Lease shall have become void or unenforceable or
impossible of performance in accordance with the intent and
purpose of the parties as expressed in this Lease, or if
unreasonable burdens or excessive liabilities shall have been
imposed upon the Director or the Company, with respect to the
Project or operation thereof, including without limitation
federal, state or other ad valorem, property, income or other
taxes not being imposed on the date of this Lease other than
ad valorem taxes presently levied upon privately owned
property used for the
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same general purpose as the Project; provided, that the
provisions of this subsection shall in no way effect the
Company's obligation for the continued maintenance of the
Project during the Lease Term.
To exercise such option, the Company shall, within ninety (90) days following
the event authorizing the exercise of such option, give written notice to the
Director, and to the Trustee if any of the Bonds shall then be unpaid, and
shall specify therein the date of closing such purchase, which date shall be
not less than forty-five (45) nor more than ninety (90) days from the date such
notice is mailed, and in case of a redemption of the Bonds in accordance with
the provisions of the Trust Agreement shall make arrangements satisfactory to
the Trustee for the giving of the required notice of redemption, in which
arrangements the Director shall cooperate. The purchase price payable by the
Company, in the event of its exercise of the option granted in this Section,
shall be the sum of the following:
(1) An amount of money which, when added to (i) the moneys and
investments held to the credit of the Collateral Proceeds Account and the
Primary Reserve Account and (ii) the aggregate rental payments made by
the Company and not theretofore applied to the payment of principal of or
interest on the Bonds, will be sufficient pursuant to the provisions of
the Trust Agreement, to pay and discharge all then outstanding Bonds on
the first possible date for redemption and to pay the Loan and all
amounts due under the Loan Agreement and Note in full, plus
(2) An amount of money equal to the Trustee's fees and expenses, to the
extent payable by the Company pursuant to this Lease, accrued and to
accrue until such final payment and redemption of the Bonds, plus
(3) The sum of One Dollar ($1.00) to the Director.
In the event of the exercise of the option granted in this Section any Net
Proceeds of insurance or condemnation shall be paid to the Company,
notwithstanding any provision of Section 6.1, 6.2 and 11.2 hereof, and the
Director will deliver to the Company the documents referred to in Section 10.4
hereof.
The mutual agreements contained in this Section 10. 2, are independent of,
and constitute an agreement separate and distinct from, any and all other
provisions of this Lease and shall be unaffected by any fact or circumstance
which might impair or be alleged to impair the validity of any other
provisions.
Section 10.3 Agreement to Purchase Project. The Company agrees that it
will purchase and the Director agrees that it will sell the Project for One
Dollar ($1.00) upon full payment of the Bonds or provision for payment thereof
having been made in accordance with the provisions of the Trust Agreement and
full payment of the Loan and all amounts due under the Loan Agreement and the
Note. Upon sale of the Project to the Company as provided in this Section
10.3, the Director will
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deliver to the Company the documents referred to in Section 10.4 hereof.
Section 10.4 Conveyance upon Exercise of Option to Purchase. Upon
exercise of any option or agreement to purchase granted herein, the Director
will upon payment of the purchase price deliver or cause to be delivered to the
Company documents conveying to the Company good and marketable title to the
property being purchased, as such property then exists, subject to the
following: (i) those liens and encumbrances, if any, to which title to said
property was subject when conveyed to the Director; (ii) those liens and
encumbrances created by the Company or to the creation or suffering of which the
Company consented; (iii) those liens and encumbrances resulting from the failure
of the Company to perform or observe any of the agreements on its part contained
in this Lease; (iv) Permitted Encumbrances, other than this Lease; and (v) if
the option is exercised pursuant to the provisions of Section 10.2(b) hereof,
the rights and title of the condemning authority.
Section 10.5 Option to Purchase, Redeem or Def ease Bonds. Provided no
Event of Default has occurred and is existing, the Company may instruct the
Trustee to apply any moneys on deposit in the Collateral Proceeds Account,
together with any moneys furnished to the Trustee by the Company but not
constituting payments due under Article IV of this Lease, to any of the
following purposes:
(a) Purchase of Bonds in the open market at prices not greater
than their fair market value;
(b) Redemption of Bonds pursuant to the optional redemption
provisions thereof; or
(c) Defeasance of Bonds pursuant to Article IX of the Trust
Agreement.
If the sum of the amounts in the Collateral Proceeds Account and the Primary
Reserve Account, when added to the amount delivered by the Company to the
Trustee for application in accordance with this Section 10.5, is sufficient to
purchase for cancellation, optionally redeem or defease all of the Outstanding
Bonds, the Trustee shall, at the direction of the Company, apply moneys in the
Primary Reserve Account for any of such purposes.
ARTICLE XI
RELATIVE RIGHTS OF DIRECTOR AS TO BONDS AND LOAN
Section 11.1 Default, Notices and Remedies. If an Event of Default
occurs hereunder or under the Loan Agreement, the giving or receiving of notice
of such Event of Default under either the terms hereof or of the Loan Agreement
shall be deemed to give notice under the other agreement. Upon the occurrence
of such an Event of Default which is not cured within any applicable period of
grace or cure, the Director shall have the right to declare all installments of
rent payable under Section 4.3 hereof for the remainder of the Lease Term to be
immediately due and payable and to
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declare all amounts due under the Loan Agreement to be immediately due and
payable, without notice or demand to the Company, and to avail itself of all
remedies provided herein, under the Loan Agreement, in any related security
documents or under applicable law.
Section 11.2 Allocation of Proceeds from Damage, Destruction or
Condemnation. Any moneys received by the Director, or by the Trustee on behalf
of the Director, as a result of eminent domain proceedings or damage and
destruction of the Project shall be allocated as follows:
1. the Lease Pro Rata Share of such moneys shall be applied in
accordance with Article VI hereof; and
2. the Loan Pro Rata Share of such moneys shall be paid and
applied in accordance with the applicable provisions of the Loan
Agreement.
Section 11. 3 Allocation of Other Proceeds. Except as provided in
Section 11.2 hereof, moneys, including, without limitation, the proceeds of any
sale of the Project, and any part thereof or any interest therein, received by
the Director or by the Trustee on behalf of the Director under either this Lease
or the Loan Agreement pursuant to the exercise of any remedies provided herein,
in the Loan Agreement or by law following the occurrence of an uncured Event of
Default hereunder or under the Loan Agreement shall be applied as follows:
First: To the payment of all costs of collection including reasonable
attorneys fees and expenses; and
Second: To the payment hereunder and under the Loan Agreement in proportion
to the ratio of the amount of moneys reasonably advanced hereunder or
thereunder for managing, operating and maintaining the Project to the
aggregate amount of moneys so advanced hereunder and thereunder, of
all moneys reasonably advanced for managing, operating and
maintaining the Project, including, without limitation, the
salaries, fees and wages of a managing agent and such other
employees as the Director may deem necessary or desirable to employ,
all taxes, charges, claims, assessments, water rents, sewer rents
and other liens, and premiums for all insurance which the Director
may deem necessary or desirable to pay, and the cost of all
alterations, renovations, repairs or replacements made by the
Director with respect to the Project; and
Third: To the payment to all remaining indebtedness owed hereunder
(exclusive of amounts due pursuant to Section 4.3(e) hereof) or
under the Loan Agreement provided that if the amount available is
insufficient for such payment in full, the payment shall be made in
the Lease Pro Rata Share and the Loan Pro Rata Share until payment
in full of all amounts due to the Director hereunder (exclusive of
amounts due pursuant to Section 4.3(e) hereof) and under the Loan
Agreement.
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The Director hereby agrees that upon the occurrence and during the
continuance of an Event of Default hereunder or under the Loan Agreement, the
Trustee shall be the Director's agent for the purpose of (a) receiving any of
the above-described monies and (b) paying expenses and costs from such monies
received, and depositing and allocating the remainder of such monies in
accordance with Paragraphs Second and Third above. In the event causes the
appointment of a receiver, the Director shall cause such receiver to pay over to
the Trustee any of such monies collected by such receiver so that the Trustee
may perform the functions described in this Section. Upon notification by the
Director to the Trustee and the Company of an uncured Event of Default, the
Trustee shall, upon direction from the Director, commence collection of such
monies in the manner set forth in this Section.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Surrender of Project. In the event the Company should
default under this Lease and the Lease Term is terminated, the Company agrees to
surrender possession of the Project peaceably and promptly to the Director in as
good condition as prevailed at the time it was put in full possession thereof,
loss by fire or other casualty covered by insurance, ordinary wear and tear,
obsolescence and acts of God excepted.
Section 12.2 Amounts Remaining in Collateral Proceeds Account and
Primary Reserve Account and Additional Reserve. It is agreed by the parties
hereto that any amounts remaining in the Collateral Proceeds Account, the
Primary Reserve Account or the Additional Reserve upon expiration or sooner
cancellation or termination of this Lease, after payment in full of the Bonds
(or provision for payment thereof having been made in accordance with the
provisions of the Trust Agreement) and the fees, charges and expenses of the
Trustee and all other amounts required to be paid hereunder, shall belong to and
be paid to the Company by the Trustee as overpayment of rents.
Section 12.3 Notices. All notices, certificates, requests or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by registered or certified mail, postage prepaid, sent prepaid via a
reputable overnight courier or by telecopy addressed to the recipient at its
Notice Address. A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Director, the Company, or the Trustee shall
also be given to the others. The Company, the Director and the Trustee may, by
notice given hereunder, change a Notice Address or designate any further
addresses to which subsequent notices, certificates, requests or other
communications shall be sent.
Section 12.4 Net Lease. This Lease shall be deemed and construed to be
a "net lease", and the Company shall pay absolutely net during the Lease Term
the rent and all other payments required hereunder, free of any deductions,
without abatement, deduction or set-off other than those herein expressly
provided.
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<PAGE> 41
Section 12.5 Binding Effect. This Lease shall inure to the benefit of
and shall be binding upon the Director, the Company and their respective
successors and assigns, subject, however, to the limitations contained in
Sections 8.1 and 8.3 hereof, and subject to the further limitation, as set forth
on page 1 of this Lease, that any obligation of the Director created by or
arising out of this Lease shall not be a general debt of the Director or the
State but shall be payable solely out of the proceeds derived from this Lease or
the Net Proceeds of any insurance or condemnation awards as provided herein.
Section 12.6 Extent of Covenants of the Director: No Personal Liability.
All covenants, stipulations, obligations and agreements of the Director
contained in this Lease shall be effective to the extent authorized and
permitted by applicable law. No such covenant, stipulation, obligation or
agreement shall be deemed to be a covenant, stipulation, obligation or agreement
of any present or future Director in other than such Director's official
capacity acting pursuant to the Act.
Section 12.7 Amendments, Changes and Modifications. This Lease may not
be effectively amended, changed or modified except by an instrument in writing
executed by the Director and the Company. No amendment to the Supplement which
has the effect of increasing the Company's obligations under this Lease shall
become effective without the written consent of the Company.
Section 12.8 Execution Counterparts. This Lease may be executed in
several counterparts, each of which shall be regarded as an original and all of
which shall constitute but one and the same Lease.
Section 12.9 Severability. If any clause, provision or section of this
Lease shall be held illegal or invalid by any court, the invalidity of such
clause, provision or section shall not affect any of the remaining clauses,
provisions or sections hereof and this Lease shall be construed and enforced as
if such illegal or invalid clause, provision or section had not been contained
herein. In case any agreement or obligation contained in this Lease shall be
held to be in violation of law then such agreement or obligation shall be deemed
to be the agreement or obligation of the Director or the Company, as the case
may be, to the full extent permitted by law.
Section 12.10 Captions. The captions or headings in this Lease are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or sections of this Lease.
Section 12.11 Governing Law. This Lease shall be deemed to be a contract
made under the laws of the State of Ohio and for all purposes shall be governed
by and construed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the Director and the Company have caused this Lease to
be executed in their respective names by their duly authorized officers, all as
of the date first above written.
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<PAGE> 42
Signed and acknowledged DIRECTOR OF DEVELOPMENT OF THE
in the presence of: STATE OF OHIO
/s/ Marlo B. Tannous By: /s/ Thomas C. Washbush
- --------------------------- -------------------------------
/s/ Stanley J. Dobrowski Title: Chief Legal Counsel
- --------------------------- ----------------------------
Signed and acknowledged BAILEY TRANSPORTATION
in the presence of: PRODUCTS, INC.
/s/ Virginia D. Benjamin By: By: /s/ Anthony A. Martino
- --------------------------- -------------------------------
/s/ Stanley J. Dobrowski Title: President
- --------------------------- ----------------------------
STATE OF OHIO :
: ss.
COUNTY OF Franklin :
----------
On this 27th day of July, 1992, before me, a Notary Public in and for
said County and State, personally appeared Thomas C. Washbush, Chief Legal
Counsel of the Department of Development of the State of Ohio, and
acknowledged the execution of the foregoing instrument and that the same is his
voluntary act and deed on behalf of the Director of Development of the State of
Ohio and the voluntary act and deed of said officer as such.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my seal
on the day and year aforesaid.
/s/ Stanley J. Dobrowski
----------------------------
Notary Public
41
<PAGE> 43
STATE OF OHIO :
:ss.
COUNTY OF FRANKLIN
On this 27th day of July, 1992, before me, a Notary Public in and for
said County and State, personally appeared Anthony A. Martino, President of
Bailey Transportation Products, Inc., the corporation which executed the
foregoing instrument, who acknowledged that he did sign said instrument as such
President, for and on behalf of said Bailey Transportation Products, Inc.; that
the same is his free act and deed as such President, and the free act and deed
of said Bailey Transportation Products, Inc.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
seal on the day and year aforesaid.
/s/ Stanley J. Dobrowski
-----------------------------
Notary Public
This instrument was prepared by Virginia D. Beni., Calfee, Halter & Griswold,
800 Superior Avenue, N.E., Cleveland,
Ohio 44114.
42
<PAGE> 1
EXHIBIT 10.26
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN AGREEMENT
between
THE DIRECTOR OF DEVELOPMENT
OF THE STATE OF OHIO
and
BAILEY TRANSPORTATION PRODUCTS, INC.
Dated
as of
July 29, 1992
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
LOAN AGREEMENT
THIS LOAN AGREEMENT made and entered into as of July 29, 1992 between the
Director of Development of the State of Ohio (the "Director") , and Bailey
Transportation Products, Inc., a Delaware corporation (the "Company"), under
the circumstances summarized in the following recitals (the capitalized terms
used in the recitals being used therein as defined in Article I hereof):
A. Pursuant to the Act, the Director is authorized, among other things,
to make loans to assist in the financing of an Eligible Project.
B. The Company has requested that the Director provide the financial
assistance for the Project hereinafter described.
C. The Director has determined that the Project constitutes an
Eligible Project and that the financial assistance to be provided pursuant to
the Lease (as defined below) and this Agreement is appropriate under the Act
and will be in furtherance and in implementation of the public policy set forth
in the Act.
D. The financial assistance to be provided pursuant to the Lease and
the issuance of the Bonds described therein and pursuant to this Agreement has
been reviewed and approved by the Development Financing Advisory Board and the
Controlling Board, pursuant to the Act.
E. In consideration of the financial assistance and the issuance of
the Bonds, the Director is taking title to the Project Facilities and Project
Equipment and leasing same back to the Company pursuant to the Lease.
NOW, THEREFORE, in consideration of the premises and the representations
and agreements hereinafter contained, the Director and the Company agree as
follows:
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 3
ARTICLE I
DEFINITIONS
SECTION 1.1. Use of Defined Terms. In addition to the words and terms
elsewhere defined in this Agreement or by reference to the Security Document or
other instruments, the words and terms set forth in Section 1.2 hereof shall
have the meanings therein set forth unless the context or use expressly
indicates different meaning or intent. Such definitions shall be equally
applicable to both the singular and plural forms of any of the words and terms
therein defined.
SECTION 1.2. Definitions. As used herein:
"ACT" means Chapter 166, Ohio Revised Code, as from time to time enacted
and amended.
"ALLOWABLE COSTS" means "allowable costs" of the Project within the
meaning of the Act.
"APPLICATION" means the Application of the Company submitted to the
Director requesting assistance under the Act.
"BONDS" means the State of Ohio State Economic Development Revenue Bonds
(Ohio Enterprise Bond Fund), Series 1992-3 (Bailey Transportation Projects,
Inc. Project) (Taxable Bonds) authorized by the General Bond Order and the
Series Bond Order.
"CDBG" means the Community Development Block Grant.
"CDBG LOAN" means the loan in the original principal amount of Three
Hundred Forty-Five Thousand Dollars ($345,000.00) from the CDBG Lender.
"CLOSING DATE" means July 29, 1992, the date of execution and delivery of
the Loan Documents.
"COMMITMENT" means the Commitment Letter between the Director and the
Company dated June 10, 1992.
"COMPLETION DATE" means the date of completion of the Project, as
certified by the Company pursuant to Section 3.5 hereof.
"CONTROLLING BOARD" means the controlling board of the State.
"COST CERTIFICATION" means a certification of the Company, as of a
specified date, setting forth in reasonable detail the costs incurred and, if
appropriate, to be incurred, by the Company in completing the provision of the
Project, including a detail by category of all Allowable Costs.
<PAGE> 4
"DEVELOPMENT FINANCING ADVISORY BOARD" means the Development Financing
Advisory Board of the State.
"DIRECTOR" means the officer of the State, appointed pursuant to Section
121.03 of the Ohio Revised Code, who administers and is the executive head of
the Department of Development of the State, the officer who by law performs the
functions of that office, and any person acting on behalf of the Director of
Development of the State pursuant to any delegation permitted by law.
"DISBURSEMENT DATE" means July 29, 1992, or such subsequent date as may be
established by the Director in writing in accordance with Section 3.7 hereof
for the disbursement of the Loan.
"ELIGIBLE PROJECT" means an "eligible project" within the meaning of the
Act, and with respect to the Loan means the Project Equipment, Project
Facilities and the Project Site.
"ENVIRONMENTAL LAW" means any federal, state or local law, regulation,
ordinance, order or directive pertaining to the protection of the environment
and the health and safety of the public.
"ERISA" means the Employee Retirement Income Security Act of 1974, as from
time to time amended and supplemented.
"EVENT OF DEFAULT" means any of the events described as an event of
default in Section 5.1 hereof.
"FINAL COST CERTIFICATION" means the Cost Certifications dated as of the
Completion Date.
"FORCE MAJEURE" means, without limitation:
(i) acts of God; strikes, lockouts or other industrial
disturbances; acts of public enemies; orders or restraints of any
kind of the government of the United States or of the State or
any of their departments, agencies, political subdivisions or
officials, or any civil or military authority; insurrections;
civil disturbances; riots; epidemics; landslides; nuclear
accidents; lightning; earthquakes; fires; hurricanes; tornadoes;
storms; droughts; floods; arrests; restraint of government and
people; explosions, breakages, malfunction or accident to
facilities, machinery, transmission pipes or canals; partial or
entire failure of utilities; shortages of labor, materials,
supplies or transportation; or
(ii) any cause, circumstances or event not reasonably within
the control of the Company.
"GOVERNING INSTRUMENTS" means the certificate of incorporation and by-laws
of the Company.
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<PAGE> 5
"GOVERNMENTAL AUTHORITY" means, collectively, the State, any political
subdivision thereof, any municipality, and any agency, department, commission,
board or bureau of any of the foregoing having jurisdiction over the Project.
"HAZARDOUS SUBSTANCE" means a hazardous substance as defined under the
Comprehensive Emergency Response Compensation and Liability Act of 1980, 42
U.S.C. Section 6901, as from time to time amended.
"HAZARDOUS WASTE" means a hazardous waste as defined under the Resource
Conservation and Recovery Act on 1976, 42 U.S. C. Section 6901, as from time to
time amended.
"INITIAL COST CERTIFICATION" means the Cost Certification dated as of the
Closing Date.
"LEASE" means the lease between the Director and the Company dated July
29, 1992, pursuant to which the Director has provided financial assistance
through issuance of the Bonds in the amount of Three Million One Hundred
Seventy Thousand Dollars ($3,170,000.00).
"LESSOR" means Director.
"LOAN" means the loan by the Director to the Company in the total sum of
the Loan Amount, to be disbursed pursuant to Section 3.9 hereof.
"LOAN AGREEMENT" means this Loan Agreement, as from time to time amended
or supplemented.
"LOAN AMOUNT" means the lesser of (i) One Million Dollars ($1,000,000.00)
or (ii) twenty-one percent (21%) of the allowable costs of the Project, as
determined by the Director in the Director's sole discretion pursuant to this
Loan Agreement.
"LOAN APPROVAL DOCUMENTS" means, with respect to the Loan, the
Recommendation of the Director to the Development Financing Advisory Board
dated April 30, 1992, the Resolution of the Development Financing Advisory
Board dated April 30, 1992, the Approval of the Controlling Board dated May
18th, 1992, and the Commitment.
"LOAN DOCUMENTS" means all documents and instruments delivered to or
required by the Director to evidence or secure the Loan, including but not
limited to this Loan Agreement, the Note and the Security Document, as required
by the Commitment and this Loan Agreement.
"NOTE" means the promissory note, in the form attached hereto as Exhibit
C, evidencing the obligation of the Company to repay the Loan.
3
<PAGE> 6
"NOTICE ADDRESS" means:
(a) As to the Director: Department of Development
77 South High Street
PO Box 1001
Columbus, Ohio 43266-0101
Attention: Director
Facsimile: (614) 644-1789
and
Anthony M. Roseboro
Attorney at Law
319 Sherborne Drive
Columbus, Ohio 43219
Facsimile: (614) 252-3807
(b) As to the Company: Bailey Transportation Products, Inc.
333 Gore Road
Conneaut, Ohio 44030
Attention: Anthony A. Martino
Facsimile: (216) 599-7870
and
Sheehan, Phinney, Bass & Green
1000 Elm Street
Manchester, New Hampshire 03105-3701
Attention: Alan L. Reische, Esq.
Facsimile: (603) 627-8121
or such additional or different address, notice of which is given under Section
6.2 hereof.
"PETROLEUM" means petroleum as defined under the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Section 6901, as from time to time amended.
"PLANS AND SPECIFICATIONS" means the plans and specifications or other
appropriate documents describing the Eligible Project prepared by or at the
direction of the Company.
"PROJECT" means the Project Equipment, the Project Facilities and the
Project Site which together constitute an Eligible Project.
4
<PAGE> 7
"PROJECT EQUIPMENT" means the equipment machinery and other personal property
described in Exhibit C to the Lease.
"PROJECT FACILITIES" means the buildings, structures, additions and
improvements described in Exhibit B to the Lease.
"PROJECT PURPOSES" means the manufacture of molded plastic components for
automobiles and other industrial uses.
"PROJECT SITE" means the real estate described in Exhibit A to the Lease,
including any buildings, structures, additions, improvements, facilities,
fixtures and installations now or hereafter located thereon.
"PROVISION" means, as applicable, the acquiring, constructing,
reconstructing, rehabilitating, renovating, enlarging, improving, or furnishing
of the Project.
"SECURITY DOCUMENT" means the Lease.
"STATE" means the State of Ohio.
"TOXIC CHEMICALS" means toxic chemicals as defined under Title III of the
Superfund Amendments and Reauthorization Act of 1986 (also cited as the
Emergency Planning and Community Right-to-Know Act) 42 U.S.C. Section 11001, as
from time to time amended.
SECTION 1.3. Certain Words and References. Any reference herein to the
Director shall include those succeeding to the Director's functions, duties or
responsibilities pursuant to or by operation of law or lawfully performing such
functions. Any reference to a section or provision of the Constitution of the
State or to the Act or to a section, provision or chapter of the Ohio Revised
Code shall include such section, provision or chapter as from time to time
amended.
The terms "hereof," "hereby," "herein," "hereto," "hereunder" and similar
terms refer to this Loan Agreement; and the term "heretofore" means before, and
the term "hereafter" means after the Closing Date. Words of the masculine
gender include the feminine and the neuter, and when the sense so indicates,
words of the neuter gender may refer to any gender.
ARTICLE II
DETERMINATIONS AND REPRESENTATIONS
SECTION 2.1. Determinations of the Director. Pursuant to the Act and on
the basis of the representations and other information provided by the Company,
the Director has heretofore made certain determinations, as set forth in the
Loan Approval Documents, which are hereby confirmed, and the
5
<PAGE> 8
Director hereby determines that the financial assistance to be provided by the
State pursuant to this Loan Agreement will conform to the requirements of the
Act, including Section 166.07 thereof, and will further and implement the
purposes of the Act by creating new jobs or preserving existing jobs and
employment opportunities and improving the economic welfare of the people of
the State.
SECTION 2.2. Representations of the Company. The Company hereby
represents and warrants that:
(a) The Company is a corporation for profit duly organized
and validly existing under the laws of the State of Delaware and
in good standing under the laws of the State of Delaware and
authorized to do business in the State of Ohio.
(b) The Company has full power and authority to execute,
deliver and perform the Loan Documents and to enter into and carry
out the transactions contemplated thereby. Such
execution, delivery and performance do not, and will not, violate any
provision of law applicable to the Company and do not, and will not,
conflict with or result in a default under any agreement or instrument to
which the Company is a party or by which the Company or any of the
Company's property or assets is or may be bound immediately following the
consummation of the transactions contemplated hereby. The Loan Documents
have, by proper action, been duly authorized, executed and delivered and
all necessary actions have been taken to constitute the Loan Documents
legal, valid and binding obligations of the Company.
(c) The provision of financial assistance pursuant to the Loan Approval
Documents and this Loan Agreement induced the Company to provide the
Project, thereby creating new jobs or preserving existing jobs and
employment opportunities and improving the economic welfare of the people
of the State.
(d) The Provision of the Project will be completed and the Project will be
operated and maintained at the Project Site in such manner as to conform
with all applicable Environmental Laws and zoning, planning, building, and
other governmental regulations imposed by any Governmental Authority and
as to be consistent with the purposes of the Act.
(e) The Company presently intends that the Project will be used and operated
in a manner consistent with the Project Purposes at the Project Site until
the date on which the Loan has been fully repaid, and the Company knows of
no reason why the Project will not be so operated.
(f) Except as disclosed in Exhibit F to the Lease, there are no actions,
suits, or proceedings pending or threatened against or affecting the
Company, the Project, the Project Equipment, Project Facilities or the
Project Site which, if adversely determined, would individually or in the
aggregate materially impair the ability of the Company to perform any of
the Company's obligations under the Loan Documents or adversely affect the
financial condition of the Company.
6
<PAGE> 9
(g) The Company is not in default under any of the Loan Documents or in the
payment of any indebtedness for borrowed money or under any agreement or
instrument evidencing any such indebtedness, and no event has occurred
which by notice, the passage of time or otherwise would constitute any such
event of default.
(h) The Project Site is zoned by the County of Ashtabula, Ohio, under a
zoning ordinance which permits the Provision of the Project thereon in
accordance with the Plans and Specifications and the operation of the
Company's business; and all utilities, including water, storm and sanitary
sewer, gas, electric and telephone, and rights of access to public ways
shall be available or will be provided to the Project Site in sufficient
locations and capacities to meet the requirements of operating the Project
and of any applicable Governmental Authority.
(i) The Company has made no contract or arrangement of any kind, other than
the Loan Documents which has given rise to or the performance of which by
the other party thereto would give rise to a lien or claim of lien
immediately following the consummation of the transactions contemplated
hereby on the Project or other collateral covered by the Loan Documents
and no materials or labor have heretofore been supplied to or performed
in connection with the Project.
(j) No representation or warranty of the Company contained in any of the
Loan Approval Documents or Loan Documents and no statement contained in
any certificate, schedule, list, financial statement or other instrument
furnished to the Director or the Lender by or on behalf of the Company
(including, without limitation, the Application) contains any untrue
statement of a material fact, or omits to state a material fact necessary
to make the statements contained herein or therein not misleading. To
the extent that any of the foregoing consist of projections the Company
acknowledges that such projections were prepared in good faith and the
Company believes that the projections and the assumptions on which they
are based were reasonable when made and continue to be reasonable as of
the date hereof but the Company does not warrant that the results set
forth in any projection can be achieved or that the assumptions on which
the projects were based will in fact prove to be accurate.
(k) All proceeds of the Loan shall be used for the payment of Allowable Costs
relating to Provision of the Project. No part of any such proceeds shall
be knowingly paid to or retained by the Company or any partner, officer,
shareholder, director or employee of the Company as a fee, kick-back or
consideration of any type except for purchase of equipment from Bailey
Corporation. The Company has no identity of interest with the general
contractor or any architect, subcontractor, laborer or materialman
performing work or service or supplying materials in connection with the
provision of the Project.
(l) The Project Site has never, and does not currently contain, nor is it
contaminated by, any hazardous or toxic waste materials in violation of
any applicable environmental laws or regulations, including, but not
limited to, Section 103 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 USC 9601 ET SEQ. and Chapter 3734 of
the Ohio Revised Code; and no "clean-up" of the Project Site has occurred
pursuant to any applicable federal or state environmental laws or
7
<PAGE> 10
regulations which would give rise to (i) liability on the part of any
person, entity or association to reimburse any governmental authority for
the costs of such "clean-up," or (ii) a lien or encumbrance on the Project
Site.
(m) The financial statements of the Company heretofore delivered to the
Director are true and correct, in all respects, have been prepared in
accordance with generally accepted accounting principles. No materially
adverse change has occurred in the financial condition of the Company
reflected therein since the respective dates thereof.
(n) The Company will convey, or cause to be conveyed, at the Closing, to the
Director good and marketable title to a fee simple interest in the Project
Site and Project Facilities and to such portion, if any, of the Project
Equipment heretofore owned by the Company, subject in all cases to no
lien, charge, easement, condition, restriction or encumbrance except as
created by the Lease and except for Permitted Encumbrances.
ARTICLE III
LOAN; PROVISION OF PROJECT; CONDITIONS TO DISBURSEMENT
SECTION 3.1 Loan and Repayment. On the terms and conditions of this
Agreement and the Commitment, the Director shall lend to the Company the Loan
Amount to assist in the financing of the Project. The Loan Amount and the
proceeds of the issuance of the Bonds are consideration for the Director
acquiring title to the Project Equipment and Project Facilities. The Loan
shall be evidenced by this Agreement and the Note and secured by the Security
Document and other Loan Documents, as applicable. Those instruments shall be
executed and delivered by the Company to the Director on the Closing Date,
concurrently with the execution and delivery of this Agreement and the delivery
of all other documents and the satisfaction of all other closing conditions
required by this Agreement and the Commitment. The Loan shall be disbursed on
the Disbursement Date pursuant to Section 3.8 hereof upon the satisfaction of
the conditions set forth in Section 3.6 hereof. The Loan shall be disbursed
only from and only to the extent that on the Disbursement Date funds not
heretofore committed are available to make the loan from moneys in, the
"Facilities Establishment Fund" created by the Act.
The terms of repayment of the Loan shall be as set forth in the Note and
the Company shall make all payments required to be made under the Note as and
when due.
SECTION 3.2. Provision of Project. The Company (a) has commenced the
Provision of the Project; (b) shall pay all expenses incurred in such Provision
from funds made available therefor in accordance with this Agreement or
otherwise; and (c) shall demand, sue for, levy and recover all sums of money
and debts which may be due and payable under the terms of any contract, order,
receipt, guaranty, warranty, writing or instruction in connection with the
Provision of the Project and will enforce the terms of any contract, agreement,
obligations, bond or other performance security with respect thereto. The
Company confirms its agreement in the Commitment that all wages paid to
laborers and
8
<PAGE> 11
mechanics employed on the Project shall be paid at not less than the prevailing
rates of wages for laborers and mechanics for the class of work called for by
the Project, which wages shall be determined in accordance with the
requirements of Chapter 4115, Ohio Revised Code, for determination of
prevailing wage rates; provided that if the Company undertakes, as part of the
Project, work to be performed by its regular bargaining unit employees who are
covered under a collective bargaining agreement which was in existence prior to
the date of the Commitment, the rate of pay provided under the applicable
collective bargaining agreement may be paid to such employees or if the
Department of Industrial Relations of the State determines that the Davis-Bacon
Act applies to the Project, then this Section shall not apply, but the Company
shall comply with any applicable requirements of the Davis-Bacon Act and of the
Department of Industrial Relations of the State.
SECTION 3.3. Plans and Specifications; Inspections. At his option, the
Director may designate an employee or officer of the State or may retain, at
the Company's expense, an architect, engineer, appraiser or other consultant
for the purpose of approving the Plans and Specifications, verifying costs and
performing inspections as Provision of the Project progresses. Such
inspections or approvals of Plans and Specifications or the Project Facilities
shall impose no responsibility or liability of any nature upon the Director,
the State, their agents, representatives or designees nor, without limitation,
carry any warranty or representation as to the adequacy or safety of the
structures or any of their component parts or any other physical condition or
feature pertaining to the Project Facilities. The Company shall, at the
request of the Director, make periodic reports (including, if required,
submission of updated Cost Certifications) to the Director concerning the
status of completion and the expenditure of costs in respect thereof.
The Company may revise the Plans and Specifications from time to time;
provided that no revision shall be made (a) which would change the Project
Purposes to purposes other than those permitted by the Act; (b) without
obtaining, to the extent required by law, the approval of any applicable
Governmental Authority; and (c) without the prior written approval of the
Director if such revision would change the amounts set forth in the most
recently furnished Cost Certification. In any event, all revisions to the
Plans and Specifications shall be promptly filed with the Director.
SECTION 3.4. Company Required to Pay Costs in Event Proceeds
Insufficient. In the event that the proceeds of the Loan, the Bonds issued as
described in the Lease and the CDBG Loan are not sufficient to pay all costs of
the Project, the Company will, nonetheless and irrespective of the cause of
such deficiency, complete the Project in accordance with the Plans and
Specifications and pay all costs of such completion in full from its own funds.
SECTION 3.5. Completion Date. The Completion Date shall occur not
later than July 31, 1993, and shall be evidenced to the Director by a
certificate of the Company stating (a) the Completion Date, (b) that all
licenses, permits and approvals, including a certificate of occupancy, required
by any Governmental Authority have been procured and/or obtained, (c) that the
Eligible Project is completed, that all costs of providing the Project have
been paid and the date as of which operation of the Project shall commence,
which certificate shall be accompanied by the Final Cost Certification; and (d)
if the Provision of the Project entailed construction by completed forms
AIA-G702 and AIA-G703.
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<PAGE> 12
SECTION 3.6. Conditions to Disbursement. The disbursement of the Loan
shall be made on or before the Disbursement Date, provided the Director shall
have received the following on or before the Disbursement Date:
(a) this Loan Agreement, duly executed;
(b) the duly executed Note;
(c) the duly executed Lease;
(d) the items required by Section 3.5 hereof (when
available);
(e) a Certificate of Compliance from the Department of
Industrial Relations of the State, certifying as to full
compliance with Chapter 4115, Ohio Revised Code or evidence
satisfactory to the Director of Compliance with the Davis Bacon
Act on any applicable requirements of the Department of
Industrial Relations of the State, as applicable;
(f) a paid ALTA Loan Policy--1970 (Rev. 10/17/70) of title
insurance issued by a title Company acceptable to the Director,
in the amount of $2,000,000.00 insuring the Director's interest
created by the Mortgage at the level of priority therein stated
to be a valid lien on the Project Site (including all
appurtenances thereto) free and clear of all defects and
encumbrances, except as created by the Loan Documents, with such
endorsements as the Director may require, which policy shall
contain:
(i) affirmative insurance coverage against mechanic's liens;
(ii) no survey exception not theretofore approved
by the Director and his legal counsel;
(iii) affirmative insurance coverage regarding
access, compliance with respect to restrictive covenants and
any other matters to which the Director may have objection
or require affirmative insurance coverage; and
(iv) the results of a UCC search and all liens
search in the county wherein the Project is located and the
Company has its principal place of business;
(g) a current (dated not more than sixty (60) days prior to
the Disbursement Date) survey of the Project Site, prepared by a
licensed surveyor acceptable to the Director, certified to the
Director and the title Company, pursuant to certificate of survey
acceptable to the Director, showing:
(i) the location of the perimeter of the Project Site by
courses and distances with all reference points shown or
referred to in the aforesaid title report;
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(ii) all easements (including those easements whose
existence is disclosed by physical inspection of the Project
site), rights-of-way and the location of all utility lines
servicing the Project Site;
(iii) the established building lines;
(iv) the full legal description of the Project Site
(conforming to the legal description subject of the aforesaid
title policy) and a certification as to the acreage and square
footage thereof;
(v) the highway and street right-of-way lines abutting the
Project Site and the width thereof;
(vi) encroachments upon the Project Site and the extent
thereof in feet and inches.
(vii) the Project Facilities and the relation thereof by
distances to the perimeter of the Project Site, the established
building lines and the street lines; and
(viii) if the Project Site is described as being part of a filed map,
a legend relating the survey to said map;
(h) a surveyor's Certificate for the Project;
(i) certification by the Company that (i) the Company's
representations and warranties made in the Loan Approval Documents or
Loan Documents remain true, accurate and complete as of the
Disbursement Date in all material respects, (ii) no default or event
which, by notice, the passage of time or otherwise, would constitute
a default, exists under the Loan Documents, (iii) that the value of
the Project is, or upon completion will be, equal to or greater than
the total amount of money expended in the Provision of the Project,
and (iv) the amount of the Loan will not exceed twenty-one percent
(2116) of the total Allowable Costs of the Project;
(j) a certificate of occupancy for the Project Site (when
available);
(k) evidence of the liability and property insurance required
by Section 4.2(d) of this Loan Agreement or by the Security
Agreement;
(1) evidence of zoning compliance;
(m) evidence of availability and adequacy of utilities for the
Project;
(n) copies of all building permits for the Project Site (when
available);
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(o) Cost Certification and a Final Cost Certification (when available);
(p) certification by the Company that the Plans and
Specifications, all construction contracts for the Project, and all
payment and performance bonds or other forms of assurance of
completion of the Project are available or will be available when
obtained for inspection in accordance with Section 3.3 of this Loan
Agreement;
(q) the Company's Certificate of Corporate Good Standing issued
by the Secretary of Delaware dated within thirty (30) days of the
Disbursement Date;
(r) certified copies of the resolutions of the Company
authorizing execution and delivery of all documents with respect to
the Loan, the Lender Loan and the CDBG Loan and performance
thereunder;
(s) certificate of incumbency as to the Company;
(t) copies, certified by the Company to be true, correct and
complete, of the Governing Instruments of the Company;
(u) evidence of title to all Project Equipment purchased with
proceeds of the Loan and copies of executed purchase agreements
therefore;
(v) copies of the Lender Loan Documents, and CDBG Loan
Documents, certified by the Company as being true, accurate and
complete;
(w) an opinion of the Company's counsel, which substantially
sets forth the following in form and substance acceptable to the
Director and the Director's counsel:
(i) the Company has been duly organized and is validly
existing as a corporation in good standing under the laws of
the State of Delaware, is qualified to do business in the State
of Ohio, and has all requisite power, corporate or otherwise,
to conduct the Company's business and to own, or hold under
lease, the Company's properties;
(ii) the Company has full corporate power and authority
to execute and deliver the Loan Documents;
(iii) the Company has duly authorized the taking of any
and all actions necessary to carry out and give effect to the
transactions contemplated to be performed on the Company's part
under the Loan Documents;
(iv) each of the Loan Documents has been duly authorized,
executed and delivered by the Company, and is a legal, valid
and binding obligation of the Company,
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enforceable in accordance with its terms, except as such
enforcement may be limited by the application of bankruptcy,
insolvency, reorganization, moratorium and other similar laws
or equitable principles affecting creditors' rights generally;
(v) upon the consummation of the transactions contemplated
hereby, including but not limited to the receipt of appropriate
releases and discharges from Star Bank, N.A., and Bank One,
N.A., and the contemplated subordination agreement by which the
Ashtabula County 503 corporation will subordinate its interests
under the $150,000.00 loan and the $345,000.00 CDBG loan, the
execution and delivery of each of the Loan Documents, and the
performance by the Company of the actions required of it
thereby and the consummation of the transactions contemplated
therein do not and will not conflict with or violate any
provisions of the Company's Governing Instruments or constitute
a default under or conflict with or violate any resolution of
the Board of Directors of the Company or any judgment, decree,
indenture, mortgage, deed of trust, guaranty, lease, agreement
or other instrument known to Company after due inquiry to which
the Company is a party or by which the Company or any of the
Company's property is bound, or conflict with or violate any
provision of any law, administrative regulation, k or court
order or consent decree. "DUE INQUIRY" means that counsel has
directly inquired of the officers of the Company as to whether
any matter referred to in the relevant portion of the opinion
exists or is threatened, and to the best of their knowledge,
none do, except as noted herein.
(vi) to the best knowledge after due inquiry, except as
disclosed in Exhibit A to the opinion, there is no action,
temporary restraining order, injunction, suit, proceeding,
inquiry or investigation at law or in . equity, before or by
any judicial or administrative court or agency, pending or
threatened against or affecting, or involving the properties,
securities or businesses of, the Company, and based solely on
the Officer's Certificate attached to the opinion there are no
facts known upon which to reasonably conclude there is a
reasonable basis for any such action, temporary restraining
order, injunction, suit, proceeding, inquiry or investigation,
which would, individually or in the aggregate, adversely affect
the transactions contemplated by the Loan Documents, the
delivery, validity or enforceability of any of the Loan
Documents, or the financial condition of the Company;
(vii) to the best knowledge after due inquiry, the
Company has obtained all requisite governmental consents,
permits, licenses and approvals necessary for it to operate the
Eligible Project, as defined in the Loan Agreement, and to
enter into, execute and deliver the Loan Documents, and to
perform the Company's respective obligations thereunder;
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(x) evidence satisfactory to the Director that the
Project is not located in a flood-prone area as defined by the
United States Department of Housing and Urban Development in the
Flood Disaster Protection Act of 1973, as amended, or if the
Project is located in a flood-prone area, that appropriate flood
insurance or other satisfactory measures have been taken to
protect the Project from flood damage;
(y) a list of all contractors and subcontractors when
available for the Project (names and addresses) certified as
true, accurate and complete by the Company and affidavits of all
such contractors and subcontractors as to mechanics liens and
prevailing wages;
(z) a duly executed Power of Attorney to authorize wire
transfers, if any;
(aa) a duly executed disbursement request pursuant to Section 3.8;
(bb) such other certifications, documents or opinions as
the Director may reasonably request.
SECTION 3.7. Disbursement of Loan. The Director shall disburse the
Loan by delivering funds in the Loan Amount, 'as determined by the Director in
the Director's sole discretion based on the Initial Cost Certification on July
___, 1992, for release to, or at the direction of, the Company upon written
confirmation by the Director and upon execution of the Lease.
SECTION 3.8. Payment of Costs; Indemnification. The Company shall pay
all reasonable costs incident to the Loan, including recording and title fees,
title examination and insurance fees, escrow fees, all costs and expenses
incurred by the Director and the fees and expenses of the counsel and
accountants assisting in this matter at the request of the Director or his
representative. The Company shall defend, indemnify and hold the Director and
any officials of the State harmless against any and all loss, cost, expense,
claims or actions arising out of or connected with the execution and delivery
of this Loan Agreement or any other Loan Documents and the preparation of
documents relating to the disbursement of the Loan, including all
aforementioned costs and expenses, regardless of whether or not the
disbursement of the Loan shall actually occur. Anything herein to the contrary
notwithstanding, the foregoing agreements by the Company to indemnify any
Indemnified Party shall not apply to grossly negligent acts or omissions or
acts or omissions of willful misconduct on the part of such Indemnified Party.
The provisions of this Section will survive the termination of this Loan
Agreement.
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ARTICLE IV
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION 4.1. Information Concerning Operations. At the request of the
Director and, in any event, within seventy-five (75) days after the last day of
each fiscal year of the Company beginning with the fiscal year in which the
Completion Date occurs, the Company shall furnish to the Director a report on
Project operations setting forth the total number of employees then employed on
the Project and such other employment, economic and statistical data concerning
the Project as may reasonably be requested by the Director.
SECTION 4.2. Affirmative Covenants of the Company. Throughout the term
of this Loan Agreement, the Company shall:
(a) Taxes and Assessments. Pay and discharge promptly, or
cause to be paid and discharged promptly, when due and payable,
all taxes, assessments and governmental charges or levies imposed
upon the Company, the Company's income or any of the Company's
property, or upon any part thereof, as well as all claims of any
kind (including claims for labor, materials and supplies) which,
if unpaid, might by law become a lien or charge upon the
Company's property.
Nothing in this Section shall require the Company to pay or
discharge any such tax, assessment, governmental charge or levy
so long as the validity thereof shall be contested in good faith
and by appropriate legal proceedings, provided that the Company
shall have delivered to the Director an opinion of counsel,
selected by the Company and reasonably acceptable to the Director
to the effect that nonpayment of any such items during the
pendency of such contest will not adversely affect the Director's
rights hereunder.
(b) Maintain Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect the
Company's existence and the Company's material rights and
franchises.
(c) Maintain Property. Maintain and keep the Company's
property in good repair, working order and condition, and from
time to time make all repairs, renewals and replacements which, in
the opinion of the Company, are necessary and proper so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that
nothing in this subsection (c) shall prevent the Company from
selling or otherwise disposing of any property whenever, in the
good faith judgment of the Company, such property is obsolete,
worn out, without economic value or unnecessary for the conduct of
the business of the Company.
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(d) Maintain Insurance. Keep all of its insurable property insured
against loss or damage by fire and other risks, maintain public
liability insurance against claims for personal injury, death, or
property damage suffered by others upon, in or about any premises
occupied by the Company; and maintain all such worker's compensation
or similar insurance as may be required under the laws of any state
or jurisdiction in which it may be engaged in business. All
insurance for which provision has been made in this subsection (d)
shall be maintained against such risks and in at least such amounts
as such insurance is usually carried by persons engaged in the same
or similar businesses, and all insurance herein provided for shall
be effected and maintained in force under a policy or policies
issued by insurers of recognized responsibility, except that it may
effect worker's compensation or similar insurance in respect of
operations in any state or other jurisdiction either through an
insurance fund operated by such state or other jurisdiction or by
causing to be maintained a system or systems of self-insurance which
is in accordance with applicable law.
(e) Furnish Information. Furnish to the Director:
(i) Quarterly Reports. Within forty-five (45) days
after the end of each quarterly period of each fiscal year of
the Company, the compiled quarterly financial statements of
the company, and its parent, Bailey Corporation, as at the
end of such quarterly period, together with related
statements of income and retained earnings (or accumulated
deficit) and changes in financial position for such quarterly
period, setting forth in comparative form the corresponding
figures as at the end of or for the corresponding quarter of
the previous fiscal year, all in reasonable detail, prepared
in accordance with generally accepted accounting principles
applied on a consistent basis, subject to usual year-end
audit adjustments.
(ii) Annual Reports. Within one hundred twenty (120)
days after the last day of each fiscal year of the Company and
its parent, Bailey Corporation, consolidating annual financial
statements of the Company and Bailey, which financial
statements as to the Company shall be reviewed by independent
certified public accountants and as to Bailey shall be
accompanied by an opinion of its independent certified public
accountant to the effect that such financial statements were
prepared in accordance with generally accepted accounting
principles consistently applied, and present fairly the
Company's financial position at the close of such period and
the results of its operations for such period.
(iii) Certificate; No Default. With the financial
reports required to be furnished under this Section, a
certificate of the Company's chief executive officer or chief
financial officer stating that (a) no Event of Default has
occurred and is continuing and no event or circumstance which
would constitute an Event of Default, but for
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the requirement that notice be given or time elapse or both,
has occurred and is continuing, or, if such an Event of
Default or such event or circumstance has occurred and is
continuing, a statement as to the nature thereof and the
action which the Company proposes to take with respect
thereto, and that (b) no action, suit or proceeding by it or
against it at law or in equity, or before any governmental
instrumentality or agency, is pending or threatened, which, if
adversely determined, would materially impair the right or
ability of the Company to carry on the business which is
contemplated in connection with the Project or would
materially impair the right or ability of the Company to
perform the transactions contemplated by this Agreement or the
other Loan Documents or would materially and adversely affect
its business, operations, properties, assets or condition, all
as of the date of such certificate, except as disclosed in
such certificate.
(iv) Other Information. Such other information respecting
the business, properties or the condition or operations,
financial or otherwise, of the Company as the Director may
reasonably request.
(f) Deliver Notice. Forthwith upon learning of any of the following,
deliver written notice thereof to the Director, describing the same
and the steps being taken by the Company with respect thereto:
(i) the occurrence of an Event of Default or an event or
circumstance which would constitute an Event of Default, but
for the requirement that notice be given or time elapse or
both, or
(ii) any action, suit or proceeding by it or against it at law
or in equity, or before any governmental instrumentality or
agency instituted or threatened which, if adversely
determined, would materially impair the right or ability of
the Company to carry on the business which is contemplated in
connection with the Project or would materially impair the
right or ability of the Company to perform the transactions
contemplated by the Loan Documents, or would materially and
adversely affect its business, operations, properties, assets
or condition, or the occurrence of a Reportable Event, as
defined in ERISA, under, or the institution of steps by the
Company to withdraw from or the institution of any steps to
terminate, any Plan, as defined in Section 4. 3 (b) hereof,
as to which the Company may have liability.
(g) Inspection Rights. At any reasonable time and from time to time
upon reasonable prior notice, permit the Director, or any agents or
representatives thereof, to examine and make copies of an abstract
from the records and books of account of, and visit the properties of,
the Company and discuss the general business affairs of the Company
with any of its officers; provided, however, that the Company reserves
the right to restrict access to any of the Company's facilities in
accordance with reasonably adopted procedures relating to safety.
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SECTION 4.3. Negative Covenants of the Company. Throughout the term of
this Loan Agreement, the Company shall not:
(a) Maintain Existence. Sell, transfer or otherwise dispose of all, or
substantially all, of its assets, consolidate with or merge into any
other entity, or permit one or more entities to consolidate with or
merge into it; provided, however, that the Company may, without
violating the agreement contained in this subsection (a), consolidate
with or merge into another corporation, or permit one or more other
corporations to consolidate with or merge into it, or sell, transfer
or otherwise dispose of all, or substantially all, of its assets as a
corporation and thereafter dissolve if: (i) the prior written
consent of the Director is obtained (such consent will not be
unreasonably withheld); or (ii) (A) the surviving, resulting or
transferee corporation, as the case may be, assumes in writing all of
the obligations of the Company hereunder (if such surviving,
resulting or transferee corporation is other than the Company); and
(B) the surviving, resulting or transferee corporation, as the case
may be, is a corporation duly organized and validly existing under
the laws of the State or duly qualified to do business therein, and
has a net worth of not less than that of the Company immediately
prior to such disposition, consolidation or merger, transfer or
change of form.
(b) ERISA. Voluntarily terminate any employee benefit plan
or other plan (a "Plan") maintained for employees of the Company
and covered by Title IV of ERISA, so as to result in any material
liability of the Company to the Pension Benefit Guaranty
Corporation ("PBGC"), enter into any Prohibited Transaction (as
defined in Section 4975 of the Internal Revenue Code of 1954, as
amended, and in ERISA) involving any Plan which results in any
material liability of the Company to the PBGC, cause any
occurrence of any Reportable Event (as defined in Title IV of
ERISA) which results in any material liability of it to the PBGC,
or allow or suffer to exist any other event or condition which
results in any material liability of the Company to the PBGC.
(c) Agreements. Enter into any agreement containing any
provision which would be violated or breached by the performance
of its obligations hereunder or under any instrument or document
delivered or to be delivered by it hereunder or in connection
herewith.
(d) Other Covenants.
(i) Suspension of Operation. Suspend or discontinue operation of the
Project.
(ii) Encumber Assets. Pledge, assign, sell
leaseback, hypothecate or in any manner encumber any of the
Project assets, except as otherwise expressly permitted by
this Loan Agreement.
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(iii) Mechanics' and Other Liens. The Company shall not suffer or
permit any mechanics' or other liens to be filed or exist
against the Project nor any part thereof, nor against the
Company's leasehold interest in the Project, nor against the
Project Fund or the Collateral Proceeds Account, by reason of
work, labor, services, or materials supplied or claimed to have
been supplied to, for, or in connection with, the Project or
any part thereof or to the Director of the Company or anyone
holding the Project or any part thereof through or under the
Company. Nothing in this Section shall require the Company to
pay or discharge any such lien so long as the validity thereof
shall be contested in good faith and by appropriate legal
proceedings, provided that the Company shall have delivered to
the Director an opinion of counsel, selected by the Company and
reasonably acceptable to the Director, to the effect that
nonpayment of any such lien during the pendency of such contest
will not adversely affect the Director's right, title or
interest in the Project. If any such liens shall at any time
be filed, the Company shall, within one hundred twenty (120)
days after notice of the filing thereof but subject to the
right to contest set forth in the immediately preceding
sentence, cause the same to be discharged of record by payment,
deposit, bond, order of a court of competent jurisdiction or
otherwise. If the Company shall fail to cause such lien to be
discharged, or to contest the validity or amount thereof,
within the period aforesaid, then, in addition to any other
right or remedy of the Director, the Director may, but shall
not be obligated to, discharge the same either by paying the
amount claimed to be due or by procuring the discharge of such
lien by deposit or by bonding. Any amount paid by the director
shall be reimbursed by the Company to the Director on demand,
and if not so reimbursed on demand shall be paid by the Company
with interest thereof at the Interest Rate for Advances as
provided in the Lease from the date of payment by the
Director, which amounts the Company agrees to pay.
(iv) Removal of Assets. Except as permitted by Section 4.2(c),
remove, transfer or transport any of the Company's assets from
the Project Site other than the operation of motor vehicles or
the shipment of goods in the ordinary course of business, or as
otherwise permitted by the terms hereof.
(v) Maintain Letter of Credit. Maintain at all times while the
Bonds are outstanding, a letter of credit issued by a bank or
trust company reasonably satisfactory to the Director in favor
of the Trustee in an amount of $500,000.00 (the "Letter of
Credit").
(vi) Lease Backs. directly or indirectly, with any person, whereby
the Company shall sell or transfer any property, whether now
owned or hereafter acquired, used or useful in its business, in
connection with the rental or lease or the property so sold or
transferred or of other property which the Company intends
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to sue for substantially the same purpose or purposes as the
property so sold or transferred, except for the Lease and as
may be permitted therein.
SECTION 4.4 Installation of the Company's Own Machinery and Equipment
In addition to the Project Facilities and Project Equipment, the Company may
from time to time, in its sole discretion and at its own expense, install
additional moveable personal property, machinery, equipment, furniture or
fixtures in the Project Facilities or on the Project Site. All such property
so installed by the Company shall remain the sole property of the Company in
which the Director shall have no interest, and may be modified or removed at
any time while the Company is not in default hereunder. Nothing contained in
the preceding provisions of this Section shall prevent the Company from
purchasing, after delivery of this Lease, moveable personal property,
machinery, equipment, furniture or fixtures, not constituting Project
Equipment, on conditional sale contract or lease sale contract, or subject to
vendor's lien or security agreement, as security for the unpaid portion of the
purchase price thereof; provided no such lien or security interest shall attach
to any part of the Project.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES; TERMINATION
SECTION 5.1. Events of Default. Each of the following shall be an
"Event of Default":
(a) The Company shall fail to pay any amount payable
pursuant to this Loan Agreement on the Note on the date on which
such payment is due and payable or within a ten (10) day grace
period; or
(b) The Company shall fail to observe and perform any
agreement, term or condition contained in this Agreement other
than as required pursuant to subsection (a) above, and such
failure continues for a period of thirty (30) days after notice
of such failure is given to the Company by the Director, or for
such longer period as the Director may agree to in writing;
provided, that if the failure is of such nature that it can be
corrected but not within the applicable period, such failure
shall not constitute an Event of Default so long as the Company
institutes curative action within the applicable period and
diligently pursues such action to completion; or
(c) Any representation or warranty made by the Company (or
any of its officers) herein or in any other Loan Documents, Loan
Approval Documents or Lender Loan Documents or in connection
herewith or therewith shall prove to have been incorrect in any
material respect when made, or the Company suspends or
discontinues operation of the Project for more than thirty (30)
consecutive days when caused by
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casualty, act of God, etc. and the Company is not making
reasonable offers to re-open and continue operation.
(d) The Company shall fail to pay any material indebtedness
of the Company, or any interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, by
acceleration, on demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such indebtedness; or any
other default under any agreement or instrument relating to any
such indebtedness, or any other event, shall occur and shall
continue after the applicable grace period, if any, specified in
such agreement or instrument, and as a result the holder of such
indebtedness elects to accelerate the maturity of such
indebtedness; or any such indebtedness shall be declared to be
due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated
maturity thereof; provided that, the foregoing shall not be
deemed to be an Event of Default if, at the Company's expense and
after prior notice to the Director, by appropriate proceedings
diligently prosecuted, the Company contests in good faith the
validity or amount of any of the foregoing items and during the
period of contest, and after notice to the Director, may permit
the items so contested to remain unpaid; provided further that,
if at any time the Director, in the Director's sole discretion,
shall instruct the Company to pay any such items and such items
are not paid within three (3) days after notice from the
Director, such failure to pay shall be an Event of Default
hereunder; or
(e) The Company commences a voluntary case concerning it
under titles of the United States Code entitled "Bankruptcy" as
now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code") ; or an involuntary case is commenced against
the Company under the Bankruptcy Code and relief is ordered
against the Company, or the petition is controverted but is not
dismissed within sixty (60) days after the commencement of the
case; or the Company is not generally paying its debts as such
debts become due; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially
all of the property of the Company; or the Company commences any
other proceeding under any reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution, insolvency
or liquidation or similar law of any jurisdiction whether now or
hereafter in effect; or there is commenced against the Company
any such proceeding which remains undismissed for a period of
sixty (60) days; or the Company is adjudicated insolvent or
bankrupt; or the Company fails to controvert in a timely manner
any such case under the Bankruptcy Code or any such proceeding or
any order of relief or other order approving any such case or
proceeding or in the appointment of any custodian or the like of
or for it or any substantial part of its property or suffers any
such appointment to continue undischarged or unstayed for a
period of sixty (60) days; or the Company makes a general
assignment for the benefit of creditors; or any action is taken
by the Company for the purpose of effecting any of the foregoing;
or a receiver or trustee or any other
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officer or representative of the court or of creditors, or any
court, governmental officer or agency, shall under color of legal
authority, take and hold possession of any substantial part of
the property or assets of the Company for a period in excess of
sixty (60) days; or
(f) A judgment or order for the payment of money in excess
of Fifty Thousand Dollars ($50,000.00) shall be rendered against
the Company and either (i) enforcement proceedings shall have
been commenced by any creditor upon such judgment or order or
(ii) there shall be any period of thirty (30) consecutive days
during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
or
(g) Any default under the Note, the Security Document, any
other Loan Document, the Guaranties or the Loan Documents shall
have occurred and be continuing; and is not cured within any
applicable period of grace or cure;
(h) The Company fails to meet its minimum funding
requirements under Section 301 et seq. of ERISA, with respect to
any of its Plans.
SECTION 5.2. Remedies on Default. Whenever an Event of Default shall
have happened and be subsisting, beyond any applicable period of grace or cure
any one or more of the following remedial steps may be taken:
(a) If the Loan has not been disbursed, the Director may
terminate any and all of its obligations under this Agreement and
the Commitment;
(b) The Director may declare all payments under the Note to
be immediately due and payable, whereupon the same shall become
immediately due and payable;
(c) The Director may exercise any remedies specified in the
Loan Documents or any documents ancillary thereof, including but
not limited to the Lease;
(d) The Director may have access to, inspect, examine and
make copies of the books and records accounts and financial data
of the Company; or
(e) The Director may pursue all remedies now or hereafter
existing at law or in equity to collect all amounts then due and
thereafter to become due under this Agreement, the Security
Document, the Note or any other Loan Documents, or to enforce the
performance and observance of any other obligation or agreement
of the Company under the Loan Documents.
SECTION 5.3. No Remedy Exclusive. No remedy conferred upon or reserved
to the Director by this Agreement is intended to be exclusive of any other
available remedy or remedies, but each and
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every such remedy shall be cumulative and shall be in addition to every other
remedy given under this Agreement, each other Loan Document, or now or
hereafter existing at law, in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Director to exercise any remedy reserved to
it in this Article, it shall not be necessary to give any notice, other than
such notice as may be expressly provided for herein or required by law.
SECTION 5.4. Agreement to Pay Attorneys' Fees and Expenses. If an
Event of Default shall occur and the Director should incur reasonable expenses,
including reasonable attorney's fees, in connection with the enforcement of
this Agreement, or any other Loan Document, or the collection of sums due
thereunder, the Company shall reimburse the Director for the expenses so
incurred upon demand. If any such expenses are not so reimbursed, the amount
thereof, together with interest thereon from the date of demand for payment at
the Interest Rate for Advances (as defined in the Security Document), shall
constitute indebtedness secured by the Security Document, and in any action
brought to collect such indebtedness or to foreclose or enforce the Security
Document, the Director shall be entitled to seek the recovery of such expenses
in such action.
SECTION 5.5. No Waiver. No failure by the Director to insist upon the
strict performance by the Company of any provision hereof shall constitute a
waiver of his right to strict performance and no express waiver shall be deemed
to apply to any other existing or subsequent right to remedy the failure by the
Company to observe or comply with any provision hereof.
SECTION 5.6. Reinstatement. Notwithstanding any termination of this
Loan Agreement in accordance with the provisions of Section 5.2 hereof, unless
and until the Director shall have entered into a valid and binding agreement
providing for the reletting of the Project, the Company may at any time after
such termination pay all accrued unpaid rent and any other amounts due and
payable under this Loan Agreement plus any costs to the Director and the
Trustee (including, but not limited to, fees and expenses) occasioned by the
default and fully cure all other defaults then capable of being cured. Upon
such payment and cure, this Loan Agreement shall be fully reinstated, as if it
had never been terminated, and the Company shall be restored to the use,
occupancy and possession of the Project.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Term of Loan Agreement. This Agreement shall be and
remain in full force and effect from the date of its delivery until (a) the
termination of this Agreement pursuant to Section 5.2 (a) hereof or (b) such
time as the Loan shall have been fully repaid and all other sums payable by the
Company under this Agreement, the Security Document, the Note and the other
Loan Documents shall have been paid.
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SECTION 6.2. Notices. All notices, certificates, requests or other
communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by registered or certified mail, postage
prepaid, sent prepaid via a reputable overnight courier or by telecopy and
addressed to the appropriate recipient at its Notice Address. The Company or
the Director may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates, requests or other
communications shall be sent.
SECTION 6.3. Extent of Covenants of the Director; No Personal Liability.
All covenants, obligations and agreements of the Director contained in this
Agreement shall be effective to the extent authorized and permitted by
applicable law. No such covenant, obligation or agreement shall be deemed to
be a covenant, obligation or agreement of any present or future Director in
other than his official capacity acting pursuant to the Act.
SECTION 6.4. Binding Effect. This Agreement shall inure to the benefit
of and shall be binding in accordance with its terms upon the Director, the
Company and their respective successors and assigns.
SECTION 6.5. Amendments and Supplements. This Agreement may not be
amended or supplemented except by an instrument in writing executed by the
Director and the Company.
SECTION 6.6. Execution Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be regarded as an original and
all of which shall constitute but one and the same instrument.
SECTION 6.7. Severability. If any provision of the Agreement, or any
covenant, obligation or agreement contained herein is determined by a court to
be invalid or unenforceable, such determination shall not affect any other
provision, covenant, obligation or agreement, each of which shall be construed
and enforced as if such invalid or unenforceable portion were not contained
herein. Such invalidity or unenforceability shall not affect any valid and
enforceable application thereof, and each such provision, covenant, obligation
or agreement, shall be deemed to be effective, operative, made, entered into or
taken in the manner and to the full extent permitted by law.
SECTION 6.8. Captions. The captions and headings in this Agreement
shall be solely for convenience of reference and shall in no way define, limit
or describe the scope or intent of any provisions or Sections of this
Agreement.
SECTION 6.9. Governing Law. This Agreement shall be deemed to be a
contract made under the laws of the State and for all purposes shall be
governed by and construed in accordance with the laws of the State.
IN WITNESS WHEREOF, this Agreement has been executed and delivered all as
of the date hereinbefore written.
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DIRECTOR OF DEVELOPMENT OF THE STATE OF
OHIO, ACTING ON BEHALF OF THE STATE.
By: /s/ Thomas C. Washbush
------------------------------------
Thomas C. Washbush
Chief Legal Counsel
BAILEY TRANSPORTATION PRODUCTS, INC.
By: /s/ Anthony A. Martino
------------------------------------
Title: President
---------------------------------
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<PAGE> 1
EXHIBIT 10.27
AGREEMENT OF
VENTURE INDUSTRIES CORPORATION AND AFFILIATES
TO LEASE AND SUBLEASE THE OPERATING ASSETS OF
AUTOSTYLE PLASTICS, INC.
(THE "VENTURE-AUTOSTYLE LEASE AGREEMENT")
THIS AGREEMENT (the "Venture-AutoStyle Lease Agreement") IS ENTERED INTO THIS
2nd DAY OF JUNE, 1996, by and between VENTURE INDUSTRIES CORPORATION (AND ITS
AFFILIATES AS LISTED ON THE SIGNATURE PAGE), 33662 JAMES J. POMPO, FRASER, MI
48026 (collectively, "Venture") AND AUTOSTYLE PLASTICS, INC. of 5015 52nd
STREET, S.E., GRAND RAPIDS, MI 49512 ("AutoStyle") [together, Venture and
AutoStyle are herein referred to as the "Parties"] effective
immediately;
WHEREAS, AutoStyle is in the business of manufacturing plastic products
primarily for the automotive market;
AND WHEREAS, Venture is the business of manufacturing plastic products
primarily for the automotive market;
AND WHEREAS, AutoStyle is contemplating discontinuing its manufacturing
operations and is willing (pursuant to the terms of this Agreement) to allow
Venture to make such arrangements as it is able to make in order to allow
Venture to manufacture those products that AutoStyle is presently manufacturing
(the "AutoStyle Products");
AND WHEREAS, Venture desires to enter into this agreement to allow it
to manufacture those AutoStyle Products which Venture is able to arrange to
manufacture for third party customers (the "Assumed Business");
<PAGE> 2
AND WHEREAS, it is contemplated that the Bankruptcy Court will either
approve or refuse to approve the assumption by AutoStyle of this Agreement on
or before June 6, 1996. This date as it may be extended by the Parties
(provided that the extended date, together with the time for an appeal is no
later than June 30, 1996), is referred to as the "Court Date." If the Court
approves the assumption and no appeal is filed or if an appeal has been filed,
it has been withdrawn or dismissed by the Court Date, herein referred to as
the "Court Approval".
AND WHEREAS, if the Bankruptcy Court does not give the Court Approval, it is
contemplated that Venture will (if AutoStyle is able to provide the facilities
and machinery and equipment to Venture) operate the AutoStyle Facilities (as
herein defined) until General Motors' tools can be moved to other locations
[the "Winddown Period" -- which period shall not extend beyond
August 31, 1996].
NOW THEREFORE, in consideration of the mutual covenants herein
exchanged, the parties agree the following will be implemented as of 11:59 PM
JUNE 2, 1996 (the "Effective Time") as follows:
1. Lease Period and Rate and Rental Payments. (A) As an "Advance"
towards the consideration otherwise herein provided for, Venture has upon the
signing hereof paid AutoStyle the sum of TWENTY FIVE THOUSAND DOLLARS
($25,000).
(B) (1) (a) Subject only to cancellation upon (x) at Venture's
option, there being no Court Approval, (y) at Venture's option, the failure of
any contingency or precondition herein set forth (time being of the essence),
or (z) at Venture's option, a breach by AutoStyle of the terms of this
Agreement or related agreements which AutoStyle fails to cure on or before ten
(10) days have elapsed from Venture's written notice of the same (time being of
the essence) , Venture hereby agrees to pay AutoStyle the sum of:
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(i) FIVE HUNDRED THOUSAND DOLLARS ($500,000)
monthly (the "Base Monthly Rent"), or a prorata amount for a partial month
period, for a period starting the Effective Time and ending the earlier of the
31st day of May, 1998 (inclusively, the "Overall Lease Term") and the Winddown
period, if any; less
(ii) The following [the "Rent
Reduction"]: the sum of any base
monthly rental payments made or to
be made by Venture directly to
present third party, Lessors of
AutoStyle ("Third Party Lessors")
pursuant to new leases or assumed
and assigned leases entered into
between Venture and such Third Party
Lessors (the "New Lease (s)") to
maintain the use by Venture during
the Winddown Period and/or Overall
Lease Term of real estate (other
than the Breton properties)
presently leased to AutoStyle
pursuant to existing leases [(the
"Existing Leases"]; provided
however, that the total amount of
Rent Reduction as to any
property(ies) represented by any
lease presently in existence shall
not exceed the amount of base rent
monthly for which AutoStyle would
have otherwise been obligated under
the relevant Existing Lease. Any
new lease of the Kendrick plant,
which extends beyond the Court Date,
shall not expire before July 31,
1998. If Venture does not exercise
its option to purchase the AutoStyle
property under Section 4 below,
Venture may offset against the last
payments of the AutoStyle Rent (as
hereafter defined) the Kendrick
plant lease's base rent payments for
the months of June and July 1998.
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(b) Venture shall be obligated for all taxes,
insurance and maintenance of the leased property, as more
fully provided for in the Leases described in Section 3.
below; provided that, until Venture has had an opportunity to
insure the same, venture shall promptly pay to AutoStyle the
prorata cost of AutoStyle's insurance.
(2) The difference between the Base Monthly Rent
and the Rent Reduction in any one month during the Overall
Lease Period is herein referred to as the "AutoStyle Rent".
(3) It is acknowledged that the AutoStyle Rent
may vary from period to period and in some periods a prorata
calculation may have to be made. In all cases, such
calculations shall be made using the rentals paid in advance
or in arrears, as the case may be, for the period that is
relevant.
(4) It is acknowledged that during some periods
the AutoStyle Rent may not be accurately calculable; in such
case Venture and AutoStyle shall make a reasonable calculation
of the rental amount due.
(5) In any case, whether or not the Parties
believe that they are accurately calculating the rental
amount, such rental amount shall be subject to a final
adjustment if it is later determined that the rental amount
paid is inaccurate.
(6) As to the Breton properties, Venture may
assume AutoStyle's lease or enter into a lease of them at its
option, and at its cost.
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(C) The AutoStyle Rent shall be paid:
(1) (a) In weekly sums (or pro rata amounts thereof) in
advance, due on Monday of each week starting the Effective
Time, by wire transferring the same to an account designated
by AutoStyle in writing from time to time until the last day
of the month which falls at least ten (10) days after such
time as the Bankruptcy Court approves the assumption of this
Agreement and the related agreements of the Parties.
(b) Such weekly sums shall be calculated by taking the then
monthly AutoStyle Rent and multiplying by twelve (12) and
dividing this result by three hundred and sixty-five (365) and
then taking this result and multiplying by seven (7) all of
which is subject to the adjustments set forth in (B)(3), (4),
and (5) above.
(2) As of the first day of the month beginning at
least ten (10) days after such time as the Bankruptcy Court
approves the assumption of this Agreement and the related agreements
of the Parties, the AutoStyle Rent shall be paid monthly in advance.
2. Obligations Re Existing Leases.
(A) It has been represented by AutoStyle to Venture that the
following are the Existing Leases regarding real property: (i) the main plant
in Grand Rapids (a/k/a Kendrick) -- approx. 410,000 Sq. Ft. with a base rental
payment of approx. $172, 000; (ii) the 52d Street Warehouse and Administrative
Offices -- approx. 60,000 Sq. Ft. with a base rental payment of approx.
$29,000; (iii) Elston Warehouse -- approx. 100,000 Sq. Ft. of base space with
a base rental payment of approx. $26,000 (together with additional space used
as needed on a month- to-month basis); and (iv) Hopkinsville Warehouse --
approx. 80,000 Sq. Ft. with a base rental payment of approx. $16,000. These
facilities, together with the main plant at Hopkinsville, which is owned by
AutoStyle, are referred to as the "AutoStyle Facilities."
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<PAGE> 6
However, the lease of Kendrick may have been terminated by the landlord, and
therefore, Venture's use on or before the Court Date may be as a result of
AutoStyle's "colorable title." (B) Except in the case where Venture enters into
a New Lease as to those AutoStyle Facilities not directly leased by Venture,
AutoStyle shall lease or sublease them to Venture pursuant to the terms of a
real estate lease of the form and substance of the "Real Estate Lease" executed
simultaneously with this Agreement, for a period ending at the end of the
Winddown Period if there is no Court Approval and at the Termination Date if
there is. AutoStyle shall continue to be liable for, and shall continue in
full force and effect, the Existing Leases [other than (on or after the earlier
of the Court Date or Venture's entering into of a new lease, Kendrick]);
provided, nothing herein to the contrary withstanding, AutoStyle shall have
neither a binding nor a good faith obligation to assume any Existing Lease
which cannot be renegotiated, without any additional rent or other cost, to
terminate (including optional terminations at AutoStyle's option) at the end of
the Winddown Period if there is no Court Approval and at the Termination Date
if there is (unless Venture has agreed to assume the remainder of such Lease
upon the expiration of the Overall Lease Term).
(C) From time to time, Venture shall have the right to enter into
New Lease(s) as to any of the real properties presently subject to Existing
Leases and, provided that such New Leases terminate AutoStyle's obligations
under that portion of the Existing Lease related to such property(ies) without
such Existing Lease prior to the date such New Lease is effective) AutoStyle
hereby agrees to cancel such Existing Lease in favor of the New Lease.
(D) AutoStyle shall lease to Venture as part of Venture's $500,000
monthly consideration the personal property owned by AutoStyle pursuant to the
[attached] "Personal Property Lease" executed simultaneously with this
Agreement).
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(E) AutoStyle shall use its best efforts to continue to
lease on a month-to-month basis those of the computers it currently leases that
Venture wishes to sublease. Venture shall promptly reimburse AutoStyle the
rent paid by AutoStyle.
(F) The property leased by AutoStyle from third parties
is herein referred to as the "AutoStyle Leased Property."
3. Venture's Lease of Assets Owned or Leased by AutoStyle.
(A) As set forth in Section 2 above, for the AutoStyle Rent,
Venture shall (subject to (B) below) lease the AutoStyle Facilities [all such
leases and subleases, the "Leases"], including, but not limited to, the
following:
(i) the AutoStyle Facilities; and
(ii) machinery and equipment owned by AutoStyle, located
and/or used in connection with the AutoStyle Facilities; and
(ii) subject to any legal or confidentiality restrictions with
unaffiliated third parties and legal restrictions as to AutoStyle's employees,
all intangibles of whatever nature, which shall include, but not be limited by,
the following:
(a) to the extent reasonably necessary to operate
the AutoStyle Facilities, the telephone and facsimile numbers,
job files, engineering drawings and records, trade secrets and
know-how and other intellectual property, research and development
rights, employee files, records and information, operating manuals,
assignable warranties, and other information;
(b) a license to use, royalty free (except
Venture will pay any royalty AutoStyle would have otherwise
been liable to pay to unaffiliated third parties) patents
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<PAGE> 8
and patents pending presently own ed by or licensed to or otherwise
enjoyed by AutoStyle (whether or not AutoStyle has a formal right to
use the same), except that the patent on the horizontal reaction
injection molding machine and the patent pending known as GMT Material
Technology shall be subject to the following. As to the patent and
patent pending referred to in the previous sentence, Venture shall be
restricted during the time of the lease under this Section 3, (but not
after a purchase under Section 4) to manufacturing machinery and
equipment to be used in connection with the manufacture and sale of
parts sold by AutoStyle; provided that, if Venture does not exercise
its option to purchase, it shall transfer to AutoStyle for no cost any
[replacement ] machinery and equipment manufactured by it under any
such patent at the end of the Overall Lease Term;
(c) a world-wide (except to the extent AutoStyle's rights are more
limited), royalty free (except Venture will pay any royalty AutoStyle would
have otherwise been liable to pay to unaffiliated third parties), license to
use any trade secret and know-how and/or other intellectual property presently
licensed to or otherwise enjoyed by AutoStyle (whether or not AutoStyle has a
formal right to use the same) and used in connection with the manufacture and
sale of parts sold by AutoStyle for the life of the part and any renewal,
extension, modification, or related part sale (including the sale of any part
to the same customer); provided that, if necessary, as to the license, with
CPI, AutoStyle will produce the parts at Venture's cost and profit; and
(d) all intellectual property owned by or licensed to AutoStyle,
including any properties mentioned in (a),(b) or (c) above;
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<PAGE> 9
(together, the "AutoStyle Assets") ; but the same shall not include:
(r) refunds of workers' compensation and other insurance
paid by AutoStyle;
(s) customer owned equipment, tools, and machinery and
the like;
(t) accounts receivable arising prior to the Effective
Time;
(u) cash on hand or on deposit at the Effective Time;
(v) claims or causes of action of AutoStyle;
(w) AutoStyle's SWAP grant from the State of Michigan;
(x) AutoStyle's prepaid expenses and other deposits; and
(y) AutoStyle's tax refunds.
[all such property to be leased by Venture is herein referred to as the
"AutoStyle Property" and that portion which is owned by AutoStyle is herein
referred to as the "AutoStyle Owned Property"].
(B) (1) The payment referred to in 1 (B) above shall not include
payment for (i) the 3000 ton or the 2000 ton molding presses currently leased
by AutoStyle from GE Capital (the "Presses") ; provided that either` (x)
AutoStyle arranges (before the Court Date) for GE Capital to enter into new
leases with Venture as to such presses which provide for the same terms and
conditions as AutoStyle presently enjoys as to the remaining term of the leases
and for Venture to have the right to cancel said leases at the earlier of the
end of the Overall Lease Term or the Winddown Period, if any, or (y) Venture
shall have the right to terminate this Agreement before the Court Date, and
(ii) any other personal property leased by AutoStyle.
(2) The option price set forth in 4. shall not be adjusted with
respect to any of the lease payments referred to in (B) (1) .
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<PAGE> 10
4. Option to Purchase. (A) If Venture gives notice of its
intention to do so not later than six (6) months before the end of the Overall
Lease Term, at the end of the Overall Lease Term Venture shall have the right
to purchase all of the AutoStyle Owned Property (including AutoStyle's patents
and patents) pending for a price calculated as follows:
(i) The Base Monthly Rent shall be reduced by (a) the
Rent Reduction and (b), the base monthly rent paid by
AutoStyle to third party lessors for the AutoStyle Facilities
and
(ii) such result shall be divided by the Base Monthly Rent
and
(iii) the resulting "Rental Fraction" shall be multiplied
by the sum of ONE MILLION ONE HUNDRED EIGHT THOUSAND SIXTY
DOLLARS ($1,108,060). The result of multiplying said Rental
Fraction by this remainder sum shall be the option price that
Venture shall pay at the end of the Overall Lease Term, if it
exercises its option, for the AutoStyle Owned Property.
(B) Venture shall have the right to modify the AutoStyle Property;
provided that it shall only do so if it restores the same to its original
condition, normal wear and tear excepted, or exercises its option to purchase
the same, as herein provided.
5. Purchase of Inventory, Raw Materials, Work-In-Progress, and
Supplies. (A) (1) (a) Coopers & Lybrand shall perform inventories at all of
the AutoStyle facilities on or before June 2, 1996 (the "AutoStyle Inventory").
(b) Venture shall have the right to have its
representatives at the AutoStyle Inventory. Such representatives shall havethe
rightt to observe the AutoStyle Inventory and make such inspections and do such
testing as they deem appropriate. In any case, Venture's presence at the
AutoStyle Inventory shall not be deemed to be an acceptance of the quality of
the inventory, and Venture shall have the right to raise issues as to the same
as set forth below.
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(c) The quantity accepted will be valued preliminarily pursuant to
AutoStyle's standard cost procedures, except that (i) raw materials will be
valued at AutoStyle's cost, (ii) finished goods will be valued at AutoStyle's
customers, prices and (iii) the value of work-in-process shall not exceed that
percentage of AutoStyle's price to its customer of the finished part that the
standard cost of the work-in-process bears to the standard cost of the finished
part.
(d) The value determined under (c) above shall be adjusted with
respect to quality as follows:
(i) During the week starting June 3, 1996,
Venture shall observe the production processes of the various parts in order
to derive its estimate of defective inventory at the Effective Time.
(ii) During the week starting June 10, 1996, the Parties shall
use their best efforts to agree upon the deductions to be made
with respect to defective, obsolete and slow moving inventory. If the
parties cannot agree, the question shall be submitted to an arbitrator
chosen by the Parties, which arbitrator shall be an expert in
production and quality. The Parties agree to use their best efforts to
expedite the arbitration proceedings.
B. On or after court approval, AutoStyle shall sell and Venture shall
purchase as of the Effective Time all of AutoStyle's inventory of raw
materials, work-in-process, finished goods, and supplies (the "Inventory") not
sold pursuant to the consignment herein provided for at the price determined
pursuant to A. above. Venture shall pay the purchase price in of the sold and
consigned Inventory in four equal monthly payments starting July 1, 1996. If
at the time payments are due, the Parties have not agreed upon the price of the
Inventory Venture shall periodically pay based upon the
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average of the prices claimed by the parties, with the difference over that
claimed by Venture being paid into escrow. When the price is finally
determined, the money in escrow shall be distributed based upon the price. If
any additional money is owed by Venture, it shall pay the additional money
within seven days of the determination.
(C) Upon a termination of this Agreement as a result of the Bankruptcy
Court's refusal to approve the assumption of this Agreement and related
agreements, a similar process to the above shall be conducted to put AutoStyle,
or any third party taking over the AutoStyle business, in a position to
continue that business including purchasing the Inventory Venture owns at the
AutoStyle Facilities; provided that the valuation shall be made as though
Venture were buying from AutoStyle.
(D) Until Court Approval, all purchases of raw materials and
supplies shall, at Venture's option and provided that Venture advances the
funds, be made by AutoStyle.
(E) Venture hereby grants to AutoStyle a security interest in the
Inventory it is holding on consignment and the Inventory it is purchasing from
AutoStyle to secure its obligation to pay for the Inventory.
6. Commitment to Maintain Business. (A) Assuming the condition
in Section 9.(A)(1) is satisfied, Venture shall take over the operations of
AutoStyle as of the Effective Time with no payment to AutoStyle in addition to
those set forth in this Agreement. Subject to the obligation of Venture to pay
AutoStyle for Inventory (as provided for in 5. above), the proceeds of any
sales of products sold by Venture shall be Venture's.
(B) Until the earlier of (i) the termination of this Agreement or
(ii) the Court Date, Venture shall conduct the business in the manner
previously conducted by AutoStyle or better in the ordinary course and if
reasonably possible shall continue production of parts at the various
facilities where
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they are now produced.
(C) Thereafter, until the end of the Overall Lease Term, Venture
(subject to its reasonable business judgment) will make an effort to maintain,
or cause to be maintained a total amount of manufacturing at the Hopkinsville
main plant facility and Kendrick which is similar to the total amount of
Assumed Business conducted by such facilities on the date of this Agreement;
provided however that such commitment may be reduced as a result of cut backs
in production demands for the products manufactured at such facilities which
are caused by a reduction in the needs of the facilities, third party
customers. Also, Venture shall not transfer out of its current location any
machinery and equipment owned by AutoStyle without the consent of
AutoStyle,,which will not be unreasonably withheld or delayed.
7. AutoStyle's Employees.
(A) (1) After the Effective Time and until the earlier of the
termination of this Agreement or (ii) the Court Approval, AutoStyle leases to
Venture all of AutoStyle's current employees. All employees shall remain the
employees of AutoStyle, and AutoStyle shall pay when due all salaries, wages
and other compensation and benefits owing to the employees and all other
related costs and expenses (the "Employee Costs").
(2) During such period, Venture will reimburse AutoStyle for
the necessary and legitimate Employee Costs, provided that the same shall
include no pay increases not announced before May 31, 1996 or any bonuses or
extra-ordinary vacation or other items not in the ordinary course of business.
Venture shall make the reimbursement on each Thursday for the previous week
(for example, Venture will make the reimbursement for the week of June 3-9,
1996 on June 13, 1996). As to those costs the amount of which is not then
determinable, AutoStyle shall, when known,
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bill that amount to Venture, and Venture shall promptly pay. As the
employer, AutoStyle shall have the sole discretion to recruit, hire, train,
evaluate, replace, supervise, discipline and terminate the employees provided
to Venture under this Lease, except: (i) if Venture determines that an
employee is unsatisfactory, Venture will notify AutoStyle and AutoStyle will
remove said employee from the facility or take other appropriate corrective
action as the employer of said employees; (ii) if Venture notifies AutoStyle
that an employee is unsatisfactory, and AutoStyle does not agree, Venture shall
indemnify AutoStyle for any damages suffered by AutoStyle as a result of the
termination, but such indemnification shall not include (x) any claim for any
salary, wages, bonuses, commissions, accrued vacations, or sick leave time;
profit sharing or pension benefits; and any other compensation or benefits
which accrue prior to the Effective Time, as well as (y) any actions or causes
of action, including, but not limited to, unemployment compensation claims and
worker's compensation claims and claims for race, age, and sex discrimination
and sexual harassment that any of its employees assert for actions which occur
prior to the Effective Time. Venture will not act as the employer of the
employees and does not assume any of AutoStyle's contractual commitments or
liabilities to the employees.
(B) After the Court Approval, Venture shall hire all of AutoStyle Is
then working employees. AutoStyle shall be responsible and liable for any
salary, wages, bonuses, commissions, accrued vacations, or sick-leave time;
profit sharing or pension benefits; and any other compensation or benefits
which accrue prior to the Court Date, as well as any actions or causes of
action, including, but not limited to, unemployment compensation claims and
worker's compensation claims and claims for race, age, and sex discrimination
and sexual harassment that any of its employees assert for actions which occur
prior to approval of assumption of this Agreement, except to the extent such
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obligations or claims arise from the acts of Venture, its agents or employees
under this Agreement. AutoStyle shall further be responsible for all rights of
AutoStyle's employees under the Consolidated Omnibus Budget Reconciliation Act
of 1985 (COBRA).
(C) Notwithstanding the above, AutoStyle may use any of its former
employees for administering its bankruptcy case, provided that AutoStyle shall
(1) use its best efforts not to disrupt Venture's operations and (2) reimburse
Venture for the prorata costs of the employees based upon usage.
8. Representations and Warranties.
(A) AutoStyle represents and warrants that:
(i) AutoStyle will immediately, upon filing a bankruptcy
proceeding file a motion with the Bankruptcy Court seeking
approval of the assumption of this Agreement and related
agreements and, to the extent this Agreement and related
agreements may be deemed a sale of assets, approval of such
sale.
(ii) AutoStyle will seek the protection of the Bankruptcy
Court whether or not this Agreement is executed and that
AutoStyle's seeking of such Bankruptcy Court protection has
not been caused by or induced by Venture.
(B) Venture represents and warrants that:
(i) It has full power and authority and is authorized to
enter into this transaction and to perform its obligations
hereunder.
(ii) The combined 1995 sales of Venture in the
United States were approximately $252 million.
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9. Conditions to Venture's obligations Hereunder. Except for
obligations of Venture which this Agreement provides arise before the time for
the fulfillment of the following conditions or arise because the following
conditions are not met, and in either case are not canceled by the terms of
this Agreement, Venture's obligations hereunder are conditioned upon the
following conditions being satisfied (unless otherwise extended by Venture):
(A) On or before the court filing on 6/3/96:
(1) General Motors shall have made purchase arrangements
for all existing AutoStyle - General Motors production with Venture at pricing
satisfactory to Venture and General Motors.
(2) Representation of counsel for AutoStyle and AutoStyle
that (i) the execution, delivery, and performance of this Agreement and the
related agreements have been duly and effectively authorized by AutoStyle's
board of directors and, if necessary, AutoStyle's shareholders.
(B) On or before the Court Approval, all parties claiming a
security interest in the inventory of AutoStyle have released
such security interests.
(C) On or before the Court Date:
(1) The lessors who are leasing to AutoStyle the AutoStyle
Leased Property that is real estate have agreed to reduce the terms of their
leases so that they end at the end of the Overall Lease Term or Winddown
Period, whichever is applicable.
10. Dispute Resolution. Except as otherwise provided, if the
Parties, having used a reasonable method of dispute resolution, can not agree,
the Bankruptcy Court shall have exclusive jurisdiction for a resolution of any
dispute.
16
<PAGE> 17
11. Termination. (A) Except as provided in (B) below and those
rights and obligations which this Agreement contemplates will arise upon a
termination or which relate to the period before the termination: (1) this
Agreement and all related agreements and obligations of Venture shall be
terminated as of the end of the Winddown Period if the Court Approval does not
occur, time being of the essence.
(2) Subject to 13.5, this Agreement and all related agreements and
obligations of Venture shall be immediately terminated or, at Venture's option,
extended to the end of the Winddown Period if there is a failure of any
condition precedent (whether or not set forth in Section 9) which Venture does
not waive or postpone.
(B) If terminated, the provisions of Section 5. (C) shall apply
except that AutoStyle's obligation to pay for the Inventory
if the Agreement is terminated because of Venture's breach
shall be offset by AutoStyle's damages; provided that the
Parties shall work diligently to obtain, to the extent
necessary, Bankruptcy Court approval of an interim agreement
which provides an unwinding period in the event there is no
approval of this Agreement and all related documents which
fully protects the interests of AutoStyle or Venture.
12. Cooperation. The Parties agree to enter into such other
documents and commitments as are reasonably necessary to accomplish their
mutual obligations as herein set forth.
13. Miscellaneous Provisions.
13.1 Governing Law. This Agreement shall be subject to, and
governed by, the laws of the State of Michigan, irrespective of the fact that
one or more of the parties now is, or may become, a resident of a different
state.
17
<PAGE> 18
13.2 Notices. All notices under this Agreement shall at the option
of the sender be either served personally upon the intended recipient, or shall
be mailed certified mail, postage paid, thereto at the last business address of
the intended recipient which the sender is reasonably aware or should be aware
or faxed so long as an electronic confirmation of the same is received by the
sender. Such mailing shall constitute full and adequate notice on the date of
such mailing.
13.3 Right to Alter. This Agreement may be altered, amended, or
modified only in writing signed by all of the parties.
13.4 Venture's Right to Assign. Venture shall have the right to assign
its rights (but not exculpate itself from its obligations) under this Agreement
to another entity related to Venture.
13.5 Continued Production. If (i) this Agreement is terminated
before Court Approval, and (ii) AutoStyle gives Venture access to the necessary
(without relocating Venture's operations) facilities, machinery and equipment,
then Venture agrees, pursuant to its production and related obligations to its
customers arising from its assumption of responsibilities to AutoStyle's
customers, to continue the Leases and Venture Is payment and other obligations
under this Agreement and related agreements during the Winddown Period.
13.6 HSR Act. (a) In connection with this Agreement and the
transactions contemplated in this Agreement, each of the Parties shall, to the
extent required, expeditiously prepare and file, and cooperate in the
preparation and filing of, any notifications with the Federal Trade Commission
(the "FTC") and the Antitrust Division of the United States Department of
Justice (the "Antitrust Division") pursuant to the Hart-Scott-Rodino Act of
1976, as amended (the "HSR Act") and the rules and regulations promulgated
thereunder and to comply with requests of the FTC and the Antitrust Division
for supplementing information.
18
<PAGE> 19
(b) A condition precedent to the closing of any sale of
assets by AutoStyle to Venture is that any applicable waiting period under the
HSR Act relating to the sale of those assets shall have expired.
13.7 Environmental. (a) The Parties jointly agree to commission a
Phase one environmental study of the Hopkinsville plant facility by a firm
mutually agreeable to the Parties, which study shall be undertaken as soon as
reasonably feasible. Either of the Parties may request a Phase Two
environmental study of the Hopkinsville plant facility after examining the
Phase One report, which Phase Two study shall be undertaken no later than two
weeks after Court Approval. The purpose of the studies is to obtain
information to establish the environmental condition of the property as close
to the Effective Time as is reasonably possible. Each of the Parties shall pay
one-half of the cost of the study(ies).
(b) Without cost to AutoStyle, Venture agrees alone or in
conjunction with the landlord to commission a Phase One study of the Kendrick
plant facility and may alone or in conjunction with the landlord also
commission a Phase Two study of that property. The reports of the study(ies)
will be shared with AutoStyle.
(c) Either party may at its own expense commission
additional environmental studies at any subsequent time in order to obtain
baseline information as of a particular time, and the other party agrees to
cooperate in giving access to the particular property to the extent it has
control thereof.
(d) AutoStyle shall retain all environmental liabilities
arising prior to the Effective Time. Venture shall assume all environmental
liabilities arising out of its lease or ownership or operation of or production
at the AutoStyle Facilities on or after the Effective Time and continuing
19
<PAGE> 20
until the time Venture ceases such operation and production and its lease
obligations terminate and the AutoStyle Facilities and the Hopkinsville plant
facility are returned to the control of AutoStyle pursuant to this Agreement.
13.8 Notwithstanding anything to the contrary contained
herein, after Court Approval, Venture may not terminate this Agreement and must
perform its obligations hereunder, and AutoStyle may not terminate this
Agreement without the consent of General Motors.
13.9 Venture Industries Corporation, Vemco, Inc., Venture Mold
& Engineering Corporation, Venture Leasing Company, Vemco Leasing, Inc.,
Venture Services Company , and Venture Industries Canada, Ltd. shall be jointly
and severally liable under this Agreement and the related agreements.
13.10 As of the execution of this Agreement, the parties with
security interests in the inventory have not yet agreed to release their liens.
Notwithstanding anything to the contrary in this Agreement, until the release
of liens by such parties, AutoStyle is not selling the inventory to Venture but
is consigning it to Venture, with full rights of Venture to sell the same to
third parties, with the same terms of payment as set forth above.
13.11 MascoTech, Inc. has agreed, by signing this Agreement, to fund
the payment of AutoStyle's employees' wages, vacation pay, health and dental
benefits, and other benefits for which Venture would be liable as a successor,
all to the extent accrued as of the Effective Time, to the extent assets of
AutoStyle are not sufficiently available to pay the same.
13.12 This Agreement may be executed in counterpart.
20
<PAGE> 21
IN WITNESS WHEREOF, the parties have set their hands the day and year
first above written.
VENTURE INDUSTRIES CORPORATION.
VEMCO, INC.
VENTURE INDUSTRIES CORPORATION
VENTURE MOLD & ENGINEERING CORPORATION
VENTURE LEASING COMPANY
VEMCO LEASING, INC.
VENTURE SERVICES COMPANY
VENTURE INDUSTRIES CANADA, LTD.
By: /s/ James E. Butler
--------------------
James E. Butler,
Its: Vice President
AUTOSTYLE PLASTICS, INC.
By: ____________________________________
MASCOTECH
(only for the purposes of Section 13.11)
By: ____________________________________
21
<PAGE> 1
EXHIBIT 10.27.1
ASSIGNMENT
OF
VENTURE - AUTOSTYLE LEASE AGREEMENT
This ASSIGNMENT made as of the lst day of September, 1996, by and among;
Venture Industries Corporation, Venture Mold & Engineering Corporation, Venture
Industries Canada Ltd., Vemco, Inc., Vemco Leasing, Inc., Venture Leasing
Company, Venture Service Company ("Assignor"), whose business address is 33662
James J. Pompo Dr., Fraser, Michigan,
and Venture Holdings Trust ("Assignee") whose business address is 33662 James
J. Pompo Dr., Fraser, Michigan;
WITNESS:
1. By this ASSIGNMENT, Assignor does hereby transfer and assign to
Assignee ALL OF VENTURE'S RIGHT, TITLE, AND INTEREST IN AND TO, AND
RELATED OBLIGATIONS (the "Related Obligations"), those assets acquired an a
result of that certain agreement (the "Venture AutoStyle Lease Agreement")
entered into on and amended as of the 2nd day of June, 1996, by and between
Venture and AutoStyle Plastics , Inc., whose business address was 5015 52nd
Street, S.E., Grand Rapids, Michigan 49512 ("AutoStyle") [together, such
parties being the "AutoStyle Parties" and such acquired interest being the
"AutoStyle Assets"] and any and all related obligations in those assets
acquired, including, but not limited to, the following (whether or not
Venture's rights to the same arise from the Venture AutoStyle Lease Agreement
or otherwise:
(i) The Venture - AutoStyle Lease Agreement itself;
(ii) The "Real Estate Lease" between the AutoStyle Parties
concerning certain property in Hopkinsville, Ky. and dated as of
June 2, 1996;
(iii) The "Personal Property Lease" between the AutoStyle Parties
concerning certain property owned by AutoStyle and dated as of June
2, 1996;
(iv) The Lease Agreement concerning the Mullins-Kentucky Warehouse
#2 by and between Hopkinsville Associates Limited Partnership and
AutoStyle whose last extension date was January 1, 1996;
(v) The Real Estate Lease concerning 2400 Bradshaw Road,
Hopkinsville, Kentucky, between Gary Marsh, Inc. andAutoStyle;
(vi) The Elston-Richards, Inc. Lease concerning premises located at
3739 Patterson Rd, Grand Rapids, Michigan between Elston-Richards,
Inc. and Venture;
<PAGE> 2
but in any case not including any and all purchase orders and supply agreements
entered into by and between Venture and/or its agent, Venture Grand Rapids
L.L.C. and any customer [together, such interest being assigned is herein
referred to as the "Assigned Interest"].
2. By this ASSIGNMENT, Assignee:
(a) accepts the assignment of such AutoStyle Assets, and
(b) agrees to be liable for the Related Obligations, and
(c) agrees to hold Assignor harmless from any and all costs or
liabilities which arise as a result of Assignee's
performance of or failure to perform such obligations.
3. This ASSIGNMENT shall act as delivery of said property and shall be
without any exception, limitation or reservation of any kind.
IN WITNESS WHEREOF, the parties have set their hands the day and year first
above written.
VENTURE INDUSTRIES CORPORATION
VEMCO, INC.
VENTURE INDUSTRIES CORPORATION
VENTURE MOLD & ENGINEERING CORPORATION
VENTURE LEASING COMPANY
VEMCO LEASING, INC.
VENTURE SERVICES COMPANY
VENTURE INDUSTRIES CANADA, LTD.
By: /s/ Michael G. Torakis
-------------------------
MICHAEL G. TORAKIS
their President
VENTURE HOLDINGS TRUST
By: /s/ Michael G. Torakis
-------------------------
-------------------------
Its:
-------------------
2
<PAGE> 1
EXHIBIT 10.27.2
ASSIGNMENT OF LEASE
OF
VENTURE - AUTOSTYLE LEASE AGREEMENT
This ASSIGNMENT made as of the Ist day of September, 1996, by and among:
Venture Holdings Trust ("Assignor") , whose business address in 33662 James J.
Pompo Dr.,
Fraser, Michigan,
and Venture Western Michigan Ltd. ("Assignee"), whose business address is 33662
James J. Pompo Dr., Fraser, Michigan;
WITNESS:
1. By this ASSIGNMENT, Assignor does hereby transfer and assign to Assignee,
which is a new Corporation which will be an S Corporation ALL OF VENTURE'S
RIGHT, TITLE, AND INTEREST IN AND TO, AND RELATED OBLIGATIONS (the "Related
Obligations"), those assets acquired as a result of that certain agreement (the
"Venture - AutoStyle Lease Agreement") entered into on and amended as of the
2nd day of June, 1996, by and between Venture and AutoStyle Plastics, Inc.,
whose business address was 5015 52nd Street, S.E., Grand Rapids, Michigan 49512
("AutoStyle") [together, such parties being the "AutoStyle Parties" and such
acquired interest being the "AutoStyle Assets"] and any and all related
obligations in those assets acquired, including, but not limited to, the
following (whether or not Venture's rights to the same arise from the Venture -
AutoStyle Lease Agreement or otherwise:
(i) The Venture - AutoStyle Lease Agreement itself;
(ii) The "Real Estate Lease" between the AutoStyle Parties concerning
certain property in Hopkinsville, Ky. and dated as of June 2, 1996;
(iii) The "Personal Property Lease" between the AutoStyle Parties
concerning certain property owned by AutoStyle and dated as of June 2,
1996;
(iv) The Lease Agreement concerning the Mullins-Kentucky Warehouse #2 by
and between Hopkinsville Associates Limited Partnership and AutoStyle
whose last extension date was January 1, 1996;
(v) The Real Estate Lease concerning 2400 Bradshaw Road, Hopkinsville,
Kentucky, between Gary Marsh, Inc. and AutoStyle;
(vi) The Elston-Richards, Inc. Lease concerning premises located at 3739
Patterson Rd., Grand Rapids, Michigan between Elston-Richards, Inc. and
Venture;
<PAGE> 2
but in any case not including any and all purchase orders and supply agreements
entered into by and between Venture and/or its agent, Venture Grand Rapids
L.L.C. and any customer [together, such interest being assigned is herein
referred to as the "Assigned Interest"].
2. By this ASSIGNMENT, Assignee:
(a) accepts the assignment of such AutoStyle Assets, and
(b) agrees to be liable for the Related Obligations, and
(c) agrees to hold Assignor harmless from any and all costs or
liabilities which arise as a result of Assignee's performance of or
failure to perform such obligations.
3. This ASSIGNMENT shall act as delivery of said property and shall be without
any exception, limitation or reservation of any kind.
IN WITNESS WHEREOF, the parties have set their hands the day and year first
above written.
VENTURE HOLDINGS TRUST
By: /s/ Michael G. Torakis
-----------------------
Its:
----------------------
VENTURE WESTERN MICHIGAN LTD.
By: /s/ Michael G. Torakis
------------------------
Its:
-----------------------
<PAGE> 1
EXHIBIT 10.28
GUARANTY
Fraser, Michigan July 1,1996
1. For valuable consideration, the receipt whereof by VIC Management,
L.L.C. and Venture Industries Corporation and its affiliated companies (each
individually a "Guarantor" and collectively, the "Guarantors") is hereby
acknowledged, and to induce
RIC Management Corp.
("RIC") to extend a Loan to:
Atlantic Automotive Components, L.L.C.
(the "Borrower") (the term "Loan" shall mean the $11, 883, 600 loan extended to
Borrower by RIC under the Loan Agreement between the parties dated as of July
1, 1996) the Guarantors hereby guarantee to RIC that the Borrower will promptly
perform and observe the Loan Agreement and that all sums stated to be payable
in, or which become payable under the Loan Agreement will be promptly paid in
full when due whether at maturity or earlier by reason of acceleration or
otherwise, together with interest due thereunder, or the Guarantors shall
immediately upon receipt of written demand thereof, fully pay and otherwise
discharge all such obligations of the Borrower up to the amount of this
Guaranty. This is a guaranty of payment and not of collection. In case of one
or more extensions of time of payment or renewals, in whole or in part, of the
Loan Agreement, the same will be promptly paid or performed when due, according
to each such extension or renewal, whether at maturity or earlier by reason of
acceleration or otherwise.
2. The Guarantors hereby consent that from time to time, without
notice to or further consent of the Guarantors, the performance or observance
by the Borrower of the Loan Agreement may be waived or the time of performance
thereof extended by RIC, and payment of any obligation hereby guaranteed may be
accelerated in accordance with any agreement between RIC and the Borrower, or
may be increased, extended, or renewed in whole or in part without affecting
the liability of the Guarantors hereunder.
3. Notwithstanding the aggregate sums which may be or become payable by
the Borrower to RIC at any time or from time to time the liability of the
Guarantors hereunder shall not exceed:
U.S. $3,500,000
(Three Million Five Hundred Thousand United States Dollars )
plus any and all interest on that amount after a demand for payment under this
Guaranty has been made, and all costs of collection including without limit
attorney fees related to collection on this Guaranty. It is understood that
the obligations of the Borrower to RIC may at any time and from
<PAGE> 2
time to time exceed the liability or the Guarantors hereunder without impairing
this Guaranty. Each Guarantor agrees that whenever at any time or from time to
time it shall make any payment to RIC hereunder on account of its liability
hereunder, that it will notify RIC in writing that such payment is made under
this Guaranty for such purpose. No payment pursuant to any provision hereof
shall entitle the Guarantors, by subrogation to the rights of RIC, to any
payment by the Borrower or out of the property of the Borrower, except after
payment in full of all sums (including interest, costs and expenses) which may
be or become payable by the Borrower to RIC at any time or from time to time .
4. The Guarantors reserve the right, at any time or from time to time,
on three (3) banking days prior written notice to RIC, to reduce the maximum
amount guaranteed hereunder; provided, however, that the Guarantors shall in
any event remain liable as guarantors, up to the amount of this Guaranty, for
all obligations of the Borrower outstanding at the effective date of any such
notice to RIC pursuant to this paragraph.
5. The Guarantors waive any right to require RIC to (a) proceed against
the Borrower or any property or (b) pursue any other remedy in RIC's power.
The Guarantors unconditionally and irrevocably waive each and every defense and
setoff of any nature which, under principles of guaranty or otherwise, would
operate to impair or diminish in any way the obligation of the Guarantors under
this Guaranty, and acknowledges that as of the date of this Guaranty no such
defense or setoff exists. Such waiver shall include but not be limited to a
waiver of (a) any defense based on any law, regulation, or other action
affecting the terms of repayment of the Loan and (b) any other event or action
that would result in discharge by operation of law or otherwise of the
Guarantors from the performance or observance of any obligation, covenant or
agreement contained in this Guaranty. The liabilities of the Guarantors
hereunder shall be joint and several.
6. This Guaranty and all rights, obligations and liabilities arising
hereunder shall be construed according to the laws of the State of Michigan,
United States of America. Unless the context otherwise requires, all terms
used herein which are defined in the Uniform Commercial Code shall have the
meanings therein stated.
7. Each Guarantor has full corporate power and authority to execute,
deliver and perform this Guaranty. This Guaranty has been duly authorized and
approved by all necessary and proper corporate action of each Guarantor and
constitutes a legal, valid and binding obligation of each Guarantor,
enforceable against each Guarantor in accordance with its terms.
IN WITNESS WHEREOF, this instrument has been duly executed by each Guarantor as
of the day and year above written.
<PAGE> 3
VIC MANAGEMENT, L.L.C.
By: /s/ Larry J. Winget
---------------------
Larry J. Winget
CEO Deluxe Pattern Corp.
Its Member
VENTURE INDUSTRIES CORPORATION, FOR ITSELF AND ITS AFFILIATED COMPANIES
By: /s/ Michael G. Torakis
------------------------
Michael G. Torakis
President
WITNESS:
/s/ Timothy M. Bradley
----------------------
Timothy M. Bradley
<PAGE> 1
EXHIBIT 10.29
VENTURE INDUSTRIES GROUP
PARTICIPATION AGREEMENT
BETWEEN:
Venture Industries Corp, a US company having its principal office at
33662 James J Pompo Drive, Fraser, Michigan.
("Venture US")
AND
Venture Asia Pacific Pty Ltd, an Australian company having its principal
office at Level 19, 90 St Kilda Road, Melbourne Victoria.
("Venture Australia")
WHEREAS
A Venture US possesses the managerial staff and employees who by training,
education and experience are capable of providing management,
co-ordination, commercial, marketing and procurement services.
B Venture US possesses sales and marketing staff who by training,
education, experience and location are capable of providing sales support
to customers of Venture Australia.
C Venture Australia wishes to benefit from the above expertise through
the provision of services upon the terms and conditions hereinafter
set forth.
IT IS AGREED AS FOLLOWS:
I DEFINITIONS
1.1 Definitions
The following definitions apply unless the context requires otherwise.
"Know-How" means
(a) trade secrets and other like property of Venture.
(b) technical, industrial, commercial knowledge or information of Venture US.
(c) information of Venture US in respect of improvement to manufacturing
processes.
<PAGE> 2
"Net Selling Price" means the value, expressed in dollars, [of the gross
receipts received by or on behalf of Venture Australia for the sale, lease or
other disposal of or dealing with the Products, less:
(a) the cost of transport and freight;
(b) insurance charges;
(c) purchase or sales tax or any government charges;
(d) genuine trade and other discounts; and
(e) credits allowed in respect of defective Products.]
"Products" means [the stock-in-trade of Venture Australia].
"Services" means the supply of assistance including but not limited to:
(a) visits by experts of Venture US to advise and train employees of Venture
Australia in relation to the Know-How;
(b) commercial services (sales and marketing);
(c) product design services;
(d) tool design services;
(e) administrative services;
(f) financial services;
(g) procurement services;
(h) provision of senior management; and
in particular includes the services in Schedule A.
"Term" means the term of this Agreement, commencing on 1 July 1995 and expiring
on 31 December 2004 or an extended date agreed by the parties.
2 GRANT
2.1 Subject to the Agreement Venture US shall provide services to Venture
Australia.
2.2 The services shall be provided exclusively to Venture Australia.
<PAGE> 3
3 TERM
This agreement continues in full force and effect for the Term, unless
terminated earlier by the agreement of the parties or in accordance with
this Agreement.
4 CONSIDERATION
4.1 In respect of the Services provided, Venture Australia shall pay:
(a) commissions in respect of each year at a rate of 3% of the Net Selling
Price of the Products and expenses (direct out of pocket);
(b) a service fee at the rate of $100,000 per month.
4.2 Should either party consider that a payment due under this Agreement does
not constitute a fair and reasonable market value it may, by notice, call
on the other party to renegotiate the consideration payable in clause 4.1
and the parties shall then, in good faith, renegotiate the consideration.
4.3 Consideration under clause 4.1 shall become due and payable as and when
agreed by the parties.
4.4 Payment of the consideration shall be made in [US] dollars and shall be
deposited by electronic funds transfer to a bank account in the United
States nominated by Venture US.
5 ANNUAL REPORT
Venture Australia shall deliver to Venture US on an annual basis a
statement setting out the nature, amount and Net Selling Price of
Products sold during the year by Venture Australia.
6 INTEREST ON ARREARS
Venture Australia shall pay to Venture US interest on any consideration
due and payable by Venture Australia to Venture US under this agreement
and unpaid. Such interest shall be payable at the rate of 10% per annum
and shall accrue daily.
7 TERMINATION BY VENTURE US
Venture US, in addition to any other right of Venture US in this
Agreement, may terminate the Agreement by notice to the Venture Australia
in any of the following circumstances:
(a) (UNPAID CONSIDERATION) Any consideration in excess of $100,000
due to Venture US by Venture Australia is unpaid within 60 days
from the agreed date upon which consideration becomes due and
payable.
<PAGE> 4
(b) (MATERIAL BREACH) Venture Australia commits a material breach of this
Agreement and if the breach is capable of being remedied, Venture
Australia fails to remedy the breach within [30] days after being
required to do so.
(c) (CHANGE OF CONTROL) The power, whether held directly or indirectly
and by whatever means (and whether or not enforceable at law or in
equity):
(i) to exercise or control the right to vote attached to [50%] or
more of the issued shares in Venture Australia; or
(ii) to dispose of or exercise a right of disposal in respect of
[50%] or more of the issued voting shares in Venture
Australia; or
(iii) to appoint one half or more of the number of directors to
the board of Venture Australia; or
(iv) to determine substantially the conduct of Venture Australia's
business activities,
resides with any persons other than those holding that power on the
date on which this Agreement is executed.
(d) (SUSPENSION OF PAYMENTS OR INSOLVENCY) Venture Australia:
(i) stops or suspends or threatens to stop or suspend payment of
all or a class of its debts;
(ii) is insolvent within the meaning of section 95A of the
Corporations Law;
(iii) a court is required by reason of section 459(2) to presume
that the party is insolvent;
(iv) fails to comply with a statutory demand (within the
meaning of section 459F(1) of the Corporations Law);
(v) an administrator is appointed over all or any of its assets
or undertaking any step preliminary to the appointment of an
administrator or undertaking; or
(vi) a controller within the meaning of section 9 of the
Corporations Law or similar officer is appointed to all or
any of its assets or undertaking; or
(vii) an application or order is made, proceedings are commenced,
a resolution is passed or proposed in a notice of meeting or
an application to a court or other steps taken [(other than
frivolous or vexatious applications, proceedings, notices or
steps)] for its winding up or dissolution or for it to enter
an
<PAGE> 5
arrangement, compromise or composition with or assignment
for the benefit of its creditors, a class of them or any of
them.
8 RIGHTS ON TERMINATION
RIGHTS TO CEASE ON TERMINATION OF THE AGREEMENT
Upon the termination of the Agreement under clause 7, all rights held by
Venture Australia under the Agreement will cease immediately.
9 ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties with
respect to its subject matter.
10 AMENDMENT
No amendment or variation of this Agreement is valid or binding on a
party unless made in writing executed by all parties.
11 SEVERANCE
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction is ineffective as to that jurisdiction to the extent of
the prohibition or unenforceability. That does not invalidate the
remaining provisions of this Agreement nor affect the validity or
enforceability of that provision in any other jurisdiction.
12 NO WAIVER
No failure to exercise nor any delay in exercising any right, power or
remedy by a party operates as a waiver. A single or partial exercise of
any right, power or remedy does not preclude any other or further
exercise of that or any other right, power or remedy. A waiver is not
valid or binding on the party granting that waiver unless made in
writing.
13 COSTS AND STAMP DUTY
Each party shall bear its own costs arising out of the negotiation,
preparation and execution of this Agreement. All stamp duty (including
fines, penalties and interest) which may be payable on or in connection
with this Agreement and any instrument executed under this Agreement
shall be borne by the Licensee.
14 NO PARTNERSHIP
This Agreement does not constitute either party a partner, agent or
employee of the other and no party has the authority or power to bind,
contract in the name of or create a liability
<PAGE> 6
against the other party.
15 GOVERNING LAW AND JURISDICTION
This Agreement is governed by the laws of Victoria and the Commonwealth
of Australia. Each party submits to the non-exclusive jurisdiction of
courts exercising jurisdiction in Victoria and the Commonwealth of
Australia in connection with matters concerning this Agreement.
16 COUNTERPARTS
This Agreement may be executed in any number of counterparts. All
counterparts will constitute one instrument.
EXECUTED as an Agreement
<PAGE> 7
ANNEXURE
1 PROCESSES
Manufacturing processes for use by Venture Australia including:
(a) injection molding processes; and
(b) plastic molding processes.
2 IMPROVEMENT OF PROCESSES
Information in relation to:
(a) raw materials;
(b) manufacturing improvements;
(c) process improvements;
(d) synchronous (In Kaisan) manufacturing.
3 TECHNICAL INFORMATION
3.1 Provision of technical information including:
(e) access to training personnel and facilities;
(f) library services, technical library searches; and
(g) relevant magazine reports.
3.2 Provision of expert advice by means of:
(a) visits by employees of Venture US to Venture Australia's premises;
(b) facilitation of attendance at global conferences to be organized by
Venture US;
3.3 Provision of technical advice in respect of commissioning equipment and
plant.
4 PROCUREMENT SERVICES
4.1 Venture US shall:
(a) assist in the procurement of equipment;
<PAGE> 8
(b) obtain and pass on to Venture Australia discounts obtained on the
purchase of equipment;
(c) procure specific raw materials as instructed from time to time by
Venture;
(d) provide information as to the range and availability of machinery
worldwide; and
(e) assist with the commissioning of equipment.
5 MARKETING
5.1 Provision of assistance in respect to:
(a) international market condition;
(b) marketing strategies developed for specific purposes as requested by
Venture.
6 SALES SUPPORT
Provision of sales support to Ford ensuring that Products meet design,
delivery and pricing requirements.
7 EXECUTIVE MANAGEMENT
Includes the costs associated with the provision of the following
services and functions:
- planning
- budgeting
- coordination
- employee and compensation benefits
- employee relations
- policy setting
7 ADMINISTRATION
8 FINANCE/TREASURY
9 LEGAL SUPPORT
10 SYSTEMS OPERATION AND MAINTENANCE
<PAGE> 1
EXHIBIT 10.30
LICENSE AGREEMENT AS TO PROPRIETARY TECHNOLOGIES AND PROCESSES
This "License" is entered into between:
Larry J. Winget ("Winget") for himself and his Affiliated Companies
(together, the "Licensors") and
Venture Industries Corporation, Vemco, Inc., Venture Mold &
Engineering Corporation, Venture Industries Canada Ltd., Vemco Leasing,
Inc., Venture Leasing Company, Venture Service Company, Venture
Holdings Corporation, and Venture Holdings Trust (the
"Licensees");
WHEREAS, the from time to time proprietary technologies or processes, such as
REAP, are developed by the Affiliated Companies, including Deluxe Pattern
Company (the "Intellectual Property");
AND WHEREAS it has been the past practice of the Licensors to permit the
Licensees to use the Intellectual Property on a non-exclusive, royalty free
basis pursuant to an unwritten agreement which was cancelable without notice by
the Licensors;
AND WHEREAS, third party entities providing financing to the Licensees have
requested that the license between the Licensors and the Licensees be set forth
in writing;
NOW THEREFORE, the Licensors hereby grant to the Licensees a non-
1
<PAGE> 2
exclusive, non-assignable, perpetual license (the "License") to incorporate
into the parts that the Licensees manufacture and to otherwise practice the
Intellectual Property developed by the Licensors; provided, however, that the
parties agree that the License shall be conditioned upon the following:
(A) No royalty shall accrue during the period up to and
including any period when Winget and all Excluded Persons (as
hereinafter defined) together own not less than an 80% beneficial
interest in Venture Holdings Trust or any other entity which is its
successor.
(B) A Reasonable Royalty (as hereinafter defined) shall
accrue and promptly be accounted for and paid jointly to the Licensors
(who shall then be obligated between themselves to determine a fair
division of the same) at least monthly for all periods after any time
when Winget and all Excluded Persons together own less than an 80%
beneficial interest in Venture Holdings Trust or any other entity which
is its successor.
For purposes of this License, a "Reasonable Royalty" shall be
2
<PAGE> 3
that royalty that the Fairness Committee of the Trust and a representative of
the Licensors shall jointly determine as being fair and reasonable under the
circumstances or, if they shall not agree, such royalty as shall be determined
by an arbitration, one arbitrator, determined pursuant to the rules of the
American Arbitration Association.
For purposes of this License, "Excluded Person" means Winget, his
estate or legal representative, a member of his immediate family, all lineal
descendants of Winget and all spouses of such lineal descendants (or any trust
or entity whose sole beneficiaries or equity interest holders are any one or
more of the foregoing).
For purposes of this License, Larry J. Winget's "Affiliated Companies"
shall be any and all companies which Larry J. Winget directly or indirectly
controls or is controlled by or is under direct or indirect common control
with. For purposes of this definition, the term "control" means the power to
direct the management and policies of a such company, directly or through one
or more intermediaries, whether through the ownership of voting securities, by
contract, or otherwise, provided that with respect to an ownership interest in
Venture Holdings Trust and its
3
<PAGE> 4
successors and Subsidiaries, a Beneficial Owner of 10% or more of the total
voting power normally entitled to vote in the election of directors, managers
or trustees, as applicable, shall for such purposes be deemed to constitute
control.
For purposes of this License, "Beneficial Owner" shall have the meaning
attributed to it in Rules 13d-3 and 13d-5 under the Securities and Exchange Act
of 1934 (as amended as of this date), whether or not applicable, except that a
"person" shall be deemed to have "beneficial ownership" of all shares that any
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time.
In witness whereof, we have executed this agreement as of July 9, 1997.
"Licensors":
/s/ Larry J. Winget
- ---------------------------
Larry J. Winget for himself
and his Affiliated Companies
"Licensees":
Venture Industries Corporation, Vemco, Inc., Venture Mold & Engineering
Corporation, Venture Industries Canada Ltd., Vemco Leasing, Inc., Venture
Leasing Company, Venture Service Company, Venture Holdings Corporation, and
Venture Holdings Trust
4
<PAGE> 5
By: /s/ Michael G. Torakis
-----------------------
Michael G. Torakis, their President
5
<PAGE> 1
EXHIBIT 10.31
LICENSE AGREEMENT AS TO PATENTS
This "License" is entered into between:
Larry J. Winget ("Winget") and his solely owed entity, Patent
Holdings Corporation ("Patent Holdings"), and together with
Winget, the "Licensors") and
Venture Industries Corporation, Vemco, Inc., Venture Mold &
Engineering Corporation, Venture Industries Canada Ltd., Vemco
Leasing, Inc., Venture Leasing Company, Venture Service Company,
Venture Holdings Corporation, and Venture Holdings Trust (the
"Licensee");
WHEREAS, the Licensors have conceived of and developed certain intellectual
property for which they have been issued patents under applications filed by
Winget as assignee (the "Patents");
AND WHEREAS it has been the past practice of the Licensors to permit the
Licensee to use the Patents on a non-exclusive, royalty free basis pursuant to
an unwritten agreement which was cancelable without notice by the Licensors;
AND WHEREAS, third party entities providing financing to the Licensee have
requested that the license between the Licensors and the Licensee be set forth
in writing;
1
<PAGE> 2
NOW THEREFORE, the Licensors hereby grant to the Licensee a non-exclusive,
non-assignable, perpetual license (the "License") to incorporate into the parts
that the Licensee manufactures and to otherwise practice the Patents owned by
the Licensors; provided, however, that the parties agree that the License shall
be conditioned upon the following:
(A) No royalty shall accrue during the period up to and
including any period when Winget and all Excluded Persons (as hereinafter
defined) together own not less than an 80% beneficial interest in Venture
Holdings Trust or any other entity which is its successor.
(B) A Reasonable Royalty (as hereinafter defined) shall accrue
and promptly be accounted for and paid jointly to the Licensors (who shall
then be obligated between themselves to determine a fair division of the
same) at least monthly for all periods after any time when Winget and all
Excluded Persons together own less than an 80% beneficial interest in
Venture Holdings Trust or any other entity which is its successor.
2
<PAGE> 3
For purposes of this License, a "Reasonable Royalty" shall be that
royalty that the Fairness Committee of the Trust and a representative of the
Licensors shall jointly determine as being fair and reasonable under the
circumstances or, if they shall not agree, such royalty as shall be determined
by an arbitration, one arbitrator, determined pursuant to the rules of the
American Arbitration Association.
For purposes of this License, "Excluded Person" means Winget, his
estate or legal representative, a member of his immediate family, all lineal
descendants of Winget and all spouses of such lineal descendants (or any trust
or entity whose sole beneficiaries or equity interest holders are any one or
more of the foregoing).
In witness whereof, we have executed this agreement as of July 9, 1997.
"Licensors":
/s/ Larry J. Winget
- --------------------------
Larry J. Winget
Patent Holdings Corporation
By:/s/ Larry J. Winget
-----------------------
Larry J. Winget
3
<PAGE> 4
"Licensee":
Venture Industries Corporation, Vemco, Inc., Venture Mold & Engineering
Corporation, Venture Industries Canada Ltd., Vemco Leasing, Inc., Venture
Leasing Company, Venture Service Company, Venture Holdings Corporation, and
Venture Holdings Trust
By:/s/ Michael G. Torakis
----------------------
Michael G. Torakis, their President
4
<PAGE> 1
EXHIBIT 12
VENTURE HOLDINGS TRUST
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------------------- -------------------------
1996 1995 1994 1993 1992 1997 1996
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net earnings from continuing operations $ 1,999 $ 4,142 $ 7,445 $14,188 $ 5,044 $13,299 $ 5,864
Add back:
Taxes on income 1,002 577 3,405 1,178 0 1,885 666
Fixed charges 21,899 16,704 16,049 13,204 11,860 16,179 8,524
Amortization of previously capitalized interest 285 285 285 285 285 148 148
Deduct:
Capitalized interest 108 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- -------
Earnings available for fixed charges $25,077 $21,708 $27,184 $28,855 $17,189 $31,511 $15,202
Fixed charges of Venture Holdings Trust:
Interest expense 19,248 15,032 14,345 11,158 10,390 14,208 7,409
Capitalized interest 108 0 0 0 0 0 0
Amortization of debt expense and debt discount 885 556 466 895 469 905 286
Interest portion of rent expense 1,658 1,116 1,238 1,151 1,001 1,066 829
------- ------- ------- ------- ------- ------- -------
$21,899 $16,704 $16,049 $13,204 $11,860 $16,179 $ 8,524
Ratio of earnings to fixed charges 1.15 1.30 1.69 2.19 1.45 1.95 1.78
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANTS
Set forth below are the wholly owned subsidiaries of Venture Holdings
Trust, including those subsidiaries that are co-registrants. The subsidiaries
of Venture Holdings Trust have no subsidiaries. Also listed below is the state
or other jurisdiction of incorporation of each subsidiary, and the names under
which such subsidiaries do business.
<TABLE>
<CAPTION>
Other name(s) under which
Name Jurisdiction the company does business
- ---- ----------- -------------------------
<S> <C> <C>
Vemco, Inc. Michigan Quantum Polymer Processors, Inc.
Venture Grand Blanc
Venture Hopkinsville
Venture Industries Corporation Michigan n/a
Venture Mold & Engineering Michigan Venture Industries Technical
Corporation Development Company
Venture Leasing Company Michigan n/a
Vemco Leasing, Inc. Michigan n/a
Venture Holdings Corporation Michigan Bailey
Bailey Corporation
Bailey Automotive Products
Bailey Transportation Products, Inc.
Bailey Manufacturing Corporation
Venture - Seabrook
Venture Service Company Michigan Venture Holding
Venture Advanced Engineering
Venture Advanced Engineering
Group
Venture Manufacturing Group
Venture Holdings Group
Venture Mold Group
Venture Sales Group
Venture Industries Canada Ltd. Ontario, Canada n/a
</TABLE>
<PAGE> 1
EXHIBIT 23.1
[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Venture Holdings Trust
on Form S-4 of our report dated March 27, 1997, on our audit of the
consolidated financial statements of Venture Holdings Trust as of December 31,
1996 and 1995, and for the years ended December 31, 1996, 1995 and 1994,
appearing in the prospectus, which is part of the Registration Statement, and
of our report dated June 26, 1997, on our audit of the financial statements of
Bailey Corporation and Subsidiaries for the year ended July 28, 1996,
appearing in the prospectus which is part of the Registration Statement.
We also consent to the reference to us under the headings "Selected
Consolidated Financial Data" and "Experts" in such prospectus.
Deloitte & Touche LLP
Detroit, Michigan
August 27, 1997
<PAGE> 1
EXHIBIT 23.3
The Board of Directors
Venture Holdings Trust:
We consent to the inclusion of our report dated October 25, 1995, on our audit
of the consolidated financial statements of Bailey Corporation and subsidiaries
for the years ended July 30, 1995 and July 31, 1994, included herein and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Boston, Massachusetts
August 25, 1997
<PAGE> 1
EXHIBIT 25
United States
Securities and Exchange Commission
Washington, D.C. 20549
----------------------------------------------------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
----------------------------------------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
----------------------------------------------------------------------------
THE HUNTINGTON NATIONAL BANK
(Exact name of trustee as specified in its charter)
--------------------------------------------- 31-0966785
(Jurisdiction of incorporation or organization (IRS Employer
if not a U.S. national bank) Identification Number)
41 S. High Street
Columbus, Ohio 43215
(Address of principal executive offices) (Zip Code)
Ralph K. Frazier, General Counsel
The Huntington National Bank
41 S. High Street - HC3412
Columbus, Ohio 43215
Tel: (614) 480-4647
(Name, address and telephone number of agent for service)
-------------------------------------------------------
VENTURE HOLDINGS TRUST
(Exact name of obligor as specified in its charter)
Michigan 38-6530870
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
33662 James J. Pompo Drive
Fraser, Michigan 48026 48026
(Address of principal executive offices) (Zip Code)
---------------------------------------------------
VENTURE HOLDINGS TRUST 9 1/2% SENIOR NOTES DUE 2005
Debt Securities
(Title of the indenture securities)
---------------------------------------------------
1
<PAGE> 2
GENERAL
Pursuant to General Instruction B of the Form T-1, the applicant is providing
responses to only Items 1, 2, and 16 of the Form T-1 since the obligor is not
in default.
Item 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.
Office of the Comptroller of the Currency Federal Deposit Insurance
Central District Corporation
One Financial Plaza Chicago Region
440 South LaSalle, Suite 2700 30 South Wacker Drive
Chicago, Illinois 60605 Chicago, Illinois 60505
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Federal Reserve Bank of Cleveland - District No. 4
1455 East Sixth Street
Cleveland, Ohio 44115
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
2
<PAGE> 3
16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect (see
Item 16, Exhibit 1 to Form T-1 filed in connection with Registration Statement
No. 33-80090 which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence Business
(see Item 16, Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-80090, which is incorporated by reference).
3. A copy of the authorization of the Trustee to exercise corporate trust
powers (see Item 16, Exhibit 3 to Form T-1 filed in connection with
Registration Statement No. 33-80090, which is incorporated by reference).
4. A copy of the existing By Laws of the Trustee (see Item 16, Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 33-80090, which
is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321 (b) of the Act (see Item
16, Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-80090, which is incorporated by reference).
7. A copy of the latest report of condition of the Trustee, published pursuant
to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Huntington National Bank, a national association organized and
existing under the laws of the United States, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Columbus and State of Ohio, on the 9th day of
July, 1997.
THE HUNTINGTON NATIONAL BANK
(Trustee)
By: Donna L. Shutek
-----------------------------------
Donna L. Shutek, Assistant Vice
President
(Name and Title)
3
<PAGE> 4
Item #16
Exhibit 7
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
[FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL LOGO]
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND
FOREIGN OFFICES--FFIEC 031
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1997 (970630)
--------
(RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State nonmember banks);
12 U.S.C. Section 1817 (State nonmember banks);and U.S.C. Section 161
(National banks).
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, John D. Van Fleet, SVP and HNB Controller
---------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and are
true to the best of my knowledge and belief.
\s\ John D. Van Fleet
- -----------------------------------------------------
Signature of Officer Authorized to Sign Report
July 28, 1997
- -----------------------------------------------------
Date of Signature
- --------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal
Reserve District Bank.
STATE NONMEMBER BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return
address envelope, return the original only to the FDIC, c/o Quality Data
Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
- --------------------------------------------------------------------------------
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
- --------------------------------------------------------------------------------
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in
some cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it
has been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
[SIG]
- -----------------------------------------------------
Director (Trustee)
[SIG]
- -----------------------------------------------------
Director (Trustee)
[SIG]
- -----------------------------------------------------
Director (Trustee)
[SIG]
- -------------------------------------------------------------------------------
NATIONAL BANKS: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
- -------------------------------------------------------------------------------
FDIC Certificate Number \ \ \ \ \ \
------------
(RCRI 9050)
Banks should affix the address label in this space.
---------------------------------------------------
Legal Title of Bank (TEXT 9010)
---------------------------------------------------
City (TEXT 9130)
---------------------------------------------------
State Abbrev. (TEXT 9200) ZIP Code (TEXT 9220)
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE> 5
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RI-1
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
CONSOLIDATED REPORT OF INCOME
FOR THE PERIOD JANUARY 1, 1997 - JUNE 30, 1997
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
SCHEDULE RI--INCOME STATEMENT
<TABLE>
<S><C>
------
I480 <-
---------- ------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------------------- -----------------
1. Interest income: /////////////////
a. Interest and fee income on loans: /////////////////
(1) In domestic offices: /////////////////
(a) Loans secured by real estate ........................................................ 4011 225,778 1.a.(1)(a)
(b) Loans to depository institutions .................................................... 4019 67 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers.................. 4024 3,616 1.a.(1)(c)
(d) Commercial and industrial loans ..................................................... 4012 166,325 1.a.(1)(d)
(e) Acceptances of other banks .......................................................... 4026 0 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expenditures: /////////////////
(1) Credit cards and related plans .................................................. 4054 32,528 1.a.(1)(f)(1)
(2) Other ........................................................................... 4055 190,840 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions .............................. 4056 0 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political /////////////////
subdivisions in the U.S.): /////////////////
(1) Taxable obligations ............................................................. 4503 0 1.a.(1)(h)(1)
(2) Tax-exempt obligations .......................................................... 4504 1,909 1.a.(1)(h)(2)
(i) All other loans in domestic offices ................................................. 4058 64 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ........................... 4059 0 1.a.(2)
b. Income from lease financing receivables: /////////////////
(1) Taxable leases .......................................................................... 4505 37,052 1.b.(1)
(2) Tax-exempt leases ....................................................................... 4307 0 1.b.(2)
c. Interest income on balances due from depository institutions:(1) /////////////////
(1) In domestic offices ..................................................................... 4105 14 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ........................... 4106 0 1.c.(2)
d. Interest and dividend income on securities: /////////////////
(1) U.S. Treasury securities and U.S. Government agency obligations ......................... 4027 139,667 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: /////////////////
(a) Taxable securities .................................................................. 4506 0 1.d.(2)(a)
(b) Tax-exempt securities ............................................................... 4507 1,481 1.d.(2)(b)
(3) Other domestic debt securities .......................................................... 3657 14,676 1.d.(3)
(4) Foreign debt securities ................................................................. 3658 158 1.d.(4)
(5) Equity securities (including investments in mutual funds) ............................... 3659 402 1.d.(5)
e. Interest income from trading assets ......................................................... 4069 0 1.e.
</TABLE>
- ---------------
(1) Includes interest income on time certificates of deposit not held for
trading.
3
<PAGE> 6
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFEIC 031
Address: P.O. BOX 1558 Page RI-2
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
Schedule RI--Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands Year-to-date
- ----------------------------------------------------------------------------------------------------------
<S><C> <C>
1. Interest income (continued) RIAD Bil Mil Thou
f. Interest income on federal funds sold and securities purchased under //////////////////
agreements to resell...................................................... 4020 1,063 1.f.
g. Total interest income (sum of items 1.a through 1.f)...................... 4107 815,640 1.g.
2. Interest expense: //////////////////
a. Interest on deposits: //////////////////
(1) Interest on deposits in domestic offices: //////////////////
(a) Transaction accounts (NOW accounts, ATS accounts, and //////////////////
telephone and preauthorized transfer accounts)................... 4508 12,393 2.a.(1) (a)
(b) Nontransaction accounts: //////////////////
(1) Money market deposit accounts (MMDAs)..................... 4509 17,192 2.a.(1) (b) (1)
(2) Other savings deposits.................................... 4511 44,793 2.a.(1) (b) (2)
(3) Time deposits of $100,000 or more......................... A517 32,246 2.a.(1) (b) (3)
(4) Time deposits of less than $100,000....................... A518 126,922 2.a.(1) (b) (4)
(2) Interest on deposits in foreign offices, Edge and Agreement //////////////////
subsidiaries, and IBFs............................................... 4172 15,700 2.a.(2)
b. Expense of federal funds purchased and securities sold under //////////////////
agreements to repurchase.................................................. 4180 44,340 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading //////////////////
liabilities, and other borrowed money..................................... 4185 80,364 2.c.
d. Not applicable //////////////////
e. Interest on subordinated notes and debentures............................. 4200 14,602 2.e.
f. Total interest expense (sum of items 2.a through 2.e)..................... 4073 388,552 2.f.
3. Net interest income (item 1.g minus 2.f)...................................... ////////////////// RIAD 4074 427,088 3.
4. Provisions: //////////////////
a. Provision for loan and lease losses....................................... ////////////////// RIAD 4230 43,195 4.a.
b. Provision for allocated transfer risk..................................... ////////////////// RIAD 4243 0 4.b.
5. Noninterest income: //////////////////
a. Income from fiduciary activities.......................................... 4070 19,383 5.a.
b. Service charges on deposit accounts in domestic offices................... 4080 48,478 5.b.
c. Trading revenue (must equal Schedule RI, sum of Memorandum //////////////////
items 8.a through 8.d).................................................... A220 921 5.c.
d.-e. Not applicable //////////////////
f. Other noninterest income: //////////////////
(1) Other fee income..................................................... 5407 42,095 5.f.(1)
(2) All other noninterest income*........................................ 5408 14,441 5.f.(2)
g. Total noninterest income (sum of items 5.a through 5.f)................... ////////////////// RIAD 4079 125,318 5.g.
6. a. Realized gains (losses) on held-to-maturity securities.................... ////////////////// RIAD 3521 0 6.a.
b. Realized gains (losses) on available-for-sale securities.................. ////////////////// RIAD 3196 5,532 6.b.
7. Noninterest expense: //////////////////
a. Salaries and employee benefits............................................ 4135 129,784 7.a.
b. Expenses of premises and fixed assets (net of rental income) //////////////////
(excluding salaries and employee benefits and mortgage interest).......... 4217 34,413 7.b.
c. Other noninterest expense*................................................ 4092 137,600 7.c.
d. Total noninterest expense (sum of items 7.a through 7.c).................. ////////////////// RIAD 4093 301,797 7.d.
8. Income (loss) before income taxes and extraordinary items and other //////////////////
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d) ////////////////// RIAD 4301 212,946 8.
9. Applicable income taxes (on item 8)........................................... ////////////////// RIAD 4302 75,753 9.
10. Income (loss) before extraordinary items and other adjustments (item 8 //////////////////
minus 9)...................................................................... ////////////////// RIAD 4300 137,193 10.
11. Extraordinary items and other adjustments, net of income taxes*............... ////////////////// RIAD 4320 0 11.
12. Net income (loss) (sum of items 10 and 11)................................... ////////////////// RIAD 4340 137,193 12.
</TABLE>
- -----------------------------------------------
*Describe on Schedule RI-E--Explanations.
4
<PAGE> 7
<TABLE>
<S> <C> <C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RI-3
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RI -- CONTINUED
<TABLE>
<CAPTION>
-------
I481 <-
------------
MEMORANDA Year-to-date
------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and /////////////////
leases acquired after August 7, 1986, that is not deductible for
federal income tax purposes ........................................ 4513 0 M.1.
2. Income from the sale and servicing of mutual funds and annuities //////////////////
in domestic offices (included in Schedule RI, item 8) .............. 8431 6,219 M.2.
3. -4. Not applicable //////////////////
5. Number of full-time equivalent employees at end of current period //// Number
(round to nearest whole number) .................................... 4150 6,916 M.5.
6. Not applicable //////////////////
7. If the reporting bank has restated its balance sheet as a result of
applying push down accounting this calendar year, report the date RIAD CC YY MM DD
of the bank's acquisition(1) ....................................... 9106 00 00 00 00 M.7.
8. Trading revenue (from cash instruments and off-balance sheet
derivative instruments) //////////////////
(sum of Memorandum items 8.a through 8.d must equal Schedule RI,
item 5.c): //// Bil Mil Thou
a. Interest rate exposures ......................................... 8757 392 M.8.a
b. Foreign exchange exposures ...................................... 8758 529 M.8.b.
c. Equity security and index exposures ............................. 8759 0 M.8.c.
d. Commodity and other exposures ................................... 8760 0 M.8.d.
9. Impact on income of off-balance sheet derivatives held
for pruposes other than trading: //////////////////
a. Net increase (decrease) to interest income ..................... 8761 321 M.9.a.
b. Net (increase) decrease to interest expense .................... 8762 (1,440) M.9.b.
c. Other (noninterest) allocations ................................ 8763 462 M.9.c.
10. Credit losses on off-balance sheet derivatives (see instructions).. A251 0 M.10.
11. DOES THE REPORTING BANK HAVE A SUBCHAPTER S ELECTION IN EFFECT FOR YES NO
FEDERAL INCOME TAX PURPOSES FOR THE CURRENT TAX YEAR? ............. A530 /// X M.11.
12. DEFERRED PORTION OF TOTAL APPLICABLE INCOME TAXES INCLUDED IN
SCHEDULE RI, ITEMS 9 AND 11 (TO BE REPORTED WITH THE //// BIL MIL THOU
DECEMBER REPORT OF INCOME) ........................................ 4772 N/A M.12.
- ------------------------
</TABLE>
(1) For example, a bank acquired on June 1, 1997, would report 19970601.
5
<PAGE> 8
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-4
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RI-A--CHANGES IN EQUITY CAPITAL
Indicate decreases and losses in parentheses.
<TABLE>
<S><C>
------
I483 <-
---------- ------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------------------- -----------------
1. Total equity capital originally reported in the December 31, 1996, Reports of Condition /////////////////
and Income .................................................................................... 3215 834,472 1.
2. Equity capital adjustments from amended Reports of Income, net* ............................... 3216 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) .......................... 3217 834,472 3.
4. Net income (loss) (must equal Schedule RI, item 12) ........................................... 4340 137,193 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net ............................ 4346 0 5.
6. Changes incident to business combinations, net ................................................ 4356 737,750 6.
7. LESS: Cash dividends declared on preferred stock .............................................. 4470 0 7.
8. LESS: Cash dividends declared on common stock ................................................. 4460 105,222 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions for /////////////////
this schedule) ................................................................................ 4411 (1,794) 9.
10. Corrections of material accounting errors from prior years* (see instructions for this /////////////////
schedule) ..................................................................................... 4412 0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities .............. 8433 (19,366) 11.
12. Foreign currency translation adjustments ...................................................... 4414 0 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ...... 4415 0 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal /////////////////
Schedule RC, item 28) ......................................................................... 3210 1,583,033 14.
-----------------
</TABLE>
- --------------
*Describe on Schedule RI-E--Explanations.
SCHEDULE RI-B--CHARGE-OFFS AND RECOVERIES AND CHANGES
IN ALLOWANCE FOR LOAN AND LEASE LOSSES
PART I. CHARGE-OFFS AND RECOVERIES ON LOANS AND LEASES
PART I EXCLUDES CHARGE-OFFS AND RECOVERIES THROUGH
THE ALLOCATED TRANSFER RISK RESERVE.
<TABLE>
<S><C>
------
I486 <-
----------------------------- ------
(Column A) (Column B)
Charge-offs Recoveries
----------------- -----------------
Calendar year-to-date
------------------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou
- ------------------------------------------------------------------------------- ----------------- -----------------
1. Loans secured by real estate: ///////////////// /////////////////
a. To U.S. addressees (domicile) ........................................... 4651 1,774 4661 237 1.a.
b. To non-U.S. addressees (domicile) ....................................... 4652 0 4662 0 1.b.
2. Loans to depository institutions and acceptances of other banks: ///////////////// /////////////////
a. To U.S. banks and other U.S. depository institutions .................... 4653 0 4663 0 2.a.
b. To foreign banks ........................................................ 4654 0 4664 0 2.b.
3. Loans to finance agricultural production and other loans to farmers ........ 4655 0 4665 0 3.
4. Commercial and industrial loans: ///////////////// /////////////////
a. To U.S. addressees (domicile) ........................................... 4645 11,445 4617 1,605 4.a.
b. To non-U.S. addressees (domicile) ....................................... 4646 0 4618 0 4.b.
5. Loans to individuals for household, family, and other personal ///////////////// /////////////////
expenditures: ///////////////// /////////////////
a. Credit cards and related plans .......................................... 4656 10,916 4666 1,570 5.a.
b. Other (includes single payment, installment, and all student loans) ..... 4657 19,792 4667 5,799 5.b.
6. Loans to foreign governments and official institutions ..................... 4643 0 4627 0 6.
7. All other loans ............................................................ 4644 0 4628 0 7.
8. Lease financing receivables: ///////////////// /////////////////
a. Of U.S. addressees (domicile) ........................................... 4658 2,321 4668 311 8.a.
b. Of non-U.S. addressees (domicile) ....................................... 4659 0 4669 0 8.b.
9. Total (sum of items 1 through 8) ........................................... 4635 46,248 4605 9,522 9.
------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RI-5
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RI-B--CONTINUED
PART I. CONTINUED
<TABLE>
<CAPTION>
------------------------------------
(Column A) (Column B)
Charge-offs Recoveries
------------------------------------
Memoranda Calendar year-to-date
------------------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou
- --------------------------------------------------------------------------------- ----------------- -----------------
<S><C>
1-3. Not applicable ///////////////// /////////////////
4. Loans to finance commercial real estate, construction, and land ///////////////// /////////////////
development activities (NOT SECURED BY REAL ESTATE) included in ///////////////// /////////////////
Schedule RI-B, part I, items 4 and 7, above.................................. 5409 0 5410 0 M.4.
5. Loans secured by real estate in domestic offices (included in ///////////////// /////////////////
Schedule RI-B, part I, item 1, above): ///////////////// /////////////////
a. Construction and land development........................................ 3582 150 3583 56 M.5.a.
b. Secured by farmland...................................................... 3584 0 3585 0 M.5.b.
c. Secured by 1-4 family residential properties: ///////////////// /////////////////
(1) Revolving, open-end loans secured by 1-4 family residential ///////////////// /////////////////
properties and extended under lines of credit....................... 5411 597 5412 74 M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties........ 5413 850 5414 57 M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties................ 3588 0 3589 0 M.5.d.
e. Secured by nonfarm nonresidential properties............................. 3590 166 3591 50 M.5.e.
------------------------------------
</TABLE>
PART II. CHANGES IN ALLOWANCE FOR LOAN AND LEASE LOSSES
<TABLE>
<CAPTION>
-----------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------- -----------------
<S><C>
1. Balance originally reported in the December 31, 1996, Reports of Condition and Income............ 3124 144,088 1.
2. Recoveries (must equal part I, item 9, column B above)........................................... 4605 9,522 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above)................................... 4635 46,248 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a)........................... 4230 43,195 4.
5. Adjustments* (see instructions for this schedule)............................................... 4815 58,342 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, /////////////////
item 4.b)........................................................................................ 3123 208,899 6.
-----------------
</TABLE>
- ----------------------
*Describe on Schedule RI-E--Explanations.
7
<PAGE> 10
<TABLE>
<S> <C> <C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RI-6
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RI-D--INCOME FROM INTERNATIONAL OPERATIONS
FOR ALL BANKS WITH FOREIGN OFFICES, EDGE OR AGREEMENT SUBSIDIARIES, OR IBFS
WHERE INTERNATIONAL OPERATIONS ACCOUNT FOR MORE THAN 10 PERCENT OF TOTAL
REVENUES, TOTAL ASSETS, OR NET INCOME.
PART I. ESTIMATED INCOME FROM INTERNATIONAL OPERATIONS
<TABLE>
<CAPTION> -----
I492 <-
------------
Year-to-date
------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, /////////////////
and IBFs: /////////////////
a. Interest income booked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4837 N/A 1.a.
b. Interest expense booked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4838 N/A 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and /////////////////
IBFs (item 1.a minus 1.b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4839 N/A 1.c.
2. Adjustments for booking location of international operations: /////////////////
a. Net interest income attributable to international operations booked at domestic offices . . . . . 4840 N/A 2.a.
b. Net interest income attributable to domestic business booked at foreign offices . . . . . . . . . 4841 N/A 2.b.
c. Net booking location adjustment (item 2.a minus 2.b) . . . . . . . . . . . . . . . . . . . . . . . 4842 N/A 2.c.
3. Noninterest income and expense attributable to international operations: /////////////////
a. Noninterest income attributable to international operations . . . . . . . . . . . . . . . . . . . 4097 N/A 3.a.
b. Provision for loan and lease losses attributable to international operations . . . . . . . . . . . 4235 N/A 3.b.
c. Other noninterest expense attributable to international operations . . . . . . . . . . . . . . . . 4239 N/A 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a minus /////////////////
3.b and 3.c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4843 N/A 3.d.
4. Estimated pretax income attributable to international operations before capital allocation /////////////////
adjustment (sum of items 1.c, 2.c, and 3.d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4844 N/A 4.
5. Adjustment to pretax income for internal allocations to international operations to reflect /////////////////
the effects of equity capital on overall bank funding costs . . . . . . . . . . . . . . . . . . . . . 4845 N/A 5.
6. Estimated pretax income attributable to international operations after capital allocation /////////////////
adjustment (sum of items 4 and 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4846 N/A 6.
7. Income taxes attributable to income from international operations as estimated in item 6 . . . . . . 4797 N/A 7.
8. Estimated net income attributable to international operations (item 6 minus 7) . . . . . . . . . . . 4341 N/A 8.
-----------------
</TABLE>
Memoranda
<TABLE>
<CAPTION>
------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C>
1. Intracompany interest income included in item 1.a above . . . . . . . . . . . . . . . . . . . . . . . 4847 N/A M.1.
2. Intracompany interest expense included in item 1.b above . . . . . . . . . . . . . . . . . . . . . . 4848 N/A M.2.
-----------------
</TABLE>
PART II. SUPPLEMENTARY DETAILS ON INCOME FROM INTERNATIONAL OPERATIONS REQUIRED
BY THE DEPARTMENTS OF COMMERCE AND TREASURY FOR PURPOSES OF THE U.S.
INTERNATIONAL ACCOUNTS AND THE U.S. NATIONAL INCOME AND PRODUCT ACCOUNTS
<TABLE>
<CAPTION>
------------
Year-to-date
------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C>
1. Interest income booked at IBFs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4849 N/A 1.
2. Interest expense booked at IBFs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4850 N/A 2.
3. Noninterest income attributable to international operations booked at domestic offices /////////////////
(excluding IBFs): /////////////////
a. Gains (losses) and extraordinary items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5491 N/A 3.a.
b. Fees and other noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5492 N/A 3.b.
4. Provision for loan and lease losses attributable to international operations booked at domestic /////////////////
offices (excluding IBFs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4852 N/A 4.
5. Other noninterest expense attributable to international operations booked at domestic offices /////////////////
(excluding IBFs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4853 N/A 5.
-----------------
</TABLE>
8
<PAGE> 11
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RI-7
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RI-E--EXPLANATIONS
SCHEDULE RI-E IS TO BE COMPLETED EACH QUARTER ON A CALENDAR YEAR-TO-DATE BASIS.
Detail all adjustments in Schedule RI-A and RI-B, all extraordinary items and
other adjustments in Schedule RI, and all significant items of other
noninterest income and other noninterest expense in Schedule RI.
(See instructions for details.)
<TABLE>
<S><C>
------
I4895 <-
-----------------
Year-to-date
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------------------- -----------------
1. All other noninterest income (from Schedule RI, item 5.f. (2)) /////////////////
Report amounts that exceed 10% of Schedule RI, item 5.f. (2): /////////////////
a. Net gains (losses) on other real estate owned................................................ 5415 0 1.a.
b. Net gains (losses) on sales of loans......................................................... 5416 0 1.b.
c. Net gains (losses) on sales of premises and fixed assets..................................... 5417 0 1.c.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, /////////////////
item 5.f. (2): /////////////////
d. TEXT 4461 MISCELLANEOUS MORTGAGE BANKING INCOME 4461 7,859 1.d.
e. TEXT 4462 GAIN ON SALES OF OTHER ASSETS 4462 2,122 1.e.
f. TEXT 4463 CHECK PROCESSING FEE INCOME 4463 2,011 1.f.
2. Other noninterest expense (from Schedule RI, item 7.c): /////////////////
a. Amortization expense of intangible assets.................................................... 4531 8,316 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c: /////////////////
b. Net (gains) losses on other real estate owned................................................ 5418 0 2.b.
c. Net (gains) losses on sales of loans......................................................... 5419 0 2.c.
d. Net (gains) losses on sales of premises and fixed assets..................................... 5420 0 2.d.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, /////////////////
item 7.c: /////////////////
e. TEXT 4464 INTERCOMPANY OPERATION FEES 4464 38,426 2.e.
f. TEXT 4467 4467 2.f.
g. TEXT 4468 4468 2.g.
3. Extraordinary items and other adjustments and applicable income tax effect /////////////////
(from Schedule RI, item 11) (itemize and describe all extraordinary items and /////////////////
other adjustments): /////////////////
a. (1) TEXT 4469 4469 3.a.(1)
(2) Applicable income tax effect RIAD 4486 ///////////////// 3.a.(2)
b. (1) TEXT 4487 4487 3.b.(1)
(2) Applicable income tax effect RIAD 4488 ///////////////// 3.b.(2)
c. (1) TEXT 4489 4489 3.c.(1)
(2) Applicable income tax effect RIAD 4491 ///////////////// 3.c.(2)
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, item 2) /////////////////
(itemize and describe all adjustments): /////////////////
a. TEXT 4492 4492 4.a.
b. TEXT 4493 4493 4.b.
5. Cumulative effect of changes in accounting principles from prior years /////////////////
(from Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): /////////////////
a. TEXT A546 EFFECT OF CHANGE TO GAAP FROM PREVIOUS NON-GAAP INSTRUCTIONS A546 (1,794) 5.a.
b. TEXT 4495 4495 5.b.
6. Corrections of material accounting errors from prior years (from Schedule RI-A, item 10) /////////////////
(itemize and describe all corrections): /////////////////
a. TEXT 4496 4496 6.a.
b. TEXT 4497 4497 6.b.
-----------------
</TABLE>
9
<PAGE> 12
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RI-8
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RI-E--CONTINUED
<TABLE>
<S><C>
------------
Year-to-date
---------- ------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------------------- -----------------
7. Other transactions with parent holding company (from Schedule RI-A, item 13) /////////////////
(itemize and describe all such transactions): /////////////////
a. TEXT 4498 4498 7.a.
b. TEXT 4499 4499 7.b.
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, item 5) /////////////////
(itemize and describe all adjustments): /////////////////
a. TEXT 4521 INCREASE INCIDENT TO BUSINESS COMBINATIONS 4521 58,342 8.a.
b. TEXT 4522 4522 8.b.
-----------------
9. Other explanations (the space below is provided for the bank to briefly describe, at its I498 I499 <-
option, any other significant items affecting the Report of Income): -----------------
No comment / / (RIAD 4769)
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
10
<PAGE> 13
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-1
City, State Zip: COLUMBUS, OH 43216
DIC Certificate No.: 06560
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION> ------------------
C400 <-
------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C>
ASSETS /////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): /////////////////
a. Noninterest-bearing balances and currency and coin(1). . . . . . . . . . . . . . . . . . . . . . . 0081 942,243 1.a.
b. Interest-bearing balances(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0071 350 1.b.
2. Securities: /////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) . . . . . . . . . . . . . . . . . . . . 1754 54,972 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) . . . . . . . . . . . . . . . . . . . 1773 4,388,610 2.b.
3. Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . 1350 33,204 3.
4. Loans and lease financing receivables: /////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C) . . . . . . . RCFD 2122 14,842,799 ///////////////// 4.a.
b. LESS: Allowance for loan and lease losses . . . . . . . . . . . . . . . . . RCFD 3123 . . 208,899 ///////////////// 4.b.
c. LESS: Allocated transfer risk reserve . . . . . . . . . . . . . . . . . . . RCFD 3128 . . . . . 0 ///////////////// 4.c.
d. Loans and leases, net of unearned income, /////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c). . . . . . . . . . . . . . . . . . . . . . . . 2125 14,633,900 4.d.
5. Trading assets (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3545 2,481 5.
6. Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . 2145 298,208 6.
7. Other real estate owned (from Schedule RC-M). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2150 16,238 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M). . . . . . . 2130 11,034 8.
9. Customers' liability to this bank on acceptances outstanding. . . . . . . . . . . . . . . . . . . . . 2155 42,573 9.
10. Intangible assets (from Schedule RC-M). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2143 283,651 10.
11. Other assets (from Schedule RC-F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2160 333,261 11.
12. Total assets (sum of items 1 through 11). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2170 21,040,725 12.
-----------------
</TABLE>
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
11
<PAGE> 14
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-2
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC -- CONTINUED
<TABLE>
<S><C>
------------------------
Dollar Amounts in Thousands /////////// Bil Mil Thou
- --------------------------------------------------------------------------------------------------- ------------------------
LIABILITIES //////////////////////
13. Deposits: //////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, //////////////////////
part I)................................................................................... RCON 2200 14,187,019 13.a.
(1) Noninterest-bearing(1).....................................RCON 6631 2,461,257 ////////////////////// 13.a.(1)
(2) Interest-bearing...........................................RCON 6636 11,725,762 ////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, //////////////////////
part II).................................................................................. RCFN 2200 449,512 13.b.
(1) Noninterest-bearing........................................RCFN 6631 0 ////////////////////// 13.b.(1)
(2) Interest-bearing...........................................RCFN 6636 449,512 ////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase................ RCFD 2800 1,436,086 14.
15. a. Demand notes issued to the U.S. Treasury.................................................... RCON 2840 25,000 15.a.
b. Trading liabilities (from Schedule RC-D).................................................... RCFD 3548 0 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under //////////////////////
capitalized leases): //////////////////////
a. With a remaining maturity of one year or less............................................... RCFD 2332 1,850,208 16.a.
b. WITH A REMAINING MATURITY OF MORE THAN ONE YEAR THROUGH THREE YEARS......................... RCFD A547 722,906 16.b.
c. WITH A REMAINING MATURITY OF MORE THAN THREE YEARS.......................................... RCFD A548 0 16.c.
17. Not applicable //////////////////////
18. Bank's liability on acceptances executed and outstanding....................................... RCFD 2920 42,573 18.
19. Subordinated notes and debentures(2)........................................................... RCFD 3200 449,424 19.
20. Other liabilities (from Schedule RC-G)......................................................... RCFD 2930 294,964 20.
21. Total liabilities (sum of items 13 through 20)................................................. RCFD 2948 19,457,692 21.
22. Not applicable //////////////////////
EQUITY CAPITAL //////////////////////
23. Perpetual preferred stock and related surplus.................................................. RCFD 3838 0 23.
24. Common stock................................................................................... RCFD 3230 40,000 24.
25. Surplus (exclude all surplus related to preferred stock)....................................... RCFD 3839 482,600 25.
26. a. Undivided profits and capital reserves...................................................... RCFD 3632 1,085,910 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities...................... RCFD 8434 (25,477) 26.b.
27. Cumulative foreign currency translation adjustments............................................ RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27).............................................. RCFD 3210 1,583,033 28.
29. Total liabilities and equity capital (sum of items 21 and 28).................................. RCFD 3300 21,040,725 29.
----------------------
Memorandum
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external ----------------------------
auditors as of any date during 1996............................................................ RCFD 6724 N/A M.1.
----------------------------
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
12
<PAGE> 15
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 06/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-3
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-A--CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS
Exclude assets held for trading.
<TABLE>
<CAPTION>
C405 <-
(Column A) (Column B)
Consolidated Domestic
Bank Offices
------------------ -------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
- --------------------------------------------------------------------------------------- ------------------ -------------------
<S><C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and ////////////////// ////////////////
coin ........................................................................... 0022 754,797 //////////////// 1.
a. Cash items in process of collection and unposted debits ...................... ////////////////// 0020 583,877 1.a.
b. Currency and coin ........................................................... ////////////////// 0080 170,920 1.b.
2. Balances due from depository institutions in the U.S. .......................... ////////////////// 0082 81,925 2.
a. U.S. branches and agencies of foreign banks (including their IBFs) .......... 0083 0 //////////////// 2.a.
b. Other commercial banks in the U.S. and other depository institutions ////////////////// ////////////////
in the U.S. (including their IBFs) .......................................... 0085 81,925 //////////////// 2.b.
3. Balances due from banks in foreign countries and foreign central banks ......... ////////////////// 0070 0 3.
a. Foreign branches of other U.S. banks ........................................ 0073 0 //////////////// 3.a.
b. Other banks in foreign countries and foreign central banks .................. 0074 0 //////////////// 3.b.
4. Balances due from Federal Reserve Banks ........................................ 0090 105,871 0090 105,871 4.
5. Total (sum if items 1 through 4) (total of column A must equal ////////////////// ////////////////
Schedule RC, sum of items 1.a and 1.b) ......................................... 0010 942,593 0010 942,593 5.
- ----------------------------------------------------------------------------------------------------------------------------
Memorandum Dollar Amounts in Thousands RCON Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, /////////////////
column B above) ................................................................ 0050 81,575 M.1.
-----------------
</TABLE>
SCHEDULE RC-B--SECURITIES
Exclude assets held for trading.
<TABLE>
<CAPTION>
C410 <-
------------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
-------------------------------------- --------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Vaue Amortized Cost Fair Value (1)
----------------- -------------------- ----------------------- -----------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- ------------------------------------------------ -------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. U.S. Treasury securities.. 0211 156 0213 156 1286 690,077 1287 674,226 1.
2. U.S. Government agency
obligations (exclude //////////////// //////////////// //////////////// //////////////////
mortgage-backed //////////////// //////////////// //////////////// //////////////////
securities): //////////////// //////////////// //////////////// //////////////////
a. Issued by U.S. //////////////// //////////////// //////////////// //////////////////
Government
agencies (2) ....... 1289 0 1290 0 1291 0 1293 0 2.a.
b. Issued by U.S. //////////////// //////////////// //////////////// //////////////////
Government-sponsored //////////////// //////////////// //////////////// //////////////////
agencies (3) ....... 1294 0 1295 0 1297 1,510,673 1298 1,502,271 2.b.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.b, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates ,"
U.S. Maritime Administration obligations, and Export-Import Bank
participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the
Farm Credit System, the Federal Home Loan Bank System, the Federal Home Loan
Mortgage Corporation , the Federal National Mortgage Association, the
Financing Corporation, Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
13
<PAGE> 16
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-4
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-B--CONTINUED
Held-to-maturity Available-for-sale
------------------------------------------- ----------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
------------------------------------------- ----------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- ------------------------------------------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C>
3. Securities issued by states ///////////////// ///////////////// ///////////////// /////////////////
and political subdivisions ///////////////// ///////////////// ///////////////// /////////////////
in the U.S.: ///////////////// ///////////////// ///////////////// /////////////////
a. General obligations........ 1676 19,958 1677 20,170 1678 6,652 1679 6,831 3.a.
b. Revenue obligations........ 1681 34,858 1686 35,209 1690 26,230 1691 27,173 3.b.
c. Industrial development ///////////////// ///////////////// ///////////////// /////////////////
and similar obligations.... 1694 0 1695 0 1696 0 1697 0 3.c.
4. Mortage-backed ///////////////// ///////////////// ///////////////// /////////////////
securities (MBS): ///////////////// ///////////////// ///////////////// /////////////////
a. Pass-through securities: ///////////////// ///////////////// ///////////////// /////////////////
(1) Guaranteed by ///////////////// ///////////////// ///////////////// /////////////////
GNMA.................. 1698 0 1699 0 1701 68,323 1702 68,324 4.a.(1)
(2) Issued by FNMA ///////////////// ///////////////// ///////////////// /////////////////
and FHLMC............. 1703 0 1705 0 1706 1,097,036 1707 1,084,585 4.a.(2)
(3) Other pass-through ///////////////// ///////////////// ///////////////// /////////////////
securities............ 1709 0 1710 0 1711 0 1713 0 4.a.(3)
b. Other mortgage-backed ///////////////// ///////////////// ///////////////// /////////////////
securities (include CMOs, ///////////////// ///////////////// ///////////////// /////////////////
REMICs, and stripped ///////////////// ///////////////// ///////////////// /////////////////
MBS): ///////////////// ///////////////// ///////////////// /////////////////
(1) Issued or guaranteed ///////////////// ///////////////// ///////////////// /////////////////
by FNMA, FHLMC ///////////////// ///////////////// ///////////////// /////////////////
or GNMA............... 1714 0 1715 0 1716 576,230 1717 572,828 4.b.(1)
(2) Collateralized ///////////////// ///////////////// ///////////////// /////////////////
by MBS issued or ///////////////// ///////////////// ///////////////// /////////////////
guaranteed by FNMA, ///////////////// ///////////////// ///////////////// /////////////////
FHLMC, or GNMA........ 1718 0 1719 0 1731 23,751 1732 23,706 4.b.(2)
(3) All other mortgage- ///////////////// ///////////////// ///////////////// /////////////////
backed securities..... 1733 0 1734 0 1735 0 1736 0 4.b.(3)
5. Other debt securities: ///////////////// ///////////////// ///////////////// /////////////////
a. Other domestic debt ///////////////// ///////////////// ///////////////// /////////////////
securities................. 1737 0 1738 0 1739 392,521 1741 391,714 5.a.
b. Foreign debt ///////////////// ///////////////// ///////////////// /////////////////
securities................. 1742 0 1743 0 1744 3,503 1746 3,486 5.b.
6. Equity securities: ///////////////// ///////////////// ///////////////// /////////////////
a. Investments in mutual ///////////////// ///////////////// ///////////////// /////////////////
funds and other equity ///////////////// ///////////////// ///////////////// /////////////////
securities with readily ///////////////// ///////////////// ///////////////// /////////////////
determinable fair values... ///////////////// ///////////////// A510 42 A511 42 6.a.
b. All other equity ///////////////// ///////////////// ///////////////// /////////////////
securities (1)............. ///////////////// ///////////////// 1752 33,424 1753 33,424 6.b.
7. Total (sum of items 1 ///////////////// ///////////////// ///////////////// /////////////////
through 6) (total of ///////////////// ///////////////// ///////////////// /////////////////
column A must equal ///////////////// ///////////////// ///////////////// /////////////////
Schedule RC, item 2.a) ///////////////// ///////////////// ///////////////// /////////////////
(total of column D must ///////////////// ///////////////// ///////////////// /////////////////
equal Schedule RC, ///////////////// ///////////////// ///////////////// /////////////////
item 2.b) ..................... 1754 54,972 1771 55,535 1772 4,428,462 1773 4,388,610 7.
----------------------------------------------------------------------------------------
</TABLE>
- -----------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.b, column D.
14
<PAGE> 17
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-5
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-B--CONTINUED
<TABLE>
<CAPTION>
--------
Memoranda C412 <-
------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- --------------------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C>
1. Pledged securities(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0416 1,692,624 M.1.
2. Maturity and repricing data for DEBT securities(1), (2) (excluding those in //////////////////
nonaccrual status): //////////////////
a. SECURITIES ISSUED BY THE U.S. TREASURY, U.S. GOVERNMENT AGENCIES, AND STATES AND //////////////////
POLITICAL SUBDIVISIONS IN THE U.S.; OTHER NON-MORTGAGE DEBT SECURITIES; AND //////////////////
MORTGAGE PASS-THROUGH SECURITIES OTHER THAN THOSE BACKED BY CLOSED-END FIRST LIEN 1-4 //////////////////
FAMILY RESIDENTIAL MORTGAGES WITH A REMAINING MATURITY OR REPRICING FREQUENCY //////////////////
OF: (3) (4) //////////////////
(1) THREE MONTHS OR LESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A549 14,978 M.2.a.(1)
(2) OVER THREE MONTHS THROUGH 12 MONTHS . . . . . . . . . . . . . . . . . . . . . . . . . A550 27,213 M.2.a.(2)
(3) OVER ONE YEAR THROUGH THREE YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . A551 301,630 M.2.a.(3)
(4) OVER THREE YEARS THROUGH FIVE YEARS . . . . . . . . . . . . . . . . . . . . . . . . . A552 1,662,046 M.2.a.(4)
(5) OVER FIVE YEARS THROUGH 15 YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . A553 560,244 M.2.a.(5)
(6) OVER 15 YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A554 94,562 M.2.a.(6)
b. MORTGAGE PASS-THROUGH SECURITIES BACKED BY CLOSED-END FIRST LIEN 1-4 FAMILY RESIDENTIAL //////////////////
MORTGAGES WITH A REMAINING MATURITY OR REPRICING FREQUENCY OF:(3)(5) //////////////////
(1) THREE MONTHS OR LESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A555 0 M.2.b.(1)
(2) OVER THREE MONTHS THROUGH 12 MONTHS . . . . . . . . . . . . . . . . . . . . . . . . . A556 80 M.2.b.(2)
(3) OVER ONE YEAR THROUGH THREE YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . A557 1,183 M.2.b.(3)
(4) OVER THREE YEARS THROUGH FIVE YEARS . . . . . . . . . . . . . . . . . . . . . . . . . A558 45,012 M.2.b.(4)
(5) OVER FIVE YEARS THROUGH 15 YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . A559 1,101,895 M.2.b.(5)
(6) OVER 15 YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A560 4,739 M.2.b.(6)
c. OTHER MORTGAGE-BACKED SECURITIES (INCLUDE CMOS, REMICS, AND STRIPPED MBS; EXCLUDE MORTGAGE //////////////////
PASS-THROUGH SECURITIES) WITH AN EXPECTED AVERAGE LIFE OF:(6) //////////////////
(1) THREE YEARS OR LESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A561 5,171 M.2.c.(1)
(2) OVER THREE YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A562 591,363 M.2.c.(2)
d. FIXED RATE AND FLOATING RATE DEBT SECURITIES WITH A REMAINING MATURITY OF ONE YEAR OR LESS //////////////////
(INCLUDED IN MEMORANDUM ITEMS 2.a THROUGH 2.c ABOVE) . . . . . . . . . . . . . . . . . . . A248 43,654 M.2.d.
3.-6. Not applicable //////////////////
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or //////////////////
trading securities during the calendar year-to-date (report the amortized cost at date of sale //////////////////
or transfer) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1778 0 M.7.
8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale accounts //////////////////
in Schedule RC-B, item 4.b): //////////////////
a. Amortized cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8780 0 M.8.a.
b. Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8781 0 M.8.b.
9. Structured notes (included in the held-to-maturity and available-for-sale accounts in Schedule //////////////////
RC-B, items 2, 3, and 5): //////////////////
a. Amortized cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8782 0 M.9.a.
b. Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8783 0 M.9.b.
------------------
</TABLE>
- ----------------
(1) Includes held-to-maturity securities at amortized cost and
available-for-sale securities at fair value.
(2) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(3) Report fixed rate debt securities by remaining maturity and floating rate
debt securities by repricing frequency.
(4) Sum of Memorandum items 2.a.(1) through 2.a.(6) plus any nonaccrual debt
securities in the categories of debt securities reported in Memorandum item
2.a that are included in Schedule RC-N, item 9, column C, must equal
Schedule RC-B, sum of items 1, 2, 3, and 5, columns A and D, plus mortgage
pass-through securities other than those backed by closed-end first lien
1-4 family residential mortgages included in Schedule RC-B, item 4.a,
columns A and D.
(5) Sum of Memorandum items 2.b.(1) through 2.b.(6) plus any nonaccrual
mortgage pass-through securities backed by closed-end first lien 1-4 family
residential mortgages included in Schedule RC-N, item 9, column C, must
equal Schedule RC-B, item 4.a, sum of columns A and D, less the amount of
mortgage pass-through securities other than those backed by closed-end
first lien 1-4 family residential mortgages included in Schedule RC-B, item
4.a, columns A and D.
(6) Sum of Memorandum items 2.c.(1) and 2.c.(2) plus any nonaccrual "Other
mortgage-backed securities" included in Schedule RC-N, item 9, column C,
must equal Schedule RC-B, item 4.b, sum of columns A and D.
15
<PAGE> 18
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-6
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No. : 06560
</TABLE>
SCHEDULE RC-C--LOANS AND LEASE FINANCING RECEIVABLES
PART I. LOANS AND LEASES
Do not deduct the allowance for loan and lease losses from amounts
reported in this schedule. Report total loans and leases, net of unearned
income. Exclude assets held for trading and commercial paper.
<TABLE>
<CAPTION>
-----
C415 <-
--------------------------------------
(Column A) (Column B)
Consolidated Domestic
Bank Offices
--------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C>
1. Loans secured by real estate ........................................... 1410 6,039,269 ///////////////// 1.
a. Construction and land development ................................... ////////////////// 1415 426,939 1.a.
b. Secured by farmland (including farm residential and other ////////////////// /////////////////
improvements) ....................................................... ////////////////// 1420 19,102 1.b.
c. Secured by 1-4 family residential properties: ////////////////// /////////////////
(1) Revolving, open-end loans secured by 1-4 family residential ////////////////// /////////////////
properties and extended under lines of credit.................... ////////////////// 1797 1,139,992 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: ////////////////// /////////////////
(a) Secured by first liens ...................................... ////////////////// 5367 1,498,654 1.c.(2)(a)
(b) Secured by junior liens ..................................... ////////////////// 5368 382,582 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties ........... ////////////////// 1460 120,765 1.d.
e. Secured by nonfarm nonresidential properties ........................ ////////////////// 1480 2,451,235 1.e.
2. Loans to depository institutions: ////////////////// /////////////////
a. To commercial banks in the U.S. ..................................... ////////////////// 1505 26,791 2.a.
(1) To U.S. branches and agencies of foreign banks .................. 1506 0 ///////////////// 2.a.(1)
(2) To other commercial banks in the U.S. ........................... 1507 26,791 ///////////////// 2.a.(2)
b. To other depository institutions in the U.S. ....................... 1517 34 1517 34 2.b.
c. To banks in foreign countries ....................................... ////////////////// 1510 0 2.c.
(1) To foreign branches of other U.S. banks ......................... 1513 0 ///////////////// 2.c.(1)
(2) To other banks in foreign countries ............................. 1516 0 ///////////////// 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers .... 1590 92,925 1590 92,925 3.
4. Commercial and industrial loans: ////////////////// /////////////////
a. To U.S. addressees (domicile) ....................................... 1763 3,427,557 1763 3,427,557 4.a.
b. To non-U.S. addressees (domicile) ................................... 1764 44 1764 44 4.b.
5. Acceptances of other banks: ////////////////// /////////////////
a. Of U.S. banks ....................................................... 1756 3,759 1756 3,759 5.a.
b. Of foreign banks .................................................... 1757 0 1757 0 5.b.
6. Loans to individuals for household, family, and other personal ////////////////// /////////////////
expenditures (i.e., consumer loans) (includes purchased paper) ......... ////////////////// 1975 3,982,578 6.
a. Credit cards and related plans (includes check credit and other ////////////////// /////////////////
revolving credit plans) ............................................. 2008 547,535 ///////////////// 6.a.
b. Other (includes single payment, installment, and all student loans).. 2011 3,435,043 ///////////////// 6.b.
7. Loans to foreign governments and official institutions (including ////////////////// /////////////////
foreign central banks) ................................................. 2081 5 2081 5 7.
8. Obligations (other than securities and leases) of states and political ////////////////// /////////////////
subdivisions in the U.S. (includes nonrated industrial development ////////////////// /////////////////
obligations) ........................................................... 2107 66,497 2107 66,497 8.
9. Other loans ............................................................ 1563 104,222 ///////////////// 9.
a. Loans for purchasing or carrying securities (secured and unsecured).. ////////////////// 1545 10,718 9.a.
b. All other loans (exclude consumer loans) ............................ ////////////////// 1564 93,504 9.b.
10. Lease financing receivables (net of unearned income) ................... ////////////////// 2165 1,099,815 10.
a. Of U.S. addressees (domicile) ....................................... 2182 1,099,815 ///////////////// 10.a.
b. Of non-U.S. addressees (domicile) ................................... 2183 0 ///////////////// 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above ....... 2123 697 2123 697 11.
12. Total loans and leases, net of unearned income (sum of items 1 ////////////////// /////////////////
through 10 minus item 11) (total of column A must equal ////////////////// /////////////////
Schedule RC, item 4.a) ................................................. 2122 14,842,799 2122 14,842,799 12.
--------------------------------------
</TABLE>
16
<PAGE> 19
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-7
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC -- CONTINUED
PART I. CONTINUED
<TABLE>
<CAPTION>
<S><C>
-----------------------
Memoranda Dollar Amounts in Thousands //////// Bil Mil Thou
- --------------------------------------------------------------------------------------------------- -----------------------
1. Not applicable //////////////////////
2. Loans and leases restructured and in compliance with modified terms (included in Schedule //////////////////////
RC-C, part I, above and not reported as past due or nonaccrual in Schedule RC-N, //////////////////////
Memorandum item 1): //////////////////////
a. Loans secured by real estate: //////////////////////
(1) To U.S. addressees (domicile)........................................................... RCFD 1687 1,369 M.2.a.(1)
(2) To non-U.S. addressees (domicile)....................................................... RCFD 1689 0 M.2.a.(2)
b. All other loans and all lease financing receivables (exclude loans to individuals for //////////////////////
household, family, and other personal expenditures)......................................... RCFD 8691 0 M.2.b.
c. Commercial and industrial loans to and lease financing receivables of non-U.S. //////////////////////
addresses (domicile) included in Memorandum item 2.b above.................................. RCFD 8692 0 M.2.c.
3. Maturity and repricing data for loans and leases (excluding those in nonaccrual status): //////////////////////
a. CLOSED-END LOANS SECURED BY FIRST LIENS ON 1-4 FAMILY RESIDENTIAL PROPERTIES IN DOMESTIC //////////////////////
OFFICES WITH A REMAINING MATURITY OR REPRICING FREQUENCY OF: (1)(2) //////////////////////
(1) THREE MONTHS OR LESS.................................................................... RCON A564 333,827 M.3.a.(1)
(2) OVER THREE MONTHS THROUGH 12 MONTHS..................................................... RCON A565 407,232 M.3.a.(2)
(3) OVER ONE YEAR THROUGH THREE YEARS....................................................... RCON A566 237,058 M.3.a.(3)
(4) OVER THREE YEARS THROUGH FIVE YEARS..................................................... RCON A567 72,311 M.3.a.(4)
(5) OVER FIVE YEARS THROUGH 15 YEARS........................................................ RCON A568 240,245 M.3.a.(5)
(6) OVER 15 YEARS........................................................................... RCON A569 207,981 M.3.a.(6)
b. ALL LOANS AND LEASES OTHER THAN CLOSED-END LOANS SECURED BY FIRST LIENS ON 1-4 FAMILY //////////////////////
RESIDENTIAL PROPERTIES IN DOMESTIC OFFICES WITH A REMAINING MATURITY OR REPRICING //////////////////////
FREQUENCY OF: (1)(3) //////////////////////
(1) THREE MONTHS OR LESS.................................................................... RCFD A570 7,274,923 M.3.b.(1)
(2) OVER THREE MONTHS THROUGH 12 MONTHS..................................................... RCFD A571 1,791,054 M.3.b.(2)
(3) OVER ONE YEAR THROUGH THREE YEARS....................................................... RCFD A572 3,430,512 M.3.b.(3)
(4) OVER THREE YEARS THROUGH FIVE YEARS..................................................... RCFD A573 399,304 M.3.b.(4)
(5) OVER FIVE YEARS THROUGH 15 YEARS........................................................ RCFD A574 290,666 M.3.b.(5)
(6) OVER 15 YEARS........................................................................... RCFD A575 102,304 M.3.b.(6)
c. FIXED RATE AND FLOATING RATE LOANS AND LEASES WITH A REMAINING MATURITY OF ONE YEAR //////////////////////
OR LESS (INCLUDED IN MEMORANDUM ITEMS 3.A AND 3.B ABOVE).................................... RCFD A247 9,807,036 M.3.c.
d. FIXED RATE AND FLOATING RATE LOANS SECURED BY NONFARM NONRESIDENTIAL PROPERTIES //////////////////////
IN DOMESTIC OFFICES (4) WITH A REMAINING MATURITY OF OVER FIVE YEARS (INCLUDED IN //////////////////////
MEMORANDUM ITEM 3.B ABOVE).................................................................. RCON A577 292,057 M.3.d.
e. FIXED RATE AND FLOATING RATE COMMERCIAL AND INDUSTRIAL LOANS (5) WITH A REMAINING //////////////////////
MATURITY OF OVER THREE YEARS (INCLUDED IN MEMORANDUM ITEM 3.B ABOVE)........................ RCFD A578 305,987 M.3.e.
----------------------
</TABLE>
- ----------
(1) Report fixed rate loans and leases by remaining maturity and floating rate
loans by repricing frequency.
(2) Sum of Memorandum items 3.a.(1) through 3.a.(6) plus total nonaccrual
closed-end loans secured by first liens on 1-4 family residential
properties in domestic offices included in Schedule RC-N, Memorandum item
3.c.(2), column C, must equal total closed-end loans secured by first
liens on 1-4 family residential properties from Schedule RC-C, part I,
item 1.c.(2)(a), column B.
(3) Sum of Memorandum items 3.b.(1) through 3.b.(6), plus total nonaccrual
loans and leases from Schedule RC-N, sum of items 1 through 8, column C,
minus nonaccrual closed-end loans secured by first liens on 1-4 family
residential properties in domestic offices included in Schedule RC-N,
Memorandum item 3.c.(2), column C, must equal total loans and leases from
Schedule RC-C, part I, sum of items 1 through 10, column A, minus total
closed-end loans secured by first liens on 1-4 family residential
properties in domestic offices from Schedule RC-C, part I,
item 1.c.(2)(a), column B.
(4) As defined for Schedule RC-C, part I, item 1.e, column B.
(5) As defined for Schedule RC-C, part I, item 4, column A.
17
<PAGE> 20
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-8
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-C--CONTINUED
PART I. CONTINUED
<TABLE>
<S><C>
Memoranda (continued)
-----------------------
Dollar Amounts in Thousands ///////// Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
4. Loans to finance commercial real estate, construction, and land development activities ///////////////////////
(NOT SECURED BY REAL ESTATE) included in Schedule RC-C, part I, items 4 and 9, column A, ///////////////////////
page RC-6(1)................................................................................ RCFD 2746 0 M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I, page RC-6)............... RCFD 5369 144,391 M.5.
6. Adjustable rate closed-end loans secured by first liens on 1-4 family residential properties ///////////////////////
in domestic offices (included in Schedule RC-C, part I, item 1.c.(2)(a), column B, page RC-6) RCON 5370 470,152 M.6.
-----------------------
</TABLE>
- ----------------------
(1) Exclude loans secured by real estate that are included in Schedule RC-C,
part I, item 1, column A.
SCHEDULE RC-D--TRADING ASSETS AND LIABILITIES
Schedule RC-D is to be completed only by banks with $1 billion or more in total
assets or with $2 billion or more in par/notional amount of off-balance sheet
derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e,
columns A through D).
<TABLE>
<S><C>
----
C420 <-
-----------------------
Dollar Amounts in Thousands ///////// Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
ASSETS ///////////////////////
1. U.S. Treasury securities in domestic offices.............................................. RCON 3531 0 1.
2. U.S. Government agency obligations in domestic offices (exclude mortgage-backed
securities)............................................................................... RCON 3532 0 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices.... RCON 3533 0 3.
4. Mortgage-backed securities (MBS) in domestic offices: ///////////////////////
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA.................. RCON 3534 0 4.a.
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA ///////////////////////
(include CMOs, REMICs, and stripped MBS).............................................. RCON 3535 0 4.b.
c. All other mortgage-backed securities.................................................. RCON 3536 0 4.c.
5. Other debt securities in domestic offices................................................. RCON 3537 0 5.
6. Certificates of deposit in domestic offices............................................... RCON 3538 0 6.
7. Commercial paper in domestic offices...................................................... RCON 3539 0 7.
8. Bankers acceptances in domestic offices................................................... RCON 3540 2,481 8.
9. Other trading assets in domestic offices.................................................. RCON 3541 0 9.
10. Trading assets in foreign offices......................................................... RCFN 3542 0 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity ///////////////////////
contracts: ///////////////////////
a. In domestic offices................................................................... RCON 3543 0 11.a.
b. In foreign offices.................................................................... RCFN 3543 0 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5)......... RCFD 3545 2,481 12.
-----------------------
-----------------------
LIABILITIES ///////// Bil Mil Thou
-----------------------
13. Liability for short positions............................................................. RCFD 3546 0 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity ///////////////////////
contracts................................................................................. RCFD 3547 0 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) RCFD 3548 0 15.
-----------------------
</TABLE>
18
<PAGE> 21
<TABLE>
<S><C>
Legal Title of Bank: The Huntington National Bank Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. Box 1558 Page RC-8a
City, State Zip: Columbus, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-C--CONTINUED
PART II. LOANS TO SMALL BUSINESSES AND SMALL FARMS
Schedule RC-C, Part II is to be reported only with the June Report of Condition.
Report the number and amount currently outstanding as of June 30 of business
loans with "original amounts" of $1,000,000 or less and farm loans with
"original amounts" of $500,000 or less. The following guidelines should be used
to determine the "original amount" of a loan: (1) For loans drawn down under
lines of credit or loan commitments, the "original amount" of the loan is the
size of the line of credit or loan commitment when the line of credit or loan
commitment was MOST RECENTLY approved, extended, or renewed prior to the report
date. However, if the amount currently outstanding as of the report date
exceeds this size, the "original amount" is the amount currently outstanding on
the report date. (2) For loan participations and syndications, the "original
amount" of the loan participations or syndication is the entire amount of the
credit originated by the lead lender. (3) For all other loans, the "original
amount" is the total amount of the loan at origination or the amount currently
outstanding as of the report date, whichever is larger.
<TABLE>
<S><C>
LOANS TO SMALL BUSINESSES
1. Indicate in the appropriate box at the right whether all or substantially
all of the dollar volume of your bank's "Loans secured by nonfarm nonresidential properties"
in domestic offices reported in Schedule RC-C, part I, item 1.e, column B, AND all or substantially C418 <-
all of the dollar volume of your bank's "Commercial and industrial loans to U.S. addressees" in -----------------------
domestic offices reported in Schedule RC-C, part I, item 4.a, column B, have ORIGINAL AMOUNTS of RCON YES NO
$100,000 or less (if your bank has no loans outstanding in BOTH of these two loan categories, -----------------------
place an "x" in the box marked "no".)......................................................... 6999 /// x 1.
-----------------------
if yes, complete items 2.a and 2.b below, skip items 3 and 4, and go to item 5.
if no and your bank has loans outstanding in either loan category, skip items 2.a and 2.b,
complete items 3 and 4 below, and go to item 5.
if no and your bank has no loans outstanding in both loan categories, skip items 2 through 4,
and go to item 5.
-----------------
number of loans
2. Report the total NUMBER of loans CURRENTLY OUTSTANDING for each of the -----------------
following schedule rc-c, part i, loan categories: RCON ////////////
a. "Loans secured by nonfarm nonresidential properties" in domestic offices /////////////////
reported in Schedule RC-C, part I, item 1.e, column B. (Note: Item 1.e, /////////////////
column B, divided by the number of loans should NOT exceed $100,000.)..... 5562 N/A 2.a.
b. "Commercial and industrial loans to U.S. addressees" in domestic offices /////////////////
reported in Schedule RC-C, part I, item 4.a, column B. (Note: Item 4.a, /////////////////
column B, divided by the number of loans should NOT exceed $100,000.)..... 5563 N/A 2.b.
------------------
-------------------------------------
(Column A) (Column B)
Amount
Currently
Number of Loans Outstanding
Dollar Amounts in Thousands RCON ///////////// RCON Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
3. Number and amount CURRENTLY OUTSTANDING of "Loans secured by nonfarm //////////////////////////////////////
nonresidential properties" in domestic offices reported in Schedule RC-C, //////////////////////////////////////
part I, item 1.e, column B (sum of items 3.a through 3.c must be less than //////////////////////////////////////
or equal to Schedule RC-C, part I, item 1.e, column B): //////////////////////////////////////
a. With ORIGINAL AMOUNTS of $100,000 or less ................................. 5564 3,810 5565 134,704 3.a.
b. With ORIGINAL AMOUNTS of more than $100,000 or less ....................... 5566 2,278 5567 288,932 3.b.
c. With ORIGINAL AMOUNTS of more than $250,000 through $1,000,000............. 5568 2,206 5569 804,460 3.c.
4. Number and amount CURRENTLY OUTSTANDING of "Commercial and industrial //////////////////////////////////////
loans to U.S. addressees" in domestic offices reported in Schedule RC-C, //////////////////////////////////////
part I, item 4.a, column B (sum of items 4.a through 4.c must be less than //////////////////////////////////////
or equal to Schedule RC-C, part I, item 4.a, column B): //////////////////////////////////////
a. With ORIGINAL AMOUNTS of $100,000 or less.................................. 5570 21,664 5571 325,232 4.a.
b. With ORIGINAL AMOUNTS more than $100,000 through $250,000.................. 5572 2,352 5573 267,899 4.b.
c. With ORIGINAL AMOUNTS more than $250,000 through $1,000,000................ 5574 2,103 5575 689,978 4.c.
--------------------------------------
</TABLE>
18a
<PAGE> 22
<TABLE>
<S><C>
Legal Title of Bank: The HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-8b
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-C--CONTINUED
PART II. CONTINUED
AGRICULTURAL LOANS TO SMALL FARMS
5. Indicate in the appropriate box at the right whether all or substantially
all of the dollar volume of your bank's "Loans secured by farmland
(including farm residential and other improvements)" in domestic offices
reported in Schedule RC-C, part I, item 1.b, column B, AND all or
substantially all of the dollar volume of your bank's "Loans to finance
agricultural production and other loans to farmers" in domestic offices
reported in Schedule RC-C, part I, item 3, column B, have ORIGINAL AMOUNTS
of $100,000 or less (If your bank has no loans outstanding in BOTH of these
two loan categories, YES NO
-------------
place an "X" in the box marked "NO".) ....... 6860 /// X 5.
-------------
If YES, complete items 6.a and 6.b below and do not complete item 7 and 8.
If NO and your bank has loans outstanding in either loan category, skip items
6.a and 6.b and complete items 7 and 8 below.
If NO and your bank has no loans outstanding in both loan categories, do not
complete items 6 through 8.
<TABLE>
<S><C>
---------------------
6. Report the total NUMBER of loans CURRENTLY OUTSTANDING for each of the Number of Loans
following Schedule RC-C, part I, loan categories: ---------------------
a. "Loans secured by farmland (including farm residential and other RCON ////////////////
improvements)" in domestic offices reported in Schedule RC-C, part ////////////////////
I, item 1.b, column B. (Note: Item 1.b, column B, divided by the number ///////////////////
of loans should NOT exceed $100,000.) .................................. 5576 N/A 6.a.
-------------------
b. "Loans to finance agricultural production and other loans to farmers" in
domestic offices reported in Schedule RC-C, part I, item 3, column B. ///////////////////
(Note: Item 3, column B, divided by the number of loans should NOT ///////////////////
exceed $100,000.) ...................................................... 5577 N/A 6.b.
--------------------
</TABLE>
<TABLE>
<S><C>
---------------------------------------
(Column A) (Column B)
Amount
Currently
Number of Loans Outstanding
---------------------------------------
Dollar Amounts in Thousands RCON //////////// RCON Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
7. Number and amount CURRENTLY OUTSTANDING of "Loans secured by farmland ///////////////////////////////////////
(including farm residential and other improvements)" in domestic offices ////////////////////////////////////////
reported in Schedule RC-C, part I, item 1.b, column B (sum of items 7.a ////////////////////////////////////////
through 7.c must be less than or equal to Schedule RC-C, part I, item 1.b, ////////////////////////////////////////
column B): ////////////////////////////////////////
a. With ORIGINAL AMOUNTS of $100,000 or less ............................. 5578 127 5579 5,655 7.a.
b. With ORIGINAL AMOUNTS of more than $100,000 through $250,000 .......... 5580 66 5581 7,653 7.b.
c. With ORIGINAL AMOUNTS of more than $250,000 through $500,000 .......... 5582 9 5583 2,771 7.c.
8. Number and amount CURRENTLY OUTSTANDING of "Loans to financial agricultural ///////////////////////////////////////
production and other loans to farmers" in domestic offices reported in ////////////////////////////////////////
Schedule RC-C, part I, item 3, column B (sum of items 8.a through 8.c ////////////////////////////////////////
must be less than or equal to Schedule RC-C, part I, item 3, column B): ////////////////////////////////////////
a. With ORIGINAL AMOUNTS of $100,000 or less ............................. 5584 1,197 5585 31,133 8.a.
b. With ORIGINAL AMOUNTS of more than $100,000 through $250,000 .......... 5586 214 5587 26,275 8.b.
c. With ORIGINAL AMOUNTS of more than $250,000 through $500,000 .......... 5588 55 5589 14,485 8.c.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. Box 1558 Page RC-9
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-E--DEPOSIT LIABILITIES
PART I. DEPOSITS IN DOMESTIC OFFICES
C425
Nontransaction
Transaction Accounts Accounts
-------------------------------------------------------------
(Column A) (Column B) (Column C)
Total transaction Memo: Total Total
accounts (including demand deposits nontransaction
total demand (included in accounts
deposits) column A) (including MMDAs)
-----------------------------------------------------------
Dollar Amounts in Thousands RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deposits of: ///////////////// ///////////////// /////////////////
1. Individuals, partnerships, and corporations........... 2201 2,872,521 2240 2,240,279 2346 10,762,236 1.
2. U.S. Government....................................... 2202 7,336 2280 7,336 2520 0 2.
3. States and political subdivisions in the U.S. ........ 2203 82,776 2290 82,776 2530 331,284 3.
4. Commercial banks in the U.S. ......................... 2206 60,359 2310 60,359 2550 0 4.
5. Other depository institutions in the U.S. ............ 2207 5,490 2312 5,490 2349 0 5.
6. Banks in foreign countries............................ 2213 3,718 2320 3,718 2236 0 6.
7. Foreign governments and official institutions ///////////////// ///////////////// /////////////////
(including foreign central banks)..................... 2216 0 2300 0 2377 0 7.
8. Certified and official checks......................... 2330 61,299 2330 61,299 ///////////////// 8.
9. Total (sum of items 1 through 8) (sum of ///////////////// ///////////////// /////////////////
columns A and C must equal Schedule RC, ///////////////// ///////////////// /////////////////
item 13.a)............................................ 2215 3,093,499 2210 2,461,257 2385 11,093,520 9.
-----------------------------------------------------------
Memoranda
Dollar Amounts in Thousands RCON Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): /////////////////
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts.......................... 6835 849,628 M.1.a.
b. Total brokered deposits...................................................................... 2365 440,326 M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): /////////////////
(1) Issued in denominations of less than $100,000 .......................................... 2343 0 M.1.c. (1)
(2) Issued EITHER in denominations of $100,00O OR in denominations greater than /////////////////
$100,000 and participated out by the broker in shares of $100,000 or less............... 2344 0 M.1.c. (2)
d. Maturity data for brokered deposits: /////////////////
(1) Brokered deposits issued in denominations of less than $100,000 with a remaining /////////////////
maturity of one year or less (included in Memorandum item 1.c. (1) above) .............. A243 0 M.1.d. (1)
(2) Brokered deposits issued in denominations of $100,000 or more with a remaning /////////////////
maturity of one year or less (included in Memorandum item 1.b above) ................... A244 440,326 M.1.d. (2)
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. /////////////////
reported in item 3 above which are secured or collateralized as required under state law) ... 5590 38,123 M.1.e.
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d /////////////////
must equal item 9, column C above): /////////////////
a. Savings deposits: /////////////////
(1) Money market deposit accounts (MMDAs) .................................................. 6810 2,072,343 M.2.a. (1)
(2) Other savings deposits (excludes MMDAs) ................................................ 0352 2,737,234 M.2.a. (2)
b. Total time deposits of less than $100,000 ................................................... 6648 4,885,968 M.2.b.
c. Total time deposits of $100,000 or more ..................................................... 2604 1,397,975 M.2.c.
3. All NOW accounts (included in column A above) ................................................... 2398 552,835 M.3.
4. Not applicable -----------------
</TABLE>
19
<PAGE> 24
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. Box 1558 Page RC-10
City, State Zip: Columbus, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-E--CONTINUED
PART I. CONTINUED
Memoranda (continued)
<TABLE>
<S><C>
Dollar Amounts in Thousands RCON Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
5. MATURITY AND REPRICING DATA FOR TIME DEPOSITS OF LESS THAN $100,000: //////////////////
A. TIME DEPOSITS OF LESS THAN $100,000 WITH A REMAINING MATURITY OR REPRICING FREQUENCY //////////////////
OF: (1) (2) //////////////////
(1) THREE MONTHS OR LESS................................................................ A579 842,903 M.5.a.(1)
(2) OVER THREE MONTHS THROUGH 12 MONTHS................................................. A580 1,823,661 M.5.a.(2)
(3) OVER ONE YEAR THROUGH THREE YEARS................................................... A581 1,820,126 M.5.a.(3)
(4) OVER THREE YEARS.................................................................... A582 399,278 M.5.a.(4)
B. FIXED RATE AND FLOATING RATE TIME DEPOSITS OF LESS THAN $100,000 WITH A REMAINING MATURITY //////////////////
OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEMS 5.A.(1) THROUGH 5.A.(4) ABOVE)......... A241 2,666,564 M.5.b.
6. MATURITY AND REPRICING DATA FOR TIME DEPOSITS OF $100,000 OR MORE: //////////////////
A. TIME DEPOSITS OF $100,000 OR MORE WITH A REMAINING MATURITY OR REPRICING FREQUENCY OF:(1)(3) //////////////////
(1) THREE MONTHS OR LESS................................................................ A584 655,065 M.6.a.(1)
(2) OVER THREE MONTHS THROUGH 12 MONTHS................................................. A585 601,153 M.6.a.(2)
(3) OVER ONE YEAR THROUGH THREE YEARS................................................... A586 104,260 M.6.a.(3)
(4) OVER THREE YEARS.................................................................... A587 37,497 M.6.a.(4)
B. FIXED RATE AND FLOATING RATE TIME DEPOSITS OF $100,000 OR MORE WITH A REMAINING MATURITY OF //////////////////
ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEMS 6.A.(1) THROUGH 6.A.(4) ABOVE............. A242 1,256,218 M.6.b.
- -----------------------------
(1) Report fixed rate time deposits by remaining maturity and floating rate time deposits by repricing frequency.
(2) SUM OF MEMORANDUM items 5.a.(1) through 5.a.(4) must equal Schedule RC-E, Memorandum item 2.b above.
(3) Sum of Memorandum items 6.a.(1) through 6.a.(4) must equal Schedule RC-E, Memorandum item 2.c above.
</TABLE>
20
<PAGE> 25
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-11
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-E--CONTINUED
PART II. DEPOSITS IN FOREIGN OFFICES (INCLUDING EDGE AND
AGREEMENT SUBSIDIARIES AND IBFs)
<TABLE>
<CAPTION>
<S><C>
-----------------
Dollar Amounts in Thousands RCFN Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
Deposits of: /////////////////
1. Individuals, partnerships, and corporations........................................................ 2621 92,300 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks)..................................... 2623 305,000 2.
3. Foreign banks (including U.S. branches and agencies of foreign banks, including their IBFs......... 2625 0 3.
4. Foreign governments and official institutions (including foreign central banks).................... 2650 0 4.
5. Certified and official checks...................................................................... 2330 0 5.
6. All other deposits................................................................................. 2668 52,212 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b)............................... 2200 449,512 7.
Memorandum
-----------------
Dollar Amounts in Thousands RCFN Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
1. Time deposits with a remaining maturity of one year or less (included in Part II, item 7 above) A245 449,512 M.1.
SCHEDULE RC-F--OTHER ASSETS
--------
C430 <-
-----------------
Dollar Amounts in Thousands //// Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
1. Income earned, not collected on loans.............................................................. RCFD 2164 76,301 1.
2. Net deferred tax assets (1)........................................................................ RCFD 2148 0 2.
3. INTEREST-ONLY STRIPS RECEIVABLE (NOT IN THE FORM OF A SECURITY) (2) ON: /////////////////
a. MORTGAGE LOANS................................................................................. RCFD A519 0 3.a.
b. OTHER FINANCIAL ASSETS ........................................................................ RCFD A520 0 3.b.
4. Other (itemize and describe amounts that exceed 25% of this item).................................. RCFD 2168 256,960 4.
--------- ----------------------------------
a. TEXT 3549 RCFD 3549 ///////////////// 4.a.
------------------------------------------------------------
b. TEXT 3550 RCFD 3550 ///////////////// 4.b.
------------------------------------------------------------
c. TEXT 3551 RCFD 3551 ///////////////// 4.c.
-----------------------------------------------------------------------------------------------
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11)................................. RCFD 2160 333,261 5.
-----------------
Memorandum Dollar Amounts in Thousands //// Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
1. Deferred tax assets disallowed for regulatory capital purposes...................................... RCFD 5610 0 M.1.
SCHEDULE RC-G--OTHER LIABILITIES
--------
C435 <-
-----------------
Dollar Amounts in Thousands //// Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
1. a. Interest accrued and unpaid on deposits in domestic offices (3) ............................... RCON 3645 92,738 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable)...................... RCFD 3646 134,538 1.b.
2. Net deferred tax liabilities (1) .................................................................. RCFD 3049 30,152 2.
3. Minority interest in consolidated subsidiaries..................................................... RCFD 3000 49 3.
4. Other (itemize and describe amounts that exceed 25% of this item).................................. RCFD 2938 37,487 4.
----------------------------------
a. TEXT 3552 RCFD 3552 ///////////////// 4.a.
------------------------------------------------------------
b. TEXT 3553 RCFD 3553 ///////////////// 4.b.
------------------------------------------------------------
c. TEXT 3554 RCFD 3554 ///////////////// 4.c.
-----------------------------------------------------------------------------------------------
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20)................................. RCFD 2930 294,964 5.
</TABLE>
- ---------------
(1) See discussion of deferred income taxes in Glossary entry on "income
taxes."
(2) Report interest-only strips receivable in the form of a security as
available-for-sale securities in Schedule RC, item 2.b, or as trading
assets in Schedule RC, item 5, as appropriate.
(3) For savings banks, include "dividends" accrued and unpaid on deposits.
21
<PAGE> 26
<TABLE>
<S> <C> <C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-12
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-H--SELECTED BALANCE SHEET ITEMS FOR DOMESTIC OFFICES
<TABLE>
<CAPTION>
-----------
C440
-----------
Domestic Offices
Dollar Amounts in Thousands RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C>
1. Customers' liability to this bank on acceptances outstanding ................................. 2155 42,573 1.
2. Bank's liability on acceptances executed and outstanding ...................................... 2920 42,573 2.
3. Federal funds sold and securities purchased under agreements to resell ....................... 1350 33,204 3.
4. Federal funds purchased and securities sold under agreements to repurchase ................... 2800 1,436,086 4.
5. Other borrowed money ......................................................................... 3190 2,573,113 5.
EITHER //////////////////
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs .................. 2163 N/A 6.
OR //////////////////
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs .................... 2941 458,342 7.
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and //////////////////
IBFs) ........................................................................................ 2192 21,040,574 8.
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and //////////////////
IBFs) ........................................................................................ 3129 18,999,200 9.
----------------------
-----------------------
ITEMS 10-17 INCLUDE HELD-TO-MATURITY AND AVAILABLE-FOR-SALE SECURITIES IN DOMESTIC OFFICES. RCON Bil Mil Thou
-----------------------
10. U.S. Treasury securities ..................................................................... 1779 674,382 10.
11. U.S. Government agency obligations (exclude mortgage-backed securities) ...................... 1785 1,502,271 11.
12. Securities issued by states and political subdivisions in the U.S. ........................... 1786 88,820 12.
13. Mortgage-backed securities (MBS): ///////////////////
a. Pass-through securities: ///////////////////
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA .......................................... 1787 1,152,909 13.a.(1)
(2) Other pass-through securities ......................................................... 1869 0 13.a.(2)
b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): ///////////////////
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA .......................................... 1877 572,828 13.b.(1)
(2) All other mortgage-backed securities .................................................. 2253 23,706 13.b.(2)
14. Other domestic debt securities ............................................................... 3159 391,714 14.
15. Foreign debt securities ...................................................................... 3160 3,486 15.
16. Equity securities: ///////////////////
a. Investments in mutual funds and other equity securities with readily ///////////////////
determinable fair values .................................................................. A513 42 16.a.
b. All other equity securities ............................................................... 3169 33,424 16.b.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) ........ 3170 4,443,582 17.
-----------------------
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
<CAPTION>
-----------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EITHER ///////////////////
1. Net due from the IBF of the domestic offices of the reporting bank ........................... 3051 N/A M.1.
OR ///////////////////
2. Net due to the IBF of the domestic offices of the reporting bank ............................. 3059 N/A M.2.
-----------------------
</TABLE>
22
<PAGE> 27
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-13
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-I--SELECTED ASSETS AND LIABILITIES OF IBFS
TO BE COMPLETED ONLY BY BANKS WITH IBFS AND OTHER "FOREIGN" OFFICES.
<TABLE>
<CAPTION>
------------------------
C445 <-
------------------------
Dollar Amounts in Thousands RCFN Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) ............... 2133 N/A 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, //////////////////////
item 12, column A) .......................................................................... 2076 N/A 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, //////////////////////
column A).................................................................................... 2077 N/A 3.
4. Total IBF liabilities (component of Schedule RC, item 21) ................................... 2898 N/A 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, //////////////////////
part II, items 2 and 3) ..................................................................... 2379 N/A 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) ... 2381 N/A 6.
SCHEDULE RC-K--QUARTERLY AVERAGES (1)
-----------------------
C455 <-
------------------------
Dollar Amounts in Thousands ////// Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS ///////////////////////
1. Interest-bearing balances due from depository institutions ................................. RCFD 3381 353 1.
2. U.S. Treasury securities and U.S. Government agency obligations (2) ........................ RCFD 3382 4,398,793 2.
3. Securities issued by states and political subdivisions in the U.S. (2) ..................... RCFD 3383 58,009 3.
4. a. Other debt securities (2) ............................................................... RCFD 3647 433,748 4.a.
b. Equity securities (3)(includes investments in mutual funds and Federal Reserve stock).... RCFD 3648 33,466 4.b.
5. Federal funds sold and securities purchased under agreements to resell ..................... RCFD 3365 26,722 5.
6. Loans: ///////////////////////
a. Loans in domestic offices: ///////////////////////
(1) Total loans ......................................................................... RCON 3360 13,623,322 6.a.(1)
(2) Loans secured by real estate ........................................................ RCON 3385 4,687,450 6.a.(2)
(3) Loans to finance agricultural production and other loans to farmers ................. RCON 3386 88,116 6.a.(3)
(4) Commercial and industrial loans...................................................... RCON 3387 4,518,401 6.a.(4)
(5) Loans to individuals for household, family, and other personal expenditures ......... RCON 3388 4,326,640 6.a.(5)
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs ............... RCFN 3360 0 6.b.
7. Trading assets ......................................................................... RCFD 3401 3,967 7.
8. Lease financing receivables (net of unearned income) ....................................... RCFD 3484 1,080,771 8.
9. Total assets (4) ........................................................................... RCFD 3368 20,987,023 9.
LIABILITIES ///////////////////////
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, ///////////////////////
and telephone and preauthorized transfer accounts) (exclude demand deposits) .............. RCON 3485 1,539,632 10.
11. Nontransaction accounts in domestic offices: ///////////////////////
a. Money market deposit accounts (MMDAs) .................................................. RCON 3486 856,143 11.a.
b. Other savings deposits ................................................................. RCON 3487 2,845,110 11.b.
c. Time deposits if $100,000 or more ...................................................... RCON A514 1,326,217 11.c.
d. Time deposits of less than $100,000 .................................................... RCON A529 4,770,547 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs ... RCFN 3404 571,719 12.
13. Federal funds purchased and securities sold under agreements to repurchase................. RCFD 3353 1,503,127 13.
14. Other borrowed money (includes mortgage indebtedness and obligations under capitalized ///////////////////////
leases) .................................................................................. RCFD 3355 2,634,999 14.
</TABLE>
- -------------
(1) For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter, or (2) an average of weekly figures (i.e.,
the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized
cost.
(3) Quarterly averages for all equity securities should be based on historical
cost.
(4) The quarterly average for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
23
<PAGE> 28
<TABLE>
<S> <C> <C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-14
City, State Zip: COLUMBUS, OH 43216
FDIC Certification No.: 06560
</TABLE>
<TABLE>
SCHEDULE RC-L--OFF BALANCE SHEET ITEMS
Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts
reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk.
<CAPTION>
--------
C460
----------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C>
1. Unused commitments: //////////////////
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home equity //////////////////
lines ....................................................................................... 3814 1,177,309 1.a.
b. Credit card lines ........................................................................... 3815 1,787,377 1.b.
c. Commercial real estate, construction, and land development: //////////////////
(1) Commitments to fund loans secured by real estate ........................................ 3816 490,383 1.c.(1)
(2) Commitments to fund loans not secured by real estate .................................... 6550 0 1.c.(2)
d. Securities underwriting ..................................................................... 3817 0 1.d.
e. Other unused commitments .................................................................... 3818 2,500,689 1.e
2. Financial standby letters of credit and foreign office guarantees .............................. 3819 502,716 2.
a. Amount of financial standby letters of credit conveyed to others | RCFD 3820 | 90,482 ////////////////// 2.a.
3. Performance standby letters of credit and foreign office guarantees ............................ 3821 117,889 3.
a. Amount of performance standby letters of credit conveyed to others | RCFD 3822 | 34,005 ////////////////// 3.a.
4. Commercial and similar letters of credit ....................................................... 3411 145,722 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by the //////////////////
reporting bank ................................................................................. 3428 0 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting //////////////////
(nonaccepting) bank ............................................................................ 3429 0 6.
7. Securities borrowed ............................................................................ 3432 0 7.
8. Securities lent (including customers' securities lent where the customer is indemnified against //////////////////
loss by the reporting bank) .................................................................... 3433 0 8.
9. FINANCIAL ASSETS TRANSFERRED WITH RECOURSE THAT HAVE BEEN TREATED AS SOLD FOR //////////////////
CALL REPORT PURPOSES: //////////////////
a. FIRST LIEN 1-TO-4 FAMILY RESIDENTIAL MORTGAGE LOANS: //////////////////
(1) OUTSTANDING PRINCIPAL BALANCE OF MORTGAGES TRANSFERRED AS OF THE REPORT DATE ............ A521 15,154 9.a.(1)
(2) AMOUNT OF RECOURSE EXPOSURE ON THESE MORTGAGES AS OF THE REPORT DATE .................... A522 15,154 9.a.(2)
b. OTHER FINANCIAL ASSETS (EXCLUDING SMALL BUSINESS OBLIGATIONS REPORTED IN ITEM 9.C) : //////////////////
(1) OUTSTANDING PRINCIPAL BALANCE OF ASSETS TRANSFERRED AS OF THE REPORT DATE ............... A523 0 9.b.(1)
(2) Amount of recourse exposure on these assets as of the report date ....................... A524 0 9.b.(2)
c. Small business obligations transferred with recourse under Section 208 of the //////////////////
Riegle Community Development and Regulatory Improvement Act of 1994: //////////////////
(1) Outstanding principal balance of small business obligations transferred //////////////////
as of the report date ................................................................... A249 0 9.c.(1)
(2) Amount of retained recourse on these obligations as of the report date .................. A250 0 9.c.(2)
10. NOTIONAL AMOUNT OF CREDIT DERIVATIVES: //////////////////
a. CREDIT DERIVATIVES ON WHICH THE REPORTING BANK IS THE GUARANTOR ............................. A534 0 10.a.
b. CREDIT DERIVATIVES ON WHICH THE REPORTING BANK IS THE BENEFICIARY ........................... A535 0 10.b.
11. Spot foreign exchange contracts ................................................................ 8765 5,468 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives) (itemize and //////////////////
describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") 3430 0 12.
------------- -------------------- //////////////////
a. TEXT 3555 ___________________________________________________________ RCFD 3555 ////////////////// 12.a.
b. TEXT 3556 ___________________________________________________________ RCFD 3556 ////////////////// 12.b.
c. TEXT 3557 ___________________________________________________________ RCFD 3557 ////////////////// 12.c.
d. TEXT 3558 ___________________________________________________________ RCFD 3558 ////////////////// 12.D.
------------ ------------------------------------------
</TABLE>
24
<PAGE> 29
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-15
City, State Zip COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-L--CONTINUED
<TABLE>
<CAPTION>
-------------------------
Dollar Amount in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and //////////////////////
describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") 5591 0 13.
----------- ------------------------------------ //////////////////////
a. TEXT 5592 RCFD 5592 ////////////////////// 13.a.
b. TEXT 5593 ------------------------------------------- RCFD 5593 ////////////////////// 13.b.
c. TEXT 5594 ------------------------------------------- RCFD 5594 ////////////////////// 13.c.
d. TEXT 5595 ------------------------------------------- RCFD 5595 ////////////////////// 13.d.
- ----------------------------------------------------------------------------------------------------------------------------
------------
C461
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
- -------------------------------------------- Contracts Contracts Contracts Other Contracts
Off-balance Sheet Derivatives ---------------- ----------------- ----------------- -----------------
Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou
Position Indicators ------------------ ----------------- ----------------- -----------------
- --------------------------------------------
14. Gross amounts (e.g., notional //////////////// ///////////// ////////////// ///////////////
amounts) (for each column, sum of //////////////// ///////////// ////////////// ///////////////
items 14.a through 14.e must equal //////////////// ///////////// ////////////// ///////////////
sum of items 15, 16.a, and 16.b): //////////////// ///////////// ////////////// ///////////////
a. Futures contracts ................. 0 0 0 0 14.a.
RCFD 8693 RCFD 8694 RCFD 8695 RCFD 8696
b. Forward contracts ................. 207,062 27,196 0 0 14.b.
RCFD 8697 RCFD 8698 RCFD 8699 RCFD 8700
c. Exchange-traded option contracts: //////////////// ///////////// ///////////// ///////////////
(1) Written options ............... 0 0 0 0 14.c.(1)
RCFD 8701 RCFD 8702 RCFD 8703 RCFD 8704
(2) Purchased options ............. 0 0 0 0 14.c.(2)
RCFD 8705 RCFD 8706 RCFD 8707 RCFD 8708
d. Over-the-counter option contracts: //////////////// ///////////// ///////////// ///////////////
(1)Written options ................ 73,674 0 0 0 14.d.(1)
RCFD 8709 RCFD 8710 RCFD 8711 RCFD 8712
(2) Purchased options ............. 637,674 0 0 0 14.d.(2)
RCFD 8713 RCFD 8714 RCFD 8715 RCFD 8716
e. Swaps .............................. 2,746,692 766 0 0
RCFD 3450 RCFD 3826 RCFD 8719 RCFD 8720 14.e
15. Total gross notional amount of //////////////// ////////////// ////////////// ///////////////
derivative contracts held for trading . 728,322 27,196 0 0.15
trading................................ RCFD A126 RCFD A127 RCFD 8723 RCFD 8724
16. Total gross notional amount of //////////////// ////////////// ////////////// ///////////////
derivative contracts held for //////////////// ////////////// ////////////// ///////////////
purposes other than trading: .......... //////////////// ////////////// ////////////// ///////////////
a. Contracts marked to market ......... 471,062 0 0 0 16.a.
RCFD 8725 RCFD 8726 RCFD 8727 RCFD 8728
b. Contracts not marked to market ..... 2,465,718 766 0 0 16.b.
RCFD 8729 RCFD 8730 RCFD 8731 RCFD 8732
c. Interest rate swaps where the bank //////////////// ////////////// ///////////// ///////////////
has agreed to pay a fixed rate ..... 50,000 ////////////// ////////////// /////////////// 16.c.
RCFD A589 /////////////// ////////////// ///////////////
------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 30
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: #39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-16
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-L--CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
______________________________________________________________________________
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
___________________________________ Contracts Contracts Contracts Other Contracts
Off-balance Sheet Derivatives ____________________ ___________________ __________________ _________________
Position Indicators RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
___________________________________________________________________________ __________________ _________________
17. Gross fair values of //////////////////// /////////////////// ////////////////// /////////////////
derivative contracts: //////////////////// /////////////////// ////////////////// /////////////////
a. Contracts held for //////////////////// /////////////////// ////////////////// /////////////////
trading: //////////////////// /////////////////// ////////////////// /////////////////
(1) Gross positive //////////////////// /////////////////// ////////////////// /////////////////
fair value .......... 8733 29,750 8734 236 8735 0 8736 0 17.a.(1)
(2) Gross negative //////////////////// /////////////////// ////////////////// /////////////////
fair value .......... 8737 28,989 8738 218 8739 0 8740 0 17.a.(2)
b. Contracts held for //////////////////// /////////////////// ////////////////// /////////////////
purposes other than //////////////////// /////////////////// ////////////////// /////////////////
trading that are marked //////////////////// /////////////////// ////////////////// /////////////////
to market: //////////////////// /////////////////// ////////////////// /////////////////
(1) Gross positive //////////////////// /////////////////// ////////////////// /////////////////
fair value .......... 8741 4,948 8742 0 8743 0 8744 0 17.b.(1)
(2) Gross negative //////////////////// /////////////////// ////////////////// /////////////////
fair value .......... 8745 1,769 8746 0 8747 0 8748 0 17.b.(2)
c. Contracts held for //////////////////// /////////////////// ////////////////// /////////////////
purposes other than //////////////////// /////////////////// ////////////////// /////////////////
trading that are not //////////////////// /////////////////// ////////////////// /////////////////
marked to market: //////////////////// ////////////////// ////////////////// /////////////////
(1) Gross positive //////////////////// ////////////////// ////////////////// /////////////////
fair value .......... 8749 18,418 8750 110 8751 0 8752 0 17.c.(1)
(2) Gross negative //////////////////// ////////////////// ////////////////// /////////////////
fair value .......... 8753 11,1538 754 0 8756 0 8756 0 17.c.(2)
-------------------- ------------------ ------------------ -----------------
___________________
Memoranda Dollar Amounts in Thousands RCFD Bil Mil Thou
- --------------------------------------------------------------------------------------------------- __________________
1.-2. Not applicable //////////////////
3. Unused commitments with an original maturity exceeding one year that are reported in //////////////////
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments //////////////////
that are fee paid or otherwise legally binding) ................................................ 3833 2,216,463 M.3.
a. Participations in commitments with an original maturity _____________________________ //////////////////
exceeding one year conveyed to others ........................ RCFD 3834 395,488 ////////////////// M.3.a.
____________ ________________ //////////////////
4. To be completed only by banks with $1 billion or more in total assets: //////////////////
Standby letters of credit and foreign office guarantees (both financial and performance) issued //////////////////
to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above .............. 3377 2,600 M.4.
5. Installment loans to individuals for household, family, and other personal expenditures that //////////////////
have been securitized and sold (with servicing retained), amounts outstanding by type of loan: //////////////////
a. Loans to purchase private passenger automobiles (TO BE COMPLETED FOR THE //////////////////
SEPTEMBER REPORT ONLY) ..................................................................... 2741 N/A M.5.a.
b. Credit cards and related plans (TO BE COMPLETED QUARTERLY) ................................. 2742 0 M.5.b.
c. All other consumer installment credit (including mobile home loans) (TO BE COMPLETED FOR THE //////////////////
SEPTEMBER REPORT ONLY ...................................................................... 2743 N/A M.5.c.
------------------
</TABLE>
26
<PAGE> 31
<TABLE>
<CAPTION>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 St-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1958 Page RC-17
City, State, Zip: COLUMBUS, OH 43126
FDIC Certification No.: 06560
SCHEDULE RC-M--MEMORANDA
<CAPTION>
----------
C465
----------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal //////////////////
shareholders, and their related interests as of the report date: //////////////////
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal //////////////////
shareholders, and their related interests ................................................... 6164 285,147 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of //////////////////
all extensions of credit by the reporting bank (including extensions of credit to //////////////////
related interests) equals or exceeeds the lesser of $500,000 or 5 percent Number //////////////////
of total capital as defined for this purpose in agency regulations | RCFD 6165 | 28 //////////////////
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches //////////////////
and agencies of FOREIGN BANKS(1) (included in Schedule RC, item 3) ............................. 3405 0 2.
3. Not applicable. //////////////////
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others //////////////////
(include both retained servicing and purchased servicing): //////////////////
a. Mortgages serviced under a GNMA contract .................................................... 5500 21,335 4.a.
b. Mortgages serviced under a FHLMC contract: //////////////////
(1) Serviced with recourse to servicer ...................................................... 5501 5,215 4.b.(1)
(2) Serviced without recourse to servicer ................................................... 5502 863,923 4.b.(2)
c. Mortgages serviced under a FNMA contract: //////////////////
(1) Serviced under a regular option contract ................................................ 5503 9,520 4.c.(1)
(2) Serviced under a special option contract ................................................ 5504 3,625,112 4.c.(2)
d. Mortgages serviced under other servicing contracts .......................................... 5505 1,648,741 4.d.
5. To be completed only by banks with $1 billion or more in total assets: //////////////////
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must //////////////////
equal Schedule RC, item 9): //////////////////
a. U.S. addressees (domicile) .................................................................. 2103 42,573 5.a.
b. Non-U.S. addressees (domicile) .............................................................. 2104 0 5.b.
6. Intangible assets: //////////////////
a. Mortgage servicing assets ................................................................... 3164 52,954 6.a.
(1) ESTIMATED FAIR VALUE OF MORTGAGE SERVICING ASSETS ................ | RCFD A590 | 56,983 ////////////////// 6.a.(1)
b. Other identifiable intangible assets: //////////////////
(1) Purchased credit card relationships ..................................................... 5506 0 6.b.
(2) All other identifiable intangible assets ................................................ 5507 2,916 6.b.(2)
c. Goodwill .................................................................................... 3163 227,781 6.c.
d. Total (sum of items 6.a, 6.b.(1), 6.b.(2), and 6.c) must equal Schedule RC, item 10) ........ 2143 283,651 6.d.
e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or //////////////////
are otherwise qualifying for regulatory capital purposes .................................... 6442 0 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to //////////////////
redeem the debt ................................................................................ 3295 0 7.
----------------------
</TABLE>
- ----------
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this item.
27
<PAGE> 32
<TABLE>
<S><C>
Legal Title of Bank: The Huntington National Bank Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. Box 1558 Page RC-18
City, State Zip: Columbus, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-M--CONTINUED
<TABLE>
<S><C>
------------------
Dollar Amounts in Thousands Bil Mil Thou
- --------------------------------------------------------------------------------------------------- ------------------
8. a. Other real estate owned: //////////////////
(1) Direct and indirect investments in real estate ventures .............................. RCFD 5372 0 8.a.(1)
(2) All other real estate owned: //////////////////
(a) Construction and land development in domestic offices ............................ RCON 5508 5,417 8.a.(2)(a)
(b) Farmland in domestic offices ..................................................... RCON 5509 0 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices ............................ RCON 5510 2,932 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices ............... RCON 5511 310 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices ............................ RCON 5512 7,579 8.a.(2)(e)
(f) In foreign offices ............................................................... RCFN 5513 0 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7 ............ RCFD 2150 16,238 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: //////////////////
(1) Direct and indirect investments in real estate ventures .............................. RCFD 5374 11,034 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies......... RCFD 5375 0 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8 ............. RCFD 2130 11,034 8.b.(3)
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, //////////////////
item 23, "Perpetual preferred stock and related surplus"...................................... RCFD 3378 0 9.
10.Mutual fund and annuity sales in domestic offices during the quarter (include //////////////////
proprietary, private label, and third party products): ....................................... //////////////////
a. Money market funds ........................................................................ RCON 6641 6,620 10.a.
b. Equity securities funds ................................................................... RCON 8427 18,833 10.b
c. Debt securities funds...................................................................... RCON 8428 10,329 10.c.
d. Other mutual funds......................................................................... RCON 8429 9,733 10.d.
e. Annuities ................................................................................. RCON 8430 23,322 10.e.
f. Sales of proprietary mutual funds and annuities (included in items 10.a through //////////////////
10.e above)................................................................................ RCON 8784 10 10.f.
11. NET UNAMORTIZED REALIZED DEFERRED GAINS (LOSSES) ON OFF-BALANCE SHEET DERIVATIVE //////////////////
CONTRACTS INCLUDED IN ASSETS AND LIABILITIES REPORTED IN SCHEDULE RC ........................ RCFD A525 897 11.
12. AMOUNT OF ASSETS NETTED AGAINST NONDEPOSIT LIABILITIES AND DEPOSITS IN FOREIGN OFFICES //////////////////
(OTHER THAN INSURED BRANCHES IN PUERTO RICO AND U.S. TERRITORIES AND POSSESSIONS) ON......... //////////////////
THE BALANCE SHEET (SCHEDULE RC) IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING //////////////////
PRINCIPLES (1) .............................................................................. RCFD A526 0 12.
13. OUTSTANDING PRINCIPAL BALANCE OF LOANS OTHER THAN 1-4 FAMILY RESIDENTIAL MORTGAGE //////////////////
LOANS THAT ARE SERVICED FOR OTHERS (TO BE COMPLETED IF THIS BALANCE IS MORE THAN //////////////////
$10 MILLION AND EXCEEDS TEN PERCENT OF TOTAL ASSETS) ........................................ RCFD A591 0 13.
---------------------
- -------------------------------------------------------------------------------------------------------------------------------
Memorandum Dollar Amounts in Thousands RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
1. Reciprocal holdings of banking organizations' capital instruments ///////////////////
(TO BE COMPLETED FOR THE DECEMBER REPORT ONLY) ............................................... 3836 N/A M.1
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------
(1) Exclude netted on-balance sheet amounts associated with off-balance sheet
derivative contracts, deferred tax assets netted against deferred tax
liabilities, and assets netted in accounting for pensions.
28
<PAGE> 33
<TABLE>
<S> <C> <C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-19
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-N--PAST DUE AND NONACCRUAL LOANS, LEASES, AND OTHER ASSETS
The FFIEC regards the information reported in
all of Memorancum item 1, in items 1 through 10,
column A, and in Memorandum items 2 through 4,
column A, as confidential.
<CAPTION>
--------
C470
-------------------------------------------------------------------
(Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
-------------------------------------------------------------------
Dollar Amounts in Thousands | RCFD Bil Mil Thous | RCFD Bil Mil Thou | RCFD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C>
1. Loans secured by real estate: /////////////////// ////////////////// ///////////////////
a. To U.S. addressees (domicile) .................... 1245 105,001 1246 11,522 1247 24,140
b. To non-U.S. addressees (domicile) ................ 1248 0 1249 0 1250 0 1.b.
2. Loans to depository institutions and acceptances /////////////////// ////////////////// ///////////////////
of other banks: /////////////////// ////////////////// ///////////////////
a. To U.S. banks and other U.S. depository /////////////////// ////////////////// ///////////////////
institutions ..................................... 5377 0 5378 0 5379 0 2.a.
b. To foreign banks ................................. 5380 0 5381 0 5382 0 2.b.
3. Loans to finance agricultural production and /////////////////// ////////////////// ///////////////////
other loans to farmers .............................. 1594 1,352 1597 404 1583 256 3.
4. Commercial and industrial loans: /////////////////// ////////////////// ///////////////////
a. To U.S. addressees (domicile) .................... 1251 67,475 1252 10,748 1253 30,499 4.a.
b. To non-U.S. addressees (domicile) ................ 1254 0 1255 0 1256 0 4.b.
5. Loans to individuals for household, family, and /////////////////// ////////////////// ///////////////////
other personal expenditures: /////////////////// ////////////////// ///////////////////
a. Credit cards and related plans ................... 5383 10,063 5384 4,059 5385 0 5.a.
b. Other (includes single payment, installment, /////////////////// ////////////////// ///////////////////
and all student loans) ........................... 5386 54,551 5387 4,586 5388 97 5.b.
6. Loans to foreign governments and official /////////////////// ////////////////// ///////////////////
institutions ........................................ 5389 0 5390 0 5391 0 6.
7. All other loans ..................................... 5459 0 5460 0 5461 0 7.
8. Lease financing receivables: /////////////////// ////////////////// ///////////////////
a. Of U.S. addressees (domicile) .................... 1257 13,648 1258 1,697 1259 390 8.a.
b. Of non-U.S. addressees (domicile) ................ 1271 0 1272 0 1791 0 8.b.
9. Debt securities and other assets (exclude other /////////////////// ////////////////// ///////////////////
real estate owned and other repossessed assets) ..... 3505 0 3506 0 3507 0 9.
-----------------------------------------------------------------
</TABLE>
<TABLE>
====================================================================================================================================
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
<S><C> <C> <C> <C> <C>
-------------------------------------------------------------------
10. Loans and leases reported in items 1 RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
through 8 above which are wholly or partially ////////////////// ////////////////// ///////////////////
guaranteed by the U.S. Government ................. 5612 2,238 5613 3,004 5614 1,231 10.
a. Guaranteed portion of loans and leases ////////////////// ////////////////// ///////////////////
included in item 10 above ...................... 5615 2,102 5616 2,989 5617 675 10.a.
-------------------------------------------------------------------
</TABLE>
29
<PAGE> 34
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-20
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-N--CONTINUED
<TABLE>
<S><C>
--------
C473 <-
----------------------------------------------------------------
(Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
Memoranda accruing accruing
-----------------------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
1. Restructured loans and leases included in ////////////////// ////////////////// //////////////////
Schedule RC-N, items 1 through 8, above (and not ////////////////// ////////////////// //////////////////
reported in Schedule RC-C, part I, Memorandum ////////////////// ////////////////// //////////////////
item 2) .......................................... 1658 0 1659 0 1661 0 M.1.
2. Loans to finance commercial real estate, ////////////////// ////////////////// //////////////////
construction, and land development activities ////////////////// ////////////////// //////////////////
(NOT SECURED BY REAL ESTATE) included in ////////////////// ////////////////// //////////////////
Schedule RC-N, items 4 and 7, above .............. 6558 0 6559 0 6560 0 M.2.
------------------------------------------------------------
3. Loans secured by real estate in domestic offices RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou
------------------ ------------------ ------------------
(included in Schedule RC-N, item 1, above) : ////////////////// ////////////////// //////////////////
a. Construction and land development ............ 2759 6,205 2769 1,370 3492 2,276 M.3.a.
b. Secured by farmland .......................... 3483 0 3494 0 3495 0 N.3.b.
c. Secured by 1-4 family residential properties: ////////////////// ////////////////// //////////////////
(1) Revolving, open-end loans secured by ////////////////// ////////////////// //////////////////
1-4 family residential properties and ////////////////// ////////////////// //////////////////
extended under lines of credit .......... 5398 7,646 5399 2,499 5400 0 M.3.c.(1)
(2) All other loans secured by 1-4 family ////////////////// ////////////////// //////////////////
residential properties .................. 5401 59,154 5402 4,996 5403 12,466 M.3.c.(2)
d. Secured by multifamily (5 or more) residential ////////////////// ////////////////// //////////////////
properties ................................... 3499 0 3500 0 3501 0 M. 3.d.
e. Secured by nonfarm nonresidential properties .. 3502 31,996 3503 2,657 3504 9,398 M.3.e.
-----------------------------------------------------------
-------------------------------------------
(Column A) (Column B)
Past due Past due 90
30 through 89 days days or more
-------------------------------------------
RCFD Bil Mil Thou RCFD Bil Mil Thou
-------------------------------------------
4. Interest rate, foreign exchange rate, and other ////////////////// //////////////////
commodity and equity contracts: ////////////////// //////////////////
a. Book value of amounts carried as assets ...... 3522 0 3528 0 M.4.a.
b. Replacement cost of contracts with a ////////////////// //////////////////
positive replacement cost .................... 3529 0 3550 0 M.4.b.
-------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Person to whom questions about the Reports of Condition and Income should be directed: C477 <-
BILL TELZEROW, MANAGER OF FINANCIAL REPORTING (614) 480-4563
- ----------------------------------------------------------------------------- ----------------------------------------------
Name and Title (TEXT 88901) Area code/phone number/extension (TEXT 8902)
</TABLE>
30
<PAGE> 35
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-21
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-O--OTHER DATA FOR DEPOSIT INSURANCE AND FICO ASSESSMENTS
<TABLE>
<CAPTION>
<S><C>
----
C475
-------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------
1. Unposted debits (see instructions): /////////////////
a. Actual amount of all unposted debits .................................................... 0030 0 1.a.
OR /////////////////
b. Separate amount of unposted debits: /////////////////
(1) Actual amount of unposted debits to demand deposits ................................ 0031 N/A 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits (1) ................... 0032 N/A 1.b.(2)
2. Unposted credits (see instructions): /////////////////
a. Actual amount of all unposted credits: 3510 2,040 2.a.
OR /////////////////
b. Separate amount unposted credits: /////////////////
(1) Actual amount of unposted credits to demand deposits ................................ 3512 N/A 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits (1) .................. 3514 N/A 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included in total /////////////////
deposits in domestic offices) .............................................................. 3520 0 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in Puerto /////////////////
Rico and U.S. territories and possessions (not included in total deposits): /////////////////
a. Demand deposits in insured branches (included in Schedule RC-E, Part II) ................ 2211 4,632 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries ............................... 2351 0 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries .................... 5514 0 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: /////////////////
a. Demand deposits in insured branches (included in Schedule RC-E, Part II) ................ 2229 0 5.a.
b. Time and savings deposits (1) in insured branches (included in Schedule RC-E, Part II) .. 2383 0 5.b.
c. Interest accrued and unpaid on deposits in insured branches /////////////////
(included in Schedule RC-G, item 1.b) ................................................. 5515 0 5.c.
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on /////////////////
behalf of its respondent depository institutions that are also reflected as deposit /////////////////
liabilities of the reporting bank: /////////////////
a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, item 4 or 5, /////////////////
column B) ............................................................................... 2314 0 6.a.
b. Amount reflected in time and savings deposits (1) (included in Schedule RC-E, Part I, /////////////////
item 4 or 5, column A or C, but not column B) ........................................... 2315 0 6.b.
7. Unamortized premiums and discounts on time and savings deposits: (1), (2) /////////////////
a. Unamortized premiums .................................................................... 5516 199 7.a.
b. Unamortized discounts ................................................................... 5517 0 7.b.
8. TO BE COMPLETED BY BANKS WITH "OAKAR DEPOSITS." /////////////////
a. DEPOSITS PURCHASED OR ACQUIRED FROM OTHER FDIC-INSURED INSTITUTIONS DURING THE QUARTER /////////////////
(EXCLUDE DEPOSITS PURCHASED OR ACQUIRED FROM FOREIGN OFFICES OTHER THAN INSURED BRANCHES /////////////////
IN PUERTO RICO AND U.S TERRITORIES AND POSSESSIONS): /////////////////
(1) TOTAL DEPOSITS PURCHASED OR ACQUIRED FROM FOREIGN FDIC-INSURED INSTITUTIONS DURING /////////////////
THE QUARTER ......................................................................... A531 5,656,581 8.a.(1)
(2) AMOUNT OF PURCHASED OR ACQUIRED DEPOSITS REPORTED IN ITEM 8.A.(1) ABOVE ATTRIBUTABLE /////////////////
TO A SECONDARY FUND (I.E., BIF MEMBERS REPORT DEPOSITS ATTRIBUTABLE TO SAIF; SAIF /////////////////
MEMBERS REPORT DEPOSITS ATTRIBUTABLE TO BIF) ....................................... A531 705,608 8.a.(2)
b. TOTAL DEPOSITS SOLD OR TRANSFERRED TO OTHER FDIC-INSURED INSTITUTIONS DURING THE QUARTER /////////////////
(EXCLUDE SALES OR TRANSFERS BY THE REPORTING BANK OF DEPOSITS IN FOREIGN OFFICES OTHER /////////////////
THAN INSURED BRANCHES IN PUERTO RICO AND U.S. TERRITORIES AND POSSESSIONS)............... A533 0 8.b.
</TABLE>
- --------------
(1) For FDIC insurance and FICO assessment purposes, "time and savings
deposits" consists of nontransaction accounts and all transaction accounts
other than demand deposits.
(2) Exclude core deposit intangibles.
31
<PAGE> 36
<TABLE>
<S> <C> <C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-22
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
SCHEDULE RC-O--CONTINUED
<TABLE>
<CAPTION>
-----------------------
Dollar Amounts in Thousands | RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
9. Deposits in lifeline accounts ................................................................... 5596 /////////////// 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total /////////////////////
deposits in domestic offices) ................................................................... 8432 0 10.
11. ADJUSTMENTS TO DEMAND DEPOSITS IN DOMESTIC OFFICES AND IN INSURED BRANCHES IN PUERTO RICO /////////////////////
AND U.S. TERRITORIES AND POSSESSIONS REPORTED IN SCHEDULE RC-E FOR CERTAIN RECIPROCAL /////////////////////
DEMAND BALANCES: /////////////////////
a. AMOUNT BY WHICH DEMAND DEPOSITS WOULD BE REDUCED IF THE REPORTING BANK'S RECIPROCAL /////////////////////
DEMAND BALANCES WITH THE DOMESTIC OFFICES OF U.S. BANKS AND SAVINGS ASSOCIATIONS /////////////////////
AND INSURED BRANCHES IN PUERTO RICO AND U.S. TERRITORIES AND POSSESSIONS THAT WERE /////////////////////
REPORTED ON A GROSS BASIS IN SCHEDULE RC-E HAD BEEN REPORTED ON A NET BASIS ................. 8785 5,490 11.a.
b. AMOUNT BY WHICH DEMAND DEPOSITS WOULD BE INCREASED IF THE REPORTING BANK'S RECIPROCAL /////////////////////
DEMAND BALANCES WITH FOREIGN BANKS AND FOREIGN OFFICES OF OTHER U.S. BANKS (OTHER THAN /////////////////////
INSURED BRANCHES IN PUERTO RICO AND U.S. TERRITORIES AND POSSESSIONS) THAT WERE REPORTED /////////////////////
ON A NET BASIS IN SCHEDULE RC-E HAD BEEN REPORTED ON A GROSS BASIS .......................... A181 0 11.b.
c. AMOUNT BY WHICH DEMAND DEPOSITS WOULD BE REDUCED IF CASH ITEMS IN PROCESS OF COLLECTION /////////////////////
WERE INCLUDED IN THE CALCULATION OF THE REPORTING BANK'S NET RECIPROCAL DEMAND BALANCES /////////////////////
WITH THE DOMESTIC OFFICES OF U.S. BANKS AND SAVINGS ASSOCIATIONS AND INSURED BRANCHES /////////////////////
IN PUERTO RICO AND U.S. TERRITORIES AND POSSESSIONS IN SCHEDULE RC-E ........................ A182 0 11.c.
12. AMOUNT OF ASSETS NETTED AGAINST DEPOSIT LIABILITIES IN DOMESTIC OFFICES AND IN INSURED /////////////////////
BRANCHES IN PUERTO RICO AND U.S. TERRITORIES AND POSSESSIONS ON THE BALANCE SHEET /////////////////////
(SCHEDULE RC) IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (EXCLUDE AMOUNTS /////////////////////
RELATED TO RECIPROCAL DEMAND BALANCES): /////////////////////
a. AMOUNT OF ASSETS NETTED AGAINST DEMAND DEPOSITS ............................................. A527 0 12.a.
b. AMOUNT OF ASSETS NETTED AGAINST TIME AND SAVINGS DEPOSITS ................................... A528 0 12.b
---------------------
Memoranda (TO BE COMPLETED EACH QUARTER EXCEPT AS NOTED)
-----------------------
Dollar Amounts in Thousands | RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and //////////////////////
1.b.(1) must equal Schedule RC, item 13.a): //////////////////////
a. Deposit accounts of $100,000 or less: //////////////////////
(1) Amount of deposit accounts of $100,000 or less ................................. 2702 9,892,555 M.1.a. (1)
(2) Number of deposit accounts of $100,000 or less (TO Number //////////////////////
BE COMPLETED FOR THE JUNE REPORT ONLY) ............ RCON 3779 1,656,825 ////////////////////// M.1.a. (2)
b. Deposit accounts of more than $100,000: //////////////////////
(1) Amount of deposit accounts of more than $100,000 .............................. 2710 4,294,464 M.1.b. (1)
Number //////////////////////
//////////////////////
(2) Number of deposit accounts of more than $100,000 .. RCON 2722 13,253 ////////////////////// M.1.b. (2)
//////////////////////
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by multiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2)
above by $100,000 and subtracting the result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b. (1) above.
Indicate in the appropriate box at the right whether your bank has a method or YES NO
procedure for determining a better estimate of uninsured deposits than the ___________________________
estimate described above ......................................................... 6861| | /// | X M.2.a.
b. If the box marked YES has been checked, report the estimate of uninsured deposits RCON Bil Mil Thou
determined by using your bank's method or procedure .............................. 5597 N/A M.2.b.
3. HAS THE REPORTING INSTITUTION BEEN CONSOLIDATED WITH A PARENT BANK OR
SAVINGS ASSOCIATION IN THAT PARENT BANK'S OR PARENT SAVINGS ASSOCIATION'S
CALL REPORT OR THRIFT FINANCIAL REPORT?
IF SO, REPORT THE LEGAL TITLE AND FDIC CERTIFICATE NUMBER OF THE PARENT BANK OR PARENT
SAVINGS ASSOCIATION:
FDIC Cert. No.
------------------------- -------------------------
| TEXT A5A5 | N/A |RCON A545| N/A | M.3.
----------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE> 37
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 PAGE RC-23
City, State Zip: COLUMBUS, OH 43216
FDIC Certification No.: 06560
</TABLE>
SCHEDULE RC-R--REGULATORY CAPITAL
<TABLE>
<CAPTION>
<S><C>
This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC,
item 12, for June 30, 1996, must complete items 2 through 9 and Memoranda items 1 and 2. BANKS WITH ASSETS OF LESS THAN $1 BILLION
MUST COMPLETE ITEMS 1 THROUGH 3 BELOW OR SCHEDULE RC-R IN ITS ENTIRETY, DEPENDING ON THEIR RESPONSE TO ITEM 1 BELOW.
1. TEST FOR DETERMINING THE EXTENT TO WHICH SCHEDULE RC-R MUST BE COMPLETED. TO BE -----
COMPLETED ONLY BY BANKS WITH TOTAL ASSETS OF LESS THAN $1 BILLION. Indicate in the C480
appropriate box at the right whether the bank has total capital greater than or ----------------
equal to eight percent of adjusted total assets ......................................... YES NO
----------------------------
RCFD 6056 /// 1.
----------------------------
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government
agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for
loan and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked
NO has been checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than
eight percent or that the bank is not in compliance with the risk-based capital guidelines.
- -------------------------------------------------------------------
NOTE: ALL BANKS ARE REQUIRED TO COMPLETE ITEMS 2 AND 3 BELOW.
SEE OPTIONAL WORKSHEET FOR ITEMS 3.a THROUGH 3.f.
- -------------------------------------------------------------------
<CAPTION>
-----------------------
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
- -------------------------------------------------------------------------------------------------------------------------------
<S><C>
2. PORTION OF QUALIFYING LIMITED-LIFE CAPITAL INSTRUMENTS (ORIGINAL WEIGHTED | ////////////////// |
AVERAGE MATURITY OF AT LEAST FIVE YEARS) THAT IS INCLUDIBLE IN TIER 2 CAPITAL: | ////////////////// |
a. SUBORDINATED DEBT(1) AND INTERMEDIATE TERM PREFERRED STOCK ..................................... | A515 449,424 | 2.a.
b. OTHER LIMITED-LIFE CAPITAL INSTRUMENTS ......................................................... | A516 0 | 2.b.
3. Amounts used in calculating regulatory capital ratios (report amounts | ////////////////// |
determined by the bank for its own internal regulatory capital analyses | ////////////////// |
consistent with applicable capital standards): | ////////////////// |
a. Tier 1 capital ................................................................................. | 8274 1,372,637 | 3.a.
b. Tier 2 capital ................................................................................. | 8275 658,323 | 3.b.
c. Total risk-based capital ....................................................................... | 3792 2,030,960 | 3.c.
d. Excess allowance for loan and lease losses (amount that exceeds 1.25% of gross | ////////////////// |
risk-weighted assets) .......................................................................... | A222 0 | 3.d.
e. Net risk-weighted assets (gross risk-weighted assets less excess allowance reported | ////////////////// |
in item 3.d above and all other deductions) .................................................... | A223 17,692,537 | 3.e.
f. "Average total assets" (quarterly average reported in Schedule RC-K, item 9, less all | /////////////////// |
assets deducted from Tier 1 capital(2) ......................................................... | A224 20,987,023 | 3.f.
-----------------------
<CAPTION>
<S><C>
-------------------------------------------
| (Column A) | (Column B) |
| Assets | Credit Equiv- |
| Recorded | alent Amount |
ITEMS 4-9 AND MEMORANDA ITEMS 1 AND 2 ARE TO BE COMPLETED | on the | of Off-Balance |
BY BANKS THAT ANSWERED NO TO ITEM 1 ABOVE AND | Balance Sheet | Sheet Items(3) |
BY BANKS WITH TOTAL ASSETS OF $1 BILLION OR MORE. -------------------------------------------
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
4. Assets and credit equivalent amounts of off-balance sheet items -------------------------------------------
assigned to the Zero percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet ...................................... | 5163 1,073,071 | ////////////////// | 4.a.
b. Credit equivalent amount of off-balance sheet items ....................... | ////////////////// | 3796 0 | 4.b.
-------------------------------------------
</TABLE>
- ----------
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not deduct excess allowance for loan and lease losses.
(3) Do not report in column B the risk-weighted amount of assets reported in
column A.
33
<PAGE> 38
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-24
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
SCHEDULE RC-R--CONTINUED
---------------------------------------------
(Column A) (Column B)
Assets Credit Equiv-
Recorded alent Amount
on the of Off-Balance
Balance Sheet Sheet Items (1)
----------------- ----------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou
- ----------------------------------------------------------------------------- -------------------------------------------
5. Assets and credit equivalent amounts of off-balance sheet items ////////////////// /////////////////
assigned to the 20 percent risk category: ////////////////// /////////////////
a. Assets recorded on the balance sheet................................... 5165 3,986,110 ///////////////// 5.a.
b. Credit equivalent amount of off-balance sheet items.................... ////////////////// 3801 7,259 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items ////////////////// /////////////////
assigned to the 50 percent risk category: ////////////////// /////////////////
a. Assets recorded on the balance sheet .................................. 3802 1,632,901 ///////////////// 6.a.
b. Credit equivalent amount of off-balance sheet items.................... ////////////////// 3803 21,687 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items ////////////////// /////////////////
assigned to the 100 percent risk category: ////////////////// /////////////////
a. Assets recorded on the balance sheet................................... 3804 14,597,394 ///////////////// 7.a.
b. Credit equivalent amount of off-balance sheet items.................... ////////////////// 3805 1,699,036 7.b.
8. On-balance sheet asset values excluded from and deducted in ////////////////// //////////////////
the calculation of the risk-based capital ratio(2) ....................... 3806 (39,852) ////////////////// 8.
9. Total assets recorded on the balance sheet (sum of ////////////////// //////////////////
items 4.a, 5.a, 6.a, 7.a, and 8, column A) (must equal Schedule RC, ////////////////// //////////////////
item 12 plus items 4.b and 4.c) .......................................... 3807 21,249,624 ///////////////// 9.
Memoranda
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------
1. Current credit exposure across all off-balance sheet derivative contracts covered by the ////////////////////
risk-based capital standards .................................................................... 8764 19,189 M.1.
------------------------------------------------------------------
With a remaining maturity of
-----------------------------------------------------------------
(Column A) (Column B) (Column C)
One year or less Over one year Over five years
through five years
2. Notional principal amounts of ------------------- ------------------ ----------------------
off-balance sheet derivative contracts (3): RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou
---------------------------------------------------------------------
a. Interest rate contracts...................... 3809 992,960 8766 1,220,428 |8767 490,652 M.2.a.
b. Foreign exchange contracts................... 3812 27,196 8769 766 |8770 0 M.2.b.
c. Gold contracts............................... 8771 0 8772 0 |8773 0 M.2.c.
d. Other precious metals contracts.............. 8774 0 8775 0 |8776 0 M.2.d.
e. Other commodity contracts.................... 8773 0 8778 0 |8779 0 M.2.e.
f. Equity derivative contracts.................. A000 0 A001 0 |A002 0 M.2.f.
</TABLE>
- ---------------
(1) Do not report in column B the risk-weighted amount of assets reported in
column A.
(2) Include the difference between the fair value and the amortized cost of
available-for-sale debt securities in item 8 and report the amortized cost
of these debt securities in items 4 through 7 above. For available-for-sale
equity securities, if fair value exceeds cost, include the difference
between the fair value and the cost in item 8 and report the cost of these
equity securities in items 5 through 7 above; if cost exceeds fair value,
report the fair value of these equity securities in items through 7 above
and include no amount in item 8. Item 8 also includes on-balance sheet asset
values (or portions thereof) of off-balance sheet interest rate, foreign
exchange rate, and commodity contracts and those contracts (e.g., futures
contracts) not subject to risk-based capital. Exclude from item 8 margin
accounts and accrued receivables not included in the calculation of credit
equivalent amounts of off-balance sheet derivatives as well as any portion
of the allowance for loan and lease losses in excess of the amount that
may be included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days or
less and all futures contracts.
34
<PAGE> 39
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 PageRC-25
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
</TABLE>
OPTIONAL NARRATIVE STATEMENT CONCERNING THE AMOUNTS
REPORTED IN THE REPORTS OF CONDITION AND INCOME
at close of business on JUNE 30, 1997
THE HUNTINGTON NATIONAL BANK
- -------------------------------------------------------------------------------
Legal Title of Bank
The management of the reporting bank may, if it wishes, submit a brief
narrative statement on the amounts reported in the Reports of Condition and
Income. This optional statement will be made available to the public, along
with the publicly available data in the Reports of Condition and Income, in
response to any request for individual bank report data. However, the
information reported in column A and in all of Memorandum item 1 of Schedule
RC-N is regarded as confidential and will not be released to the public. BANKS
CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT
DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK
CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN
SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE
PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks choosing
not to make a statement may check the "No comment" box below and should make no
entries of any kind in the space provided for the narrative statement; i.e., DO
NOT enter in this space such phrases as "No statement," "Not applicable,"
"N/A," "No comment," and "None."
The optional statement must be entered on this sheet. The statement should not
exceed 100 words. Further, regardless of the number of words, the statement
must not exceed 750 characters, including punctuation, indentation, and
standard spacing between words and sentences. If any submission should exceed
750 characters, as defined, it will be truncated at 750 characters with no
notice to the submitting bank and the truncated statement will appear as the
bank's statement
COLUMBUS , OHIO
- -------------------------------------------------------------------------------
City State
both on agency computerized records and in computer-file releases to the public.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must
be signed, in the space provided below, by a senior officer of the bank who
thereby attests to its accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing
narrative statement will be deleted from the files, and from disclosure; the
bank, at its option, may replace it with a statement, under signature,
appropriate to the amended data.
The optional narrative statement will appear in agency records and in release
to the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the truncation of
statements exceeding the 750-character limit described above). THE STATEMENT
WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY
FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
- -------------------------------------------------------------------------------
No comment _ (RCON 6979) C471 C472 <-
BANK MANAGEMENT STATEMENT (please type or print clearly):
(TEXT 6980)
PURSUANT TO AN AGREEMENT DATED JANUARY 15, 1997, THE FOLLOWING SIX AFFILIATED
BANKS WERE MERGED, ON JUNE 30, 1997, INTO THE HUNTINGTON NATIONAL BANK: THE
HUNTINGTON NATIONAL BANK OF FLORIDA; THE HUNTINGTON NATIONAL BANK OF INDIANA;
HUNTINGTON NATIONAL BANK OF WEST VIRGINIA; HUNTINGTON BANKS OF MICHIGAN; THE
HUNTINGTON TRUST COMPANY, NATIONAL ASSOCIATION; AND, THE HUNTINGTON TRUST
COMPANY OF FLORIDA, NATIONAL ASSOCIATION. ACCORDINGLY, THIS CALL REPORT
DISCLOSES THE RESULTS THERON.
- ---------------------------------------------------- ------------------------
Signature of Executive Officer of Bank Date of Signature
35
<PAGE> 40
<TABLE>
<S><C>
Legal Title of Bank: THE HUNTINGTON NATIONAL BANK Call Date: 6/30/97 ST-BK: 39-1610 FFIEC 031
Address: P.O. BOX 1558 Page RC-26
City, State Zip: COLUMBUS, OH 43216
FDIC Certificate No.: 06560
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF BANK | OMB No. For OCC: 1557-0081
| OMB No. For FDIC: 3064-0052
| OMB No. For Federal Reserve: 7100-0036
| Expiration Date: 3/31/2000
|
PLACE LABEL HERE | SPECIAL REPORT
| (Dollar Amounts in Thousands)
|
| ---------------------------------------------------------------------
| CLOSE OF BUSINESS | FDIC CERTIFICATE NUMBER | |
| DATE | | C-700 | <-
| 6/30/97 | 06560 | |
- ------------------------------------------------------------------------------------------------------------------------------------
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
- ------------------------------------------------------------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but does not constitute a part of the Report of Condition.
With each Report of Condition, these Laws require all banks to furnish a report of all loans or other extensions of credit to their
executive officers made SINCE THE DATE OF THE PREVIOUS REPORT OF CONDITION. Data regarding individual loans or other extensions of
credit are not required. If no such loans or other extensions of credit were made during the period, insert "none" against subitem
(a). (Exclude the first $15,000 of indebtedness of each executive officer under bank credit card plan.) SEE SECTIONS 215.2 AND
215.3 OF TITLE 12 OF THE CODE OF FEDERAL REGULATIONS (FEDERAL RESERVE BOARD REGULATION O) FOR THE DEFINITIONS OF "EXECUTIVE
OFFICER" AND "EXTENSION OF CREDIT," RESPECTIVELY. EXCLUDE LOANS AND OTHER EXTENSIONS OF CREDIT TO DIRECTORS AND PRINCIPAL
SHAREHOLDERS WHO ARE NOT EXECUTIVE OFFICERS.
- ------------------------------------------------------------------------------------------------------------------------------------
-----------------------------
a. Number of loans made to executive officers since the previous Call Report date ............ | RCFD 3561 | 34 a.
b. Total dollar amount of above loans (in thousands of dollars) .............................. | RCFD 3562 | 20,909 b.
c. Range of interest charged on above loans ------------------------------------------------------
(example: 9 3/4% = 9.75) ....................................... | RCFD 7701 | 8.25 | % to | RCFD 7702 | 14.90 | % c.
------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT | DATE (Month, Day, Year)
|
|
|
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND TITLE OF PERSON TO WHOM INQUIRIES MAY BE DIRECTED (TEXT 8903) | AREA CODE/PHONE NUMBER/EXTENSION
| (TEXT 8904)
BILL TELZEROW, MANAGER OF FINANCIAL REPORTING | (614) 480-4563
|
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC 8040/53 (6-95)
</TABLE>
36
<PAGE> 41
The Huntington National Bank Sheshunoff Info. Services Inc.
Columbus, OH Prepared 7/30/97 Page 1
Financial Ratios, Quarter Ending 6/30/97
Annualized Interest Margin
Interest Income (tax adjusted) / Average Assets ...................... 7.79%
Interest Expense / Average Assets ................................... 3.70%
Net Interest Margin (tax adjusted) / Average Assets .................. 4.09%
Memo: Tax Adj. for Nondeductible Interest Expense / Avg Assets ....... 0.00%
Return on Average Assets
Net Income / Average Assets .......................................... 1.31%
Income Before Extraordinary Items / Average Assets ................... 1.31%
Annualized Yields
Total Loans and leases (tax adjusted) ................................ 8.97%
Securities (tax adjusted) ............................................ 6.38%
Federal Funds Sold ................................................... 7.96%
Interest-bearing Balances with Depository Institutions ............... 7.93%
Annualized Rates Paid
Interest-bearing transaction accounts ................................ 1.61%
Time deposits of $100,000 or more .................................... 4.86%
Interest-bearing nontransaction accounts
(excluding time deposits of $100,000 or more) ................... 4.46%
All Interest-bearing Deposits ........................................ 4.19%
Federal Funds Purchased .............................................. 5.90%
Reserves
Allowance for Loan and Lease Losses / Total Loans and Leases ......... 1.41%
Provision for Loan and Lease Losses (YTD) / Avg Loans & Leases ....... 0.29%
Net Charge-offs (YTD) / Average Loans and Leases ..................... 0.25%
Nonperforming and Restructured Loans and Leases
As a percent of Gross Loans and Leases:
Loans and Leases past due 30 - 89 days ............................. 1.68%
Loans and Leases past due 90 days or more .......................... 0.20%
Nonaccrual Loans and Leases ........................................ 0.37%
Total, excluding past due 30 - 89 days ............................. 0.57%
Memo: Loans and Leases Restructured
and in compliance with modified terms ........................... 0.01%
Liquidity, Asset / Liability Management
One-day to 12-month Cumulative Gap / Total Assets .................... 9.02%
Fair value of HTM securities - amortized cost / amortized cost ....... 1.02%
As a percent of Total Deposits:
Time Deposits of $100,000 or more .................................. 9.85%
All NOWs, MMDAs and time deposits of less than $100,000 ............ 52.94%
Total Brokered Deposits ............................................ 3.10%
* Report of Income item for entire year,
divided by year-to-date average entered separately from Call Report
<PAGE> 42
The Huntington National Bank Sheshunoff Info. Services Inc.
Columbus, OH Prepared 7/30/97 Page 2
Bank's Status under Prompt Corrective Action Guidelines
Quarter Ending 6/30/97
The "Prompt Corrective Action" provision of the FDIC Improvement Act of
1991 provided a foundation for supervisory actions based on the capital levels
of institutions. Five capital categories were established. Under the rules,
an institution becomes subject to certain mandatory provisions on the basis of
its capital category without agency action, and the final rules deem an
institution to be aware of its capital category as of the date that the Call
Report is required to be filed.
The following analysis has been provided to help your institution identify
its capital category based on Call Report information. Please be aware that
these ratios are provided as an indication of your category from the Call Report
data only, and other factors may affect your final capital category. For
example, the results of your institution's examination are also used by the
agencies in establishing a capital category. Additionally, the regulatory
agencies may reclassify an institution's capital category using other
information available to the agency, such as public announcements by the
institution and other reports filed under banking or securities laws.
Risk-Based Capital Ratio...................................... 11.48%
Tier 1 Capital / Net Risk-weighted Assets..................... 7.76%
Leverage Ratio................................................ 6.54%
Tangible Equity Ratio......................................... 6.54%
Based solely upon the preceding ratios, this institution would be assigned to
the Well Capitalized category.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF VENTURE HOLDINGS TRUST FOR THE YEAR ENDED
DECEMBER 31, 1996 AND THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF VENTURE
HOLDINGS TRUST FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000864167
<NAME> VENTURE HOLDINGS TRUST
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 JUN-30-1997
<CASH> 15,436,391 348,188
<SECURITIES> 0 0
<RECEIVABLES> 132,449,560 139,775,591
<ALLOWANCES> (2,781,155) (3,052,276)
<INVENTORY> 51,100,052 48,957,732
<CURRENT-ASSETS> 210,417,645 197,400,261
<PP&E> 294,384,714 313,161,305
<DEPRECIATION> (90,410,101) (105,145,481)
<TOTAL-ASSETS> 498,067,221 483,803,108
<CURRENT-LIABILITIES> 127,014,260 109,234,494
<BONDS> 289,364,393 285,225,752
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 52,759,163 66,058,001
<TOTAL-LIABILITY-AND-EQUITY> 498,067,221 483,803,108
<SALES> 351,776,672 320,115,012
<TOTAL-REVENUES> 351,776,672 320,115,012
<CGS> 302,939,580 199,716,270
<TOTAL-COSTS> 329,527,198 290,723,091
<OTHER-EXPENSES> 20,250,653 16,093,083
<LOSS-PROVISION> 2,781,155 3,052,276
<INTEREST-EXPENSE> 20,133,276<F1> 15,112,773<F1>
<INCOME-PRETAX> 2,334,798 14,712,551
<INCOME-TAX> 335,977 1,413,713
<INCOME-CONTINUING> 1,998,821 13,298,838
<DISCONTINUED> 0 0
<EXTRAORDINARY> (2,737,650) 0
<CHANGES> 0 0
<NET-INCOME> (738,829) 13,298,838
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
<FN>
<F1>INCLUDES THE BALANCE OF THE "AMORTIZATION OF DEBT EXPENSE AND DEBT DISCOUNT"
LINE ITEM FOR THE RESPECTIVE PERIOD, FROM EXHIBIT 12.
</FN>
</TABLE>
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FOR
TENDER OF
9 1/2% SENIOR NOTES DUE 2005
(CUSIP NOS. 92326YAB5 AND 92326YAC3)
IN EXCHANGE FOR
SERIES B 9 1/2% SENIOR SUBORDINATED NOTES DUE 2005
(CUSIP NO. )
VENTURE HOLDINGS TRUST
VEMCO, INC.
VENTURE INDUSTRIES CORPORATION
VENTURE MOLD & ENGINEERING
VENTURE LEASING COMPANY
VEMCO LEASING, INC.
VENTURE HOLDINGS CORPORATION
VENTURE SERVICE COMPANY
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1997,
UNLESS EXTENDED (THE "EXPIRATION DATE"). ORIGINAL NOTES TENDERED IN THE
EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
DELIVER TO THE EXCHANGE AGENT:
THE HUNTINGTON NATIONAL BANK
By Mail, Overnight Courier or Hand Delivery:
The Huntington National Bank
41 South High Street-HC1112
Columbus, Ohio 43215
Attention: Corporate Trust Department
By Facsimile:
The Huntington National Bank
Attention: Corporate Trust Department
(614) 480-5223
(For Eligible Institutions Only)
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned hereby acknowledges receipt and review of the Prospectus
dated , 1997 (the "Prospectus") of Venture Holdings Trust, a grantor
trust organized under the laws of the State of Michigan, Vemco, Inc., Venture
Industries Corporation, Venture Mold & Engineering Corporation, Venture Leasing
Company, Vemco Leasing, Inc., Venture Holdings Corporation and Venture Service
Company, each a Michigan corporation (each an "Issuer" and, together with the
Trust, the "Issuers"), and this Letter of Transmittal (the "Letter of
Transmittal"), which together describe the Issuers' offer (the "Exchange Offer")
to exchange their Series B 9 1/2% Senior Notes due July 1, 2005 (the "Series B
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), for a like principal amount of their issued and
outstanding 9 1/2% Senior Notes due July 1, 2005 (the "Original Notes"),
pursuant to a Registration Statement of which the Prospectus is a part.
Capitalized terms used but not defined herein have the respective meaning given
to them in the Prospectus.
The Issuers reserve the right, at any time or from time to time, to extend
the Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest time and date in which the Exchange Offer is extended. The
Issuers shall notify the holders of the Original Notes of any extension by
written notice prior to 9:00 A.M., New York City time, on the next business day
after the previously scheduled Expiration Date.
<PAGE> 2
This Letter of Transmittal is to be used by a Holder of Original Notes
either if original Original Notes are to be forwarded herewith or if delivery of
Original Notes, if available, is to be made by book-entry transfer to the
account maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in the
Prospectus under the caption "The Exchange Offer-Book-Entry Transfer." Holders
of Original Notes whose Original Notes are not immediately available, or who are
unable to deliver their Original Notes and all other documents required by this
Letter of Transmittal to the Exchange Agent on or prior to the Expiration Date,
or who are unable to complete the procedure for book entry transfer on a timely
basis, must tender their Original Notes according to the guaranteed delivery
procedures set forth in the Prospectus under the caption "The Exchange Offer --
Guaranteed Delivery Procedures." See Instruction 1. Delivery of documents to the
Book-Entry Transfer Facility does not constitute delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Original Notes are registered on the books of the Issuers or any
other person who has obtained a properly completed bond power from the
registered Holder. 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. Holders who wish to tender their Original
Notes must complete this Letter of Transmittal in its entirety.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
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 Original Notes to which this Letter of Transmittal relates.
If the space below is inadequate, list the registered numbers and principal
amounts on a separate signed schedule and affix the list to this Letter of
Transmittal.
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF ORIGINAL NOTES TENDERED
- -----------------------------------------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) REGISTERED REPRESENTED BY AGGREGATE
EXACTLY AS NAME(S) APPEAR(S) ON SERIES A NOTE NUMBER(S)* NOTE(S) PRINCIPAL AMOUNT TENDERED**
===================================================================================================================================
===================================================================================================================================
===================================================================================================================================
TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
* Need not be completed by book-entry Holders.
** Unless otherwise indicated, any tendering Holder of Original Notes will be deemed to have tendered the entire aggregate
principal amount represented by such Original Notes. All tenders must be in integral multiples of $1,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE
INSTITUTIONS ONLY):
Name of Tendering Institution:
----------------------------------------
Account Number:
-------------------------------------------------------
Transaction Code Number:
----------------------------------------------
- ------------------------------ DTC Participant Number (Book-entry only)
----------------------------------------
<PAGE> 3
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING
(FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered Holder(s) of Original Notes:
-----------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------------
Window Ticket Number (if available):
--------------------------------------------
Name of Eligible Institution that Guaranteed Delivery:
--------------------------
Account Number (if delivered by book-entry transfer):
--------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
---------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of Series
B Notes. If the undersigned is a broker-dealer that will receive Series B Notes
for its own account in exchange for Original Notes, it acknowledges that the
Original Notes were acquired as a result of market-making activities or other
trading activities and that it will deliver a prospectus in connection with any
resale of such Series B Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE> 4
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Issuers for exchange the principal amount of Original
Notes indicated above. Subject to and effective upon the acceptance for exchange
of the principal amount of Original Notes tendered in accordance with this
Letter of Transmittal, the undersigned hereby exchanges, assigns and transfers
to the Issuers all right, title and interest in and to the Original Notes
tendered for exchange hereby. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent, the agent and attorney-in-fact of the undersigned
(with full knowledge that the Exchange Agent also acts as the agent of the
Issuers in connection with the Exchange Offer) with respect to the tendered
Original Notes with full power of substitution to (i) deliver such Original
Notes, or transfer ownership of such Original Notes on the account books
maintained by the Book-Entry Transfer Facility, to the Issuers and deliver all
accompanying evidences of transfer and authenticity, and (ii) present such
Original Notes for transfer on the books of the Issuers and receive all benefits
and otherwise exercise all rights of beneficial ownership of such Original
Notes, all in accordance with the terms of the Exchange Offer. The power of
attorney granted in this paragraph shall be deemed to be irrevocable and coupled
with an interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the Original
Notes tendered hereby and to acquire the Series B Notes issuable upon the
exchange of such tendered Original Notes, and that the Issuers will acquire good
and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim, when the same are
accepted for exchange by the Issuers.
The undersigned acknowledges that this Exchange Offer is being made in
reliance upon interpretations contained in no-action letters issued to third
parties by the staff of the Securities and Exchange Commission (the
"Commission") that the Series B Notes issued in exchange for the Original Notes
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by Holders thereof (other than 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 Series B Notes are acquired
in the ordinary course of such Holders' business and such Holders are not
engaging in and do not intend to engage in a distribution of the Series B Notes
and have no arrangement or understanding with any person to participate in a
distribution of such Series B Notes. The undersigned hereby further represent(s)
to the Company that (i) any Series B Notes acquired in exchange for Original
Notes tendered hereby are being acquired in the ordinary course of business of
the person receiving such Series B Notes, (ii) neither the undersigned nor any
such other person is engaging in or intends to engage in a distribution of the
Series B Notes, (iii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such Series B Notes, and (iv) neither the Holder nor any such other person is
an "affiliate," as defined in Rule 405 under the Securities Act, of the Issuers.
If the undersigned or the person receiving the Series B Notes is a
broker-dealer that is receiving Series B Notes for its own account in exchange
for Original Notes that were acquired as a result of market-making activities or
other trading activities, the undersigned acknowledges that it or such other
person will deliver a Prospectus in connection with any resale of such Series B
Notes; however, by so acknowledging and by delivering a Prospectus, the
undersigned will not be deemed to admit that the undersigned or such other
person is an "underwriter" within the meaning of the Securities Act. The
undersigned acknowledges that if the undersigned is participating in the
Exchange Offer for the purpose of distributing the Series B Notes (i) the
undersigned cannot rely on the position of the staff of the Commission in
certain 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 a secondary resale transaction of the Series B
Notes, in which case the registration statement must contain the information
required by the Securities Act, and (ii) failure to comply with such
requirements in such instance could result in the undersigned incurring
liability under the Securities Act for which the undersigned is not indemnified
by the Issuers.
If the undersigned or the person receiving the Series B Notes is an
"affiliate" (as defined in Rule 405 under the Securities Act) of the Issuers,
the undersigned represents to the Issuers that the undersigned
<PAGE> 5
understands and acknowledges that the Series B Notes may not be offered for
resale, resold or otherwise transferred by the undersigned or such other person
without registration under the Securities Act or an exemption therefrom.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Issuers to be necessary or
desirable to complete the exchange, assignment and transfer of the Original
Notes tendered hereby, including the transfer of such Original Notes on the
account books maintained by the Book-Entry Transfer Facility.
For purposes of the Exchange Offer, the Issuers shall be deemed to have
accepted for exchange validly tendered Original Notes when, as and if the
Issuers give oral or written notice thereof to the Exchange Agent. Any tendered
Original Notes that are not accepted for exchange pursuant to the Exchange Offer
for any reason will be returned, without expense, to the undersigned at the
address shown below or at a different address as may be indicated herein under
"Special Delivery Instructions" as promptly as practicable after the Expiration
Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned acknowledges that the Issuers' acceptance of properly
tendered Original Notes pursuant to the procedures described under the caption
"The Exchange Offer -- Procedures for Tendering" in the Prospectus and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Issuers upon the terms and subject to the conditions of the Exchange
Offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the Series B Notes issued in exchange for the Original Notes accepted for
exchange and return any Original Notes not tendered or not exchanged, in the
name(s) of the undersigned. Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail or deliver the Series B Notes issued in
exchange for the Original Notes accepted for exchange and any Original Notes not
tendered or not exchanged (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signatures). In the
event that both "Special Issuance Instructions" and "Special Delivery
Instructions" are completed, please issue the Series B Notes issued in exchange
for the Original Notes accepted for exchange in the name(s) of, and return any
Original Notes not tendered or not exchanged to, the person(s) so indicated. The
undersigned recognizes that the Issuers have no obligation pursuant to the
"Special Issuance Instructions" and "Special Delivery Instructions" to transfer
any Original Notes from the name of the registered holder(s) thereof if the
Issuers do not accept for exchange any of the Original Notes so tendered for
exchange.
<PAGE> 6
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY (i) if Original Notes in a principal amount not
tendered, or Series B Notes issued in exchange for Original Notes accepted for
exchange, are to be issued in the name of someone other than the undersigned, or
(ii) if Original Notes tendered by book-entry transfer which are not exchanged
are to be returned for credit to an account maintained at the Book-Entry
Transfer Facility. Issue Series B Notes and/or Original Notes to:
Name(s):
------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(COMPLETE SUBSTITUTE FORM W-9)
[ ] Credit unexchanged Original Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility set forth below:
- --------------------------------------------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER, IF APPLICABLE)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY if Original Notes in a principal amount not tendered,
or Series B Notes issued in exchange for Original Notes accepted for exchange,
are to be mailed or delivered to someone other than the undersigned, or to the
undersigned at an address other than that shown below the undersigned's
signature.
Mail or deliver Series B Notes and/or Original Notes to:
Name:
---------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
<PAGE> 7
PLEASE SIGN HERE WHETHER OR NOT
ORIGINAL NOTES ARE BEING PHYSICALLY TENDERED HEREBY
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE)
DATED:
----------------------------,
DATED:
----------------------------,
AREA CODE AND TELEPHONE NUMBER:
-------------------------------------------------
The above lines must be signed by the registered Holder(s) of Original
Notes as name(s) appear(s) on the Original Notes or on a security position
listing, or by person(s) authorized to become registered Holder(s) by a properly
completed bond power from the registered Holder(s), a copy of which must be
transmitted with this Letter of Transmittal. If Original Notes to which this
Letter of Transmittal relate are held of record by two or more joint Holders,
then all such Holders must sign this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
then such person must (i) set forth his or her full title below and (ii) unless
waived by the Issuers, submit evidence satisfactory to the Issuers of such
person's authority so to act. See Instruction 5 regarding the completion of this
Letter of Transmittal, printed below.
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Type or Print)
Capacity:
-----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
(Include Zip Code)
MEDALLION SIGNATURE GUARANTEE
(If Required by Instruction 5)
Certain signatures must be Guaranteed by an Eligible Institution.
Signature(s) Guaranteed by an Eligible Institution:
-----------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Title)
- --------------------------------------------------------------------------------
(Name of Firm)
- --------------------------------------------------------------------------------
(Address, Include Zip Code)
- --------------------------------------------------------------------------------
(Area Code and Telephone Number)
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Original Notes or Book-Entry
Confirmations. All physically delivered Original Notes or any confirmation of a
book-entry transfer to the Exchange Agent's account at the Book-Entry Transfer
Facility of Original Notes tendered by book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. The method of delivery of the tendered Original Notes, this
Letter of Transmittal and all other required documents to the Exchange Agent 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 or confirmed by the
Exchange Agent. Instead of delivery by mail, it is recommended that the Holder
use an overnight or hand delivery service. In all cases, sufficient time should
be allowed to assure delivery to the Exchange Agent before the Expiration Date.
No Letter of Transmittal or Original Notes should be sent to the Issuers.
2. Guaranteed Delivery Procedures. Holders who wish to tender their
Original Notes and (a) whose Original Notes are not immediately available, or
(b) who cannot deliver their Original Notes, this Letter of Transmittal or any
other documents required hereby to the Exchange Agent prior to the Expiration
Date or (c) who are unable to complete the procedure for book-entry transfer on
a timely basis, must tender their Original Notes according to the guaranteed
delivery procedures set forth in the Prospectus. Pursuant to such procedures:
(i) such tender must be made by or through a firm which is a member of a
registered national securities exchange or of the National Association of
Securities Dealers Inc. or a commercial bank or a trust company having an office
or correspondent in the United States (an "Eligible Institution"); (ii) prior to
the Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the Holder of the Original Notes, the registration number(s) of such
Original Notes and the principal amount of Original Notes tendered, stating that
the tender is being made thereby and guaranteeing that, within three (3) New
York Stock Exchange, Inc. ("NYSE") trading days after the Expiration Date, this
Letter of Transmittal (or facsimile hereof) together with the Original Notes (or
a Book entry Confirmation) in proper form for transfer, will be received by the
Exchange Agent within three (3) NYSE trading days after the Expiration Date; and
(iii) the certificates for all physically tendered shares of Original Notes, in
proper form for transfer, or Book-Entry Confirmation, as the case may be, and
all other documents required by this Letter are received by the Exchange Agent
within three (3) NYSE trading days after the date of execution of the Notice of
Guaranteed Delivery.
Any Holder of Original Notes who wishes to tender Original Notes pursuant
to the guaranteed delivery procedures described above must ensure that the
Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m.,
New York City time, on the Expiration Date. Upon request of the Exchange Agent,
a Notice of Guaranteed Delivery will be sent to Holders who wish to tender their
Original Notes according to the guaranteed delivery procedures set forth above.
See "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus.
3. Tender by Holder. Only a Holder of Original Notes may tender such
Original Notes in the Exchange Offer. Any beneficial Holder of Original Notes
who is not the registered Holder and who wishes to tender should arrange with
the registered Holder to execute and deliver this Letter of Transmittal on his
behalf or must, prior to completing and executing this Letter of Transmittal and
delivering his Original Notes, either make appropriate arrangements to register
ownership of the Original Notes in such Holder's name or obtain a properly
completed bond power from the registered Holder.
4. Partial Tenders. Tenders of Original Notes will be accepted only in
integral multiples of $1,000. If less than the entire principal amount of any
Original Notes is tendered, the tendering Holder should fill in the principal
amount tendered in the fourth column, entitled "Principal Amount Tendered," of
the box entitled "Description of Original Notes Tendered" above. The entire
principal amount of Original Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated. If the entire principal
amount of all Original Notes is not tendered, then Original Notes for the
principal amount of Original Notes not tendered and Series B Notes issued in
exchange for any
<PAGE> 9
Original Notes accepted will be sent to the Holder at his or her registered
address, unless a different address is provided in the appropriate box on this
Letter of Transmittal, promptly after the Original Notes are accepted for
exchange.
5. Signatures on This Letter of Transmittal; Bond Powers and Endorsements;
Medallion Guarantee of Signatures. If this Letter of Transmittal (or facsimile
hereof) is signed by the record Holder(s) of the Original Notes tendered hereby,
the signature must correspond with the name(s) as written on the face of the
Original Notes without alteration, enlargement or any change whatsoever. If this
Letter of Transmittal is signed by a participant in the Book-Entry Transfer
Facility, the signature must correspond with the name as it appears on the
security position listing as the Holder of the Original Notes.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder or Holders of Original Notes listed and tendered hereby and
the Series B Notes issued in exchange therefor is to be issued (or any
untendered principal amount of Original Notes is to be reissued) to the
registered Holder, the said Holder need not and should not endorse any tendered
Original Notes, nor provide a separate bond power. In any other case, such
Holder must either properly endorse the Original Notes tendered or transmit a
properly completed separate bond power with this Letter of Transmittal, with the
signatures on the endorsement or bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder or Holders of any Original Notes listed, such
Original Notes must be endorsed or accompanied by appropriate bond powers, in
each case signed as the name of the registered Holder or Holders appears on the
Original Notes.
If this Letter of Transmittal (or facsimile hereof) or any Original Notes
or bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Issuers of their
authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Original Notes or signatures on bond powers required by
this Instruction 5 must be guaranteed by an Eligible Institution.
No signature guarantee is required if (i) this Letter of Transmittal is
signed by the registered holder(s) of the Original Notes tendered herewith (or
by a participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of the tendered Original Notes) and the
issuance of Series B Notes (and any Original Notes not tendered or not accepted)
are to be issued directly to such registered holder(s) (or, if signed by a
participant in the Book-Entry Transfer Facility, any Series B Notes or Original
Notes not tendered or not accepted are to be deposited to such participant's
account at such Book-Entry Transfer Facility) and neither the box entitled
"Special Delivery Instructions" nor the box entitled "Special Issuance
Instructions" has been completed, or (ii) such Original Notes are tendered for
the account of an Eligible Institution. In all other cases, all signatures on
this Letter of Transmittal must be guaranteed by an Eligible Institution.
6. Special Registration and Delivery Instructions. Tendering holders should
indicate, in the applicable box or boxes, the name and address (or account at
the Book-Entry Transfer Facility) to which Series B Notes or substitute Original
Notes for principal amounts not tendered or not accepted for exchange are to be
issued or sent, if different from the name and address of the person signing
this Letter of Transmittal. In the case of issuance in a different name, the
taxpayer identification or social security number of the person named must also
be indicated.
7. Transfer Taxes. The Issuers will pay all transfer taxes, if any,
applicable to the exchange of Original Notes pursuant to the Exchange Offer. If,
however, Series B Notes or Original Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered Holder of the Original
Notes tendered hereby, or if tendered Original Notes are registered in the name
of any person other than the person signing this Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Original 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 this Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering Holder.
<PAGE> 10
EXCEPT AS PROVIDED IN THIS INSTRUCTION 7, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE ORIGINAL NOTES LISTED IN THIS LETTER OF
TRANSMITTAL.
8. Tax Identification Number. Federal income tax law requires that a holder
of any Original Notes which are accepted for exchange must provide the Issuers
(as payor) with its correct taxpayer identification number ("TIN"), which, in
the case of a Holder who is an individual is his or her social security number.
If the Issuers are not provided with the correct TIN, the Holder may be subject
to a $50 penalty imposed by Internal Revenue Service. (If withholding results in
an over-payment of taxes, a refund may be obtained.) Certain holders (including,
among others, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional instructions.
To prevent backup withholding, each tendering Holder must provide such
Holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such Holder is awaiting a
TIN), and that (i) the Holder has not been notified by the Internal Revenue
Service that such Holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the Holder that such Holder is no longer subject to backup withholding.
If the Original Notes are registered in more than one name or are not in the
name of the actual owner, see the enclosed "Guidelines for Certification of
Taxpayer Identification Number of Substitute Form W-9" for information on which
TIN to report.
The Issuers reserve the right in their sole discretion to take whatever
steps are necessary to comply with the Issuers' obligation regarding backup
withholding.
9. Validity of Tenders. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of tendered Original Notes will be
determined by the Issuers, in their sole discretion, which determination will be
final and binding. The Issuers reserve the right to reject any and all Original
Notes not validly tendered or any Original Notes, the Issuers' acceptance of
which would, in the opinion of the Issuers or their counsel, be unlawful. The
Issuers also reserve the right to waive any conditions of the Exchange Offer or
defects or irregularities in tenders of Original Notes as to any ineligibility
of any holder who seeks to tender Original Notes in the Exchange Offer. The
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the instructions hereto) by the Issuers shall be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Original Notes must be cured within such time as the
Issuers shall determine. The Issuers will use reasonable efforts to give
notification of defects or irregularities with respect to tenders of Original
Notes, but shall not incur any liability for failure to give such notification.
10. Waiver of Conditions. The Issuers reserves the absolute right to waive,
in whole or in part, any of the conditions to the Exchange Offer set forth in
the Prospectus.
11. No Conditional Tender. No alternative, conditional, irregular or
contingent tender of Original Notes or transmittal of this Letter of Transmittal
will be accepted.
12. Mutilated, Lost, Stolen or Destroyed Original Notes. Any Holder whose
Original Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated above for further instructions.
13. Requests for Assistance or Additional Copies. Requests for assistance
or for additional copies of the Prospectus or this Letter of Transmittal may be
directed to the Exchange Agent at the address or telephone number set forth on
the cover page of this Letter of Transmittal. Holders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Exchange Offer.
14. Acceptance of Tendered Original Notes and issuance of Series B Notes;
Return of Original Notes. Subject to the terms and conditions of the Exchange
Offer, the Issuers will accept for exchange all validly tendered Original Notes
as soon as practicable after the Exchange Date and will issue Series B Notes
therefor as soon as practicable thereafter. For purposes of the Exchange Offer,
the Issuers shall be deemed to have accepted tendered Original Notes when, as
and if the Issuers have given written and oral notice thereof to the Exchange
Agent. If any tendered Original Notes are not exchanged pursuant to the Exchange
Offer for any reason, such unexchanged Original Notes will be returned, without
<PAGE> 11
expense, to the undersigned at the address shown above (or credited to the
undersigned's account at the Book-Entry Transfer Facility designated above) or
at a different address as may be indicated under the box entitled "Special
Delivery Instructions."
15. Withdrawal. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer -- Withdrawal of Tenders."
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF
(TOGETHER WITH THE ORIGINAL NOTES (WHICH MUST BE DELIVERED BY BOOK-ENTRY
TRANSFER OR IN ORIGINAL HARD COPY FORM)) OR THE NOTICE OF GUARANTEED DELIVERY
MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
<PAGE> 12
(TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE INSTRUCTION 5))
PAYOR'S NAME: VENTURE HOLDINGS TRUST
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <S> <C>
SUBSTITUTE PART I--TAXPAYER IDENTIFICATION NUMBER PART II--For Payees Exempt From Backup
FORM W-9 For all accounts, enter your taxpayer Withholding, (see enclosed Guidelines)
PAYER'S REQUEST FOR identification number in the
TAXPAYER IDENTIFICATION appropriate box. For most individuals
NUMBER and sole proprietors, this is your
DEPARTMENT OF THE TREASURY social security number. For other
INTERNAL REVENUE SERVICE entities, it is your Employer
Identification Number. If you do not
have a number, see How to Obtain a TIN
in the enclosed Guidelines. Note: If
the account is in more than one name,
see the chart on page 2 of the enclosed
Guidelines to determine what number to
enter.
----------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Social Security Number or Employer Identification Number
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and either (a) I have
mailed or delivered an application to receive a taxpayer identification
number to the appropriate Internal Revenue Service Center or Social
Security Administration Office or (b) I intend to mail or deliver an
application in the near future. I understand that if I do not provide a
taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide
a number;
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding; and
(3) Any other information provided on this form is true, correct and complete.
SIGNATURE DATE , 1997
-------------------------- -------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO THE NEW
NOTES. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF
9 1/2% SENIOR NOTES DUE 2005
IN EXCHANGE FOR
SERIES B 9 1/2% SENIOR NOTES DUE 2005
VENTURE HOLDINGS TRUST
VEMCO, INC.
VENTURE INDUSTRIES CORPORATION
VENTURE MOLD & ENGINEERING CORPORATION
VENTURE LEASING COMPANY
VEMCO LEASING, INC.
VENTURE HOLDINGS CORPORATION
VENTURE SERVICE COMPANY
This form or one substantially equivalent hereto must be used by a holder
to accept the Exchange Offer of Venture Holdings Trust, a grantor trust
organized under the laws of the State of Michigan, Vemco, Inc., Venture
Industries Corporation, Venture Mold & Engineering Corporation, Venture Leasing
Company, Vemco Leasing, Inc., Venture Holdings Corporation and Venture Service
Company, each a Michigan corporation (each an "Issuer" and, together with the
Trust, the "Issuers"), who wishes to tender 9 1/2% Senior Notes due 2005 (the
"Original Notes") to the Exchange Agent pursuant to the guaranteed delivery
procedures described in "The Exchange Offer -- Guaranteed Delivery Procedures"
of the Issuers' Prospectus dated , 1997 (the "Prospectus") and in
Instruction 2 to the related Letter of Transmittal. Any holder who wishes to
tender Original Notes pursuant to such guaranteed delivery procedures must
ensure that the Exchange Agent receives this Notice of Guaranteed Delivery prior
to the Expiration Date (as defined below) of the Exchange Offer. Capitalized
terms used but not defined herein have the meanings ascribed to them in the
Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). ORIGINAL NOTES
TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer is:
THE HUNTINGTON NATIONAL BANK
By Mail, Overnight Courier or Hand Delivery:
The Huntington National Bank
41 South High Street-HC1112
Columbus, Ohio 43215
Attention: Corporate Trust Department
By Facsimile:
The Huntington National Bank
Attention: Corporate Trust Department
(614) 480-5223
(For Eligible Institutions Only)
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
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" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE
MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE BOX ON THE LETTER OF
TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Issuers, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Original Notes set forth below pursuant to the guaranteed delivery procedures
set forth in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Original Notes listed below:
<TABLE>
<CAPTION>
AGGREGATE
PRINCIPAL AMOUNT AGGREGATE
CERTIFICATE NUMBERS(S) (IF KNOWN) OF ORIGINAL NOTES REPRESENTED PRINCIPAL
OR ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY BY NOTE AMOUNT TENDERED
--------------------------------------------------- ---------------- ---------------
<S> <C> <C>
</TABLE>
PLEASE SIGN AND COMPLETE
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
Signatures of Registered Holder(s) or Authorized Date: ..............................................
Signatory:
Address: ............................................
....................................................
....................................................
....................................................
Area Code and Telephone No. ........................
....................................................
Name(s) of Registered Holder(s):
....................................................
....................................................
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear on certificates for Original Notes or on a security
position listing as the owner of Original Notes, or by person(s) authorized to
become Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
<PAGE> 3
GUARANTEE
(Not To Be Used for Signature Guarantee)
The undersigned, a firm which is a member of a registered national
Securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondence in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934,
guarantees deposit with the Exchange Agent of the Letter of Transmittal (or
facsimile thereof), together with the Original Notes tendered hereby in proper
form for transfer (or confirmation of the book-entry transfer of) such Original
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility
described in the Prospectus under the caption "The Exchange Offer--Guaranteed
Delivery Procedures" and in the Letter of Transmittal and any other required
documents, all by 5:00 p.m., New York City time, within three (3) New York Stock
Exchange trading day following the Expiration Date.
Name of Firm:
- -------------------------------------------------------
Address:
- -------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
- -------------------------------------------------------------------
Authorized Signature:
- -------------------------------------------------------
Name:
- -------------------------------------------------------
Title:
- -------------------------------------------------------
(Please Type or Print)
Date: ____________________ , 1997
DO NOT SEND ORIGINAL NOTES WITH THIS FORM. ACTUAL SURRENDER OF ORIGINAL NOTES
MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
3
<PAGE> 4
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other documents
required by this Notice of Guaranteed Delivery must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. The method
of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Original Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Original Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of
the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the Original Notes, the signature must correspond with
the name shown on the security position listing as the owner of the Original
Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Original Notes listed or a participant of the
Book-Entry Transfer Facility, this Notice of Guaranteed Delivery must be
accompanied by appropriate bond powers, signed as the name of the registered
holder(s) appears on the Original Notes or signed as the name of the participant
shown on the Book-Entry Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Issuers of such person's authority to so act.
3. Requests for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus may be directed
to the Exchange Agent at the address specified in the Prospectus. Holders may
also contact their broker, dealer, commercial bank, trust company, or other
nominee for assistance concerning the Exchange Offer.
4
<PAGE> 1
EXHIBIT 99.3
VENTURE HOLDINGS TRUST
VEMCO, INC.
VENTURE INDUSTRIES CORPORATION
VENTURE MOLD & ENGINEERING CORPORATION
VENTURE LEASING COMPANY
VEMCO LEASING, INC.
VENTURE HOLDINGS CORPORATION
VENTURE SERVICE COMPANY
FOR TENDER OF
9 1/2% SENIOR NOTES DUE 2005
IN EXCHANGE FOR
SERIES B 9 1/2% SENIOR NOTES DUE 2005
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE EXPIRATION DATE.
To Registered Holders and Depository
Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer
by Venture Holdings Trust, a grantor trust organized under the laws of the State
of Michigan (the "Trust"), Vemco, Inc., Venture Industries Corporation, Venture
Mold & Engineering Corporation, Venture Leasing Company, Vemco Leasing, Inc.,
Venture Holdings Corporation and Venture Service Company, each a Michigan
corporation (each an "Issuer" and, together with the Trust, the "Issuers"), to
exchange their Series B 9 1/2% Senior Notes due 2005 (the "Series B Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like principal amount of their issued and outstanding
9 1/2% Senior Notes due 2005 (the "Original Notes") upon the terms and subject
to the conditions set forth in the Issuers' Prospectus, dated ,
1997, and the related Letter of Transmittal (which together constitute the
"Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated , 1997;
2. Letter of Transmittal (together with accompanying Substitute Form
W-9 Guidelines);
3. Notice of Guaranteed Delivery; and
4. Letter which may be sent to your clients for whose account you hold
Original Notes in your name or in the name of your nominee, with space
provided for obtaining such client's instruction with regard to the
Exchange Offer.
<PAGE> 2
We urge you to contact your clients promptly. Please note that the Exchange
Offer will expire on the Expiration Date unless extended.
The Exchange Offer is not conditioned upon any minimum number of Original
Notes being tendered.
Pursuant to the Letter of Transmittal, each holder of Original Notes must
represent to the Issuers that (i) the Series B Notes acquired pursuant to the
Exchange Offer are being acquired in the ordinary course of business of the
undersigned, (ii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the distribution
within the meaning of the Securities Act of such Series B Notes, (iii) if the
undersigned is not a broker-dealer, or is a broker-dealer but will not receive
Series B Notes for its own account in exchange for Original Notes, neither the
undersigned nor any such other person is engaged in or intends to participate in
the distribution of such Series B Notes and (iv) neither the undersigned nor any
such other person is an "affiliate" of the Issuers within the meaning of Rule
405 under the Securities Act or, if the undersigned is an "affiliate," that the
undersigned will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable. If the undersigned
is a broker-dealer (whether or not it is also an "affiliate") that will receive
Series B Notes for its own account in exchange for Original Notes, it represents
that such Original Notes were acquired as a result of market-making activities
or other trading activities, and it acknowledges that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Series B 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 Series B Notes, the holder is not deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
The enclosed Letter to Clients contains an authorization by the beneficial
owners of the Original Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or
to any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Original Notes pursuant to the Exchange Offer. The
Company will pay or cause to be paid any transfer taxes payable on the transfer
of Original Notes to it, except as otherwise provided in Instruction 7 of the
enclosed Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
THE HUNTINGTON NATIONAL BANK
<PAGE> 1
EXHIBIT 99.4
VENTURE HOLDINGS TRUST
VEMCO, INC.
VENTURE INDUSTRIES CORPORATION
VENTURE MOLD & ENGINEERING CORPORATION
VENTURE LEASING COMPANY
VEMCO LEASING, INC.
VENTURE HOLDINGS CORPORATION
VENTURE SERVICE COMPANY
FOR TENDER OF
9 1/2% SENIOR NOTES DUE 2005
IN EXCHANGE FOR
SERIES B 9 1/2% SENIOR NOTES DUE 2005
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). NOTES TENDERED
IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO
THE EXPIRATION DATE.
To Our Clients:
We are enclosing herewith a Prospectus, dated , 1997, of Venture
Holdings Trust, a grantor trust organized under the laws of the State of
Michigan, Vemco, Inc., Venture Industries Corporation, Venture Mold &
Engineering Corporation, Venture Leasing Company, Vemco Leasing, Inc., Venture
Holdings Corporation and Venture Service Company, each a Michigan corporation
(each an "Issuer" and, together with the Trust, the "Issuers"), and a related
Letter of Transmittal (which together constitute the "Exchange Offer") relating
to the offer by the Issuers, to exchange their Series B 9 1/2% Senior Notes due
2005 (the "Series B Notes"), which have been registered under the Securities Act
of 1933, as amended (the "Securities Act") for a like principal amount of their
issued and outstanding 9 1/2% Senior Subordinated Notes due 2005 (the "Original
Notes"), upon the terms and subject to the conditions set forth in the Exchange
Offer.
The Exchange Offer is not conditioned upon any minimum number of Original
Notes being tendered.
WE ARE THE HOLDER OF RECORD OF ORIGINAL NOTES HELD BY US FOR YOUR OWN
ACCOUNT. A TENDER OF SUCH ORIGINAL NOTES CAN BE MADE ONLY BY US AS THE RECORD
HOLDER AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER ORIGINAL
NOTES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to tender any or all of the
Original Notes held by us for your account pursuant to the terms and conditions
of the Exchange Offer. We also request that you confirm that we may, on your
behalf, make the representations contained in the Letter of Transmittal.
Pursuant to the Letter of Transmittal, each holder of Original Notes will
represent to the Issuers that (i) the Series B Notes acquired pursuant to the
Exchange Offer are being acquired in the ordinary course of business of the
undersigned, (ii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the distribution
within the meaning of the Securities Act of such Series B Notes, (iii) if the
undersigned is not a broker-dealer, or is a broker-dealer but will not receive
Series B Notes for its own account in exchange for Original Notes, neither the
undersigned nor any such other person is engaged in or intends to
<PAGE> 2
participate in the distribution of such Series B Notes and (iv) neither the
undersigned nor any such other person is an "affiliate" of the Issuers within
the meaning of Rule 405 under the Securities Act or, if the undersigned is an
"affiliate," that the undersigned will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
If the undersigned is a broker-dealer (whether or not it is also an "affiliate")
that will receive Series B Notes for its own account in exchange for Original
Notes, it represents that such Original Notes were acquired as a result of
market-making activities or other trading activities, and it acknowledges that
it will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Series B 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 Series B Notes, the
undersigned is not deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
Very truly yours
2
<PAGE> 1
EXHIBIT 99.5
INSTRUCTION TO REGISTERED HOLDER AND/OR BOOK
ENTRY TRANSFER PARTICIPANT FROM BENEFICIAL OWNER
FOR
TENDER OF
9 1/2% SENIOR NOTES DUE 2005
IN EXCHANGE FOR
SERIES B 9 1/2% SENIOR NOTES DUE 2005
VENTURE HOLDINGS TRUST
VEMCO, INC.
VENTURE INDUSTRIES CORPORATION
VENTURE MOLD & ENGINEERING CORPORATION
VENTURE LEASING COMPANY
VEMCO LEASING, INC.
VENTURE HOLDINGS CORPORATION
VENTURE SERVICE COMPANY
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). ORIGINAL NOTES
TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1997 (the "Prospectus") of Venture Holdings Trust, a grantor
trust organized under the laws of the State of Michigan, Vemco, Inc., Venture
Industries Corporation, Venture Mold & Engineering Corporation, Venture Leasing
Company, Vemco Leasing, Inc., Venture Holdings Corporation and Venture Service
Company, each a Michigan corporation (each an "Issuer" and, together with the
Trust, the "Issuers"), and the accompanying Letter of Transmittal (the "Letter
of Transmittal"), that together constitute the Issuers' offer (the "Exchange
Offer") to exchange its Series B 9 1/2% Senior Notes Due 2005 (the "Series B
Notes") for all of their outstanding 9 1/2% Senior Notes Due 2005 (the "Original
Notes"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Original Notes held by you for the account of
the undersigned.
The aggregate face amount of the Original Notes held by you for the account
of the undersigned is (FILL IN AMOUNT):
$ of the 9 1/2% Senior Notes Dues 2005.
<PAGE> 2
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
[ ] To TENDER the following Original Notes held by you for the account of
the undersigned (INSERT PRINCIPAL AMOUNT OF ORIGINAL NOTES TO BE
TENDERED (IF ANY): $
[ ] NOT to TENDER any Original Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Original Notes held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) the
Series B Notes acquired pursuant to the Exchange Offer are being acquired in the
ordinary course of business of the undersigned, (ii) neither the undersigned nor
any such other person has an arrangement or understanding with any person to
participate in the distribution within the meaning of the Securities Act of
1933, as amended (the "Securities Act") of such Series B Notes, (iii) if the
undersigned is not a broker-dealer, or is a broker-dealer but will not receive
Series B Notes for its own account in exchange for Original Notes, neither the
undersigned nor any such other person is engaged in or intends to participate in
the distribution of such Series B Notes and (iv) neither the undersigned nor any
such other person is an "affiliate" of the Issuers within the meaning of Rule
405 under the Securities Act. If the undersigned is a broker-dealer (whether or
not it is also an "affiliate") that will receive Series B Notes for its own
account in exchange for Original Notes, it represents that such Original Notes
were acquired as a result of market-making activities or other trading
activities, and it acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such Series
B Notes. By acknowledging that it will deliver an by delivering a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Series B Notes, the undersigned is not deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
2
<PAGE> 3
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SIGN HERE
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Name of beneficial owner(s)
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Signature(s)
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Name(s) (please print)
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(Address)
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(Telephone Number)
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(Taxpayer Identification or Social Security Number)
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Date
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3
