<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1997.
REGISTRATION NO. 333-26925
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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INTERNATIONAL WIRE GROUP, INC.
(and Certain Subsidiaries Identified in Footnote (1) Below)
(Exact Name of Co-Registrant as Specified in Its Charter)
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DELAWARE 3357 43-1705942
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
101 SOUTH HANLEY ROAD, SUITE 400
ST. LOUIS, MISSOURI 63105 DAVID J. WEBSTER
(314) 719-1000 101 SOUTH HANLEY ROAD, SUITE 400
(Address, Including Zip Code, and Telephone ST. LOUIS, MISSOURI 63105
Number, Including (314) 746-7780
Area Code of Co-Registrants' (Name, Address, including Zip Code, and Telephone
Principal Executive Offices) Number, Including Area Code, of Agent For Service)
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Copies to:
R. SCOTT COHEN
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT
SUITE 1300
DALLAS, TEXAS 75201
(214) 746-7700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of the Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(2) OFFERING PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
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14% Senior Subordinated Notes due 2005...... $5,000,000 100% $5,000,000 $3,030.30
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Senior Subordinated Guarantees(3)...........
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(1) The following direct and indirect subsidiaries of International Wire Group,
Inc., are Co-Registrants (the "Subsidiary Guarantors"), each of which is
incorporated in the state and has the I.R.S. Employer Identification Number
indicated: Camden Wire Co., Inc., a New York corporation (16-1075193); ECM
Holding Company, a Delaware corporation (35-1937759); Omega Wire, Inc., a
Delaware corporation (04-3030938); OWI Corporation, a New York corporation
(16-1405230); Wire Harness Industries, Inc., a Delaware corporation
(43-1769493); Wirekraft Employment Company, a Delaware corporation
(35-1937760); Wirekraft Industries, Inc., a Delaware corporation
(35-1741595); and Wire Technologies, Inc., an Indiana corporation
(35-1753924).
(2) Estimated solely for the purpose of calculating the registration fee.
(3) The 14% Senior Subordinated Notes due 2005 are unconditionally (as well as
jointly and severally) guaranteed by the Subsidiary Guarantors on an
unsecured, senior subordinated basis. No separate consideration will be paid
in respect to these guarantees.
THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE CO-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 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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<PAGE> 2
INTERNATIONAL WIRE GROUP, INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K SHOWING THE LOCATION IN THE
PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM S-1
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FORM S-1 ITEM NUMBER AND HEADING LOCATION IN PROSPECTUS
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1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus..... Cover Page of Registration Statement;
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front Cover Page of Prospectus
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............... Summary; Risk Factors; Selected Financial
Data
4. Use of Proceeds............................ Use of Proceeds
5. Determination of Offering Price............ Not Applicable
6. Dilution................................... Not Applicable
7. Selling Security Holders................... Summary; Selling Securityholder and Plan of
Distribution
8. Plan of Distribution....................... Front Cover Page of Prospectus; Summary;
Selling Securityholder and Plan of
Distribution
9. Description of Securities to be
Registered................................. Description of the Notes
10. Interests of Named Experts and Counsel..... Legal Matters
11. Information with Respect to the
Registrant................................. Cover Page of Registration Statement;
Summary; Risk Factors; Capitalization;
Selected Financial Data; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Unaudited Pro Forma Financial Information;
Business; Management; Outstanding Voting
Securities of Holding and Principal Holders
Thereof; Certain Relationships and Related
Transactions; Description of Senior Bank
Facility; Description of Other
Indebtedness; Description of the Notes;
Legal Matters
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Not Applicable
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<PAGE> 3
PROSPECTUS
$5,000,000
14% SENIOR SUBORDINATED NOTES DUE JUNE 1, 2005
INTERNATIONAL WIRE GROUP, INC.
This Prospectus relates to (i) $5,000,000 in aggregate principal amount of
14% Senior Subordinated Notes due June 1, 2005 (the "Notes") of International
Wire Group, Inc., a Delaware corporation (the "Company"), which are being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
on behalf of the holder thereof (the "Selling Securityholder") in order to
permit their public sale or other distribution (see "Selling Securityholder and
Plan of Distribution"), and (ii) the Subsidiary Guarantees (as defined herein)
relating to the Notes.
Interest on the Notes is payable semiannually on June 1 and December 1 of
each year. The Notes will mature on June 1, 2005. Except as described below, the
Company may not redeem the Notes prior to June 1, 2000. The Notes are not
subject to any sinking fund requirement. Upon the occurrence of a Change of
Control (as defined herein), (i) the Company will have the option, at any time
on or prior to June 1, 2000, to redeem the Notes, in whole but not in part, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium (as defined herein), plus accrued and unpaid interest, if
any, to the date of redemption, and (ii) if the Company does not so redeem the
Notes or if such Change of Control occurs after June 1, 2000, the Company will
be required to make an offer to repurchase the Notes at a price equal to 101% of
the principal amount thereof, together with accrued and unpaid interest, if any,
to the date of repurchase. See "Description of the Notes."
The Notes are unsecured and are subordinated to all existing and future
Senior Indebtedness (as defined herein) of the Company. The Notes rank pari
passu with all existing and any future Senior Subordinated Indebtedness (as
defined herein) of the Company and rank senior to any Subordinated Obligation
(as defined herein) of the Company. The Notes are unconditionally (as well as
jointly and severally) guaranteed (each, a "Subsidiary Guarantee") on an
unsecured, senior subordinated basis, by each subsidiary of the Company (other
than foreign subsidiaries) in existence on the date hereof and will be
unconditionally guaranteed by each subsidiary of the Company (other than foreign
subsidiaries) acquired in the future (collectively, the "Subsidiary
Guarantors"). The Company is a holding company that derives all of its operating
income and cash flow from its subsidiaries, the capital stock of each of which
constitutes the Company's only material assets and is pledged (except that only
65% of the capital stock of foreign subsidiaries is pledged) to collateralize
the obligations under the Senior Bank Facility (as defined herein). See
"Description of Senior Bank Facility." As of March 31, 1997, after giving pro
forma effect to the Rule 144A Offering (as defined herein), the Senior Debt
Repayment (as defined herein) and the Notes Repurchase (as defined herein), (i)
the aggregate amount of the Company's outstanding Senior Indebtedness (excluding
unused commitments of approximately $45.0 million under the Senior Bank
Facility) and Senior Subordinated Indebtedness (including the Notes) would have
been approximately $215.5 million and $305.0 million, respectively, and (ii) the
aggregate amount of Guarantor Senior Indebtedness (as defined herein) and
Guarantor Senior Subordinated Indebtedness (as defined herein) would have been
approximately $222.4 million (including guarantees of the Senior Bank Facility)
and $305.0 million (consisting of the Subsidiary Guarantee and guarantees of the
Company's 11 3/4% Notes (as defined herein) and 11 3/4% Series B Notes (as
defined herein)), respectively. See "Description of the Notes -- Ranking."
The Notes may be sold from time to time by the Selling Securityholder
through underwriters or dealers, through brokers or other agents, or directly to
one or more purchasers, at market prices prevailing at the time of sale or at
prices otherwise negotiated. The Company will receive no portion of the proceeds
of the sale of the Notes and will bear the expenses incident to the registration
of the Notes. The Selling Securityholder and any broker-dealers, agents or
underwriters that participate with the Selling Securityholder in the
distribution of the securities to which this Prospectus relates may be deemed to
be "underwriters" within the meaning of the Securities Act, and any commissions
received by them and any profit on the resale of such securities purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act. See "Selling Securityholder and Plan of Distribution" herein for
indemnification arrangements between the Company and the Selling Securityholder.
There is currently no public market for the Notes and there can be no
assurance that an active public market for the Notes will develop.
FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE NOTES OFFERED
HEREBY, SEE "RISK FACTORS" BEGINNING ON PAGE 7.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
<PAGE> 4
No person has been authorized to give any information or make any
representations, other than those contained in this Prospectus, in connection
with the offering made hereby, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or any other person. This Prospectus does not constitute an offer to sell or
solicitation of an offer to buy any securities other than those to which it
relates or an offer to any person in any jurisdiction in which it is unlawful to
make such an offer or solicitation. Neither the delivery of this Prospectus nor
any offer or sale made hereunder shall, under any circumstances, create any
implication that the information set forth herein is correct as of any time
subsequent to the date hereof.
Until , 199 , all dealers affecting 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.
TABLE OF CONTENTS
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PAGE
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Available Information....................... 2
Summary..................................... 3
Risk Factors................................ 7
Use of Proceeds............................. 12
Capitalization.............................. 12
Selected Financial Data..................... 13
Unaudited Pro Forma Financial Information... 25
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 19
Business.................................... 32
Management.................................. 39
</TABLE>
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PAGE
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Outstanding Voting Securities of Holding and
Principals Holders Thereof................ 48
Certain Relationships and
Related Transactions...................... 50
Description of Senior Bank Facility......... 51
Description of Other Indebtedness........... 52
Description of the Notes.................... 53
Selling Securityholder and Plan of
Distribution.............................. 76
Certain United States Federal Income Tax
Considerations............................ 78
Legal Matters............................... 80
Experts..................................... 80
Index to Financial Statements............... F-1
</TABLE>
AVAILABLE INFORMATION
The Company and the Subsidiary Guarantors have filed with the Securities
and Exchange Commission (the "SEC") a registration statement under the
Securities Act (the "Registration Statement") (which term includes any
amendments thereto) with respect to the securities offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits and schedules thereto, to which reference is hereby
made for further information with respect to the Company and the securities
offered hereby. Statements contained herein concerning the provisions of any
document are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
for a more complete description of the matter involved and each such statement
shall be deemed qualified in its entirety by such reference.
Pursuant to the Indenture, the 11 3/4% Notes Indenture and the 11 3/4%
Series B Notes Indenture (each, as defined herein), the Company has agreed to
comply with the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith files reports
with the SEC. The Registration Statement, as well as such reports and other
information filed by the Company with the SEC, may be inspected at the public
facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the SEC located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
materials may be obtained from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The SEC
maintains a World Wide Web site that contains reports, proxy and information
statements and other information that are filed through the SEC's Electronic
Data Gathering, Analysis and Retrieval System. This Web site can be accessed at
http://www.sec.gov.
The Company will furnish holders of the securities offered hereby with
annual reports containing, among other information, audited financial statements
audited by an independent public accounting firm and the Company will also
furnish such other reports and other information as it may determine or
otherwise required pursuant to Section 13 of the Exchange Act or, in the case of
the Notes, the Indenture.
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SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. This
Prospectus contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. When used
in this Prospectus, the words "believe," "intends," "anticipates" and other
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected, including the actions
of the Company's competitors and customers, and those discussed under the
caption "Risk Factors." As used in this Prospectus, unless the context requires
otherwise, all references herein to (i) "Wirekraft" mean Wirekraft Industries,
Inc. and its subsidiaries (and any predecessor to any of the foregoing), (ii)
"ECM" mean Electro Componentes de Mexico, S.A. de C.V., a wholly-owned
subsidiary of Wirekraft and certain related assets acquired by Wirekraft in
December 1994, (iii) "Omega" mean Omega Wire, Inc. and its subsidiaries (and any
predecessor to any of the foregoing), (iv) "Dekko" mean the businesses of
Hoosier Wire, Inc., Dekko Automotive Wire, Inc., Albion Wire, Inc. and
Silicones, Inc., a group of affiliated companies operating together under the
trade name "Dekko Wire Technology Group" acquired by the Company in March 1996
(v) "Camden" mean Camden Wire Co., Inc. acquired by the Company in February
1997, (vi) "Holding" mean International Wire Holding Company and (vii) the
"Company" mean International Wire Group, Inc., a wholly-owned subsidiary of
Holding, and where appropriate, its subsidiaries.
THE COMPANY
The Company is engaged in the design, manufacture and marketing of (i)
non-insulated bare and tin-plated copper wire, (ii) insulated copper wire and
(iii) wire harnesses. The Company's products are utilized by a wide variety of
customers primarily in the appliance, computer and data communications,
automotive and industrial equipment industries.
- Non-insulated copper wire products (or conductors) are used to transmit
digital, video or audio signals or conduct electricity and are sold to a
variety of insulated wire manufacturers.
- Insulated wire products (copper conductors insulated with plastic, rubber
or other polymeric compounds) are incorporated in wire harnesses that
control and distribute electrical current in automobiles, trucks and
appliances.
- Wire harnesses (assemblies of wires that are terminated with connectors,
switches or other electrical devices) are sold to major U.S.
manufacturers of household appliances and utilized in refrigerators,
washers, dryers, ranges and dishwashers.
The principal executive offices of the Company and each Subsidiary
Guarantor are located at 101 South Hanley Road, Suite 400, St. Louis, Missouri
63105 and its telephone number is (314) 719-1000.
RECENT DEVELOPMENTS
On March 5, 1996, Wire Technologies, Inc. ("Wire Technologies"), a
wholly-owned subsidiary of the Company, acquired Dekko (the "DWT Acquisition")
for total consideration of approximately $173.2 million. Wire Technologies is
engaged in the design, manufacture and marketing of insulated and non-insulated
copper wire.
On February 12, 1997, the Company acquired all of the issued and
outstanding common stock of Camden, a wholly-owned subsidiary of Oneida LTD.
(the "Camden Acquisition"), for total consideration of approximately $65.0
million, including fees and expenses, consisting of cash and the assumption of
approximately $15.5 million of debt. Camden is engaged in the design,
manufacture and marketing of non-insulated bare and tin-plated copper wire.
In connection with the Camden Acquisition, Holding and the Company entered
into an Amended and Restated Credit Agreement (the "Credit Agreement") dated as
of February 12, 1997, with The Chase
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Manhattan Bank, Bankers Trust Company and the other lenders party thereto
pursuant to which the Company obtained financing of up to $428.5 million,
consisting of an $111.0 million, five year term Tranche A loan, an $115.0
million, seven year term Tranche B loan, an $127.5 million, eight year term
Tranche C loan (collectively, the "Term Facility") and a $75.0 million revolving
loan and letter of credit (the "Revolver," and together with the "Term
Facility," the "Senior Bank Facility").
On June 17, 1997, the Company sold $150.0 million aggregate principal
amount of its 11 3/4% Series B Senior Subordinated Notes due 2005 (the "11 3/4%
Series B Notes") in a private placement to Chase Securities Inc. and BT
Securities Corporation, which immediately resold the 11 3/4% Series B Notes
pursuant to Rule 144A promulgated under the Securities Act (the "Rule 144A
Offering").
In connection with the Rule 144A Offering, the Company sought and received
the consent of the lenders under the Senior Bank Facility to the application of
the net proceeds from the Rule 144A Offering as described in the following
paragraph and entered into the First Amendment to Amended and Restated Credit
Agreement, dated as of June 17, 1997 (the "First Amendment"). See "Description
of Senior Bank Facility."
The Company used the net proceeds of the Rule 144A offering to repay
approximately $158.3 million principal amount of borrowings outstanding under
the Senior Bank Facility (the "Senior Debt Repayment"). The Senior Debt
Repayment was allocated in the following manner: first, approximately $65.5
million was applied to the Tranche A Loan to reduce the aggregate principal
amount outstanding thereunder to $25.0 million; second, approximately $80.5
million was applied to the Tranche B Loan, which was combined with the Tranche C
Loan pursuant to the First Amendment, to reduce the aggregate principal amount
outstanding thereunder to $160.5 million; and third, approximately $12.3 million
was applied to the Revolver to repay in full all amounts outstanding thereunder.
See "Description of Senior Bank Facility."
The Notes were issued on February 12, 1997, as part of an original issue of
the Company's 14% Senior Subordinated Notes due June 1, 2005 in an aggregate
principal amount of $10.0 million. On June 20, 1997, the Company repurchased
$5.0 million aggregate principal amount of such 14% Senior Subordinated Notes
(the "Notes Repurchase") for 113% of the principal amount of such notes, plus
accrued and unpaid interest. The Notes offered hereby represent the Company's
14% Senior Subordinated Notes remaining outstanding following the Notes
Repurchase. See "Certain Relationships and Related Transactions."
THE NOTES
Issuer..................... International Wire Group, Inc.
Securities Offered......... $5,000,000 principal amount of 14% Senior
Subordinated Notes due 2005.
Maturity................... June 1, 2005.
Interest Payment Dates..... June 1 and December 1 of each year.
Sinking Fund............... None.
Optional Redemption........ Except as described below, the Company may not
redeem the Notes prior to June 1, 2000. On and
after such date, the Company may redeem the Notes,
in whole or in part, at any time at the redemption
prices set forth herein, together with accrued and
unpaid interest, if any, to the date of redemption.
See "Description of the Notes -- Optional
Redemption."
Change of Control.......... Upon the occurrence of a Change of Control, (i) the
Company will have the option, at any time on or
prior to June 1, 2000, to redeem the Notes, in
whole but not in part, at a redemption price equal
to 100% of the principal amount thereof plus the
Applicable Premium set forth herein, plus accrued
and unpaid interest, if any, to the date of
redemption, and (ii) if the Company does not so
redeem the Notes or if such Change of Control
occurs after June 1, 2000, the Company will be
required to make an offer to repurchase the Notes
at a price equal to 101% of the principal
4
<PAGE> 7
amount thereof, together with accrued and unpaid
interest, if any, to the date of repurchase. See
"Description of the Notes -- Change of Control."
Subsidiary Guarantee....... The Notes are unconditionally (as well as jointly
and severally) guaranteed on an unsecured, senior
subordinated basis, by the Subsidiary Guarantors.
See "Description of the Notes -- Subsidiary
Guarantee."
Ranking.................... The Notes are unsecured and are subordinated to all
existing and future Senior Indebtedness of the
Company. The Notes rank pari passu with all
existing and any future Senior Subordinated
Indebtedness of the Company and rank senior to all
Subordinated Obligations of the Company. The
Subsidiary Guarantees are general, unsecured,
senior subordinated obligations of the Subsidiary
Guarantors, subordinated in right of payment to
existing and future Guarantor Senior Indebtedness
of the Subsidiary Guarantors. The Subsidiary
Guarantees rank pari passu with all existing and
future Guarantor Senior Subordinated Indebtedness.
As of March 31, 1997, after giving pro forma effect
to the Rule 144A Offering, the Senior Debt
Repayment and the Notes Repurchase, (i) the
aggregate amount of the Company's outstanding
Senior Indebtedness and Senior Subordinated
Indebtedness would have been approximately $215.5
million (excluding unused commitments of
approximately $45.0 million under the Senior Bank
Facility), and $305.0 million (including the
Notes), respectively, and (ii) the aggregate amount
of Guarantor Senior Indebtedness and Guarantor
Senior Subordinated Indebtedness would have been
approximately $222.4 million (including guarantees
of the Senior Bank Facility) and $305.0 million
(consisting of the Subsidiary Guarantee and
guarantees of the Company's 11 3/4% Senior
Subordinated Notes due 2005 (the "11 3/4% Notes")
and 11 3/4% Series B Notes), respectively.
Restrictive Covenants...... The indenture under which the Notes were issued
(the "Indenture") limits, among other things: (i)
the incurrence of additional indebtedness by the
Company and its subsidiaries, (ii) the payment of
dividends on, and redemption of, capital stock of
the Company and its subsidiaries and the redemption
of certain subordinated obligations of the Company
and its subsidiaries, (iii) investments, (iv) sales
of assets and subsidiary stock, (v) transactions
with affiliates and (vi) consolidations, mergers
and transfers of all or substantially all the
Company's assets. The Indenture also prohibits
certain restrictions on distributions from the
Company's subsidiaries. However, all of these
limitations and prohibitions are subject to a
number of important qualifications and exceptions.
See "Description of the Notes -- Certain
Covenants."
PLAN OF DISTRIBUTION
This Prospectus relates to $5,000,000 in aggregate principal amount of
Notes, which are being registered under the Securities Act on behalf of the
Selling Securityholder in order to permit their public sale or other
distribution. See "Selling Securityholder and Plan of Distribution."
The Notes may be sold from time to time by the Selling Securityholder
through underwriters or dealers, through brokers or other agents, or directly to
one or more purchasers, at market prices prevailing at the time of sale or at
prices otherwise negotiated. The Selling Securityholder and any broker-dealers,
agents or underwriters that participate with the Selling Securityholder in the
distribution of the securities to which this Prospectus relates may be deemed to
be "underwriters" within the meaning of the Securities Act, and any
5
<PAGE> 8
commissions received by them and any profit on the resale of such securities
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
There is currently no public market for the Notes and there can be no
assurance that an active public market for the Notes will develop.
USE OF PROCEEDS
The Selling Securityholder will receive all proceeds from the sale of the
Notes. The Company has agreed to pay all expenses related to the registration of
the Notes, which are estimated at $143,000.
RISK FACTORS
See "Risk Factors" for a discussion of certain factors to be considered
prior to making an investment in the securities offered hereby.
6
<PAGE> 9
RISK FACTORS
Prospective investors should carefully consider the following factors in
addition to other information included in this Prospectus before purchasing any
of the Notes.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged and has indebtedness that is substantial in
relation to its total stockholder's equity. As of March 31, 1997, after giving
pro forma effect to the Rule 144A Offering, the Senior Debt Repayment and the
Notes Repurchase as if they had occurred on that date, the Company and its
consolidated subsidiaries would have had an aggregate of $534.4 million of
outstanding indebtedness and a stockholder's deficit of $46.8 million. See
"Capitalization." For the year ended December 31, 1996, after giving pro forma
effect to the DWT Acquisition, the Rule 144A Offering, the Senior Debt Repayment
and the Notes Repurchase as if they had occurred on January 1, 1996 the
Company's deficiency of earnings available to cover fixed charges (consisting
principally of interest on its long-term debt) would have been $82.5 million.
For the three months ended March 31, 1997, after giving pro forma effect to the
Rule 144A Offering, the Senior Debt Repayment and the Notes Repurchase as if
they occurred on January 1, 1996, the Company's ratio of earnings to fixed
charges would have been 1.3 to one. See "Unaudited Pro Forma Financial
Information." The Company may incur additional indebtedness in the future,
subject to certain limitations contained in (i) the Senior Bank Facility; (ii)
the indenture (the "11 3/4% Notes Indenture"), dated as of June 12, 1995,
pursuant to which the Company issued its 11 3/4% Notes; (iii) the indenture (the
"11 3/4% Series B Notes Indenture"), dated as of June 17, 1997, pursuant to
which the Company issued its 11 3/4% Series B Notes; and (iv) the Indenture. See
"Description of Senior Bank Facility," "Description of Other Indebtedness" and
"Description of the Notes."
The Company's high degree of leverage could have important consequences to
the holders of the Notes, including the following: (i) the Company's ability to
obtain additional financing for working capital, capital expenditures,
acquisitions, general corporate purposes or other purposes may be impaired in
the future; (ii) a substantial portion of the Company's cash flow from
operations must be dedicated to the payment of principal and interest on its
indebtedness, thereby reducing the funds available to the Company for other
purposes; (iii) certain of the Company's borrowings are and will continue to be
at variable rates of interest, which exposes the Company to the risk of
increased interest rates; (iv) the indebtedness outstanding under the Senior
Bank Facility will be secured and matures prior to the maturity of the Notes;
and (v) the Company's substantial degree of leverage may limit its flexibility
to adjust to changing market conditions, reduce its ability to withstand
competitive pressures and could make it more vulnerable to a downturn in general
economic conditions or its business. See "Description of Senior Bank Facility,"
"Description of Other Indebtedness" and "Description of the Notes."
ABILITY TO SERVICE DEBT
The Company's ability to make scheduled payments or to refinance its
obligations with respect to its indebtedness will depend on its financial and
operating performance which, in turn, is subject to prevailing economic
conditions and to certain financial, business and other factors beyond its
control. If the Company's cash flow and capital resources are insufficient to
fund its debt service obligations, the Company may be forced to reduce or delay
planned expansion and capital expenditures, sell assets, obtain additional
equity capital or restructure its debt. There can be no assurance that the
Company's cash flow and capital resources will be sufficient for payment of its
indebtedness in the future. In the absence of such operating results and
resources, the Company could face substantial liquidity problems and might be
required to dispose of material assets or operations to meet its debt service
and other obligations, and there can be no assurance as to the timing of such
sales or the proceeds which the Company could realize therefrom. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
7
<PAGE> 10
SUBORDINATION
The payment of principal of and interest on, and any premium or other
amounts owing in respect of, the Notes is subordinated to the prior payment in
full of all existing and future Senior Indebtedness of the Company, including
all amounts owing under the Senior Bank Facility. In the event of a bankruptcy,
liquidation, dissolution, reorganization or similar proceeding with respect to
the Company, assets of the Company will be available to pay obligations on the
Notes and other Senior Subordinated Indebtedness only after all Senior
Indebtedness has been paid in full, and there can be no assurance that there
will be sufficient assets to pay amounts due on all or any of the Notes. In
addition, under certain circumstances, the Company may not pay principal of,
premium, if any, or interest on, or any other amounts owing in respect of the
Notes, or purchase, redeem or otherwise retire the Notes, in the event of
certain defaults with respect to Senior Indebtedness, including the Senior Bank
Facility.
As of March 31, 1997, after giving pro forma effect to the Rule 144A
Offering, the Senior Debt Repayment and the Notes Repurchase as if they had
occurred on that date, there would have been approximately $215.5 million of
Senior Indebtedness (including the issuance of letters of credit pursuant to the
Senior Bank Facility to support borrowings of certain of the Company's
subsidiaries), outstanding. See "Capitalization." In addition, on the same pro
forma basis, there would have been approximately $45.0 million available for
borrowing under the Senior Bank Facility as of March 31, 1997 for general
corporate purposes and working capital needs, which would be Senior Indebtedness
if borrowed. Additional Senior Indebtedness may be incurred by the Company from
time to time, subject to certain restrictions. See "Description of Senior Bank
Facility," "Description of Other Indebtedness" and "Description of the Notes."
Similarly, the indebtedness evidenced by the Subsidiary Guarantee is
subordinated to the prior payment in full of all existing and future Guarantor
Senior Indebtedness, including all amounts owing pursuant to the guarantees of
the Senior Bank Facility. As of March 31, 1997, after giving pro forma effect to
the Rule 144A Offering, the Senior Debt Repayment and the Notes Repurchase as if
they had occurred on that date, Guarantor Senior Indebtedness (including
guarantees of the Senior Bank Facility and subsidiary guarantees of, and
borrowings backed by letters of credit issued pursuant to, the Senior Bank
Facility) and Guarantor Senior Subordinated Indebtedness (consisting of the
Subsidiary Guarantee and guarantees of the Company's 11 3/4% Notes and 11 3/4%
Series B Notes, would have been approximately $222.4 million and $305.0 million,
respectively. See "Unaudited Pro Forma Financial Information," "Description of
Senior Bank Facility," "Description of Other Indebtedness" and "Description of
the Notes -- Ranking" and "-- Subsidiary Guarantee."
INTEREST RATE SENSITIVITY
As borrowings under the Senior Bank Facility (approximately $193.8 million
as of March 31, 1997, after giving pro forma effect to the Rule 144A Offering,
the Senior Debt Repayment and the Notes Repurchase as if they had occurred on
that date) bear interest at floating rates that fluctuate over time, the Company
is particularly sensitive to prevailing interest rates. A change in interest
rates of 1/8 of 1% would result in a change of approximately $240,000 in the
Company's annual interest expenses. A substantial increase in interest rates
would adversely affect the Company's annual income and cash flow that would be
available to meet its debt service obligations, including the Notes. In order to
minimize this risk the Company has entered into two interest rate agreements.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Financing Arrangements."
HOLDING COMPANY STRUCTURE
The Company is a holding company that derives all of its operating income
from its subsidiaries. The Company must rely upon dividends and other payments
from its subsidiaries to generate the funds necessary to meet its obligations,
including the payment of principal of, premium, if any, and interest on the
Notes. The ability of the Company's subsidiaries to make such payments may be
restricted by, among other things, applicable state and foreign corporate laws
and other laws and regulations.
8
<PAGE> 11
Indebtedness of the Company under the Senior Bank Facility is guaranteed by
Holding and each of its direct or indirect subsidiaries (except foreign
subsidiaries), including the Subsidiary Guarantors, and secured by a pledge of
all the capital stock of the Company, all of the capital stock and the tangible
and intangible assets of such subsidiaries, and 65% of the capital stock of
foreign subsidiaries. Therefore, the rights of holders of the Notes to
participate in any distribution of assets of any Subsidiary Guarantor upon its
bankruptcy, liquidation, dissolution, reorganization or otherwise will, as is
the case with other unsecured creditors of such subsidiary, be subject to prior
claims of senior creditors of that Subsidiary Guarantor (including holders of
Indebtedness under the Senior Bank Facility and holders of other Guarantor
Senior Indebtedness). See "Description of Senior Bank Facility," "Description of
Other Indebtedness" and "Description of the Notes."
FRAUDULENT CONVEYANCE
The Subsidiary Guarantee may be subject to review under relevant federal
and state fraudulent conveyance and similar statutes in a bankruptcy or
reorganization case or a lawsuit by or on behalf of creditors of any of the
Subsidiary Guarantors. Under these statutes, if a court were to find that
obligations (such as the Subsidiary Guarantee) were incurred with the intent of
hindering, delaying or defrauding present or future creditors, that a Subsidiary
Guarantor received less than a reasonably equivalent value or fair consideration
for those obligations or that such Subsidiary Guarantor contemplated insolvency
with a design to prefer one or more creditors to the exclusion, in whole or in
part, of other creditors and, at the time of the incurrence of the obligations,
the obligor either (i) was insolvent or rendered insolvent by reason thereof,
(ii) was engaged or was about to engage in a business or transaction for which
its remaining unencumbered assets constituted unreasonably small capital or
(iii) intended to or believed that it would incur debts beyond its ability to
pay such debts as they matured or became due, such court could void such
Subsidiary Guarantor's obligations under the Subsidiary Guarantee, subordinate
such Subsidiary Guarantor's obligations under the Subsidiary Guarantee to other
indebtedness of the Subsidiary Guarantors or take other action detrimental to
the holders of the Notes.
The measure of insolvency for purposes of a fraudulent conveyance claim
will vary depending upon the law of the jurisdiction being applied. Generally,
however, a company will be considered insolvent at a particular time if the sum
of its debts at that time is greater than the then fair value of its assets or
if the fair salable value of its assets at that time is less than the amount
that would be required to pay its probable liability on its existing debts as
they become absolute and mature.
RESTRICTIVE DEBT COVENANTS
The Senior Bank Facility, the 11 3/4% Notes Indenture, the 11 3/4% Series B
Notes Indenture and the Indenture contain a number of significant covenants
that, among other things, restrict the ability of the Company and its
subsidiaries to dispose of assets, incur additional indebtedness, incur
guarantee obligations, repay other indebtedness or amend other debt instruments
(including the Indenture and the Subsidiary Guarantee), pay dividends, create
liens on assets, enter into leases, make investments, loans or advances, make
acquisitions, engage in mergers or consolidations, make capital expenditures,
enter into sale/leaseback transactions or engage in certain transactions with
subsidiaries and affiliates and otherwise restrict corporate activities. In
addition, under the Senior Bank Facility, the Company will be required to comply
with specified financial ratios and tests, including minimum interest coverage
and maximum leverage ratios and a trailing four quarter minimum EBITDA (earnings
before interest, taxes, depreciation and amortization) test. See "Description of
Senior Bank Facility," "Description of Other Indebtedness" and "Description of
the Notes."
The Company's ability to comply with the covenants and restrictions
contained in the Senior Bank Facility, the 11 3/4% Notes Indenture, the 11 3/4%
Series B Notes Indenture and the Indenture may be affected by events beyond its
control, including prevailing economic, financial and industry conditions. The
breach of any of such covenants or restrictions could result in a default under
the Senior Bank Facility, the 11 3/4% Notes Indenture, the 11 3/4% Series B
Notes Indenture and/or the Indenture, which would permit the senior lenders or
the holders of the 11 3/4% Notes, the 11 3/4% Series B Notes or the Notes, as
the case may be, to declare all amounts borrowed thereunder to be due and
payable, together with accrued and unpaid interest, and the commitments of the
senior lenders to make further extensions of credit under the Senior Bank
Facility could
9
<PAGE> 12
be terminated. If the Company were unable to repay its indebtedness to its
senior lenders, such lenders could proceed against the collateral securing such
indebtedness as described under "Description of Senior Bank Facility." See
"Description of Senior Bank Facility," "Description of Other Indebtedness" and
"Description of the Notes."
CHANGE OF CONTROL
Upon a Change of Control, as defined in the Indenture, (i) the Company will
have the option at any time on or prior to June 1, 2000, to redeem the Notes, in
whole but not in part, at a redemption price equal to 100% of the principal
amount thereof plus the Applicable Premium, plus accrued and unpaid interest, if
any, to the date of redemption, and (ii) if the Company does not so redeem the
Notes or if such Change of Control occurs after June 1, 2000, the Company will
be required to offer to purchase all of the outstanding Notes at a price equal
to 101% of the principal amount thereof to the date of repurchase plus accrued
and unpaid interest, if any, to the date of repurchase. There can be no
assurance that the Company will have funds available to repurchase the Notes
upon the occurrence of a Change of Control. In particular, a Change of Control
may cause an acceleration of, or require an offer to repurchase under, the
Senior Bank Facility and other indebtedness, if any, of the Company and its
subsidiaries, in which case such indebtedness may be required to be repaid in
full before repurchase of the Notes. See "Description of Senior Bank Facility."
Additionally, the occurrence of the events that would constitute a Change of
Control would also constitute a "Change of Control" under the 11 3/4% Notes
Indenture and the 11 3/4% Series B Notes Indenture. In such a case, the Company
would be subject to the same obligations with respect to the 11 3/4% Notes and
the 11 3/4% Series B Notes as the Company would be subject to with respect to
the Notes. See "Description of Other Indebtedness" and "Description of the
Notes -- Change of Control." The inability to repay such indebtedness, if
accelerated, and to purchase all of the tendered Notes would constitute an event
of default under the Indenture.
DEPENDENCE ON CERTAIN INDUSTRIES
A substantial portion of the Company's wire and wire harness products are
ultimately used in the appliance, computer and data communications and
automotive industries. Accordingly, a downturn in those industries could
adversely affect the Company. Furthermore, an overall softening in the economy
could adversely affect generally all the markets the Company serves.
DEPENDENCE ON KEY CUSTOMERS
One customer accounted for approximately 18% of the Company's total sales
in 1996, and certain other customers of the company account for significant
portions of the Company's sales. The loss of any such account, whether as a
result of general or regional economic conditions, a diminished demand for the
Company's products, or any other reason, could adversely affect the Company's
results of operations. See "Business -- Key Customers."
FOREIGN OPERATIONS
The Company manufactures certain of its products in Mexico. Foreign
operations are subject to special risks that can materially affect the cash
flows and financial position of the Company, including currency exchange rate
fluctuations, inflation, exchange controls and political and other risks.
COMPETITION
The wire and cable and wire harness markets in which the Company operates
are highly competitive. Some of the Company's competitors are larger than the
Company and have greater financial and other resources available to them and
there can be no assurance that the Company can compete successfully with such
other companies.
CONTROLLING STOCKHOLDER
All of the common stock of the Company is owned by Holding. The majority
stockholder of Holding is Hicks, Muse, Tate & Furst Equity Fund II, L.P. ("HM
Fund II"), an affiliate of Hicks, Muse, Tate & Furst Incorporated, a private
investment firm headquartered in Dallas with offices in New York, St. Louis and
10
<PAGE> 13
Mexico City, specializing in strategic investments, leveraged acquisitions and
real estate equity investments ("Hicks, Muse"). As a result, Hicks, Muse
effectively will be able to elect all the members of the Board of Directors of
Holding and therefore direct the management and policies of the Company. The
interests of Hicks, Muse and its affiliates may differ from the interests of
holders of the Notes. See "Outstanding Voting Securities of Holding and
Principal Holders Thereof" and "Certain Relationships and Related Transactions."
ERISA CONSIDERATIONS
HM Fund II is a private investment fund which is managed by an affiliate of
Hicks, Muse and which was formed for the principal purpose of making investments
in companies. HM Fund II currently owns at least 80% of the total outstanding
common stock of Holding and thereby indirectly possesses at least 80% of the
total combined voting power and total value of shares of all classes of stock of
the Company. HM Fund II also currently owns and may acquire at least 80% of the
total combined voting power or the total value of shares of all classes of stock
of other companies, some of which may sponsor or contribute to pension plans
subject to Title IV of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or Section 412 of the Internal Revenue Code of 1986, as
amended (the "Code"). In accordance with the provisions of ERISA and the Code,
the Company is a member of a controlled group of corporations or a group of
trades or businesses under common control that includes HM Fund II (the "Fund II
ERISA Group"), and each member of such group is jointly and severally liable for
certain unfunded pension liabilities and pension contributions which arise
during such member's inclusion within such group. While Hicks, Muse expects each
member of the Fund II ERISA Group to satisfy its pension-related obligations
with respect to its employees to the fullest extent permitted by law, without
assistance from other members of the Fund II ERISA Group, there are no
assurances that an insolvency, bankruptcy or other condition would not occur at
one member of the Fund II ERISA Group which could result in a liability to other
members of the Fund II ERISA Group (including the Company). Hicks, Muse is not
currently aware of any accrued and unpaid pension contribution, or termination
of or withdrawal from a pension plan subject to Title IV of ERISA or Section 412
of the Code at any member of the Fund II ERISA Group which would have a material
adverse effect on the Company.
ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state, local and foreign
laws and regulations relating to the storage, handling, generation, treatment,
emission, release, discharge and disposal of certain substances and wastes.
While the Company believes that it is currently in material compliance with
those laws and regulations, there can be no assurance that the Company will not
incur significant costs to remediate violations thereof or to comply with
changes in existing laws and regulations (or the enforcement thereof). Such
costs could have a material adverse effect on the Company's results of
operations and financial condition. As a manufacturer that uses hazardous
materials in its operations, it is possible that in the future the Company will
be subject to new or more stringent regulatory requirements. The Company is
currently involved with environmental monitoring activities at its Camden, New
York and Jordan, New York facilities. See "Business -- Environmental Matters."
LACK OF PUBLIC MARKET
The Company does not intend to apply for a listing of the Notes on a
securities exchange or on any automated dealer quotation system. There is
currently no established market for the Notes and there can be no assurance as
to the liquidity of markets that may develop for the Notes, the ability of the
holders of the Notes to sell their Notes or the price at which such holders
would be able to sell their Notes. If such markets were to exist, the Notes
could trade at prices that may be lower than the initial market values thereof
depending on many factors, including prevailing interest rates and the markets
for similar securities.
The liquidity of, and trading market for, the Notes also may be adversely
affected by general declines in the market for similar securities. Such a
decline may adversely affect such liquidity, and trading markets independent of
the financial performance of, and prospects for, the Company.
11
<PAGE> 14
USE OF PROCEEDS
This Prospectus has been prepared for use by the Selling Securityholder in
sales of the Notes. The Company will receive no proceeds from the sales of the
Notes by the Selling Securityholder, but will bear all expenses (estimated at
$143,000) relating to the registration of the Notes.
CAPITALIZATION
The following table sets forth the unaudited capitalization of the Company
at March 31, 1997, and as adjusted to give effect to the Rule 144A Offering, the
Senior Debt Repayment and the Notes Repurchase. See "Description of Senior Bank
Facility."
<TABLE>
<CAPTION>
MARCH 31, 1997
--------------------
AS
ACTUAL ADJUSTED
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt (including current maturities):
Revolver(1)............................................... $ 18,800 $ 8,275(2)
Term Facility:
Tranche A Loan......................................... 90,456 25,000
Tranche B Loan......................................... 114,200 160,500
Tranche C Loan......................................... 126,832 --
11 3/4% Senior Subordinated Notes due 2005................ 150,000 150,000
11 3/4% Series B Senior Subordinated Notes due 2005(3).... -- 163,125
14% Senior Subordinated Notes due 2005.................... 10,000 5,000
Other(4).................................................. 22,474 22,474
-------- --------
Total long-term debt.............................. 532,762 534,374
Stockholder's equity (deficit)(5)........................... (44,159) (46,813)
-------- --------
Total capitalization.............................. $488,603 $487,561
======== ========
</TABLE>
- ---------------
(1) The Senior Bank Facility provides for maximum revolving loans of up to
$75,000. See "Description of Senior Bank Facility."
(2) Includes (i) approximately $6,450 of indebtedness outstanding under the
Revolver as of March 31, 1997, that was repaid by the Company in accordance
with the terms of the Credit Agreement prior to the consummation of the Rule
144A Offering and (ii) approximately $1,825 of indebtedness outstanding
under the Revolver that was drawn upon (together with $3,825 of cash) to
finance the Notes Repurchase.
(3) Includes approximately $13,125 attributable to amortizable bond premium
received in connection with the Rule 144A Offering.
(4) Includes $15,500 in industrial revenue bonds issued by a Subsidiary
Guarantor that have been guaranteed by the Company.
(5) Included in stockholder's equity (deficit) are the following:
<TABLE>
<S> <C>
Contributed capital....................................... $114,080
Predecessor basis......................................... (67,762)
Accumulated deficit....................................... (93,131)(a)
--------
Total stockholder's equity (deficit).................... $(46,813)
========
</TABLE>
- ---------------
(a) Accumulated deficit at March 31, 1997 is adjusted for the extraordinary
item for the early extinguishment of debt reflecting the write-off of
deferred financing costs of approximately $3,772 related to the portion
of the Senior Bank Facility repaid with the net proceeds from the Rule
144A Offering and the $650 premium paid for the Notes Repurchase, net
of tax.
12
<PAGE> 15
SELECTED FINANCIAL DATA
THE COMPANY
The selected financial data below presents the financial information for
the seven months ended December 31, 1995, for the year ended December 31, 1996,
the three months ended March 31, 1996 and for the three months ended March 31,
1997. The data for the seven months ended December 31, 1995 and for the year
ended December 31, 1996 are derived from the audited consolidated financial
statements of the Company. The data for the three months ended March 31, 1996
and March 31, 1997 are derived from the unaudited consolidated financial
statements of the Company, which, in the opinion of management of the Company,
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation. The selected financial data should be read in
conjunction with the consolidated financial statements of the Company and notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," included elsewhere herein. Certain financial information
regarding the Company's industry segments is provided in the notes to the
consolidated financial statements of the Company included elsewhere herein.
<TABLE>
<CAPTION>
SEVEN
MONTHS THREE MONTHS ENDED
ENDED YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, -------------------
1995 1996 1996 1997
------------ ------------ -------- --------
(UNAUDITED)
(IN THOUSANDS, EXCEPT RATIO AMOUNTS)
<S> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales........................................ $245,583 $546,981 $118,807 $176,153
Cost of goods sold............................... 195,221 420,823 93,475 137,913
Selling, general and administrative expenses..... 17,129 43,885 9,721 13,308
Depreciation and amortization.................... 11,020 31,341 6,044 7,511
Impairment, unusual and plant closing
charges(1).................................... 1,750 84,250 4,000 500
Inventory valuation adjustment(2)................ -- 8,500 2,000 --
-------- -------- -------- --------
Operating income (loss).......................... 20,463 (41,818) 3,567 16,921
Interest expense................................. (19,931) (43,013) (9,572) (12,011)
Amortization of deferred financing costs......... (1,468) (3,701) (723) (995)
Other (expense) income........................... (158) 312 89 11
-------- -------- -------- --------
Income (loss) before income tax provision........ (1,094) (88,220) (6,639) 3,926
Income tax provision............................. 2,197 1,262 255 1,630
-------- -------- -------- --------
Net income (loss)................................ $ (3,291) $(89,482) $ (6,894) $ 2,296
======== ======== ======== ========
OTHER DATA:
EBITDA, as adjusted(3)........................... $ 33,233 $ 82,273 $ 15,611 $ 24,932
Capital expenditures............................. 5,751 15,849 2,537 3,038
Total assets..................................... 427,920 531,020 617,784 634,307
Long-term obligations (including current
maturities)................................... 338,677 447,667 469,977 532,762
Ratio of earnings to fixed charges(4)............ -- -- -- 1.3x
Deficiency of earnings available to cover fixed
charges(4).................................... (1,094) (88,220) (6,639) --
CASH FLOW DATA:
Net cash from (used in) operating activities..... $ 13,334 $ 31,980 $ (729) $ (4,608)
Net cash from (used in) investing activities..... (346,797) (176,108) (162,796) (62,034)
Net cash from (used in) financing activities..... 333,463 144,128 168,539 70,467
</TABLE>
- ---------------
(1) Represents charges relating to plant closings in the amounts of $1,750,
$6,000, $4,000 and $500 in the seven months ended December 31, 1995, the
year ended December 31, 1996, the three months ended March 31, 1996 and the
three months ended March 31, 1997, respectively. In addition, included in
the
13
<PAGE> 16
year ended December 31, 1996 are charges relating to the write-off of
goodwill principally related to the acquisition of Wirekraft in the amount
of $78,250. See Note 10 to the Company's audited consolidated financial
statements for the year ended December 31, 1996.
(2) Represents a pre-tax inventory valuation charge to reduce the last in, first
out ("LIFO") valuation of copper in inventory as a result of the decline in
the average price of copper during 1996. See Note 4 to the Company's audited
consolidated financial statements for the year ended December 31, 1996.
(3) As used herein, "EBITDA, as adjusted" is defined as operating income (loss)
adjusted to exclude impairment, unusual and plant closing charges, and other
one-time charges. EBITDA, as adjusted, is presented because (i) it is a
widely accepted financial indicator of a company's ability to incur and
service debt and (ii) it is the basis on which the Company's compliance with
certain financial covenants contained in the Indenture, the 11 3/4% Notes
Indenture, the 11 3/4% Series B Notes Indenture and the Senior Bank Facility
is principally determined. However, EBITDA, as adjusted, does not purport to
represent cash provided by operating activities as reflected in the
Company's consolidated statements of cash flow, is not a measure of
financial performance under generally accepted accounting principles
("GAAP") and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. Also, the measure
of EBITDA, as adjusted, may not be comparable to similar measures reported
by other companies. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
(4) For purposes of calculating the ratio of earnings to fixed charges and the
deficiency of earnings available to cover fixed charges, "earnings"
represent operating income (loss) before income taxes plus fixed charges.
"Fixed charges" consist of interest on all indebtedness, amortization of
deferred financing costs and the portion (approximately one-third) of rental
expenses that management believes is representative of the interest
component of rent expense.
14
<PAGE> 17
WIREKRAFT (A PREDECESSOR COMPANY)
The selected financial data presented below represents the financial
information of Wirekraft and its predecessor, Kirtland Indiana, Limited
Partnership ("KILP"), for the periods indicated. The data for the year ended
November 30, 1992 and for the period December 1, 1992 through December 21, 1992
are derived from the audited financial statements of KILP. The data for the
period December 22, 1992 through November 30, 1993, the year ended November 30,
1994 and the six months ended May 31, 1995 are derived from the audited
consolidated financial statements of Wirekraft. In connection with the December
2, 1994 acquisition of ECM and certain assets of GE (the "ECM Acquisition"), WB
Holdings Inc. became a wholly-owned subsidiary of Wirekraft, and, accordingly,
references to Wirekraft shall include WB Holdings Inc. The following information
should be read in conjunction with the audited consolidated financial statements
of Wirekraft and KILP and the notes thereto, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
herein.
<TABLE>
<CAPTION>
KILP WIREKRAFT
--------------------------- -------------------------------------------
DECEMBER 1, DECEMBER 22,
1992 THROUGH 1992 THROUGH YEAR ENDED SIX MONTHS
NOVEMBER 30, DECEMBER 21, NOVEMBER 30, NOVEMBER 30, ENDED MAY 31,
1992 1992 1993 (1) 1994 1995
------------ ------------ ------------ ------------ -------------
(IN THOUSANDS, EXCEPT RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales..................... $174,684 $ 9,714 $181,188 $240,972 $168,053
Cost of goods sold............ 146,597 8,339 150,092 201,602 138,851
Selling, general and
administrative expenses..... 10,869 505 10,582 14,319 13,301
Depreciation and
amortization................ 5,141 218 4,496 6,435 6,474
Compensation expense.......... -- -- -- -- 895(2)
Expenses related to sale...... -- 6,929(3) -- -- 501(4)
Expenses related to plant
closings.................... -- -- -- -- 2,000(5)
-------- ------- -------- -------- --------
Operating income (loss)....... 12,077 (6,277) 16,018 18,616 6,031
Interest expense.............. (4,761) (1,418)(6) (8,645) (10,565) (8,020)
Amortization of deferred
financing costs............. -- -- (1,677) (1,995) (1,657)
-------- ------- -------- -------- --------
Income (loss) before income
taxes and extraordinary
item........................ 7,316 (7,695) 5,696 6,056 (3,646)
Income tax provision
(benefit)(7)................ -- -- 3,155 3,023 (2,114)
-------- ------- -------- -------- --------
Income (loss) before
extraordinary item.......... -- -- 2,541 3,033 (1,532)
Extraordinary item............ -- -- -- (7,835)(8)
-------- ------- -------- -------- --------
Net income (loss)............. $ 7,316 $(7,695) $ 2,541 $ 3,033 $ (9,367)
======== ======= ======== ======== ========
OTHER DATA:
EBITDA, as adjusted (9)....... $ 18,673 $ 870 $ 20,514 $ 25,051 $ 15,901
Capital expenditures.......... 2,122 136 3,705 6,248 2,914
Total assets.................. 81,074 80,421 146,671 178,488 241,277
Long-term obligations
(including current
maturities)................. 45,294 42,143 93,123 111,639 148,386
Ratio of earnings to fixed
charges (10)................ 2.5x -- 1.5x 1.5x --
Deficiency of earnings
available to cover fixed
charges (10)................ -- (7,695) -- -- (3,646)
CASH FLOW DATA:
Net cash from (used in)
operating activities........ $ 15,710 $ 601 $ 8,620 $ 2,318 $ (3,921)
Net cash from (used in)
investing activities........ (1,964) (136) (115,026) (18,002) (47,887)
Net cash from (used in)
financing activities........ (13,009) (652) 106,646 17,497 51,663
</TABLE>
15
<PAGE> 18
- ---------------
(1) On December 21, 1992, WB Holdings Inc., through a series of acquisitions
and mergers (the "Original Wirekraft Acquisition"), acquired all of the
issued and outstanding common stock of Bristol Holding Corporation and
Burcliff Holdings Corporation, the parent companies of the general partners
of KILP.
(2) Represents payments to senior management of Wirekraft for the redemption of
employee stock options in connection with the combination of Wirekraft and
Omega in June 1995 (the "Wirekraft/Omega Combination") as described under
"Business -- General."
(3) Represents non-recurring expenses associated with the Original Wirekraft
Acquisition, which included exit bonuses, severance arrangements and
brokerage and legal fees.
(4) Represents non-recurring expenses of Wirekraft associated with the
Wirekraft/Omega Combination, which included, among other things, brokerage
and legal fees.
(5) Represents expenses related to the closing of certain domestic harness
facilities.
(6) Includes write-off of deferred financing costs of $1,211 associated with
the Original Wirekraft Acquisition.
(7) The results of operations for the year ended November 30, 1992 and the
period from December 1, 1992 through December 21, 1992 did not include a
provision for income taxes since the net income for KILP is included in the
income tax returns of its partners.
(8) Extraordinary item in 1995 represents a $7,835 loss on early extinguishment
of debt (net of income tax of $4,930).
(9) As used herein, "EBITDA, as adjusted" is defined as operating income (loss)
adjusted to exclude impairment, unusual and plant closing charges, and
other one-time charges. EBITDA, as adjusted, is presented because (i) it is
a widely accepted financial indicator of a company's ability to incur and
service debt and (ii) it is the basis on which the Company's compliance
with certain financial covenants contained in the Indenture, the 11 3/4%
Notes Indenture, the 11 3/4% Series B Notes Indenture and the Senior Bank
Facility is principally determined. However, EBITDA, as adjusted, does not
purport to represent cash provided by operating activities as reflected in
the Company's consolidated statements of cash flow, is not a measure of
financial performance under GAAP and should not be considered in isolation
or as a substitute for measures of performance prepared in accordance with
GAAP. Also, the measure of EBITDA, as adjusted, may not be comparable to
similar measures reported by other companies. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations." An
adjustment was made to EBITDA for the year ended November 30, 1993 in the
amount of $1,455. This adjustment represents charges to operations incurred
by KILP but not assumed by the Company.
(10) For purposes of calculating the ratio of earnings to fixed charges and the
deficiency of earnings available to cover fixed charges, "earnings"
represent operating income (loss) before income taxes plus fixed charges.
"Fixed charges" consist of interest on all indebtedness, amortization of
deferred financing costs and the portion (approximately one-third) of
rental expenses that management believes is representative of the interest
component of rent expense.
16
<PAGE> 19
OMEGA (A PREDECESSOR COMPANY)
The selected financial information below presents the financial information
of Omega and its predecessor, THL-Omega Holding Corporation ("THL-Omega"), for
the periods indicated. The data for the years ended December 31, 1992, 1993 and
1994 and the three months ended March 31, 1995 are derived from the audited
consolidated financial statements of THL-Omega. The data for the two months
ended May 31, 1995, are derived from the audited consolidated financial
statements of Omega. The following information should be read in conjunction
with the audited consolidated financial statements of Omega and the notes
thereto, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," included elsewhere herein.
<TABLE>
<CAPTION>
THL-OMEGA OMEGA
------------------------------------------------- ----------
THREE TWO
MONTHS MONTHS
YEARS ENDED DECEMBER 31, ENDED ENDED
--------------------------------- MARCH 31, MAY 31,
1992 1993 1994 1995 1995(1)
-------- -------- -------- ------------ ----------
(IN THOUSANDS, EXCEPT RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales............................. $108,312 $107,004 $134,457 $38,736 23,295
Cost of goods sold.................... 82,008 80,276 98,012 29,401 17,512
Selling, general and administrative
expenses............................ 8,925 12,061 10,839 2,651 1,639
Depreciation and amortization......... 5,488 5,191 5,761 1,459 1,233
Compensation expense.................. -- -- -- 9,715(2) --
Expenses related to sale.............. -- -- -- 1,689(3) --
-------- -------- -------- ------- --------
Operating income (loss)............... 11,891 9,476(7) 19,845 (6,179) 2,911
Interest expense...................... (6,526) (6,026) (5,932) (1,478) (1,797)
Amortization of deferred financing
costs............................... (285) (289) (262) (50) (238)
Other income.......................... 1,015 772 296 32 --
-------- -------- -------- ------- --------
Income (loss) before income taxes and
extraordinary item.................. 6,095 3,933 13,947 (7,675) 876
Income tax provision (benefit)........ 2,550 1,892 5,787 484 171
-------- -------- -------- ------- --------
Income (loss) before extraordinary
item................................ 3,545 2,041 8,160 (8,159) 705
Extraordinary item.................... -- -- -- (1,148)(4) (4,044)(5)
-------- -------- -------- ------- --------
Net income (loss)..................... $ 3,545 $ 2,041 $ 8,160 $(9,307) $ (3,339)
======== ======== ======== ======= ========
OTHER DATA:
EBITDA, as adjusted(6)................ $ 17,379 $ 14,667(7) $ 25,606 $ 6,684 $ 4,144
Capital expenditures.................. 1,947 3,683 8,667 1,597 581
Total assets.......................... 87,342 85,868 101,675 97,657 176,659
Long-term obligations (including
current maturities)................. 64,554 58,174 56,093 54,615 128,116
Ratio of earnings to fixed
charges(8).......................... 1.8x 1.6x 3.1x -- 1.4x
Deficiency of earnings available to
cover fixed charges(8).............. -- -- -- (7,675) --
CASH FLOW DATA:
Net cash from (used in) operating
activities.......................... $ 3,474 $ 10,070 $ 11,064 $ 3,604 $ 4,987
Net cash from (used in) investing
activities.......................... 594 (3,683) (8,667) (1,597) (159,661)
Net cash from (used in) financing
activities.......................... (4,721) (6,380) (2,081) (1,536) 154,674
</TABLE>
- ---------------
(1) On March 31, 1995, Omega acquired all of the issued and outstanding common
stock of THL-Omega.
(2) Represents payments to senior management for the redemption of stock options
and stock that was issued immediately prior to the acquisition of THL-Omega
for consideration less than the fair value.
(3) Represents expenses of the sellers associated with the acquisition of
THL-Omega.
(4) Extraordinary item in March 1995, represents a $1,148 loss on early
extinguishment of debt (net of income taxes of $765).
17
<PAGE> 20
(5) Extraordinary item in May 1995, represents a $4,044 loss on early
extinguishment of debt (net of income taxes of $2,082).
(6) As used herein, "EBITDA, as adjusted" is defined as operating income (loss)
adjusted to exclude impairment, unusual and plant closing charges, and other
one-time charges. EBITDA, as adjusted, is presented because (i) it is a
widely accepted financial indicator of a company's ability to incur and
service debt and (ii) it is the basis on which the Company's compliance with
certain financial covenants contained in the Indenture, the 11 3/4%
Indenture, the 11 3/4% Series B Indenture and the Senior Bank Facility is
principally determined. However, EBITDA, as adjusted, does not purport to
represent cash provided by operating activities as reflected in the
Company's consolidated statements of cash flow, is not a measure of
financial performance under GAAP and should not be considered in isolation
or as a substitute for measures of performance prepared in accordance with
GAAP. Also, the measure of EBITDA, as adjusted, may not be comparable to
similar measures reported by other companies. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
(7) During 1993 a charge of approximately $3,100 was recorded related to certain
one time bad debt write-offs. Excluding the effects of this charge,
operating income and EBITDA, as adjusted, would have been $12,576 and
$17,767, respectively.
(8) For purposes of calculating the ratio of earnings to fixed charges and the
deficiency of earnings available to cover fixed charges, "earnings"
represent operating income (loss) before income taxes plus fixed charges.
"Fixed charges" consist of interest on all indebtedness, amortization of
deferred financing costs and the portion (approximately one-third) of rental
expenses that management believes is representative of the interest
component of rent expense.
18
<PAGE> 21
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information (the "Unaudited Pro
Forma Financial Information") of the Company is based on the audited and
unaudited consolidated financial statements of the Company included elsewhere in
this Prospectus, as adjusted to give effect to the DWT Acquisition, the Rule
144A Offering, the Senior Debt Repayment and the Notes Repurchase.
The statements of operations data included in the Unaudited Pro Forma
Financial Information for the year ended December 31, 1996 has been prepared to
give effect to the DWT Acquisition, the Rule 144A Offering, the Senior Debt
Repayment and the Notes Repurchase as if they had occurred on January 1, 1996.
The statement of operations data included in the Unaudited Pro Forma Financial
Information for three months ended March 31, 1997 has been prepared to give
effect to the Rule 144A Offering, the Senior Debt Repayment and the Notes
Repurchase as if they had occurred on January 1, 1996. The balance sheet data
included in the Unaudited Pro Forma Financial Information as of March 31, 1997
has been prepared to give effect to the Rule 144A Offering, the Senior Debt
Repayment and the Notes Repurchase as if they had occurred on such date. The pro
forma adjustments are based upon available information and certain assumptions
that the Company believes are reasonable. The DWT Acquisition was accounted for
using the purchase method of accounting whereby the total acquisition cost has
been allocated to the consolidated assets and liabilities based upon their
estimated respective fair values.
The Unaudited Pro Forma Financial Information does not purport to be
indicative of the results that would have been obtained had such transactions
been completed as of the assumed dates and for the periods presented or that may
be obtained in the future.
19
<PAGE> 22
INTERNATIONAL WIRE GROUP, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
-------------------------------
RULE 144A
OFFERING,
SENIOR DEBT
REPAYMENT
COMPANY DEKKO DEKKO AND NOTES COMPANY
HISTORICAL HISTORICAL ADJUSTMENTS(1) REPURCHASE(2) PRO FORMA(3)
---------- ---------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales........................ $546,981 $ 29,095 $(1,249) $ -- $574,827
Cost of goods sold............... 420,823 22,938 (1,249) -- 442,512
Selling, general and
administrative expenses........ 43,885 1,199 -- -- 45,084
Depreciation and amortization.... 31,341 607 812(4) -- 32,760
Impairment, unusual and plant
closing charges................ 84,250 -- (6,000)(5) -- 78,250
Inventory valuation adjustment... 8,500 -- -- -- 8,500
-------- -------- ------- ------- --------
Operating income (loss)..... (41,818) 4,351 5,188 -- (32,279)
Other income (expense):
Interest expense............... (43,013) (216) --(6) (3,382)(8) (46,611)
Amortization of deferred
financing costs............. (3,701) (8) --(6) 135(10) (3,574)
Other (expense) income......... 312 (391) -- -- (79)
-------- -------- ------- ------- --------
Income (loss) before income
tax provision............. (88,220) 3,736 5,188 (3,247) (82,543)
Income tax provision............. 1,262 -- 3,570(7) (1,299)(10) 3,533
-------- -------- ------- ------- --------
Net income (loss)........... $(89,482) $ 3,736 $ 1,618 $(1,948) $(87,076)
======== ======== ======= ======= ========
EBITDA, as adjusted(11).......... $ 82,273 $ 87,231
======== ========
Ratio of earnings to fixed
charges(12).................... N/A
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Statement of Operations.
20
<PAGE> 23
INTERNATIONAL WIRE GROUP, INC.
NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(IN THOUSANDS)
(1) Adjustments give effect to the DWT Acquisition as if it were consummated on
January 1, 1996.
(2) Adjustments give effect to the Rule 144A Offering, the Senior Debt
Repayment and the Notes Repurchase as if each were consummated on January
1, 1996.
(3) The Unaudited Pro Forma Statement of Operations does not reflect the
following:
(a) The write-off of deferred financing costs of approximately $3,772
related to the portion of the Senior Bank Facility that was repaid with
the net proceeds from the Rule 144A Offering.
(b) The extraordinary item for early extinguishment of debt resulting from
$650 premium for the Notes Repurchase.
(c) Revenues and expenses of Camden for the year ended December 31, 1996.
(d) Cost savings related to the DWT Acquisition and the Camden Acquisition
and the full-year impact of cost reduction programs implemented in
1996. The cost savings include plant rationalizations, headcount
reductions and consolidation of administrative services. The cost
reduction programs include early retirement programs and the full-year
impact of the establishment of a southwest facility.
(4) Reflects increase in goodwill amortization in the amount of $566 and the
net increase in depreciation expense in the amount of $246 as if the DWT
Acquisition had been consummated at the beginning of the period.
(5) Reflects the elimination of expenses related to plant closing costs, which
relate to shutting down and consolidating certain facilities in connection
with the DWT Acquisition.
(6) Financing for the DWT Acquisition is included in the column "Rule 144A
Offering, Senior Debt Repayment and Notes Repurchase."
(7) Reflects the effect of pro forma adjustments described above and the
estimated pro forma tax provision of Dekko as a C corporation.
(8) Reflects the net increase in interest expense as if the Rule 144A Offering,
the Senior Debt Repayment and the Notes Repurchase had occurred on January
1, 1996:
<TABLE>
<S> <C>
Senior Bank Facility(a)
Reduction of Senior Bank Facility interest expense from
interest rate reduction................................ $ (1,515)
Reduction of Senior Bank Facility interest expense from
principal reduction -- $158,338 at applicable interest
rates.................................................. (12,683)
--------
Reduction of interest under Senior Bank Facility....... (14,198)
11 3/4% Series B Senior Subordinated Notes due 2005 at an
effective yield to maturity of 10.121%(b)................. 16,493
14% Senior Subordinated Notes due 2005 at an effective yield
to maturity of 14%(c)..................................... 1,400
Reduction of interest under Notes Repurchase(d)............. (313)
--------
Net interest adjustment................................ $ 3,382
========
</TABLE>
- ---------------
(a) A one-half of one percent change in interest rates would impact
interest expense for borrowings under the Senior Bank Facility in the
amount of approximately $760.
(b) Effective yield to maturity reflects the effect of the amortization of
the bond premium received in connection with the Rule 144A Offering.
(c) Reflects $10,000 Senior Subordinated Notes due 2005 originally
converted.
21
<PAGE> 24
(d) Reflects the net decrease in interest expense between $5,000 Senior
Subordinated Notes due 2005 and $5,650 of borrowings under the Senior
Bank Facility.
(9) Reflects the net decrease in deferred financing costs amortization as if
the Rule 144A Offering had occurred on January 1, 1996.
(10) Reflects the tax effect of the pro forma adjustments (a) and (10) described
above.
(11) As used herein, "EBITDA, as adjusted" is defined as operating income (loss)
adjusted to exclude impairment, unusual and plant closing charges, and
other one-time charges. EBITDA, as adjusted, is presented because (i) it is
a widely accepted financial indicator of a company's ability to incur and
service debt and (ii) it is the basis on which the Company's compliance
with certain financial covenants contained in the Indenture, the 11 3/4%
Notes Indenture, the 11 3/4% Series B Notes Indenture and the Senior Bank
Facility is principally determined. However, EBITDA, as adjusted, does not
purport to represent cash provided by operating activities as reflected in
the Company's consolidated statements of cash flow, is not a measure of
financial performance under GAAP and should not be considered in isolation
or as a substitute for measures of performance prepared in accordance with
GAAP. Also, the measure of EBITDA, as adjusted, may not be comparable to
similar measures reported by other companies.
(12) For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represent operating income (loss) before income taxes plus fixed
charges. "Fixed charges" consist of interest on all indebtedness,
amortization of deferred financing costs and the portion (approximately
one-third) of rental expenses that management believes is representative of
the interest component of rent expense. On a pro forma basis, earnings were
insufficient to cover fixed charges by $82,543.
22
<PAGE> 25
INTERNATIONAL WIRE GROUP, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT RATIO AMOUNTS)
<TABLE>
<CAPTION>
ADJUSTMENTS
----------------
RULE 144A
OFFERING,
SENIOR DEBT
REPAYMENT
COMPANY AND NOTES COMPANY
HISTORICAL REPURCHASE(1) PRO FORMA(2)
---------- ---------------- ------------
<S> <C> <C> <C>
Net sales............................................ $176,153 $ -- $176,153
Cost of goods sold................................... 137,913 -- 137,913
Selling, general and administrative expenses......... 13,308 -- 13,308
Depreciation and amortization........................ 7,511 -- 7,511
Plant closing charges................................ 500 -- 500
-------- ------- --------
Operating income................................ 16,921 -- 16,921
Other income (expense):
Interest expense................................... (12,011) (824)(3) (12,835)
Amortization of deferred financing costs........... (995) 34(4) (961)
Other income....................................... 11 -- 11
-------- ------- --------
Income before income tax provision.............. 3,926 (790) 3,136
Income tax provision................................. 1,630 (316)(5) 1,314
-------- ------- --------
Net income (loss)............................... $ 2,296 $(474) $ 1,822
======== ======= ========
EBITDA, as adjusted(6)............................... $ 24,932 $ 24,932
======== ========
Ratio of earnings to fixed charges(7)................ 1.3x 1.3x
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Statement of Operations.
23
<PAGE> 26
INTERNATIONAL WIRE GROUP, INC.
NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(IN THOUSANDS)
(1) Adjustments give effect to the Rule 144A Offering, the Senior Debt Repayment
and the Notes Repurchase as if each were consummated on January 1, 1996.
(2) The Unaudited Pro Forma Statement of Operations does not reflect the
following:
(a) The write-off of deferred financing costs of approximately $3,772
related to the portion of the Senior Bank Facility that was repaid with
the net proceeds from the Rule 144A Offering.
(b) The extraordinary item for early extinguishment of debt resulting from
$650 premium for the Notes Repurchase
(c) Revenues and expenses of Camden for the period from January 1, 1997 to
February 12, 1997 (the date of the Camden Acquisition) and cost savings
related to the Camden Acquisition. The cost savings include plant
rationalizations, head count reductions and the consolidation of
administrative services.
(3) Reflects net increase in interest expense as if the Rule 144A Offering, the
Senior Debt Repayment and the Notes Repurchase had occurred on January 1,
1996:
<TABLE>
<S> <C>
Senior Bank Facility(a)
Reduction of Senior Bank Facility interest expense from
interest rate reduction................................ $ (379)
Reduction of Senior Bank Facility interest expense from
principal reduction -- $158,338 at applicable interest
rates.................................................. (3,171)
-------
Reduction of interest under Senior Bank
Facility.......................................... (3,550)
11 3/4% Series B Senior Subordinated Notes due 2005 at an
effective yield to maturity of 10.121%(b)................. 4,102
14% Senior Subordinated Notes due 2005 at an effective yield
to maturity of 14%(c)..................................... 350
Reduction of interest under Notes Repurchase(d)............. (78)
-------
Net interest adjustment........................... $ 824
=======
</TABLE>
- ---------------
(a) A one-half of one percent change in interest rates would impact
interest expense for borrowings under the Senior Bank Facility in the
amount of approximately $190.
(b) Effective yield to maturity reflects the effect of the amortization of
the bond premium received in connection with the Rule 144A Offering.
(c) Reflects $10,000 Senior Subordinated Notes due 2005 originally
converted.
(d) Reflects the net decrease in interest expense between $5,000 Senior
Subordinated Notes due 2005 and $5,650 of borrowings under the Senior
Bank Facility.
(4) Reflects the net decrease in amortization of deferred financing costs as if
the Rule 144A Offering had occurred on January 1, 1996.
(5) Reflects the tax effect of the pro forma adjustments above.
(6) As used herein, "EBITDA, as adjusted" is defined as operating income (loss)
adjusted to exclude impairment, unusual and plant closing charges, and other
one-time charges. EBITDA, as adjusted, is presented because (i) it is a
widely accepted financial indicator of a Company's ability to incur and
service debt and (ii) it is the basis on which the Company's compliance with
certain financial covenants contained in the Indenture, the 11 3/4% Notes
Indenture, the 11 3/4% Series B Notes Indenture and the Senior Bank Facility
is principally determined. However, EBITDA, as adjusted, does not purport to
represent cash provided by operating activities as reflected in the
Company's consolidated statements of cash flow, is not a measure of
financial performance under GAAP and should not be considered in
24
<PAGE> 27
isolation or as a substitute for measures of performance prepared in
accordance with GAAP. Also, the measure of EBITDA, as adjusted, may not be
comparable to similar measures reported by other companies.
(7) For purposes of calculating the ratio of earnings to fixed charges and the
deficiency of earnings available to cover fixed charges, "earnings"
represent operating income (loss) before income taxes plus fixed charges.
"Fixed charges" consist of interest on all indebtedness, amortization of
deferred financing costs and the portion (approximately one-third) of rental
expenses that management believes is representative of the interest
component of rent expense.
25
<PAGE> 28
INTERNATIONAL WIRE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
MARCH 31, 1997
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
ADJUSTMENTS
-----------
RULE 144A
OFFERING, SENIOR
DEBT REPAYMENT
COMPANY AND NOTES COMPANY
HISTORICAL REPURCHASE(1) PRO FORMA
---------- ----------------- ---------
<S> <C> <C> <C>
Current assets:
Cash............................................... $ 3,825 $ (3,825) $ --
Accounts receivable................................ 106,032 -- 106,032
Inventories........................................ 72,830 -- 72,830
Other current assets............................... 14,420 -- 14,420
-------- -------- --------
Total current assets....................... 197,107 (3,825) 193,282
Property, plant and equipment, net................... 158,719 -- 158,719
Intangible assets, net............................... 271,381 1,015(2) 272,396
Other assets......................................... 7,100 -- 7,100
-------- -------- --------
Total assets............................... $634,307 $ (2,810) $631,497
======== ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term obligations........ $ 21,944 $(18,395)(3) $ 3,549
Accounts payable................................... 45,155 -- 45,155
Accrued and other liabilities...................... 66,161 (260)(4) 65,901
-------- -------- --------
Total current liabilities.................. 133,260 (18,655) 114,605
Long-term debt obligations, less current
maturities......................................... 510,818 20,007(5) 530,825
Other long-term liabilities.......................... 34,388 (1,508)(4) 32,880
Stockholder's equity (deficit)....................... (44,159) (2,654)(6) (46,813)
-------- -------- --------
Total liabilities and stockholder's equity
(deficit)................................ $634,307 $ (2,810) $631,497
======== ======== ========
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Balance Sheet.
26
<PAGE> 29
INTERNATIONAL WIRE GROUP, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
(IN THOUSANDS)
(1) The Pro Forma Condensed Balance Sheet reflects the issuance of $150,000 of
the 11 3/4% Series B Notes at a price equal to 108.75% of the principal
amount thereof, the Senior Debt Repayment and the Notes Repurchase.
(2) Adjustment reflects the recording of deferred financing costs related to the
payment of discounts and expenses in connection with the Rule 144A Offering
and the write-off of deferred financing costs of approximately $3,772
related to the portion of the Senior Bank Facility repaid with the net
proceeds from the Rule 144A Offering.
(3) Adjustment reflects the change in debt amortization related to the Rule 144A
Offering, the Senior Debt Repayment and the Notes Repurchase.
(4) Adjustment reflects the current and deferred tax impact of extraordinary
item for the early extinguishment of debt.
(5) Adjustment reflects the change in long-term debt obligations related to the
Rule 144A Offering, the Senior Debt Repayment and the Notes Repurchase as
follows:
<TABLE>
<S> <C>
Issuance of 11 3/4% Series B Senior Subordinated Notes due
2005...................................................... $ 163,125(a)
Repayment of Senior Bank Facility........................... (158,338)
Repurchase of 14% Senior Subordinated Notes due 2005........ (5,000)
Borrowing under Revolver for repurchase of 14% Senior
Subordinated Notes
due 2005.................................................. 1,825(b)
Change in debt amortization................................. 18,395
---------
Net long-term debt obligation adjustment.......... $ 20,007
=========
</TABLE>
- ---------------
(a) Includes approximately $13,125 attributable to amortizable bond premium
received in connection with the Rule 144A Offering.
(b) Includes $650 attributable to premium paid for the Notes Repurchase.
(6) Adjustment reflects extraordinary item for early extinguishment of debt for
write-off of deferred financing costs and the payment of premium for the
Notes Repurchase, net of tax.
27
<PAGE> 30
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
To facilitate a meaningful comparison, the following discussion and
analysis includes combined results of operations of the Company, Wirekraft,
Omega and ECM for the years ended December 31, 1994 and 1995. These combined
results of operations have not been prepared in accordance with GAAP, which does
not allow for the aggregation of financial data for entities that are not under
common ownership. Nevertheless, management believes that the aggregate financial
information shown below, for the years ended December 31, 1994 and 1995, is
helpful in understanding the past operations of the companies combined in the
Wirekraft/ Omega Combination. The results of operations reflect the elimination
of intercompany sales and cost of goods sold between Wirekraft and Omega
pertaining to purchases of non-insulated wire by Wirekraft from Omega in the
amounts of $1.8 million and $4.2 million for the years ended December 31, 1994
and 1995, respectively.
Included in the year ended December 31, 1994 is the year ended November 30,
1994 of Wirekraft, the year ended December 31, 1994 of THL-Omega, which was
acquired by Omega in March 1995, and the eleven month period ended November 30,
1994 of ECM. Included in the year ended December 31, 1995 is the five month
period ended May 31, 1995 of Wirekraft, the three month period ended March 31,
1995 of THL-Omega, the two month period ended May 31, 1995 of Omega, and the
seven month period ended December 31, 1995 of the Company. Included in the year
ended December 31, 1996 is the year ended December 31, 1996 of the Company,
which includes the results of operations of Wire Technologies, Inc. from March
5, 1996, the date of the DWT Acquisition. Included in the three months ended
March 31, 1996 are the results of the Company, which includes the results of
operations of Wire Technologies from March 5, 1996, the date of the DWT
Acquisition. Included in the three months ended March 31, 1997 are the results
of the Company, which includes the results of operations of Camden from February
12, 1997, the date of the Camden Acquisition.
The Company conducts its operations through two segments: (i) wire
products, which includes both non-insulated and insulated wire, and (ii) wire
harness products. The following table sets forth the major components of the
results of operations on a historical combined basis for the fiscal years 1994
and 1995 and on a historical basis for the year ended December 31, 1996 and the
three month periods ended March 31, 1996 and 1997 and should be used in
reviewing the discussion and analysis of results of operations and liquidity and
capital resources.
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<PAGE> 31
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
HISTORICAL COMBINED THREE MONTHS ENDED
FISCAL YEARS YEAR ENDED MARCH 31,
-------------------- DECEMBER 31, --------------------
1994 1995(1) 1996 1996 1997
-------- -------- ------------ -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Wire sales...................... $272,414 $293,572 $385,627 $ 77,868 $131,436
Harness sales................... 174,716 161,121 161,354 40,939 44,717
-------- -------- -------- -------- --------
Net sales............... 447,130 454,693 546,981 118,807 176,153
Cost of goods sold.............. 348,633 362,677 420,823 93,475 137,913
Selling, general and
administrative expenses...... 39,746 32,843 43,885 9,721 13,308
Depreciation and amortization... 13,310 19,333 31,341 6,044 7,511
Impairment, unusual and plant
closing charges.............. -- 3,750 84,250 4,000 500
Inventory valuation
adjustment................... -- -- 8,500 2,000 --
Compensation expense............ -- 10,610 -- -- --
Expenses related to sale........ -- 2,190 -- -- --
-------- -------- -------- -------- --------
Operating income (loss)...... $ 45,441 $ 23,290 $(41,818) $ 3,567 $ 16,921
======== ======== ======== ======== ========
</TABLE>
- ---------------
(1) The results of operations data related to Wirekraft for the five months
ended May 31, 1995 excludes the one month period ended December 31, 1994.
Loss from operations of Wirekraft for the one month period ended December
31, 1994 was $64.
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
Net sales for the three months ended March 31, 1997 were $176.2 million,
representing a $57.3 million, or 48.3%, increase compared to the first three
months of 1996. Wire segment sales increased $53.6 million, or 68.8%, in the
three months ended March 31, 1997 as compared to the three months ended March
31, 1996. This increase was primarily the result of the DWT Acquisition, the
Camden Acquisition, and growth in the Company's computer and electronics,
control signal and security and alarm accounts. The three months ended March 31,
1997 included the operations of Wire Technologies for the full quarter, while
the same period in 1996 included the operations of Wire Technologies from March
5, 1996. Wire Technologies' sales increased $26.9 million for the three months
ended March 31, 1997 as compared to the three months ended March 31, 1996. In
addition, the first quarter of 1997 includes $25.4 million of net sales from
Camden. This growth was partially offset by a decline in the average price of
copper during the three months ended March 31, 1997 compared to the same period
in 1996. In general, the Company prices its products based upon a spread over
the cost of copper, which results in a decreased dollar value of sales when
copper prices decrease. The average price of copper based upon the New York
Commodity Exchange, Inc. ("COMEX") declined to $1.11 per pound over the three
months ended March 31, 1997 from $1.18 per pound over the three months ended
March 31, 1996. Within the wire harness segment, sales increased $3.8 million,
or 9.2%, for the three months ended March 31, 1997 compared to the same period
in 1996. This increase was due to higher sales to General Electric Company
("GE") and most other major wire harness customers.
Cost of goods sold as a percent of sales decreased to 78.3% for the three
months ended March 31, 1997 from 78.7% for the three months ended March 31,
1996. This decrease reflected lower current-period costs achieved through the
transition of certain wire harness segment business to lower cost Mexican
facilities, savings realized from plant consolidation actions taken in 1996, as
well as the impact of declining copper prices. Because the Company's products
are typically priced at a spread over the cost of copper, a lower copper price
leads to a higher gross margin percentage but generally has no impact on gross
margin dollars.
Selling, general and administrative expenses were $13.3 million in the
first quarter of 1997 compared to $9.7 million for the first quarter of 1996.
This $3.6 million dollar increase reflected the addition of Camden
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<PAGE> 32
and the effect of including Wire Technologies for the entire first quarter of
1997. Expressed as a percent of sales, selling, general and administrative
expenses decreased from 8.2% for the three month period ended March 31, 1996 to
7.6% for the three-month period ended March 31, 1997. This improvement as a
percent of sales reflected synergies created in the DWT Acquisition and
increased sales volume.
A $2.0 million pre-tax inventory valuation charge was recorded in the first
quarter of 1996. This was the result of an adjustment to the LIFO valuation of
copper in inventory, reflecting the decrease in the copper cost per pound from
December 31, 1995 to March 31, 1996. During the first quarter of 1997, a similar
decrease did not occur. A $4.0 million pre-tax charge to operations was recorded
in March 1996, representing plant closing costs. The plant closing costs relate
to shutting down and consolidating several wire segment facilities. During the
same period in 1997, the Company recorded a $0.5 million pre-tax charge to
operations for consolidating a wire segment facility.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Net sales for the year ended December 31, 1996 were $547.0 million,
representing a $92.3 million, or 20.3%, increase over the year ended December
31, 1995. This increase occurred substantially within the wire segment, where
sales increased $92.1 million, or 31.3%, over the year ended December 31, 1995.
This increase reflected $139.7 million of net sales from Wire Technologies, as
well as continued growth in the Company's automotive, cable and control signal
market accounts. These increases were partially offset by a decline in copper
prices. In general, the Company prices its products based upon a spread over the
cost of copper, which results in a decreased dollar value of sales when copper
prices decrease. The average price of copper based upon the COMEX declined to
$1.06 per pound over the year ended December 31, 1996 from $1.35 per pound
during the year ended December 31, 1995. Within the wire harness segment, sales
remained constant at $161.4 million during the year ended December 31, 1996.
This constant level of sales represented strong sales from most major wire
harness customers other than Whirlpool. Sales to Whirlpool declined during the
year due to the expiration of a transition supply agreement in October 1995.
Cost of goods sold as a percent of sales decreased from 79.8% to 76.9% for
the year ended December 31, 1996. This decrease was due to the result of
negotiated price reductions for certain purchased materials and the elimination
of the majority of outside purchases of non-insulated wire subsequent to the
acquisition of Omega in 1995. Wirekraft's purchases of non-insulated wire from
outside suppliers declined as Omega's non-insulated wire production for
Wirekraft increased. In addition, the change in cost of goods sold as a percent
of sales reflected cost reductions achieved within both the wire and wire
harness segments resulting from plant consolidation actions taken in 1995 and
1996, as well as the impact of declining copper prices. Because the Company's
products are typically priced at a spread over the cost of copper, a lower
copper price leads to a higher gross margin percentage but generally has no
impact on gross margin dollars.
Selling, general and administrative expenses were $43.9 million for the
year ended December 31, 1996 compared to $32.8 million during the year ended
December 31, 1995, an increase of $11.1 million. Expressed as a percent of
sales, selling, general and administrative expenses increased from 7.2% during
the year ended December 31, 1995 to 8.0% during the year ended December 31,
1996. This increase, as a percent of sales, was partially attributable to the
effect on net sales of higher copper costs during the year ended December 31,
1995, as compared to the year ended December 31, 1996. Other cost increases
included operating expenses from Wire Technologies, volume related items and
cost inflation.
Commencing in the first quarter of 1996, the Company began a comprehensive
review of the strategic position of its individual business units. In connection
with this review the Company completed its assessment of the carrying value of
goodwill, resulting in a one-time, non-cash charge to pre-tax earnings of $78.2
million. This write down of the carrying value of goodwill related to the loss
of a major customer in 1995 and the effects of key changes in the appliance and
automotive wire industries. These changes and the DWT Acquisition necessitated
the closing of certain facilities in both the wire and wire harness segments. A
$6.0 million pre-tax charge to operations was recorded during the year ended
December 31, 1996, representing plant closing costs. The plant closing costs
relate to shutting down and consolidating six facilities.
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<PAGE> 33
An $8.5 million pre-tax inventory valuation charge was recorded during the
year ended December 31, 1996. This charge was the result of an adjustment to the
LIFO valuation of copper in inventory reflecting the decrease in the copper cost
per pound during fiscal 1996.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net sales for the year ended December 31, 1995 were $454.7 million,
representing a $7.6 million, or 1.7%, increase over the year ended December 31,
1994. This increase in net sales was primarily attributable to an increase in
sales of wire products which grew to $293.6 million in 1995 from $272.4 million
in 1994, an increase of $21.2 million, or 7.8%. The increase was largely due to
rising copper prices. In general, the Company prices its products based upon a
spread over the cost of copper, which results in an increased dollar volume of
sales when copper prices increase. The average price of copper based on the
COMEX rose to $1.35 per pound during the year ended December 31, 1995 from $1.07
per pound during the year ended December 31, 1994. The increase in wire sales
was also bolstered by growth in specialty accounts which primarily occurred in
the security, alarm, data communications and fine wire businesses. The increase
in sales of wire products was offset somewhat by a slowdown in the automotive
industry as well as by several model related changeovers at key automotive
customers. Within the wire harness segment, sales decreased $13.6 million, or
7.8%, for the year ended December 31, 1995 as compared to the year ended
December 31, 1994. This decrease reflects a decline in sales to Whirlpool. This
decline was pursuant to an agreement effective October 1, 1994, whereby
Whirlpool began transitioning certain wire harness purchases to its own captive
operation in Mexico and other third party suppliers. The wire harness segment,
however, retained Whirlpool's dishwasher harness business.
Cost of goods sold as a percent of sales increased to 79.8% from 78.0% for
the year ended December 31, 1995 compared to the year ended December 31, 1994.
The change was primarily due to the increase in the average price of copper.
Because the Company's products are typically priced at a spread over the cost of
copper, a higher copper price leads to a lower gross margin percentage but
generally has no impact on gross margin dollars. The increasing cost of
materials used to insulate wire, which include resins and plasticizers, and the
impact of producing to shorter average runs during the mid-year automotive
slowdown and customer inventory adjustment period also had dampening effects on
margins.
A $3.8 million charge to operations was recorded in 1995 related to plant
closing costs. The plant closing costs primarily related to shutting down and
consolidating harness segment facilities. During 1995, six harness plants were
closed.
Selling, general and administrative expenses were $32.8 million for the
year ended December 31, 1995 as compared to $39.7 million for the year ended
December 31, 1994, a decrease of $6.9 million, or 17.4%. Expressed as a
percentage of sales, selling, general and administrative expenses decreased to
7.2% for the year ended December 31, 1995 from 8.9% for the comparable period
ended December 31, 1994. The decrease in selling, general and administrative
expenses was primarily attributable to cost containment efforts, movement away
from commissioned sales representatives to a captive sales force and
consolidation in administrative positions. The decrease in selling, general and
administrative expenses also reflected the devaluation of the peso relative to
the U.S. dollar.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital and Cash Flows
Net cash used in operating activities was $4.6 million for the three months
ended March 31, 1997, compared to $0.7 million used in operating activities for
the three months ended March 31, 1996. The fluctuation is primarily due to
changes in working capital. Net cash used in investing activities was $62.0
million for the first quarter of 1997 and includes (i) acquisition costs of
$59.0 million, related to the Camden Acquisition and (ii) capital expenditures
of $3.0 million. Net cash used in investing activities was $162.8 million for
the first quarter of 1996 and represented (i) acquisition costs of $160.3
million related to the DWT Acquisition and (ii) capital expenditures of $2.5
million. Net cash provided by financing activities was $70.5 million for the
three months ended March 31, 1997 and includes (i) proceeds of $65.0 million
from the
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<PAGE> 34
issuance of long-term obligations, (ii) net borrowings of $10.1 million under
debt obligations, (iii) payments of $3.2 million related to financing fees and
(iv) cash dividends of $1.4 million related to the Company's Series A Senior
Cumulative Exchangeable Redeemable Preferred Stock (the "Preferred Stock"),
which was exchanged for $10 million aggregate principal amount of the Company's
14% Senior Subordinated Notes due 2005, including the Notes, on February 12,
1997. Net cash provided by financing activities was $168.5 million for the three
months ended March 31, 1996 and includes (i) proceeds of $173.2 million from the
issuance of equity securities and long-term obligations, (ii) net borrowings of
$3.1 million under debt obligations and (iii) payments of $7.8 million related
to financing fees.
For the year ended December 31, 1996, the Company generated $32.0 million
in cash from operations and $13.0 million of net proceeds from the issuance of
equity securities and long-term debt obligations related to the DWT Acquisition.
During 1996, the Company made net repayments of $21.3 million under debt
obligations, spent $15.8 million on capital projects and used $7.8 million to
pay financing fees.
For the year ended December 31, 1995, on a historical combined basis, the
Company generated $25.2 million in cash from operations and $23.0 million of net
proceeds from the issuance of equity securities and long-term debt obligations
related to acquisitions. During 1995, the Company made net repayments of $17.6
million under debt obligations, spent approximately $10.5 million on capital
projects and used $21.0 million to pay financing fees.
For the year ended December 31, 1994, on a historical combined basis, the
Company generated $13.4 million in cash from operations and $3.8 million from
the issuance of certain notes. Cash was used in 1994 primarily to fund capital
expenditures of $14.9 million.
FINANCING ARRANGEMENTS
The Senior Bank Facility provides senior secured financing of up to $260.5
million, consisting of the $25.0 million, five year Tranche A Loan, the $160.5
million, seven year Tranche B Loan and the $75.0 million Revolver. The Company
had made principal payments in respect of the Term Facility of $5.0 million thus
far in 1997. The Company is obligated to make principal payments in respect of
the Term Facility of $1.6 million for the remainder of 1997, $3.5 million in
1998, $4.8 million in 1999, $6.0 million in 2000, $7.3 million in 2001, $46.4
million in 2002 and $115.9 million in 2003. The Revolver is available for
working capital purposes including letters of credit. The Tranche A Loan
commitments terminate and all amounts under the Revolver then outstanding mature
on September 30, 2002. The Tranche B Loan commitments terminate on September 30,
2003. As of March 31, 1997, after giving pro forma effect to the Rule 144A
Offering, the Senior Debt Repayment and the Notes Repurchase, there would have
been approximately $185.5 million outstanding under the Term Facility and
approximately $45.0 million of unused borrowing capacity under the Revolver.
The Company's obligations under the Senior Bank Facility bear interest at
floating rates and require interest payments on varying dates depending on the
interest rate option selected by the Company. At March 31, 1997, after giving
pro forma effect to the Rule 144A Offering, the Senior Debt Repayment and the
Notes Repurchase the weighted average interest rate on outstanding borrowings
under the Senior Bank Facility would have been approximately 7.7%.
As of March 31, 1997, the Company had entered into two interest rate
agreements to assure the net interest cost to the Company on at least 50% of the
sums of the aggregate principal amount of the Term Facility. These agreements
provide ceilings of 7.0% on $55.5 million of indebtedness through May 1997, 8.0%
on $63.5 million of indebtedness through May 1998, 7.0% on $32.5 million of
indebtedness through March 1998 and 8.0% on $32.5 million of indebtedness
through March 1999.
In connection with the Wirekraft/Omega Combination, the Company issued the
11 3/4% Notes. On June 17, 1997, the Company issued the 11 3/4% Series B Notes
pursuant to the Rule 144A Offering. The 11 3/4% Notes and the 11 3/4% Series B
Notes require semi-annual interest payments of $17.6 million, collectively, on
each June 1 and December 1. The 11 3/4% Notes and the 11 3/4% Series B Notes are
not subject to any sinking fund requirements. The Notes require semi-annual
interest payments of $350,000 on each June 1 and December 1. The Notes are not
subject to any sinking fund requirements.
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Liquidity
The principal raw material used in the Company's products is copper. The
market price of copper is subject to significant fluctuations. Increased working
capital needs occur whenever the Company experiences a significant rise in
copper prices. The Company estimates that a $0.10 per pound change in the price
of copper changes the Company's working capital by approximately $2.8 million.
The Company enters into contractual relationships with most of its customers to
adjust it prices based upon the prevailing market prices on the COMEX. This
approach is patterned after the Company's arrangement with its copper suppliers
and is designed to minimize the Company's exposure to risk associated with
fluctuating copper prices.
The Company's primary source of liquidity are cash flows from operations
and borrowings under the Revolver, which are subject to a borrowing base
calculation. The major uses of cash in 1997 are expected to be for debt service
requirements and capital expenditures. Giving effect to the Rule 144A Offering,
the Senior Debt Repayment and the Notes Repurchase, debt service requirements in
1997 are estimated at approximately $53.0 million while capital expenditures in
1997 are estimated at $20.0 million, of which $3.0 million has been spent as of
March 31, 1997. Management believes that cash from operating activities,
together with available borrowings under the Revolver, if necessary, should be
sufficient to permit the Company to meet these financial obligations.
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BUSINESS
GENERAL
The Company is a holding company which owns all of the outstanding capital
stock of the Guarantor Subsidiaries and two foreign subsidiaries. All of the
outstanding capital stock of the Company is held by Holding. Hicks, Muse,
through its affiliates, is the controlling stockholder of the Company. With
respect to the Company, Hicks, Muse is combining its financial expertise with
the operating management experience of Mills & Partners. Organized in 1985 by
James N. Mills, Mills & Partners consists of a group of senior operating
executives who manage a portfolio of companies in a variety of industries.
The Company's insulated wire manufacturing and wire harness fabrication
businesses are conducted by its Wirekraft unit, which has been in the business
of manufacturing wire and cable and fabricating wire harnesses for approximately
35 years. On December 2, 1994, Wirekraft consummated the ECM Acquisition. ECM
was engaged in the manufacture of wire harnesses.
The Company's non-insulated wire manufacturing business is conducted by its
Omega Unit. Omega was formed in March 1995 by Hicks, Muse and Mills & Partners
to participate in the acquisition of THL-Omega. On March 31, 1995, Omega
acquired all of the issued and outstanding common stock of THL-Omega. THL-Omega
was engaged in the design, manufacture and marketing of non-insulated bare and
tin-plated copper wire.
Holding and the Company were incorporated in Delaware in April 1995 by
Hicks, Muse and Mills & Partners to facilitate the Wirekraft/Omega Combination,
pursuant to which the operations of Wirekraft and Omega were combined to form
the Company's operations. In June 1995, through a series of acquisitions and
mergers, the Company acquired Wirekraft and Omega.
On March 5, 1996, Wire Technologies, a wholly-owned subsidiary of the
Company, consummated the DWT Acquisition. Wire Technologies is engaged in the
design, manufacture and marketing of non-insulated copper wire and insulated
copper wire.
On February 12, 1997, the Company consummated the Camden Acquisition.
Camden is engaged in the design, manufacture and marketing of non-insulated bare
and tin-plated copper wire.
The principal executive offices of the Company and each Subsidiary
Guarantor are located at 101 South Hanley Road, Suite 400, St. Louis, Missouri
63105 and the Company's telephone number at such address is (314) 719-1000.
PRODUCTS AND MARKETS
The Company is engaged in the design, manufacture and marketing of (i)
non-insulated bare and tin-plated copper wire, (ii) insulated copper wire and
(iii) wire harnesses. The Company's products are used by a wide variety of
customers primarily in the appliance, computer and data communications,
automotive and industrial equipment industries.
The following is a description of the Company's primary products and
markets served:
Non-Insulated Wire
The Company's non-insulated copper conductors are primarily used to (i)
transmit digital, video and audio signals that generally control motor functions
in appliances and industrial equipment, HVAC systems, safety control systems and
switching equipment and (ii) conduct electricity. The Company's non-insulated
wire products are primarily sold to wire insulators, who apply various
insulating materials to the conductors through an extrusion process. These wire
insulators, in turn, sell the insulated wire to a variety of customers, many of
which are in the computer and data communications industry. Within this
industry, the Company's non-insulated wire is generally used in wire and cable
products that (i) connect circuit boards inside personal computers ("PCs"), (ii)
join PCs to peripheral equipment and (iii) link PCs in local area and wide area
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networks. The Company also manufactures non-insulated wire that is used in a
variety of industrial markets including appliance, fine wire automotive, mining
and mass transportation.
The Company manufactures a broad array of non-insulated copper conductors
including the following:
- Single End Wire. Single end wire is an individual wire drawn to the
customer's size requirements ranging from .08 to .002 inches in diameter.
Single end wire is used to transmit digital, video and audio signals or
low voltage current in a variety of wire products used in motor controls,
local area networks, security systems, television or telephone
connections inside homes and buildings, and water sprinkler systems.
Single end wire is capable of transmitting signals or electrical current
only between two distinct end points (terminals) such as between an
on-off switch and the starter to a motor. Single end wire is generally
the least expensive form of wire to produce due to its simple
configuration.
- Stranded Wire. Stranded wire is comprised of a number of single end
wires, twisted together in a specific geometric pattern, where each
individual wire's relative position is preserved throughout the length of
the strand. Like single end wire, stranded wire transmits digital, video
and audio signals or low voltage current but is capable of connecting
multiple terminals. This type of wire is the primary wire used in
appliance and automotive wire harnesses. In addition, stranded wire is
typically used in wire and cable products that (i) connect peripherals
such as printers to a computer, (ii) connect the internal components of a
PC, and (iii) control HVAC, security and other functions inside
buildings.
- Bunched Wire. Bunched wire is comprised of a number of single end wires
that are twisted in a random pattern rather than a specific geometric
pattern. Bunched wire is commonly used for transmission of electrical
current in lighting fixture cords, extension cords and power cords for
portable power hand tools. This type of wire provides improved
flexibility (versus single end wire) while maintaining its ability to
carry electrical currents.
- Shielding Wire. Shielding wire is comprised of varying numbers of single
end wire which are wound together in parallel construction around a
bobbin. Shielding wire does not transmit signals or voltage but rather
shields the signal traveling through the core conductor from outside
interference. This type of wire is primarily used in data communication
applications.
- Cabled Wire and Braided Wire. Cabled wire and braided wire are
combinations of single, bunched or stranded wire twisted together in
various patterns and thickness. These wires transmit electrical current
and are typically used in mining, mass transportation, automotive and
other industrial applications.
Insulated Wire
The Company's insulated wire products are primarily sold to companies that
assemble wire harnesses for installation in automobiles or appliances. The
Company manufactures a diverse array of insulated wire products including the
following:
- PVC Lead Wire and Cable. PVC lead wire and cable is copper wire that has
been insulated with polyvinyl chloride ("PVC"). This product is used
primarily in automotive wire harnesses located behind the instrument
panel or in the vehicle body that control certain functions including
turn signals and air bags.
- JIS Wire. JIS wire is copper wire insulated with PVC that is produced
according to Japanese Industrial Standards ("JIS"). The primary
difference between domestic PVC wire and JIS wire is that JIS wire is
manufactured to metric dimensions and generally has thinner insulation
than products manufactured according to U.S. Society of Automotive
Engineers Standards. JIS wire is used primarily in automotive wire
harnesses located behind the instrument panel or in the vehicle body.
- XLPE Insulated Wire. Cross-linked polyethylene ("XLPE") wire is copper
wire insulated with polyethylene that is subjected to heat and steam
pressure ("cross-linking") to make the wire resistant to high
temperatures. This product's primary application includes use in high
temperature environments such as the engine compartment of vehicles and
in electric ranges.
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- PVC Insulated Cord. PVC insulated cord is insulated wire that is
surrounded with fillers and then jacketed with PVC insulation. This
product is used primarily for wall-plug applications (cord sets) in the
appliance and power tool industries.
- Appliance Wire. Appliance wire is copper wire primarily insulated with
PVC and used in producing harnesses for a variety of appliances. The
Company also manufactures high temperature wire, insulated with silicone,
used primarily in electric ranges and niche applications such as
resistance heaters, motor leads and lighting products.
Wire Harnesses
The Company supplies wire harnesses to all of the leading domestic
appliance manufacturers, including GE, Frigidaire, Maytag, Whirlpool, and
Raytheon (Amana). A wire harness is comprised of an assembly of wires with
connectors and terminals attached to their ends that transmit electricity
between two or more points. For example, a wire harness used in a washing
machine links the washing machine's control panel with its other electrical
components, such as the motor.
The Company also participates in several niche businesses oriented around
its expertise and marketing presence in the appliance industry, including water
inlet hoses for washing machines and resistance and appliance heaters. In
addition, the Company produces truck trailer cable assemblies that transmit
electrical current from the tractor to the trailer.
INDUSTRY TRENDS
In recent years several key trends and events developed within the
automotive and appliance industries which caused the Company to develop and
execute new business strategies to maintain customer volume levels and meet
competitive pressures. The trends and events included the implementation of the
North American Free Trade Agreement ("NAFTA"), geographic relocation of
production facilities and changes in customers' ordering patterns to match
just-in-time inventory management practices.
With the NAFTA agreement and competitive pressures, the automotive and
appliance industry accelerated the shifting of production of harness assemblies
to lower cost Mexican operations. In order to address the market's demands, the
Company purchased ECM in December 1994 and began moving production from the
Midwest to the Southwest and Mexico to retain its long-standing relationship
with certain major customers and to achieve cost efficiencies. As the Company
increased the transition of harness production to Mexican facilities it began
closing several domestic harness facilities in fiscal 1995.
At the time of the acquisition of KILP in 1992, the automotive marketplace
accepted KILP's manufacturing philosophy and approach to customer service.
KILP's manufacturing philosophy was geared toward meeting long lead-time orders
for large quantities of certain types of automotive insulated wire. However, due
to overall economic trends and changes within the automotive industry, KILP's
customer base began to decrease the number and frequency of long lead-time
orders and increased the number and frequency of short lead-time orders for
small quantities of insulated wire. This allowed customers the ability to
further reduce their on-hand inventories and led to more demanding customer
service expectations and a change in KILP's production philosophy to fill the
small orders and meet stringent delivery schedules. As a result, KILP's
operating costs increased, because shorter production runs created more
downtime, an increased number of setups and higher scrap rates. This shift was a
significant factor in the Company's decision to acquire Dekko, which utilized
product line focused facilities which were geared for shorter production runs
and had a history of superior customer service and on-time delivery operating on
that basis. In addition, several of these facilities were strategically located
near the Southwest and Mexico. As the Company began integrating facilities
purchased in the DWT Acquisition, it closed several insulated wire facilities
during 1996.
MARKETING AND DISTRIBUTION
The Company sells its products through a combination of direct
(Company-employed) sales people, manufacturer's representatives and
distributors. The Company's sales organization is supported by an internal
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marketing staff and a customer service group. Collectively, these departments
act as a bridge between the Company's customers and its production and
engineering staff. The Company's engineers work directly with customers in
designing the wire or wire harness product that best fits their needs. In
addition, engineers work closely with the Company's production managers, quality
supervisors and customer service representatives to ensure the timely delivery
of quality products.
KEY CUSTOMERS
The Company sells its products primarily to major appliance manufacturers,
automotive wire harness manufacturers and copper wire insulators who then sell
to a diverse array of end users. The Company's customers are principally located
in the United States. A substantial percentage of the Company's total sales are
to GE. Sales to GE accounted for approximately 18% and 19% of the Company's
total sales in 1996 and 1995, respectively. In connection with the acquisition
of ECM, the Company entered into a supply agreement with GE, which expires
December 31, 2006, pursuant to which the Company supplies substantially all of
GE's domestic wire harness requirements for major kitchen and laundry
appliances.
RAW MATERIALS
The principal raw material used by the Company is copper, which is
purchased in the form of 5/16 inch rod from the major copper producers in North
America. Copper rod prices are based on market prices, which are generally
established by reference to the COMEX, plus a premium charged to convert copper
cathode to copper rod and deliver it to the required location. As a world traded
commodity, copper prices have historically been subject to fluctuations,
however, the Company generally passes the copper cost through to its customers.
Management has no reason to believe that this practice will change.
Other major raw materials consumed by the Company include: PVC resin,
plasticizer, XLPE compound, and a wide variety of electro-mechanical components.
The Company enters into long term supply agreements on a wide variety of
materials consumed. Supplies of these materials are currently adequate to meet
market needs.
MANUFACTURING
The Company is committed to the highest quality standards for its products,
a standard maintained in part by continuous improvements to its production
processes and upgrades and investments to its manufacturing equipment. The
Company's equipment can be adapted to satisfy the changing needs of its
customers. The Company maintains advanced quality assurance and testing
equipment to ensure the products it manufactures will consistently meet customer
quality requirements. The following is a description of the Company's
manufacturing facilities and processes for its major product lines.
Non-Insulated Wire. As of June 30, 1997, the Company had nine facilities
dedicated to the production of non-insulated wire. Five of these facilities are
located in New York, two are located in Arkansas, one facility is located in
Indiana and one facility is located in Texas. The manufacturing of non-insulated
wire consists of three processes: wire drawing, plating and bunching and
stranding.
- Wire Drawing Process. Wire drawing involves a multi-step process in which
5/16 inch copper rod is drawn through a series of dies of decreasing
diameters.
- Plating Process. After being drawn, the Company's wire products may be
plated through an electro-plating process. The Company has the capability
to plate copper wire with tin and other metals. Approximately 30% of the
Company's non-insulated wire products are plated with tin. The plating
process prevents the bare copper from oxidizing and also allows the wire
to be soldered, which is an important quality in many electrical
applications.
- Bunching and Stranding Process. Bunching and stranding is the process of
twisting together single strand wires to form a construction ranging from
seven to over 200 strands. If the wire is bunched, the individual strands
of wire are twisted together in a random pattern. Bunched wire is
typically used in power cords for lights and appliances. Stranded wire is
composed of a number of single end wires
37
<PAGE> 40
twisted together in a specific geometric pattern where each strand's
relative position is maintained throughout the length of the wire.
Stranded wire is typically used in security systems, audio systems and
intercom systems.
Insulated Wire. As of June 30, 1997, the Company had thirteen manufacturing
facilities used to insulate wire. Six of these facilities are located in
Indiana, four are located in Texas, two are located in Alabama and one is
located in Mexico. The production of insulated wire starts with noninsulated
wire (primarily manufactured internally) and involves the following two
processes:
- Compounding Process. The Company produces PVC, polyethylene, rubber and
silicone insulation formulations from basic components utilizing its own
computerized mixing and blending systems and utilizes purchased
compounds. The Company is capable of producing polymeric insulation
compounds that meet specific customer requirements.
- Extrusion Process. The Company insulates wire products with a polymeric
insulating compound through an extrusion process. Extrusion involves the
feeding, melting and pumping of insulating compounds through a die to
shape it into its final form on the wire. In order to enhance the
insulation properties of certain products, certain polymeric compounds
can be cross-linked chemically after the extrusion process. The Company
has extensive chemical cross-linking capabilities.
Wire Harnesses. As of June 30, 1997, the Company had four wire harness
manufacturing facilities in the U.S., most of which are located in the Midwest
region of the nation, and two facilities located in Mexico. The manufacturing of
wire harnesses involves the following four-step process:
- Cutting and Stripping. Insulated copper wire, obtained primarily from
internal sources, is fed through cutting machines that are programmed to
cut wire to a certain length, strip the end of the wire and attach
terminals or connectors.
- Splicing and Connecting. In the second process, the lengths of wire are
spliced or joined together and additional connectors and/or terminals are
attached. Splicing, like cutting and stripping, lends itself to
automation.
- Harness Assembly. Once these two preparatory stages have been completed,
the cut and spliced wires are brought to the assembly area. Assembly
boards are used to guide each employee on the assembly line in the
placement of designated wires.
- Quality Control. After assembly, each harness is tested for continuity
and analyzed by a trained inspector. Every assembly board is equipped
with 100% continuity testers that are designed into the assembly board.
These testers will pinpoint any defective circuits for repair or rework.
COMPETITION
As a result of the diversity of the Company's product lines, the Company
believes that no single competitor competes with the Company across the entire
spectrum of the Company's product lines. However, in each of the Company's
business segments, the Company experiences competition from at least one major
competitor. The Company competes primarily on the basis of quality, reliability,
price, reputation, customer service and delivery time. The Company believes it
maintains a leading market share position in the non-captive (defined as third
party purchases from independent suppliers) U.S. market for each of its business
segments.
BACKLOG
Due to the manner in which it processes its orders, the Company has no
significant order backlog. The Company follows the industry practice of
producing its products on an ongoing basis to meet customer demand without
significant delay. Management believes the ability to supply orders in a timely
fashion is a competitive factor in its market, and therefore, attempts to
minimize order backlog to the extent practicable.
38
<PAGE> 41
PATENTS AND TRADEMARKS
The Company has seven patents, nine registered trademarks and three
trademark applications. The Company does not believe that its competitive
position is dependent on patent protection or that its operations are dependent
on any individual patent or trademark or group of related patents or trademarks.
EMPLOYEES
As of June 30, 1997, the Company employed approximately 7,500 full time
employees, of which approximately 4,300 were located in Mexico and 145 (all
located at the Company's plant in Rolling Prairie, Indiana) were represented by
a labor union. The Company believes that it has a good relationship with its
employees.
ENVIRONMENTAL MATTERS
The Company is subject to a number of federal, state, local and foreign
environmental laws and regulations relating to the storage, handling, use,
emission, discharge, release or disposal of materials into the environment and
the investigation and remediation of contamination associated with such
materials. These laws include, but are not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, the Water Pollution
Control Act, the Clean Air Act and the Resource Conservation and Recovery Act,
the regulations promulgated thereunder, and any state analogs. The Company's
operations also are governed by laws and regulations relating to employee health
and safety. The Company believes that it is in material compliance with such
applicable laws and regulations and that its existing environmental controls are
adequate. Further, the Company has no current plans for substantial capital
expenditures in this area.
As is the case with most manufacturers, the Company could incur costs
relating to environmental compliance, including remediation costs related to
historical hazardous materials handling and disposal practices at certain
facilities, although it does not believe that such costs would materially and
adversely affect the Company. In the past the Company has undertaken remedial
activities to address on-site soil contamination caused by historic operations.
None of these cleanups have resulted in any material liability. Currently, the
Company is involved with environmental monitoring activities at its Camden, New
York and Jordan, New York facilities.
The Company currently does not anticipate that compliance with
environmental laws or regulations or the costs to remediate the sites discussed
above will have material adverse effect on the Company's operations, financial
condition or competitive position. As mentioned above, however, the risk of
environmental liability and remediation costs is inherent in the nature of the
Company's business and, therefore, there can be no assurances that material
environmental costs, including remediation costs, will not arise in the future.
In addition, it is possible that future developments (e.g., new regulations or
stricter regulatory requirements) could result in the Company incurring material
costs to comply with applicable environmental laws and regulations.
PROPERTIES
The Company uses owned or leased properties as manufacturing facilities,
warehouses and offices throughout the United States and Mexico. The Company's
principal executive offices are located in St. Louis, Missouri. The Company
considers its plants and equipment to be modern and well-maintained and
providing adequate production capacity to meet expected demand for its products.
All of the Company's owned properties are pledged to secure the Company's
indebtedness under the Senior Bank Facility.
39
<PAGE> 42
Listed below are the principal manufacturing and distribution facilities
operated by the Company as of June 30, 1997:
<TABLE>
<CAPTION>
LOCATION SQUARE FEET OWNED/LEASED PRIMARY PRODUCTS/END USE
-------- ----------- ------------ ------------------------
<S> <C> <C> <C>
NON-INSULATED WIRE
Camden, NY............. 450,000 Owned Single End, Bunched, Stranded, Cabled and
Electroplated Wire
Williamstown, NY....... 210,000 Owned Single End, Bunched, Stranded and Cabled Wire
Bremen, IN............. 175,000 Owned Bunched Wire
Camden, NY............. 150,000 Leased Single End, Bunched, Stranded and Cabled Wire
Pine Bluff, AR......... 130,000 Owned Single End, Bunched, Stranded and Cabled Wire
Jordan, NY............. 120,000 Leased Single End, Bunched, Stranded, Shielding and Cabled
Wire
Cazenovia, NY.......... 60,000 Owned Braided Wire
El Paso, TX............ 57,000 Owned Bunched Wire
Elk Grove Village, 23,000 Leased Distribution
IL...................
Pine Bluff, AR......... 20,000 Owned Shielding, Fine Pigtail and Braided Wire
Salisbury, NC.......... 20,000 Leased Distribution
Cerritos, CA........... 19,000 Leased Distribution
INSULATED WIRE
Rolling Prairie, IN.... 200,000 Owned Automotive and Appliance
Avilla, IN............. 119,000 Owned Appliance
Elkmont, AL............ 115,000 Owned Automotive
Corunna, IN............ 72,000 Owned Appliance
El Paso, TX............ 72,000 Owned Automotive
El Paso, TX............ 70,000 Leased Automotive
Kendallville, IN....... 61,000 Leased Appliance and Automotive
El Paso, TX............ 60,000 Owned Automotive
Corunna, IN............ 58,000 Owned Appliance
Ardmore, AL............ 45,000 Owned Automotive
Nogales, Mexico........ 42,000 Leased Automotive
Albion, IN............. 39,000 Owned Appliance and Automotive
El Paso, TX............ 28,000 Leased Automotive
WIRE HARNESSES
Chihuahua, Mexico...... 195,000 Owned Dishwashers, Laundry and Ranges
Juarez, Mexico......... 145,000 Leased Refrigerators, Dishwashers and Ranges
Bucyrus, OH............ 47,000 Leased Truck Trailers and Farm Machinery
Mishawaka, IN.......... 38,000 Owned Water Inlet Hoses
Mishawaka, IN.......... 29,000 Owned Refrigerators, Dishwashers and Laundry
Erin, TN............... 25,000 Owned Laundry, Ranges and Microwave
</TABLE>
The leases on the Company's Camden, New York and Jordan, New York
facilities have remaining terms of approximately 15 years. The Company has an
option to renew each of these leases for two terms of five years each or to
purchase the facilities at their respective fair values or 90% of their
respective fair values, depending on the time of exercise of the option to
purchase. The lease on the Company's Nogales, Mexico facility has a remaining
term of approximately three years. The lease on the Company's Juarez, Mexico
facility has a remaining term of approximately six years. The leases on the
Company's Kendallville, Indiana and El Paso, Texas facilities have remaining
terms of approximately two years. The lease on the Company's Bucyrus, Ohio
facility expires in November 1997. The leases on the Company's distribution
facilities in Elk Grove Village, Illinois, Salisbury, North Carolina and
Cerritos, California have remaining terms of approximately two, four and three
years, respectively.
40
<PAGE> 43
The Company believes its facilities are suitable for their present and
intended purposes and adequate for the Company's current level of operations.
LEGAL PROCEEDINGS
The Company is a party to various legal proceedings and administrative
actions, all of which are of an ordinary or routine nature incidental to the
operations of the Company. In the opinion of the Company's management, such
proceedings and actions should not, individually or in the aggregate, have a
material adverse effect on the Company's results of operations or financial
condition.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below are the names and positions of the directors and executive
officers of Holding and the Company. All directors hold office until the next
annual meeting of stockholders of Holding and the Company, and until their
successors are duly elected and qualified. All officers serve at the pleasure of
the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
James N. Mills............................ 59 Chairman of the Board and Chief Executive
Officer of Holding and the Company
Thomas P. Danis........................... 50 Director of Holding and the Company
Jack D. Furst............................. 38 Director of Holding and the Company
John A. Gavin............................. 65 Director of Holding and the Company
Charles W. Tate........................... 52 Director of Holding and the Company
Richard W. Vieser......................... 69 Director of Holding and the Company
Joseph M. Fiamingo........................ 47 Director, President and Chief Operating
Officer of Holding and the Company
Rodney D. Kent............................ 49 Director of Holding and the Company,
President and Chief Executive Officer of
Omega
Robert C. Kozlowski....................... 49 President -- Wire Technologies, Inc.
David M. Sindelar......................... 40 Senior Vice President and Chief Financial
Officer of Holding, Senior Vice President of
the Company
Larry S. Bacon............................ 50 Senior Vice President -- Human Resources of
Holding and the Company
W. Thomas McGhee.......................... 61 Secretary and General Counsel of Holding and
the Company
Glenn J. Holler........................... 49 Vice President -- Finance of the Company
</TABLE>
James N. Mills is Chairman of the Board and Chief Executive Officer of
Holding and the Company and has held such positions since April 1995. Mr. Mills
serves as Chairman of the Board, President and Chief Executive Officer of Mills
& Partners. Mr. Mills is also Chairman of the Board and Chief Executive Officer
of Berg Electronics Corp., Chairman of the Board of Berg Electronics Group,
Inc., Chairman of the Board and Chief Executive Officer of Crain Holdings Corp.,
Crain Industries, Inc., Viasystems Group, Inc. and Copy USA Holdings Corp. Mr.
Mills was Chairman of the Board and Chief Executive Officer of Jackson Holding
Company and Jackson Products, Inc. from February 1993 through August 1995. Mr.
Mills was Chairman of the Board and Chief Executive Officer of Thermadyne
Holdings Corporation from February 1989 through February 1995 and Chairman of
the Board and Chief Executive Officer of Thermadyne Industries, Inc. from 1987
to 1995. Mr. Mills was Executive Vice President of McGraw-Edison Company, a
company engaged in the electronic, industrial, commercial and automotive
industries, from 1978 to 1985, and served as Industrial Group President and
President of the Bussmann Division of the McGraw-Edison Company from 1980 to
1984. Mr. Mills also serves as a director of Hat Brands Holding Corporation.
41
<PAGE> 44
Thomas P. Danis is a director of Holding and the Company and has held such
positions since June 1995. Mr. Danis has been Chairman of the Board of AON Risk
Services of Missouri, Inc., a company engaged in the insurance brokerage
business, since 1993. In 1979, Mr. Danis co-founded an insurance brokerage firm,
a joint venture with Corroon & Black, which was ultimately purchased by Corroon
& Black in 1984. Mr. Danis also serves as a director of Commerce Bank, N.A.
Jack D. Furst is a director of Holding and the Company and has held such
positions since April 1995. Mr. Furst is a Managing Director and Principal of
Hicks, Muse and has held such position since 1989. Mr. Furst has approximately
15 years of experience in merchant and investment banking. At Hicks, Muse, Mr.
Furst is involved in all aspects of its business and has been actively involved
in originating, structuring and monitoring of investments. Mr. Furst is
primarily responsible for managing the relationship with Mills & Partners. Prior
to joining Hicks, Muse, Mr. Furst was a vice president and subsequently a
partner of Hicks & Haas Incorporated from 1987 to May 1989. From 1984 to 1986,
Mr. Furst was a merger and acquisition/ corporate finance specialist for The
First Boston Corporation in New York. Before joining First Boston, Mr. Furst was
a financial consultant at Price Waterhouse. Mr. Furst serves on the board of
directors of Neodata Corporation, Desa International, Crain Industries and
Cooperative Computing, Inc.
John A. Gavin is a director of Holding and the Company and has held such
positions since June 1995. Mr. Gavin is the founder and Chairman of the Board of
Gamma Services, an international venture capital and consulting firm established
in 1968, and is the Managing Director of Hicks, Muse, Tate & Furst (Latin
America), Incorporated and has held such position since 1996. From 1987 to 1990,
Mr. Gavin was President of Univisa Satellite Communications, a part of a
Spanish-speaking broadcast network. Prior thereto, Mr. Gavin served as a Vice
President of Atlantic Richfield Company from 1986. From 1981 to 1986, Mr. Gavin
served as the United States Ambassador to Mexico. Mr. Gavin also serves as a
director of Atlantic Richfield Company, Dresser Industries, Inc., Pinkerton's
Inc., and the Hotchkis and Wiley Funds.
Charles W. Tate is a director of Holding and the Company and has held such
positions since April 1995. Mr. Tate is a Managing Director and Principal of
Hicks, Muse. Before joining Hicks, Muse in 1991, Mr. Tate had over 19 years of
experience in investment and merchant banking with Morgan Stanley & Co.
Incorporated, including ten years in the mergers and acquisitions department and
the last two and one-half years as a managing director in Morgan Stanley's
merchant banking group. Mr. Tate serves as a director of The Morningstar Group
Inc., DESA Holdings Corporation, Hat Brands Holding Corporation, Berg
Electronics Corp., International Home Foods, Inc., Seguros Comercial America
S.A. de C.V., and Vidrio Formas S.A. de C.V. He also served as a director of
Berg Electronics Group, Inc. until August 1996 and Jackson Holding Company until
August 1995.
Richard W. Vieser is a director of Holding and the Company and has held
such positions since September 1995. Mr. Vieser is the retired Chairman of the
Board, Chief Executive Officer and President of Lear Siegler, Inc. (a
diversified manufacturing company), the former Chairman of the Board and Chief
Executive Officer of FL Industries, Inc. and FL Aerospace (formerly Midland-Ross
Corporation), also diversified manufacturing companies, and the former President
and Chief Operating Officer of McGraw-Edison Co. He is also a director of Berg
Electronics Corp., Ceridian Corporation (formerly Control Data Corporation),
Dresser Industries, Inc., INDRESCO Inc., Sybron International Corporation and
Varian Associates, Inc. He also served as a director of Berg Electronics Group,
Inc. until August 1996.
Rodney D. Kent is a director of Holding and the Company and has held such
positions since April 1995. Mr. Kent also serves as President and Chief
Executive Officer of Omega and has held such position since 1983. Mr. Kent
served as Assistant to the President of Omega from 1974 to 1983. Prior to
joining Omega, Mr. Kent was employed with Flexo Wire from 1973 to 1974 and
Camden Wire Company from 1970 to 1973. Mr. Kent also serves as a director of
Oneida Savings Bank.
Joseph M. Fiamingo is a director of Holding and the Company and has held
such positions since October 1996. Mr. Fiamingo also serves as President and
Chief Operating Officer of Holding and the Company and has held such positions
since September 1996. Previously, Mr. Fiamingo held the position of Vice
President of Operations and Technology of the Company from June 1996 and
President and Chief Operating Officer of Wirekraft from October 1995. Prior
thereto, Mr. Fiamingo was employed by General
42
<PAGE> 45
Cable Corporation from 1972 to 1995 where he held various senior management
level positions including President and Vice President and General Manager of
several divisions of General Cable and most recently, Executive Vice President
of Operations.
Robert Kozlowski is President of Wire Technologies and has held such
position since March 1996. Prior thereto, Mr. Kozlowski held various senior
management level positions with the Group Dekko companies from 1983. Previously,
Mr. Kozlowski spent ten years in the wire industry serving in various positions
with Wyre Wynd and Laribee Wire.
David M. Sindelar is Senior Vice President and Chief Financial Officer of
Holding and Senior Vice President of the Company and has held such positions
since April 1995. Mr. Sindelar is also Senior Vice President and Chief Financial
Officer of Mills & Partners, Berg Electronics Corp., Crain Industries, Inc. and
Crain Holdings Corp., Viasystems Group, Inc., Copy USA Holding Corp. and Senior
Vice President of Berg Electronics Group, Inc. Mr. Sindelar was Senior Vice
President and Chief Financial Officer of Jackson Holding Company from February
1993 through August 1995. From 1987 to February 1995, Mr. Sindelar held various
other positions at Thermadyne Holdings Corporation including Senior Vice
President and Chief Financial Officer, Vice President -- Corporate Controller
and Controller.
Larry S. Bacon is Senior Vice President -- Human Resources of Holding and
the Company and has held such positions since April 1995. Mr. Bacon is also
Senior Vice President -- Human Resources of Mills & Partners, Berg Electronics
Corp., Berg Electronics Group, Inc., Crain Industries, Inc., Crain Holdings
Corp., Viasystems Group, Inc., and Copy USA Holding Corp. Mr. Bacon was Senior
Vice President -- Human Resources of Jackson Holding Company from February 1993
through August 1995. Previously, Mr. Bacon was Senior Vice President -- Human
Resources of Thermadyne Holdings Corporation from September 1987 until February
1995.
W. Thomas McGhee is Secretary and General Counsel of Holding and the
Company and has held such positions since April 1995. Mr. McGhee is also a
partner in the law firm of Herzog, Crebs and McGhee and has held that position
since 1987. In addition, Mr. McGhee serves as Secretary and General Counsel of
Berg Electronics Corp., Berg Electronics Group, Inc., Crain Industries, Inc.,
Crain Holdings Corp., Viasystems Group, Inc. and Copy USA Holding Corp.
Glenn J. Holler is Vice President-Finance of the Company and has held such
position since August 1996. Prior to joining the Company, Mr. Holler was
employed by Vigoro Industries, Inc. as Vice President, Finance from 1994 to 1996
and Moog Automotive, Inc. from 1983 to 1994, most recently as Senior Vice
President, Finance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Compensation decisions are made by the Board of Directors. James N. Mills
served as both an executive officer and director during 1996 and is expected to
serve in such capacities in 1997.
COMPENSATION OF DIRECTORS
Directors who are officers, employees or otherwise an affiliate of Holding
or the Company receive no compensation for their services as directors. Each
director of Holding and the Company who is not also an officer, employee or an
affiliate of Holding or the Company (an "Outside Director") receives an annual
retainer of $12,000 and a fee of $1,000 for each meeting of the board of
directors at which the director is present. Directors of Holding and the Company
are entitled to reimbursement of their reasonable out-of-pocket expenses in
connection with their travel to and attendance at meetings of the board of
directors or committees thereof.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the cash and noncash compensation earned by
the Chief Executive Officer, the four other most highly compensated executive
officers of Holding and the Company and a former executive officer of the
Company. Such compensation was paid by or on behalf of Wirekraft and Omega
43
<PAGE> 46
during the year ended December 31, 1994 and the first five months of 1995 and
was paid by or on behalf of the Company during the remaining seven months of
1995, and during the year ended December 31, 1996. As of the date hereof, the
Company has not granted any stock appreciation rights.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
ANNUAL ------------
COMPENSATION(1) SECURITIES
-------------------- UNDERLYING ALL OTHER
YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
James N. Mills................ 1996 485,281 548,000 412,188(2) --
Chairman of the Board and 1995 250,000 97,500 988,725(2) --
Chief Executive Officer of 1994 186,425 150,000 -- --
Holding
Joseph M. Fiamingo............ 1996 202,166 123,337 600,000(3) --
President and Chief 1995 32,685 8,500 400,000(3) --
Operating Officer of 1994 -- -- -- --
Holding and the Company
Rodney D. Kent................ 1996 323,911 193,714 -- 142,289(4)
President and Chief 1995 285,479 70,000 400,000(3) 129,766(4)
Executive Officer of Omega 1994 240,419 2,340 -- 124,072(4)
Robert C. Kozlowski........... 1996 194,609 98,066 400,000(3) --
President -- Wire 1995 -- -- -- --
Technologies 1994 -- -- -- --
David M. Sindelar............. 1996 201,422 121,000 309,143(2) --
Senior Vice President and 1995 108,833 48,000 741,547(2) --
Chief Financial Officer of 1994 26,234 25,000 -- --
Holding, Senior Vice
President of the Company
William J. Kriss(5)........... 1996 368,956 -- -- --
President and Chief 1995 312,330 100,000 1,000,000(3) --
Operating Officer of 1994 -- -- -- --
Holding and the Company
</TABLE>
- ---------------
(1) Holding and the Company provide to certain executive officers, a car
allowance, reimbursement for club memberships, insurance policies and
certain other benefits. The aggregate incremental cost of these benefits to
Holding and the Company for each officer do not exceed the lesser of $50,000
or 10% of the total annual salary and bonus reported for each officer.
(2) Reflects Performance Options (as hereinafter defined) granted by Holding.
For a description of the material terms of such options, See
"Management -- Benefit Plans -- Performance Options."
(3) Reflects options to purchase Common Stock of Holding, par value $0.01 per
share ("Holding Common Stock") granted under the Option Plan (as hereinafter
defined). The options vest in five equal annual installments commencing on
the first anniversary date of the grant, subject to acceleration under
certain circumstances, including a Change of Control (as defined in the
Option Plan).
(4) Represents (i) $45,792, $43,347 and $43,347 in premiums paid on life
insurance policies for the benefit of Mr. Kent in 1996, 1995 and 1994
respectively and (ii) $51,797, $41,536 and $42,300 in annual deferred
compensation and $44,700, $44,883 and $38,425 in annual interest accruals
thereon earned by Mr. Kent in 1996 and 1995 respectively, pursuant to his
employment agreement.
(5) As of September 25, 1996, Mr. Kriss resigned as President and Chief
Operating Officer of Holding and the Company.
44
<PAGE> 47
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes option grants made during fiscal 1996 to the
executive officers named above.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
OPTIONS OF STOCK PRICE
NUMBER OF GRANTED TO APPRECIATION FOR OPTION
SECURITIES EMPLOYEES TERM(1)
UNDERLYING IN FISCAL EXERCISE EXPIRATION --------------------------
NAME OPTIONS(#) YEAR PRICE($/SHARE) DATE 5%($) 10%($)
---- ---------- ------------ -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James N. Mills.......................... 412,188(2) 11.8% $1.00(3) 03/05/06 0(4) 0(4)
Joseph M. Fiamingo...................... 600,000(5) 17.1% $1.00 11/08/06 378,000 954,000
Rodney D. Kent.......................... -- -- -- -- -- --
Robert C. Kozlowski..................... 400,000(5) 11.4% $1.00 03/05/06 252,000 636,000
David M. Sindelar....................... 309,143(2) 8.8% $1.00(3) 03/05/06 0(4) 0(4)
William J. Kriss........................ -- -- -- -- -- --
</TABLE>
- ---------------
(1) The potential realizable value portion of the foregoing table illustrates
the value that might be realized upon exercise of the option immediately
prior to the expiration of its term, assuming the specified compound rates
of appreciation of Holding Common Stock over the term of the options. These
amounts represent certain assumed rates of appreciation only. Actual gains
on the exercise of options are dependent on the future performance of
Holding Common Stock. There can be no assurance that the potential values
reflected in this table will be achieved. All amounts have been rounded to
the nearest whole dollar amount.
(2) Reflects Performance Options granted by Holding. For a description of the
material terms of such options, see "Management -- Benefit
Plans -- Performance Options."
(3) The exercise price for the Performance Options is initially equal to $1.00
per share and, effective each anniversary date of the grant date, the per
share exercise price for the Performance Options is equal to the per share
exercise price for the prior year multiplied by 1.09.
(4) The Performance Options are exercisable only in the event that HM Fund II
realizes a 35% overall rate of return, compounded annually, on its equity
funds invested in Holding. Accordingly, there is no potential realizable
value to the Performance Options at compound appreciation rates of 5% and
10%.
(5) Reflects options to purchase Holding Common Stock granted under the Option
Plan. The options vest in five equal annual installments commencing on the
first anniversary date of the grant, subject to acceleration under certain
circumstances, including a Change of Control (as defined in the Option
Plan).
45
<PAGE> 48
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
No options were exercised by the executive officers named above during
fiscal 1996. The following table summarizes the number of options exercised
during fiscal 1996 and the value of unexercised options as of December 31, 1996.
The per share fair market value of the Holding Common Stock used to make the
calculations in the following table is $1.00, which is the per share price at
which Holding Common Stock was sold in connection with the Wirekraft/Omega
Acquisitions and the DWT Acquisition. Accordingly, the table indicates that the
options had no value at the end of 1996 because the exercise price was equal to
or greater than such fair market value.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT FISCAL YEAR
SHARES OPTIONS AT FISCAL YEAR END END
ACQUIRED VALUE ---------------------------- ----------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) (#) (#)
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James N. Mills.......................... 0 0 0 1,400,913 0 0
Joseph M. Fiamingo...................... 0 0 80,000 920,000 0 0
Rodney D. Kent.......................... 0 0 80,000 320,000 0 0
Robert C. Kozlowski..................... 0 0 0 400,000 0 0
David M. Sindelar....................... 0 0 0 1,050,690 0 0
William J. Kriss........................ 0 0 0 0 0 0
</TABLE>
EMPLOYMENT AGREEMENTS
James N. Mills Employment Agreement. Mr. James N. Mills entered into an
employment agreement with Holding and the Company on June 12, 1995. Pursuant to
such employment agreement, Mr. Mills will serve as the Chairman of the Board and
Chief Executive Officer of Holding and the Company through June 11, 2000. Mr.
Mills is required to devote such business time and attention to the transaction
of the Company's business as is reasonably necessary to discharge his duties
under the employment agreement. Subject to the foregoing limitation on his
activities, Mr. Mills is free to participate in other business endeavors.
The compensation provided to Mr. Mills under his employment agreement
includes an annual base salary of not less than $300,000, subject to adjustment
at the sole discretion of the Board of Directors of Holding, and such benefits
as are customarily accorded the executives of Holding and the Company for as
long as the employment agreement is in force. In addition, Mr. Mills is entitled
to an annual bonus in an amount to be determined at the sole discretion of the
Board of Directors of Holding.
Mr. Mills' employment agreement also provides that if Mr. Mills' employment
is terminated without cause, Mr. Mills will continue to receive his then current
salary for the longer of the remainder of the employment period or 18 months
following such termination. In addition, Mr. Mills' employment agreement
provides that if Mr. Mills is terminated due to death or disability, Mr. Mills'
estate, heirs, or beneficiaries, as applicable, will receive, in addition to any
other benefits provided under any benefit plan, his then current salary for a
period of 18 months from the date of termination.
Joseph M. Fiamingo Employment Agreement. Mr. Joseph M. Fiamingo entered
into an employment agreement with Holding and the Company on September 25, 1996.
Pursuant to such employment agreement, Mr. Fiamingo will serve as President and
Chief Operating Officer of Holding and the Company through September 24, 1999.
The compensation provided to Mr. Fiamingo under his employment agreement
includes an annual base salary of not less than $260,000, subject to adjustment
at the sole direction of the Board of Directors of Holding, and such benefits as
are customarily accorded the executives of Holding and the Company for as long
as the employment agreement is in force. In addition, Mr. Fiamingo is entitled
to an annual bonus in an amount to be determined by the Chairman of the Board of
Holding of up to sixty-five percent of his base compensation.
46
<PAGE> 49
Mr. Fiamingo's employment agreement also provides that if Mr. Fiamingo's
employment is terminated without cause, Mr. Fiamingo will continue to receive
his then current salary for the remainder of such employment agreement. In
addition, Mr. Fiamingo's employment agreement provides that if Mr. Fiamingo is
terminated due to death or disability, Mr. Fiamingo's estate, heirs, or
beneficiaries, as applicable, will receive, in addition to any other benefits
provided under any benefit plan, his then current salary for a period of 12
months from the date of termination.
Rodney D. Kent Employment Agreement. Mr. Kent entered into an employment
agreement with Omega on March 14, 1995. Pursuant to such employment agreement,
Mr. Kent will serve as President and Chief Executive Officer of Omega through
March 28, 1998. Mr. Kent is required to devote substantially all of his business
time and attention to the performance of his duties under the employment
agreement.
The compensation provided to Mr. Kent under his employment agreement
includes an annual base salary of not less than $286,000 for the period ended
March 31, 1996, not less than $302,000 for the period ended March 31, 1997, and
not less than $325,000 thereafter, subject to increase at the sole discretion of
the Board of Directors of Omega, and certain other benefits for as long as the
employment agreement is in force. In addition, during each year of employment,
an additional 15% of the annual base salary is credited to a deferred
compensation account for the benefit of Mr. Kent, which deferred compensation
account is annually credited with an interest accrual of 8% on the balance of
the account for the prior year. Further, Mr. Kent is entitled to an annual bonus
in an amount to be determined at the sole discretion of the Chairman of the
Board of Holding of up to sixty-five percent of his annual base salary.
Mr. Kent's employment agreement also provides that if Mr. Kent's employment
is terminated without cause or due to disability or death, Mr. Kent or his
estate, heirs or beneficiaries, as applicable, will receive, in addition to any
other benefits provided him or them under any benefit plan, Mr. Kent's then
current salary for a period of 24 months from Mr. Kent's termination without
cause or his disability or death. In the event that Mr. Kent terminates his
employment and receives a bona fide offer of employment from a competitor of the
Company, Mr. Kent will receive, in addition to any other benefits provided under
any benefit plan, Mr. Kent's then current salary for a period of 24 months from
such termination, but only in the event that Omega elects to enforce certain
non-competition provisions of the employment agreement.
Robert C. Kozlowski Employment Agreement. Mr. Robert C. Kozlowski entered
into an employment agreement with Holding and the Company on March 5, 1996.
Pursuant to such employment agreement, Mr. Kozlowski will serve as President of
Wire Technologies through March 4, 1999.
The compensation provided to Mr. Kozlowski under his employment agreement
includes an annual base salary of not less than $190,000, subject to adjustment
at the discretion of the Chief Executive Officer of Holding and the Company, and
such benefits as are customarily accorded the executives of Holding and the
Company for as long as the employment agreement is in force. In addition, Mr.
Kozlowski is entitled to an annual bonus in an amount to be determined by the
Chief Executive Officer.
Mr. Kozlowski's employment agreement also provides that if Mr. Kozlowski's
employment is terminated without cause, Mr. Kozlowski will continue to receive
his then current salary for the remainder of such employment agreement or 12
months, which ever is shorter. In addition, Mr. Kozlowski's employment agreement
provides that if Mr. Kozlowski is terminated due to death or disability, Mr.
Kozlowski's estate, heirs, or beneficiaries, as applicable, will receive, in
addition to any other benefits provided under any benefit plan his then current
salary for a period of 12 months from the date of termination.
David M. Sindelar Employment Agreement. Mr. David M. Sindelar entered into
an employment agreement with Holding and the Company on June 12, 1995. Pursuant
to such employment agreement, Mr. Sindelar will serve as the Senior Vice
President and Chief Financial Officer of Holding and Senior Vice President of
the Company through June 11, 2000. Mr. Sindelar is required to devote such
business time and attention to the transaction of the Company's business as is
reasonably necessary to discharge his duties under the employment agreement.
Subject to the foregoing limitation on his activities, Mr. Sindelar is free to
participate in other business endeavors.
47
<PAGE> 50
The compensation provided to Mr. Sindelar under his employment agreement
includes an annual base salary of not less than $150,000, subject to adjustment
at the sole discretion of the Board of Directors of Holding, and such benefits
as are customarily accorded the executives of Holding and Senior Vice President
of the Company for as long as the employment agreement is in force. In addition,
Mr. Sindelar is entitled to an annual bonus in an amount to be determined by the
Chairman of the Board of Holding of up to sixty-five percent of his base
compensation.
Mr. Sindelar's employment agreement also provides that if Mr. Sindelar's
employment is terminated without cause, Mr. Sindelar will continue to receive
his then current salary for the longer of the remainder of the employment period
or 18 months following such termination. In addition, Mr. Sindelar's employment
agreement provides that if Mr. Sindelar is terminated due to death or
disability, Mr. Sindelar's estate, heirs, or beneficiaries, as applicable, will
receive, in addition to any other benefits provided under any benefit plan, his
then current salary for a period of 18 months from the date of termination.
William J. Kriss Employment Agreement. Mr. William J. Kriss entered into an
employment agreement with Wirekraft on February 6, 1995. Mr. Kriss resigned as
of September 25, 1996, but will continue to receive an annual base salary of
$300,000 pursuant to the terms of such agreement, until February 6, 1998.
BENEFIT PLANS
Stock Option Plan
Holding's qualified and non-qualified stock option plan (the "Option Plan")
provides for the granting of up to 4,795,322 shares of Holding Common Stock, to
officers and key employees of Holding and the Company. Under the Option Plan, as
of March 31, 1997, Holding has granted options to purchase 4,565,249 shares of
Holding Common Stock, 3,550,000 at $1.00 per share, 65,249 at $1.625 per share
and 950,000 at $1.40 per share, the fair market value of Holding Common Stock at
the date of grant as determined by the Board of Directors of Holding. Such
options vest ratably over a five year period commencing on the first anniversary
date after the date of grant, subject to acceleration in the discretion of the
committee appointed to administer the Option Plan in the event of a Change of
Control (as defined in the Option Plan). Generally, an option may be exercised
only if the holder is an officer or employee of Holding or the Company at the
time of exercise. Options granted under the Option Plan are not transferable,
except by will and the laws of descent and distribution. Except as expressly
provided otherwise in any optionee's agreement relating to the grant of options
under the Option Plan, in the event an optionee's employment with Holding, the
Company or a related entity terminates at any time, Holding or its designees
shall have the right to repurchase from the optionee (or optionee's
representatives) (i) the number of shares of Holding Common Stock acquired upon
exercise of an option and (ii) the optionee's right to acquire that number of
shares of Holding Common Stock which an optionee can acquire upon exercise
immediately prior to such repurchase. The purchase price to be paid is
calculated on the basis of the fair market value (as defined in the Option Plan)
of Holding Common Stock multiplied by the number of shares of Holding Common
Stock to be acquired (less the aggregate exercise price in the event such
repurchase option is exercised by Holding with respect to the optionee's right
to acquire Holding Common Stock).
Performance Options
On March 31, 1995, Omega granted options (the "Performance Options") to
purchase 1,958,762 shares of common stock of Omega ("Omega Common Stock"). Mr.
Mills was granted Performance Options to purchase 652,921 shares of Omega Common
Stock, and Performance Options to purchase the remaining 1,305,841 shares of
Omega Common Stock were granted to certain officers of Omega who are also
affiliated with Mills & Partners. In connection with the Wirekraft/Omega
Acquisitions and pursuant to the terms of the option agreements (the
"Performance Option Agreements") related to the Performance Options, the
Performance Options became options to purchase an identical number of shares of
Holding Common Stock.
On June 12, 1995, the Company granted Performance Options to purchase
1,007,416 shares of Holding Common Stock. Mr. Mills was granted Performance
Options to purchase 335,804 shares of Holding Common
48
<PAGE> 51
Stock, and Performance Options to purchase the remaining 671,612 shares of
Holding Common Stock were granted to certain officers of the Company who are
also affiliated with Mills & Partners.
On March 5, 1996, the Company granted Performance Options to purchase
1,236,566 shares of Holding Common Stock, Mr. Mills was granted Performance
Options to purchase 412,188 shares of Holding Common Stock, and Performance
Options to purchase the remaining 824,378 shares of Holding Common Stock were
granted to certain officers of the Company who are also affiliated with Mills &
Partners.
The Performance Options are exercisable only in the event that HM Fund II
has realized an overall rate of return of at least 35% per annum, compounded
annually, on all equity funds invested by it in Holding. Subject to the
foregoing, the Performance Options are exercisable (i) immediately prior to a
Liquidity Event (as hereinafter defined), (ii) concurrently with the
consummation of a Qualified IPO (as hereinafter defined), or (iii) on December
31, 2004 (with respect to the Performance Options granted on March 31, 1995 and
June 12, 1995) or on December 31, 2005 (with respect to the Performance Options
granted on March 5, 1996). A "Liquidity Event" generally means (i) one or more
sales or other dispositions of Holding Common Stock if, thereafter, the amount
of Holding Common Stock owned by HM Fund II is reduced by 50%, (ii) any merger,
consolidation or other business combination of Holding pursuant to which any
person or group acquires a majority of the common stock of the resulting entity,
or (iii) any sale of all or substantially all of the assets of Holding. A
"Qualified IPO" means a firm commitment underwritten public offering of Holding
Common Stock for gross proceeds of at least $25.0 million.
The exercise price for the Performance Options is initially equal to $1.00
per share and, effective each anniversary of the grant date, the per share
exercise price for the Performance Options is equal to the per share exercise
price for the prior year multiplied by 1.09. The exercise price of the
Performance Options and the number of shares of Holding Common Stock for which
the Performance Options are exercisable is subject to adjustment in the event of
certain fundamental changes in the capital structure of Holding. The Performance
Options terminate on the tenth anniversary of the date of grant.
49
<PAGE> 52
OUTSTANDING VOTING SECURITIES OF HOLDING
AND PRINCIPAL HOLDERS THEREOF
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of the issued and outstanding shares of capital stock of the Company
are held by Holding. The following table sets forth as of June 30, 1997 certain
information regarding the beneficial ownership of the voting securities of
Holding by each person who beneficially owns more than 5% of any class of
Holding voting securities and by the directors and certain executive officers of
Holding, individually, and by the directors and executive officers of Holding as
a group. The Class A Common Stock, par value $0.01 per share, of Holding
("Holding Class A Common Stock") votes together with the Holding Common Stock as
a single class and is entitled to one vote for each share.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
-------------------------------------------------------------------
HOLDING CLASS A
HOLDING COMMON STOCK COMMON STOCK
------------------------- ------------------------
NUMBER OF PERCENT OF NUMBER OF PERCENT OF PERCENT OF
SHARES CLASS SHARES CLASS TOTAL
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
5% Stockholders:
HM Parties(2).................. 117,050,000 100.0% -- -- 90.0%
c/o Hicks, Muse, Tate &
Furst Incorporated 200
Crescent Court, Suite 1600
Dallas, Texas 75201
Officers and Directors:
James N. Mills(3).............. 1,702,034 1.5% 13,000,000 100.0% 11.3%
Thomas P. Danis................ 100,000 * -- -- *
Jack D. Furst(2)............... 117,050,000 100.0% -- -- 90.0%
John A. Gavin.................. 135,957 * -- -- *
Charles W. Tate(2)............. 117,050,000 100.0% -- -- 90.0%
Rodney D. Kent(4).............. 5,780,000 4.9% -- -- 4.4%
Richard W. Vieser.............. 135,957 * -- -- *
Joseph Fiamingo(5)............. 80,000 * -- -- *
David M. Sindelar(6)........... -- -- 3,648,482 28.1% 2.8%
Larry S. Bacon(7).............. -- -- 875,507 6.7% *
W. Thomas McGhee(8)............ -- -- 875,505 6.7% *
Robert C. Kozlowski(9)......... -- -- -- -- --
William J. Kriss............... -- -- 514,124 -- *
All executive officers and
directors as a group (13
persons)(10)................ 117,050,000 100.0% 13,000,000 100.0% 100.0%
</TABLE>
- ---------------
* Less than one percent.
(1) Holding Class A Common Stock is convertible into Holding Common Stock (i)
at the option of any holder thereof at any time, (ii) at the option of
Holding upon the occurrence of a Triggering Event (as defined below), and
(iii) mandatorily at March 31, 2005. A "Triggering Event" means any sale of
substantially all of the assets of Holding or any merger, consolidation or
other business combination of Holding in which Hicks, Muse and its
affiliates cease to own at least 50% of the resulting entity. Each share of
Holding Class A Common Stock is convertible into a fraction of a share of
Holding Common Stock equal to the quotient of (i) the fair market value of
a share of Holding Common Stock at the time of conversion less the sum of
$.99 plus imputed interest thereon at a rate of 9% per annum, compounded
annually, at the time of conversion, divided by (ii) the fair market value
of a share of Holding Common Stock at the time of conversion. Because the
fraction of a share of Holding Common Stock into which Holding Class A
Common Stock is convertible is determinable only at the time of a
conversion, shares
50
<PAGE> 53
of Holding Common Stock are not included in the shares of Holding Common
Stock beneficially owned in the foregoing table.
(2) Includes (i) shares owned of record by HM Fund II, a limited partnership of
which the sole general partner is HM2/GP Partners, L.P., a limited
partnership of which the sole general partner is Hicks, Muse GP Partners,
L.P., a limited partnership of which the sole general partner is Hicks,
Muse, Tate & Furst Fund II Incorporated, a corporation affiliated with
Hicks, Muse; (ii) shares owned of record by HM2/Wire/Hunt Partners, L.P.,
HM2/Wire/Sunwestern Partners, L.P. and HM2/Wire/Hubbard Partners, L.P.,
limited partnerships of which the sole general partner is HM2/GP Partners,
L.P.; and (iii) shares owned of record by certain individuals subject to an
irrevocable proxy in favor of Hicks, Muse. Thomas O. Hicks is a controlling
stockholder of Hicks, Muse and serves as Chairman of the Board, President,
Chief Executive Officer, Chief Operating Officer and Secretary of Hicks,
Muse. Accordingly, Mr. Hicks may be deemed to be the beneficial owner of
Holding Common Stock held by HM Fund II. John R. Muse, Charles W. Tate,
Jack D. Furst, Lawrence D. Stuart, Michael J. Levitt and Alan B. Menkes are
officers, directors and minority stockholders of Hicks, Muse and as such
may be deemed to share with Mr. Hicks the power to vote or dispose of
Holding Common Stock held by HM Fund II. Each of Messrs. Hicks, Muse, Tate,
Furst, Stuart, Levitt and Menkes disclaims the existence of a group and
disclaims beneficial ownership of Holding Common Stock not respectively
owned of record by him.
(3) Includes shares of Holding Class A Common Stock held by James N. Mills and
shares of Holding Class A Common Stock that Mr. Mills has the power to vote
by proxy. Does not include 1,400,913 shares of Holding Common Stock
issuable to Mr. Mills upon the exercise of Performance Options that are not
currently exercisable. See "Management -- Benefit Plans -- Performance
Options."
(4) Includes 80,000 shares of Holding Common Stock issuable to Mr. Kent upon
exercise of options granted under the Option Plan that are currently
exercisable. Does not include 320,000 shares of Holding Common Stock
issuable to Mr. Kent upon exercise of options granted under the Option Plan
that are not currently exercisable. See "Management -- Benefit
Plans -- Option Plan."
(5) Includes 80,000 shares of Holding Common Stock issuable to Mr. Fiamingo
upon exercise of options granted under the Option Plan that are currently
exercisable. Does not include 920,000 shares of Holding Common Stock
issuable to Mr. Fiamingo upon exercise of options granted under the option
plan that are not currently exercisable. See "Management -- Benefit
Plans -- Option Plan."
(6) Does not include 1,050,690 shares of Holding Common Stock issuable to Mr.
Sindelar upon exercise of Performance Options that are not currently
exercisable. See "Management -- Benefit Plans -- Performance Options."
(7) Does not include 700,457 shares of Holding Common Stock issuable to Mr.
Bacon upon exercise of Performance Options that are not currently
exercisable. See "Management -- Benefit Plans -- Performance Options."
(8) Does not include 700,456 shares of Holding Common Stock issuable to Mr.
McGhee upon exercise of Performance Options that are not currently
exercisable. See "Management -- Benefit Plans -- Performance Options."
(9) Does not include 400,000 shares of Holding Common Stock issuable to Mr.
Kozlowski upon exercise of options granted under the Option Plan that are
not currently exercisable. See "Management -- Benefit Plans -- Performance
Options."
(10) Includes shares of Holding Class A Common Stock which Mr. Mills has the
power to vote by proxy. Does not include 5,652,516 shares of Holding Common
Stock issuable to executive officers of Holding upon the exercise of
Performance Options and options under the Option Plan that are not
currently exercisable. See "Management -- Benefit Plans -- Performance
Options."
51
<PAGE> 54
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
RELATIONSHIPS WITH HICKS, MUSE
Monitoring and Oversight Agreement
On June 12, 1995, Holding and the Company entered into a ten-year agreement
(the "Monitoring and Oversight Agreement") with Hicks, Muse & Co. Partners, L.P.
("Hicks Muse Partners"), a limited partnership of which the sole general partner
is HM Partners Inc., a corporation affiliated with Hicks, Muse, pursuant to
which they pay an annual fee of $500,000 for oversight and monitoring services
to Holding and the Company. The annual fee is adjustable at the end of each
fiscal year to an amount equal to 0.1% of the consolidated net sales of the
Company, but in no event less than $500,000. Hicks Muse Partners also will be
entitled to receive a fee equal to 1.5% of the transaction value (as hereinafter
defined) for each add-on transaction (as hereinafter defined) in which the
Company is involved. The term "transaction value" means the total value of any
add-on transaction, including, without limitation, the aggregate amount of the
funds required to complete the add-on transaction (excluding any fees payable
pursuant to the Monitoring and Oversight Agreement and any fees, if any, paid to
any other person or entity for financial advisory, investment banking,
brokerage, or any other similar services rendered in connection with such add-on
transaction) including the amount of any indebtedness, preferred stock or
similar items assumed (or remaining outstanding). The term "add-on transaction"
means any future proposal for a tender offer, acquisition, sale, merger,
exchange offer, recapitalization, restructuring, or other similar transaction
directly or indirectly involving Holding, the Company, or any of their
respective subsidiaries and any other person or entity. On March 5, 1996, in
connection with the DWT Acquisition, Holding and the company paid Hicks Muse
Partners a cash financial advisory fee of approximately $2.5 million as
compensation for its services as financial advisor. On February 12, 1997, in
connection with the Camden Acquisition, Holding and the Company paid Hicks Muse
Partners a cash financial advisory fee of approximately $900,000 as compensation
for its services as financial advisor.
Messrs. Tate and Furst, directors of Holding and the Company, are each
principals of Hicks Muse Partners. In addition, Holding and the Company have
agreed to indemnify Hicks Muse Partners, its affiliates and shareholders, and
their respective directors, officers, agents, employees and affiliates from and
against all claims, actions, proceedings, demands, liabilities, damages,
judgments, assessments, losses and costs, including fees and expenses, arising
out of or in connection with the services rendered by Hicks Muse Partners in
connection with the Monitoring and Oversight Agreement.
The Monitoring and Oversight Agreement makes available the resources of
Hicks Muse Partners concerning a variety of financial and operational matters.
The services that have been and will continue to be provided by Hicks Muse
Partners could not otherwise be obtained by Holding and the Company without the
addition of personnel or the engagement of outside professional advisors. In
management's opinion, the fees provided for under this agreement reasonably
reflect the benefits received and to be received by Holding and the Company.
Stockholders Agreement
Each investor in any class of common stock of Holding has entered into a
stockholders agreement (the "Stockholders Agreement"). The Stockholders
Agreement, among other things, grants preemptive rights and certain registration
rights to the parties thereto and contains provisions requiring the parties
thereto to sell their shares of common stock in connection with certain sales of
Holding Common Stock by HM Fund II ("drag-along rights") and granting the
parties thereto the right to include a portion of their shares of common stock
in certain sales in which HM Fund II does not exercise its drag-along rights
("tag-along rights"). All parties to the Stockholders Agreement agree to take
all action within their respective power (including the voting of Holding Common
Stock and Holding Class A Common Stock) to cause the Board of Directors of the
Company to at all times be constituted by the members designated by HM Fund II.
In addition, the Stockholders Agreement contains an irrevocable proxy pursuant
to which all parties to the Stockholders
52
<PAGE> 55
Agreement (other than the initial holders of Holding Class A Common Stock and
their transferees) grant to HM Fund II the power to vote all shares of Holding
Common Stock held by such parties on all matters submitted to the Company's
stockholders. Further, the Stockholders Agreement contains an irrevocable proxy
pursuant to which the initial holders of Holding Class A Common Stock and their
transferees grant to James N. Mills (HM Fund II if Mr. Mills is no longer an
officer or director of Holding and the Company) the power to vote all shares of
Holding Class A Common Stock held by such parties on all matters submitted to
the Company's stockholders. The Stockholders Agreement terminates on its tenth
anniversary date, although the preemptive rights, drag-along rights and
tag-along rights contained therein terminate earlier upon the consummation of a
firm commitment underwritten public offering of Holding Common Stock.
Notes Repurchase
On June 20, 1997, the Company consummated the Notes Repurchase, pursuant to
which the Company repurchased $5.0 million in aggregate principal amount of the
Company's 14% Senior Subordinated Notes due 2005 for 113% of the principal
amount of such notes, plus accrued and unpaid interest, from HM Fund II, and
certain affiliates and principals of Hicks, Muse, including Messrs. Tate and
Furst, directors of Holding and the Company.
DESCRIPTION OF SENIOR BANK FACILITY
The description set forth below does not purport to be complete and is
qualified in its entirety by reference to certain agreements setting forth the
principal terms and conditions of the Company's Senior Bank Facility.
Capitalized terms used but not otherwise defined in this "Description of Senior
Bank Facility" shall have the meaning to be ascribed to them in the Credit
Agreement, as amended by the First Amendment.
The Senior Bank Facility provides senior secured financing of up to $260.5
million, consisting of the $25.0 million Tranche A Loan, the $160.5 million
Tranche B Loan and the $75.0 million Revolver.
The Tranche A Loan amortizes quarterly with a maturity date of September
30, 2002, and the Tranche B Loan amortizes quarterly with a maturity date of
September 30, 2003. Optional prepayments under the Term Facility will be
allocated among the loans made thereunder as the Company may elect (other than
certain installments of the Tranche B Loan) in connection with the first $10.0
million of such prepayments, and any amount of such optional prepayments in
excess of $10.0 million and any mandatory prepayments will be allocated, on a
pro rata basis, among the Tranche A Loan and the Tranche B Loan and thereafter
applied in accordance with the then remaining number of scheduled principal
installments of the Tranche A Loan and the Tranche B Loan, respectively.
The Company has made principal payments in respect of the Term Facility of
$5.0 million thus far in 1997. The Company is obligated to make principal
payments in respect of the Term Facility of $1.6 million for the remainder of
1997, $3.5 million in 1998, $4.8 million in 1999, $6.0 million in 2000, $7.3
million in 2001, $46.4 million in 2002 and $115.9 million in 2003.
The obligations of the Company under the Senior Bank Facility are
unconditionally and irrevocably guaranteed by Holding and the Domestic
Subsidiaries (the "Guarantors"). In addition, the Senior Bank Facility is
secured by first priority or equivalent security interests in substantially all
tangible and intangible assets of the Company and the Guarantors, including all
the capital stock of, or other equity interests in, each other direct or
indirect domestic subsidiary of the Company and 65% of the capital stock of, or
other equity interests in, each direct foreign subsidiary of the Company or any
Guarantor (to the extent permitted by applicable contractual and legal
provisions).
At the Company's election, the interest rates per annum applicable to the
Tranche A Loan and the Revolver are either the Eurodollar Rate plus 1.5%, 1.25%
or 1.0% based upon a formula described in the Credit Agreement or the Alternate
Base Rate plus 0.5%, 0.25% or 0.0% based upon a formula described in the Credit
Agreement. In addition, at the Company's election, the interest rates per annum
applicable to the Tranche B Loan will be either the Eurodollar Rate plus 2.0% or
the Alternate Base Rate plus 1.0%. The Alternate Base Rate is the highest of
Chase's Prime Rate, the Secondary Market Rate for Certificates of Deposit plus
1.0%, and the Federal Funds Rate plus 0.5%.
53
<PAGE> 56
The Company pays a per annum fee equal to the interest rate margin
applicable to loans under the Revolver, which bear interest at the Eurodollar
Rate, of the average daily face amount of outstanding letters of credit under
the Revolver and a per annum fee equal to 0.5% on the undrawn portion of the
commitments in respect of the Revolver.
The Senior Bank Facility contains a number of covenants that, among other
things, restrict the ability of the Company and its subsidiaries to dispose of
assets, incur additional indebtedness, incur guarantee obligations, repay other
indebtedness or amend other debt instruments, pay dividends, create liens on
assets, enter into leases, make investments, loans or advances, make
acquisitions, engage in mergers or consolidations, make capital expenditures,
enter into sale and leaseback transactions, or engage in certain transactions
with subsidiaries and affiliates and otherwise restrict corporate activities. In
addition, under the Senior Bank Facility the Company is required to comply with
specified financial ratios and tests, including minimum interest coverage and
maximum leverage ratios and a trailing four quarter minimum EBITDA test.
The Senior Bank Facility also contains provisions that prohibit any
modification of the 11 3/4% Notes Indenture, the 11 3/4% Series B Notes
Indenture or the Indenture in any manner adverse to the lenders under the Senior
Bank Facility and that limit the Company's ability to refinance the 11 3/4%
Notes, the 11 3/4% Series B Notes or the Notes without the consent of such
lenders.
DESCRIPTION OF OTHER INDEBTEDNESS
The description set forth below does not purport to be complete and is
qualified in its entirety by reference to the 11 3/4% Notes, the 11 3/4% Notes
Indenture, the 11 3/4% Series B Notes and the 11 3/4% Series B Notes Indenture.
Capitalized terms used but not otherwise defined in this "Description of Other
Indebtedness" shall have the meanings ascribed to them in the 11 3/4% Notes
Indenture and the 11 3/4% Series B Notes Indenture, as applicable.
The Company currently has outstanding two issues of unsecured, Senior
Subordinated Indebtedness, other than the Notes: the $150.0 million aggregate
principal amount of 11 3/4% Notes and the $150.0 million aggregate principal
amount of 11 3/4% Series B Notes. The Notes will rank pari passu with the
11 3/4% Notes and the 11 3/4% Series B Notes. The 11 3/4% Notes and the 11 3/4%
Series B Notes are unconditionally guaranteed on an unsecured, senior
subordinated basis, by the Subsidiary Guarantors.
The 11 3/4% Notes were issued pursuant to the 11 3/4% Notes Indenture and
the 11 3/4% Series B Notes were issued pursuant to the 11 3/4% Series B Notes
Indenture. Except as described below, the 11 3/4% Notes Indenture and the
11 3/4% Series B Notes Indenture and the corresponding 11 3/4% Notes and 11 3/4%
Series B Notes are substantially identical to the Indenture and the Notes,
respectively, except that (i) the 11 3/4% Notes have been registered under the
Securities Act and, therefore, do not bear legends restricting their transfer
pursuant to the Securities Act and (ii) holders of the 11 3/4% Notes and the 14%
Notes will not be entitled to the rights of holders of the Notes offered hereby
under the Exchange and Registration Rights Agreement.
The 11 3/4% Notes and the 11 3/4% Series B Notes bear interest at the rate
of 11 3/4% per annum. The Notes bear interest at the rate of 14% per annum.
At any time and from time to time prior to June 1, 1998, the Company may
redeem in the aggregate up to $50.0 million principal amount of each of the
11 3/4% Notes and the 11 3/4% Series B Notes with the proceeds of one or more
Equity Offerings by the Company or Holding (to the extent, in the case of
Holding, that the net cash proceeds thereof are contributed to the equity
capital of the Company) so long as there is a Public Market at the time of such
redemption, at a redemption price (expressed as a percentage of principal
amount) of 110%, plus accrued and unpaid interest, if any, to the redemption
date, provided that at least $75.0 million, in the case of each of the 11 3/4%
Notes and the 11 3/4% Series B Notes remains outstanding after each such
redemption.
Pursuant to the 11 3/4% Notes Indenture, the Company is required, subject
to certain limitations and restrictions contained in the 11 3/4% Notes
Indenture, to make an offer to purchase the 11 3/4% Notes to the extent of Net
Available Cash from an Asset Disposition after application of such Net Available
Cash to
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(i) prepay, repay or purchase Senior Indebtedness or Indebtedness of a
Wholly-Owned Subsidiary (in each case after other than Indebtedness owed to the
Company) or (ii) invest or acquire Additional Assets. The Indenture contains a
covenant identical to the 11 3/4% Notes Indenture described in the preceding
sentence, except that the Company is required, subject to certain limitations
and restrictions, described under "Description of the Notes -- Certain
Covenants -- Limitations on Sales of Assets and Subsidiary Stock," to make the
offer to purchase the Notes only to the extent of Net Available Cash after the
Company has made an offer to purchase the 11 3/4% Notes pursuant to the
provision of the 11 3/4% Notes Indenture described above. The 11 3/4% Series B
Indenture contains a covenant identical to the 11 3/4% Notes Indenture described
in the penultimate sentence, except that the Company is required, subject to
certain limitations and restrictions contained in the 11 3/4% Series B Notes
Indenture, to make the offer to purchase the 11 3/4% Series B Notes only to the
extent of Net Available Cash after the Company has made an offer to purchase the
11 3/4% Notes pursuant to the provision of the 11 3/4% Notes Indenture described
above and an offer to purchase the Notes pursuant to the provision of the
Indenture described above.
DESCRIPTION OF THE NOTES
GENERAL
The Notes are issued under an Indenture, dated as of February 12, 1997,
between the Company and IBJ Schroder Bank & Trust Company, as Trustee (the
"Trustee"). The following summary of certain provisions of the Indenture and the
Notes does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Indenture (including the
definitions of certain terms therein and those terms made a part thereof by the
Trust Indenture Act of 1939, as amended) and the Notes.
Principal of, premium, if any, and interest on the Notes is payable, and
the Notes may be exchanged or transferred, at the office or agency of the
Company in the Borough of Manhattan, The City of New York (which initially shall
be the corporate trust office of the Trustee, at One State Street, New York, New
York), except that, at the option of the Company, payment of interest may be
made by check mailed to the address of the holders as such address appears in
the Note Register.
The Notes were issued in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000. No service charge
will be made for any registration of transfer or exchange of Notes, but the
Company may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection therewith.
TERMS OF NOTES
The Notes are unsecured senior subordinated obligations of the Company,
limited to $10 million aggregate principal amount, and will mature on June 1,
2005. Each Note bears interest at a rate of 14% per annum from the most recent
date to which interest has been paid or provided for, payable semiannually on
June 1 and December 1 of each year to holders of record at the close of business
on the May 15 or November 15 immediately preceding the interest payment date.
OPTIONAL REDEMPTION
Except as set forth below, the Notes are not redeemable at the option of
the Company prior to June 1, 2000. On and after such date, the Notes are
redeemable, at the Company's option, in whole or in part, at any time upon not
less than 30 nor more than 60 days prior notice mailed by first-class mail to
each holder's registered address, at the following redemption prices (expressed
in percentages of principal amount), plus accrued and unpaid interest to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date):
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If redeemed during the 12-month period commencing on June 1 of the years
set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
------ ----------
<S> <C>
2000...................................................... 105.875%
2001...................................................... 103.917%
2002...................................................... 101.958%
2003 and thereafter....................................... 100.000%
</TABLE>
In addition, the Indenture provides that at any time and from time to time
prior to June 1, 1998, the Company may redeem in the aggregate up to $3.0
million principal amount of Notes with the proceeds of one or more Equity
Offerings by the Company or Holding (to the extent, in the case of Holding, that
the net cash proceeds thereof are contributed to the equity capital of the
Company) so long as there is a Public Market at the time of such redemption, at
a redemption price (expressed as a percentage of principal amount) of 110%, plus
accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant interest payment date); provided, however, that at least $5.0
million aggregate principal amount of the Notes must remain outstanding after
each such redemption. Following the Notes Repurchase, the only 14% Senior
Subordinated Notes of the Company remaining outstanding are represented by the
Notes in the aggregate principal amount of $5.0 million. Accordingly, this
redemption option is no longer available with respect to the Notes.
At any time on or prior to June 1, 2000, the Notes may also be redeemed as
a whole at the option of the Company upon the occurrence of a Change of Control,
upon not less than 30 nor more than 60 days prior notice (but in no event more
than 90 days after the occurrence of such Change of Control) mailed by first-
class mail to each holder's registered address, at a redemption price equal to
100% of the principal amount thereof plus the Applicable Premium as of, and
accrued and unpaid interest, if any, to, the date of redemption (the "Redemption
Date") (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date).
"Applicable Premium" means, with respect to a Note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess
of (A) the present value at such time of (1) the redemption price of such Note
at June 1, 2000 (such redemption price being described under "-- Optional
Redemption") plus (2) all required interest payments due on such Note through
June 1, 2000, computed using a discount rate equal to the Treasury Rate plus 100
basis points, over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two business days prior to the Redemption
Date (or, if such Statistical Release is no longer published, any publicly
available source or similar market data)) most nearly equal to the period from
the Redemption Date to June 1, 2000; provided, however, that if the period from
the Redemption Date to June 1, 2000 is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given, except that if the period
from the Redemption Date to June 1, 2000 is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
Selection. In the case of any partial redemption, selection of the Notes
for redemption will be made by the Trustee on a pro rata basis, by lot or by
such other method as the Trustee in its sole discretion shall deem to be fair
and appropriate, although no Note of $1,000 in original principal amount or less
will be redeemed in part. If any Note is to be redeemed in part only, the notice
of redemption relating to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note.
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RANKING
The payment of the principal of, premium (if any), and interest on the
Notes is subordinated in right of payment, as set forth in the Indenture, to the
payment when due of all Senior Indebtedness of the Company. However, payment
from the money or the proceeds of U.S. Government Obligations held in any
defeasance trust described under "Defeasance" below is not subordinate to any
Senior Indebtedness or subject to the restrictions described herein. As of March
31, 1997, after giving pro forma effect to the Rule 144A Offering, the Senior
Debt Repayment and the Notes Repurchase as if they had occurred on that date the
outstanding Senior Indebtedness of the Company would have been approximately
$215.5 million (excluding unused commitments of $45.0 million under the Senior
Bank Facility), and the Outstanding Guarantor Senior Subordinated Indebtedness
would have been approximately $222.4 million (including guarantees of the Senior
Bank Facility) and $305.0 million (consisting of the Subsidiary Guarantee and
guarantees of the Company's 11 3/4% Notes and 11 3/4% Series B Notes). Although
the Indenture contains limitations on the amount of additional Indebtedness that
the Company may Incur, under certain circumstances the amount of such
Indebtedness could be substantial and, in any case, such Indebtedness may be
Senior Indebtedness. See "-- Certain Covenants -- Limitation on Indebtedness"
below. All the operations of the Company are conducted through its subsidiaries.
Each Subsidiary of the Company (other than foreign subsidiaries) have guaranteed
the Company's obligations under the Senior Bank Facility. Although the Indenture
limits the incurrence of Indebtedness of the Company's subsidiaries, such
limitation is subject to a number of significant qualifications; moreover, the
Indenture does not impose any limitation on the incurrence by such subsidiaries
of liabilities that are not considered Indebtedness under the Indenture. See
"-- Certain Covenants -- Limitation on Indebtedness."
"Senior Indebtedness" is defined, whether outstanding on the Issue Date or
thereafter issued, as the Bank Indebtedness and all Indebtedness of the Company,
including interest and fees thereon, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that the obligations in respect of such Indebtedness are not superior in right
of payment to the Notes; provided, however, that Senior Indebtedness will not
include (1) any obligation of the Company to any Subsidiary, (2) any liability
for Federal, state, foreign, local or other taxes owed or owing by the Company,
(3) any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities), or (4) any Indebtedness, Guarantee or obligation
of the Company that is expressly subordinate or junior in right of payment to
any other Indebtedness, Guarantee or obligation of the Company, including any
Senior Subordinated Indebtedness and any Subordinated Obligations.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the Notes in accordance with the provisions of the Indenture. The
Notes will in all respects rank pari passu with all other Senior Subordinated
Indebtedness of the Company, including the 11 3/4% Notes and the 11 3/4% Series
B Notes. The Company has agreed in the Indenture that it will not Incur,
directly or indirectly, any Indebtedness that is subordinate or junior in
ranking in any respect to Senior Indebtedness unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness. In addition, no Subsidiary Guarantor shall
incur any Indebtedness if such Indebtedness is subordinate or junior in ranking
in any respect to any Guarantor Senior Indebtedness of such Subsidiary Guarantor
or is expressly subordinated in right of payment to Guarantor Senior
Subordinated Indebtedness of such Subsidiary Guarantor. Unsecured Indebtedness
is not deemed to be subordinate or junior to Secured Indebtedness merely because
it is unsecured.
The Company may not pay principal of, premium (if any), or interest on, the
Notes or make any deposit pursuant to the provisions described under Defeasance
below and may not otherwise purchase or retire any Notes (collectively, "pay the
Notes") if (i) any Senior Indebtedness is not paid when due or (ii) any other
default on Senior Indebtedness occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
the default has been cured or waived and any such acceleration has been
rescinded or such Senior Indebtedness has been paid in full. However, the
Company may pay the Notes without regard to the foregoing if the Company and the
Trustee receive written notice approving such payment from the Representative of
the Senior Indebtedness with respect to which either of
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the events set forth in clause (i) or (ii) of the immediately preceding sentence
has occurred and is continuing. During the continuance of any default (other
than a default described in clause (i) or (ii) of the second preceding sentence)
with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may be accelerated immediately without further notice (except
such notice as may be required to effect such acceleration) or the expiration of
any applicable grace periods, the Company may not pay the Notes for a period (a
"Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to the Company) of written notice (a "Blockage Notice") of such default
from the Representative of the holders of such Designated Senior Indebtedness
specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated (i) by
written notice to the Trustee and the Company from the Person or Persons who
gave such Blockage Notice, (ii) because the default giving rise to such Blockage
Notice is no longer continuing or (iii) because such Designated Senior
Indebtedness has been repaid in full). Notwithstanding the provisions described
in the immediately preceding sentence, unless the holders of such Designated
Senior Indebtedness or the Representative of such holders have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume payments
on the Notes after the end of such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness during
such period.
Upon any payment or distribution of the assets of the Company upon a total
or partial liquidation or dissolution or reorganization or bankruptcy of or
similar proceeding relating to the Company or its property, the holders of
Senior Indebtedness will be entitled to receive payment in full of the Senior
Indebtedness before the holders are entitled to receive any payment, and until
the Senior Indebtedness is paid in full, any payment or distribution to which
holders would be entitled but for the subordination provisions of the Indenture
will be made to holders of the Senior Indebtedness as their interests may
appear. If a distribution is made to holders that, due to the subordination
provisions, should not have been made to them, such holders are required to hold
it in trust for the holders of Senior Indebtedness and pay it over to them as
their interests may appear.
If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness or the Representative of such holders of the acceleration.
The Company may not pay the Notes until five Business Days after such holders or
the Representative of the Designated Senior Indebtedness receive notice of such
acceleration and, thereafter, may pay the Notes only if the subordination
provisions of the Indenture otherwise permit payment at that time.
By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Noteholders, and creditors of
the Company who are not holders of Senior Indebtedness or of Senior Subordinated
Indebtedness (including the Notes) may recover less, ratably, than holders of
Senior Indebtedness and may recover more, ratably, than the holders of Senior
Subordinated Indebtedness.
SUBSIDIARY GUARANTEE
Each Subsidiary Guarantor fully and unconditionally guarantees, jointly and
severally, to each holder and the Trustee, subject to subordination provisions
substantially the same as those described above, the full and prompt payment of
principal of and interest on the Notes, and of all other obligations under the
Indenture. The Subsidiary Guarantors are Camden, ECM Holding Company, Omega, OWI
Corporation, Wire Harness Industries, Inc., Wirekraft Employment Company,
Wirekraft Industries, Inc. and Wire Technologies. The only Subsidiaries of the
Company which are not Subsidiary Guarantors are ECM and Wirekraft Industries de
Mexico, S.A. de C.V. ("Wirekraft Mexico").
The Indebtedness evidenced by each Subsidiary Guarantee (including the
payment of principal of, premium, if any, and interest on the Notes) will be
subordinated to Guarantor Senior Indebtedness on the same basis as the Notes are
subordinated to Senior Indebtedness. As of March 31, 1997, after giving pro
forma effect to the Rule 144A Offering, the Senior Debt Repayment and the Notes
Repurchase, the aggregate principal amount of Guarantor Senior Indebtedness of
the Subsidiary Guarantors would have been approximately $222.4 million
(including guarantees of the Senior Bank Facility). See "-- Ranking" above.
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The obligations of each Subsidiary Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor (including without limitation, any
guarantees under the Senior Bank Facility) and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to its contribution obligations under the
Indenture, result in the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent
transfer under federal or state law.
Each Subsidiary Guarantor may consolidate with or merge into or sell its
assets to the Company or another Subsidiary Guarantor without limitation. Each
Subsidiary Guarantor may consolidate with or merge into or sell all or
substantially all its assets to a corporation, partnership or trust other than
the Company or another Subsidiary Guarantor (whether or not affiliated with the
Subsidiary Guarantor). Upon the sale or disposition of a Subsidiary Guarantor
(or all or substantially all of its assets) to a Person (whether or not an
Affiliate of the Subsidiary Guarantor) which is not a Subsidiary of the Company,
which is otherwise in compliance with the Indenture, such Subsidiary Guarantor
shall be deemed released from all its obligations under the Indenture and its
Subsidiary Guarantee and such Subsidiary Guarantee shall terminate; provided,
however, that any such termination shall occur only to the extent that all
obligations of such Subsidiary Guarantor under the Senior Bank Facility and all
of its guarantees of, and under all of its pledges of assets or other security
interests which secure, Indebtedness of the Company shall also terminate upon
such release, sale or transfer.
Separate financial statements of the Subsidiary Guarantors are not included
herein because such Subsidiary Guarantors are jointly and severally liable with
respect to the Company's obligations pursuant to the Notes, such guarantees are
full and unconditional (subject to the fraudulent conveyance savings clause
described above), and the aggregate net assets, earnings and equity of the
Subsidiary Guarantors are substantially equivalent to the net assets, earnings
and equity of the Company on a combined basis. As of March 31, 1997, ECM and
Wirekraft Mexico had assets of approximately $11.9 million and $2.8 million,
respectively, and had insignificant revenues from third party sales.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each holder will have the right to require the Company to repurchase
all or any part of such holder's Notes at a purchase price in cash equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date):
(i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets
of the Company and its Subsidiaries to any Person or group of related
Persons for purposes of Section 13(d) of the Exchange Act (a "Group")
(whether or not otherwise in compliance with the provisions of the
Indenture), other than to Hicks, Muse, Mills & Partners or any of their
Affiliates, officers and directors (the "Permitted Holders"); or
(ii) a majority of the Board of Directors of Holdings or the Company
shall consist of Persons who are not Continuing Directors; or
(iii) the acquisition by any Person or Group (other than the Permitted
Holders) of the power, directly or indirectly, to vote or direct the voting
of securities having more than 50% of the ordinary voting power for the
election of directors of Holding or the Company.
Within 30 days following any Change of Control, unless the Company has
mailed a redemption notice with respect to all the outstanding Notes in
connection with such Change of Control, the Company shall mail a notice to each
holder with a copy to the Trustee stating: (1) that a Change of Control has
occurred and that such holder has the right to require the Company to purchase
such holder's Notes at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of holders of record on a record date to receive interest
on the relevant interest payment
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date); (2) the repurchase date (which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed); and (3) the procedures
determined by the Company, consistent with the Indenture, that a holder must
follow in order to have its Notes purchased.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of the Indenture, the Company will comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations described in the Indenture by virtue thereof.
The occurrence of certain of the events that would constitute a Change of
Control would constitute a default under the Senior Bank Facility. Future Senior
Indebtedness of the Company and its Subsidiaries may contain prohibitions of
certain events that would constitute a Change of Control or require such Senior
Indebtedness to be repurchased upon a Change of Control. The occurrence of the
events that would constitute a Change of Control would also constitute a "Change
of Control" under the 11 3/4% Notes Indenture and the 11 3/4% Series B Notes
Indenture. In such a case, the Company would be subject to the same obligations
with respect to the 11 3/4% Notes and the 11 3/4% Series B Notes as the Company
would be subject to with respect to the Notes. Moreover, the exercise by the
holders of their right to require the Company to repurchase the Notes, the
11 3/4% Notes or the 11 3/4% Series B Notes could cause a default under such
Senior Indebtedness, even if the Change of Control itself does not, due to the
financial effect of such repurchase on the Company. Finally, the Company's
ability to pay cash to the holders upon a repurchase may be limited by the
Company's then existing financial resources. There can be no assurance that
sufficient funds will be available when necessary to make any required
repurchases. Even if sufficient funds were otherwise available, the terms of the
Bank Indebtedness will prohibit the Company's prepayment of Notes prior to their
scheduled maturity. Consequently, if the Company is not able to prepay the Bank
Indebtedness and any other Senior Indebtedness containing similar restrictions
or obtain requisite consents, as described above, the Company will be unable to
fulfill its repurchase obligations if holders of Notes, 11 3/4% Notes or 11 3/4%
Series B Notes exercise their repurchase rights following a Change of Control,
thereby resulting in a default under the Indenture.
CERTAIN COVENANTS
The Indenture contains certain covenants including, among others, the
following:
Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, Incur any Indebtedness; provided, however, that the
Company and any of its Subsidiaries may Incur Indebtedness if on the date
thereof the Consolidated Coverage Ratio would be greater than 2.00 : 1.00,
if such Indebtedness is Incurred on or prior to the second anniversary of
the Issue Date, and 2.25 : 1.00, if such Indebtedness is Incurred
thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Subsidiaries may Incur the following Indebtedness: (i) Indebtedness
Incurred pursuant to (A) the Credit Agreement (including, without
limitation, any renewal, extension, refunding, restructuring, replacement
or refinancing thereof referred to in clause (ii) of the definition
thereof) or (B) any other agreements or indentures governing Senior
Indebtedness; provided that the aggregate principal amount of all
Indebtedness Incurred pursuant to this clause (i) does not exceed $240.0
million at any time outstanding, less the aggregate principal amount
thereof repaid with the net proceeds of Asset Dispositions (to the extent,
in the case of a repayment of revolving credit Indebtedness, the commitment
to advance the loans repaid has been terminated); (ii) Indebtedness
represented by Capitalized Lease Obligations, mortgage financings or
purchase money obligations, in each case Incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property used in a Related Business or Incurred to Refinance
any such purchase price or cost of construction or improvement, in each
case Incurred no later than 365 days after the date of such acquisition or
the date of completion of such construction or improvement; provided,
however, that the principal amount of any Indebtedness Incurred pursuant to
this
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clause (ii) shall not exceed $10.0 million at any time outstanding; (iii)
Permitted Indebtedness; and (iv) Indebtedness (other than Indebtedness
described in clauses (i)-(iii)) in a principal amount which, when taken
together with the principal amount of all other Indebtedness Incurred
pursuant to this clause (iv) and then outstanding, will not exceed $25.0
million.
(c) The Company shall not Incur any Indebtedness under paragraph (b)
above if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Obligations unless such Indebtedness shall be
subordinated to the Notes to at least the same extent as such Subordinated
Obligations. No Subsidiary Guarantor shall Incur any Indebtedness under
paragraph (b) above if the proceeds thereof are used, directly or
indirectly, to Refinance any Guarantor Subordinated Obligation of such
Subsidiary Guarantor unless such Indebtedness shall be subordinated to the
obligations of such Subsidiary Guarantor under the Subsidiary Guaranty to
at least the same extent as such Guarantor Subordinated Obligation.
(d) In addition, the Company shall not Incur any Secured Indebtedness
which is not Senior Indebtedness unless contemporaneously therewith
effective provision is made to secure the Notes equally and ratably with
such Secured Indebtedness for so long as such Secured Indebtedness is
secured by a Lien. No Subsidiary Guarantor shall Incur any Secured
Indebtedness which is not Guarantor Senior Indebtedness unless
contemporaneously therewith effective provision is made to secure such
Subsidiary Guarantor's obligations under the Subsidiary Guaranty equally
and ratably with such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
Limitation on Layering. The Company shall not Incur any Indebtedness if
such Indebtedness is subordinate or junior in ranking in any respect to any
Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness
or is expressly subordinated in right of payment to Senior Subordinated
Indebtedness. No Subsidiary Guarantor shall Incur any Indebtedness if such
Indebtedness is subordinate or junior in ranking in any respect to any Guarantor
Senior Indebtedness of such Subsidiary Guarantor unless such Indebtedness is
Guarantor Senior Subordinated Indebtedness of such Subsidiary Guarantor or is
expressly subordinated in right of payment to Guarantor Senior Subordinated
Indebtedness of such Subsidiary Guarantor.
Limitation on Restricted Payments. (a) The Company shall not, and shall not
permit any of its Subsidiaries, directly or indirectly, to (i) declare or pay
any dividend or make any distribution on or in respect of its Capital Stock
(including any payment in connection with any merger or consolidation involving
the Company or any of its Subsidiaries) except (A) dividends or distributions
payable in its Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to purchase such Capital Stock, and (B) dividends or
distributions payable to the Company or a Subsidiary of the Company (and, if
such Subsidiary is not a Wholly-Owned Subsidiary, to its other stockholders on a
pro rata basis or on a basis no more favorable to such other stockholders), (ii)
purchase, redeem, retire or otherwise acquire for value any Capital Stock of the
Company held by Persons other than a Subsidiary of the Company or any Capital
Stock of a Subsidiary of the Company held by any Affiliate of the Company, other
than another Subsidiary (in either case, other than in exchange for its Capital
Stock (other than Disqualified Stock)), (iii) purchase, repurchase, redeem,
defease or otherwise acquire or retire for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment, any Subordinated
Obligations (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition) or (iv) make any Investment (other than a
Permitted Investment) in any Person (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or Investment
being herein referred to as a "Restricted Payment"), if at the time the Company
or such Subsidiary makes such Restricted Payment: (1) a Default shall have
occurred and be continuing (or would result therefrom); or (2) the Company is
not able to incur an additional $1.00 of Indebtedness pursuant to paragraph (a)
under "Limitation on Indebtedness"; or (3) the aggregate amount of such
Restricted Payment and all other Restricted Payments declared or made subsequent
to the Issue Date would exceed the sum of: (A) 50% of the Consolidated Net
Income accrued during the period (treated as one accounting period) from the
Issue Date to the end of the most recent fiscal quarter ending prior to the date
of such Restricted Payment
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as to which financial results are available (but in no event ending more than
135 days prior to the date of such Restricted Payment) (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such deficit); (B) the
aggregate Net Cash Proceeds received by the Company from the issue or sale of
its Capital Stock (other than Disqualified Stock) or other cash contributions to
its capital subsequent to the Issue Date (other than an issuance or sale to a
Subsidiary of the company or an employee stock ownership plan or similar trust);
(C) the aggregate Net Cash Proceeds received by the Company from the issue or
sale of its Capital Stock (other than Disqualified Stock) to an employee stock
ownership plan or similar trust subsequent to the Issue Date; provided, however,
that if such plan or trust Incurs any Indebtedness to or Guaranteed by the
Company or any of its Subsidiaries to finance the acquisition of such Capital
Stock, such aggregate amount shall be limited to such Net Cash Proceeds less
such Indebtedness Incurred or Guaranteed by the Company or any of its
Subsidiaries and any increase in the Consolidated Net Worth of the Company
resulting from principal repayments made by such plan or trust with respect to
Indebtedness Incurred by it to finance the purchase of such Capital Stock; (D)
the amount by which Indebtedness of the Company is reduced on the Company's
balance sheet upon the conversion or exchange (other than by a Subsidiary of the
Company) subsequent to the Issue Date of any Indebtedness of the Company
convertible or exchangeable for Capital Stock of the Company (less the amount of
any cash, or other property, distributed by the Company upon such conversion or
exchange); and (E) the amount equal to the net reduction in Investments (other
than Permitted Investments) made by the Company or any of its Subsidiaries in
any Person resulting from repurchases or redemptions of such Investments by such
Person, proceeds realized upon the sale of such Investment to an unaffiliated
purchaser, repayments of loans or advances or other transfers of assets by such
Person to the Company or any Subsidiary of the Company; provided, however, that
no amount shall be included under this clause (E) to the extent it is already
included in Consolidated Net Income.
(b) The provisions of paragraph (a) shall not prohibit: (i) any purchase or
redemption of Capital Stock or Subordinated Obligations of the Company made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan
or similar trust); provided, however, that (A) such purchase or redemption shall
be excluded in the calculation of the amount of Restricted Payments and (B) the
Net Cash Proceeds from such sale shall be excluded from clause (3)(B) of
paragraph (a); (ii) any purchase or redemption of Subordinated Obligations of
the Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Subordinated Obligations of the Company; provided, however,
that such purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments; (iii) any purchase or redemption of Subordinated
Obligations from Net Available Cash to the extent permitted under "Limitation on
Sales of Assets and Subsidiary Stock" below; provided, however, that such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments; (iv) dividends paid within 60 days after the date of
declaration if at such date of declaration such dividend would have complied
with this provision; provided, however, that such dividend shall be included in
the calculation of the amount of Restricted Payments; (v) [intentionally
omitted]; (vi) payments by the Company to fund (A) out of pocket expenses of
Holding for administrative, legal and accounting services provided by third
parties, or to pay franchise fees and similar costs; provided, however, any such
administrative expenses shall not exceed an aggregate amount of $1,000,000 per
annum, and (B) taxes of Holding; (vii) payments by the Company to Holding
pursuant to the Monitoring and Oversight Agreement; (viii) payments of dividends
on the Company's common stock after an initial public offering of common stock
of the Company or of Holding in an annual amount not to exceed 6% of the gross
proceeds (before deducting underwriting discounts and commissions and other fees
and expenses of the offering) received by the Company (directly or as a common
equity contribution from Holding) from such initial public offering; (ix)
payments by the Company to repurchase, or to enable Holding to repurchase,
Capital Stock or other securities of Holding from members of management of
Holding or the Company in an aggregate amount not to exceed $7,500,000; (x)
payments to enable Holding to redeem or repurchase stock purchase or similar
rights granted by Holding with respect to its Capital Stock in an aggregate
amount not to exceed $500,000; (xi) payments, not to exceed $100,000 in the
aggregate, to enable Holding to make cash payments to holders of its Capital
Stock in lieu of the issuance of fractional shares of its Capital Stock; and
(xii) payments made pursuant to any merger, consolidation or sale of assets
effected in accordance with the "Merger, Consolidation and Sale of Assets"
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covenant; provided, however, that no such payment may be made pursuant to this
clause (xii) unless, after giving effect to such transaction, the Consolidated
Coverage Ratio of the Company would be greater than 3.5 to 1.0; provided,
further, that in the case of clauses (vii), (viii), (ix), (x), (xi) and (xii) no
Default or Event of Default (in the case of clause (vii) such Default or Event
of Default shall be limited to items (i) and (ii) under "-- Defaults") shall
have occurred or be continuing at the time of such payment or as a result
thereof.
Limitation on Restrictions on Distributions from Subsidiaries. The Company
shall not, and shall not permit any of its Subsidiaries to, create or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on its Capital Stock or pay any Indebtedness or other obligation
owed to the Company, (ii) make any loans or advances to the Company or (iii)
transfer any of its property or assets to the Company; except: (a) any
encumbrance or restriction pursuant to an agreement in effect at or entered into
on the Issue Date, including the Credit Agreement; (b) any encumbrance of
restriction with respect to such a Subsidiary pursuant to an agreement relating
to any Indebtedness issued by such Subsidiary on or prior to the date on which
such Subsidiary was acquired by the Company and outstanding on such date (other
than Indebtedness issued as consideration in, or to provide all or any portion
of the funds or credit support utilized to consummate, the transaction or series
of related transactions pursuant to which such Subsidiary became a Subsidiary of
the Company or was acquired by the Company); (c) any encumbrance or restriction
with respect to such a Subsidiary pursuant to an agreement evidencing
Indebtedness Incurred without violation of the Indenture or effecting a
refinancing of Indebtedness issued pursuant to an agreement referred to in
clauses (a) or (b) or this clause (c) or contained in any amendment to an
agreement referred to in clauses (a) or (b) or this clause (c); provided,
however, that the encumbrances and restrictions with respect to such Subsidiary
contained in any of such agreement, refinancing agreement or amendment, taken as
a whole, are no less favorable to the holders in any material respect, as
determined in good faith by the senior management of the Company or Board of
Directors of the Company, than encumbrances and restrictions with respect to
such Subsidiary contained in agreements in effect at, or entered into on, the
Issue Date; (d) in the case of clause (iii), any encumbrance or restriction (A)
that restricts in a customary manner the subletting, assignment or transfer of
any property or asset that is a lease, license, conveyance or contract or
similar property or asset, (B) by virtue of any transfer of, agreement to
transfer, option or right with respect to, or Lien on, any property or assets of
the Company or any Subsidiary not otherwise prohibited by the Indenture, (C)
that is included in a licensing agreement to the extent such restrictions limit
the transfer of the property subject to such licensing agreement or (D) arising
or agreed to in the ordinary course of business and that does not, individually
or in the aggregate, detract from the value of property or assets of the Company
or any of its Subsidiaries in any manner material to the Company or any such
Subsidiary; (e) in the case of clause (iii) above, restrictions contained in
security agreements, mortgages or similar documents securing Indebtedness of a
Subsidiary to the extent such restrictions restrict the transfer of the property
subject to such security agreements; (f) any restriction with respect to such a
Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of such
Subsidiary pending the closing of such sale or disposition and (g) encumbrances
or restrictions arising or existing by reason of applicable law.
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company shall
not, and shall not permit any of its Subsidiaries to, make any Asset Disposition
unless (i) the Company or such Subsidiary receives consideration at the time of
such Asset Disposition at least equal to the fair market value, as determined in
good faith by the Company's senior management or the Board of Directors
(including as to the value of all non-cash consideration), of the shares and
assets subject to such Asset Disposition, (ii) at least 75% of the consideration
thereof received by the Company or such Subsidiary is in the form of cash or
cash equivalents and (iii) an amount equal to 100% of the Net Available Cash
from such Asset Disposition is applied by the Company (or such Subsidiary, as,
the case may be) (A) first, to the extent the Company or any Subsidiary elects
(or is required by the terms of any Senior Indebtedness), to prepay, repay or
purchase (x) Senior Indebtedness or (y) Indebtedness of a Wholly-Owned
Subsidiary (in each case other than Indebtedness owed to the Company) within 180
days from the later of the date of such Asset Disposition or the receipt of such
Net Available Cash; (B) second, within one year from the receipt of such Net
Available Cash, to the extent of the balance of such Net Available Cash after
application in accordance with clause (A), at the Company's
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election either (x) to the investment in or acquisition of Additional Assets or
(y) to prepay, repay or purchase (1) Senior Indebtedness or (2) Indebtedness of
a Wholly-Owned Subsidiary (in each case other than Indebtedness owed to the
Company); (C) third, within 45 days after the later of the application of Net
Available Cash in accordance with clauses (A) and (B) and the date that is one
year from the receipt of such Net Available Cash, to the extent of the balance
of such Net Available Cash after application in accordance with clauses (A) and
(B), to make an offer to purchase 11 3/4% Notes at par plus accrued and unpaid
interest, if any, thereon in accordance with the provisions of the 11 3/4%
Indenture; and (D) fourth, within 45 days of the later of the application of Net
Available Cash in accordance with clauses (A), (B) and (C) and the date that is
one year from the receipt of such Net Available Cash, to the extent of the
balance of such Net Available Cash after application in accordance with clauses
(A), (B) and (C), to make an offer to purchase the Notes at par plus accrued and
unpaid interest, if any, thereon in accordance with the provisions of the
Indenture; and (E) fifth, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A), (B), (C) and (D), to (w)
the investment in or acquisition of Additional Assets, (x) the making of
Temporary Cash Investments, (y) the prepayment, repayment or purchase of
Indebtedness of the Company or Indebtedness of any Subsidiary (other than
Indebtedness owed to the Company) or (z) any other purpose otherwise permitted
under the Indenture, in each case within the later of 45 days after the
application of Net Available Cash in accordance with clauses (A), (B), (C) and
(D) or the date that is one year from the receipt of such Net Available Cash;
provided, however, that, in connection with any prepayment, repayment or
purchase of Indebtedness pursuant to clause (A), (B), (C), (D) or (E) above, the
Company or such Subsidiary shall retire such Indebtedness and shall cause the
related loan commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased. Notwithstanding the
foregoing provisions, the Company and its Subsidiaries shall not be required to
apply any Net Available Cash in accordance herewith except to the extent that
the aggregate Net Available Cash from all Asset Dispositions which are not
applied in accordance with this covenant at any time exceed $10 million. The
Company shall not be required to make an offer for Notes pursuant to this
covenant if the Net Available Cash available therefor (after application of the
proceeds as provided in clauses (A), (B) and (C)) is less than $10.0 million for
any particular Asset Disposition (which lesser amounts shall be carried forward
for purposes of determining whether an offer is required with respect to the Net
Available Cash from any subsequent Asset Disposition).
For the purposes of this covenant, the following will be deemed to be cash:
(x) the assumption by the transferee of Senior Indebtedness of the Company or
Indebtedness of any Subsidiary of the Company and the release of the Company or
such Subsidiary from all liability on such Senior Indebtedness or Indebtedness
in connection with such Asset Disposition (in which case the Company shall,
without further action, be deemed to have applied such assumed Indebtedness in
accordance with clause (A) of the preceding paragraph) and (y) securities
received by the Company or any Subsidiary of the Company from the transferee
that are promptly converted by the Company or such Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase of
Notes pursuant to clause (a)(iii)(D), the Company will be required to purchase
Notes tendered pursuant to an offer by the Company for the Notes at a purchase
price of 100% of their principal amount plus accrued and unpaid interest, if
any, to the purchase date in accordance with the procedures (including prorating
in the event of oversubscription) set forth in the Indenture. If the aggregate
purchase price of the Notes tendered pursuant to the offer is less than the Net
Available Cash allotted to the purchase of the Notes, the Company will apply the
remaining Net Available Cash in accordance with clause (a)(iii)(E) above.
(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to the
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under the Indenture by virtue thereof.
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Limitation on Affiliate Transactions. (a) The Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly, enter into or
conduct any transaction (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of the Company
other than a Wholly-Owned Subsidiary (an "Affiliate Transaction") unless: (i)
the terms of such Affiliate Transaction are no less favorable to the Company or
such Subsidiary, as the case may be, than those that could be obtained at the
time of such transaction in arm's-length dealings with a Person who is not such
an Affiliate; (ii) in the event such Affiliate Transaction involves an aggregate
amount in excess of $2.5 million, the terms of such transaction have been
approved by a majority of the members of the Board of Directors of the Company
and by a majority of the disinterested members of such Board, if any (and such
majority or majorities, as the case may be, determines that such Affiliate
Transaction satisfies the criteria in (i) above); and (iii) in the event such
Affiliate Transaction involves an aggregate amount in excess of $10.0 million,
the Company has received a written opinion from an independent investment
banking firm of nationally recognized standing that such Affiliate Transaction
is fair to the Company or such Subsidiary, as the case may be, from a financial
point of view.
(b) The foregoing paragraph (a) shall not prohibit (i) any Restricted
Payment permitted to be made pursuant to the covenant described under
"Limitation on Restricted Payments," (ii) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans
approved by the Board of Directors of the Company, (iii) loans or advances to
employees in the ordinary course of business of the Company or any of its
Subsidiaries, (iv) any transaction between Wholly-Owned Subsidiaries, (v) the
payment of fees and indemnities to directors, officers and employees of the
Company and its Subsidiaries in the ordinary course of business, (vi)
transactions pursuant to agreements as in existence on the Issue Date, (vii) any
employment agreements entered into by the Company or any of its Subsidiaries in
the ordinary course of business, (viii) the issuance of Capital Stock of the
Company (other than Disqualified Stock), and (ix) any obligations of the Company
pursuant to the Monitoring and Oversight Agreement.
Limitation on Preferred Stock of Subsidiaries. The Company will not permit
any of its Subsidiaries to issue any Preferred Stock (other than to the Company
or to a Wholly-Owned Subsidiary of the Company) or permit any Person (other than
the Company or a Wholly-Owned Subsidiary of the Company) to own any Preferred
Stock (other than Acquired Preferred Stock); provided that at the time the
issuer of such Acquired Preferred Stock becomes a Subsidiary of the Company or
merges with the Company or any of its Subsidiaries, and after giving effect to
such transaction, the Company shall be able to incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) of "Limitation on Indebtedness" (treating
the amount of all obligations of such Subsidiary with respect to the redemption,
repayment of other repurchase of such Acquired Preferred Stock (but excluding
any accrued dividends thereon) as Indebtedness solely for purpose of such
calculation, but only to the extent that such obligations arise on or prior to
the first anniversary of the Stated Maturity of the Notes).
Limitation on Capital Stock of Subsidiaries. The Company will not permit
any of its Subsidiaries to issue any Capital Stock (other than Preferred Stock)
to any Person (other than to the Company or a Wholly-Owned Subsidiary of the
Company) or permit any Person (other than the Company or a Wholly-Owned
Subsidiary of the Company) to own any Capital Stock (other than Preferred Stock)
of a Subsidiary of the Company, if in either case as a result thereof such
Subsidiary would no longer be a Subsidiary of the Company; provided, however
that this provision shall not prohibit the Company or any of its Subsidiaries
from selling, leasing or otherwise disposing of all of the Capital Stock of any
Subsidiary.
SEC Reports. Notwithstanding that the Company may not be required to be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the Commission, and within 15 days after such
reports are filed, provide the Trustee and the holders (at their addresses as
set forth in the register of Notes) with the annual and quarterly reports and
the information, documents and other reports which are otherwise required
pursuant to Section 13 of the Exchange Act. In addition, following the
registration of the common stock of the Company pursuant to Section 12(b) or
12(g) of the Exchange Act, the Company shall furnish to the Trustee and the
holders, promptly upon their becoming available, copies of
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the Company's annual report to stockholders and any other information provided
by the Company to its public stockholders generally.
Merger and Consolidation. The Company shall not consolidate with or merge
with or into, or convey, transfer or lease all or substantially all its assets
to, any Person, unless: (i) the resulting surviving or transferee Person (the
"Successor Company") shall be a corporation organized and existing under the
laws of the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) shall expressly assume,
by supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the Notes
and the Indenture; (ii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor Company or
any Subsidiary of the Successor Company as a result of such transaction as
having been incurred by the Successor Company or such Subsidiary at the time of
such transaction), no Default or Event of Default shall have occurred and be
continuing; (iii) immediately after giving effect to such transaction, the
Successor Company would be able to incur at least an additional $1.00 of
Indebtedness pursuant to paragraph (a) of "Limitation on Indebtedness"; and (iv)
the Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or transfer and
such supplemental indenture (if any) comply with the Indenture.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, but the
predecessor, the Company, in the case of a lease of all or substantially all its
assets will not be released from the obligation to pay the principal of and
interest on the Notes.
Notwithstanding the foregoing clauses (ii) and (iii), (1) any Subsidiary of
the Company may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and (2) the Company may merge with an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another jurisdiction to realize tax or other benefits.
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in any
payment of interest on any Note when due, continued for 30 days, whether or not
such payment is prohibited by the provisions described under "Ranking" above,
(ii) a default in the payment of principal of any Note when due at its Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise, whether or not such payment is prohibited by the provisions
described under "Ranking" above, (iii) the failure by the Company to comply with
its obligations under "Certain Covenants -- Merger and Consolidation" above,
(iv) the failure by the Company to comply for 30 days after notice with any of
its obligations under the covenants described under "Change of Control" above or
under covenants described under "Certain Covenants" above (in each case, other
than a failure to purchase Notes which shall constitute an Event of Default
under clause (ii) above), other than "-- Merger and Consolidation," (v) the
failure by the Company to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) Indebtedness of the Company or any
Subsidiary is not paid within any applicable grace period after final maturity
or is accelerated by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated exceeds $10 million and such
default shall not have been cured or such acceleration rescinded after a 10 day
period (the "cross acceleration provision"), (vii) certain events of bankruptcy,
insolvency or reorganization of the Company or a Significant Subsidiary (the
"bankruptcy provisions") or (viii) any judgment or decree for the payment of
money in excess of $10 million (to the extent not covered by insurance) is
rendered against the Company or a Significant Subsidiary and such judgment or
decree shall remain undischarged or unstayed for a period of 60 days after such
judgment becomes final and nonappealable (the "judgment default provision").
However, a default under clauses (iv) and (v) will not constitute an Event of
Default until the Trustee or the holders of 25% in principal amount of the
outstanding Notes notify the Company of the default and the Company does not
cure such default within the time specified in clauses (iv) and (v) hereof after
receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the outstanding Notes by notice to the
Company may declare the principal of and accrued and
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unpaid interest, if any, on all the Notes to be due and payable. Upon such a
declaration, such principal and accrued and unpaid interest shall be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs and is
continuing, the principal of and accrued and unpaid interest on all the Notes
will become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any holders. Under certain circumstances, the
holders of a majority in principal amount of the outstanding Notes may rescind
any such acceleration with respect to the Notes and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the holders unless such holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such holder has
previously given the Trustee notice that an Event of Default is continuing, (ii)
holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such holders have offered the
Trustee reasonable security or indemnity against any loss, liability or expense,
(iv) the Trustee has not complied with such request within 60 days after the
receipt of the request and the offer of security or indemnity and (v) the
holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction that, in the opinion of the Trustee, is
inconsistent with such request within such 60-day period. Subject to certain
restrictions, the holders of a majority in principal amount of the outstanding
Notes are given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other holder or that would
involve the Trustee in personal liability. Prior to taking any action under the
Indenture, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder notice of the Default
within 90 days after it occurs. Except in the case of a Default in the payment
of principal of, premium (if any) or interest on any Note, the Trustee may
withhold notice if and so long as a committee of its Trust officers in good
faith determines that withholding notice is in the interests of the Noteholders.
In addition, the Company is required to deliver to the Trustee, within 120 days
after the end of each fiscal year, a certificate indicating whether the signers
thereof know of any Default that occurred during the previous year. The Company
also is required to deliver to the Trustee, within 30 days after the occurrence
thereof, written notice of any events which would constitute certain Defaults,
their status and what action the Company is taking or proposes to take in
respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the
consent of the holders of a majority in principal amount of the Notes then
outstanding and any past default or compliance with any provisions may be waived
with the consent of the holders of a majority in principal amount of the Notes
then outstanding. However, without the consent of each holder of an outstanding
Note affected, no amendment may, among other things, (i) reduce the amount of
Notes whose holders must consent to an amendment, (ii) reduce the rate of or
extend the time for payment of interest on any Note, (iii) reduce the principal
of or extend the Stated Maturity of any Note, (iv) reduce the premium payable
upon the redemption of any Note or change the time at which any Note may be
redeemed as described under "Optional Redemption" above, (v) make any Note
payable in money other than that stated in the Note, (vi) impair the right of
any holder to receive payment of principal of and interest on such holder's
Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such holder's Notes or (vii)
make any change in the amendment provisions which require each holder's consent
or in the waiver provisions.
Without the consent of any holder, the Company and the Trustee may amend
the Indenture to cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a successor corporation of the
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obligations of the Company under the Indenture, to provide for uncertificated
Notes in addition to or in place of certificated Notes (provided that the
uncertificated Notes are issued in registered form for purposes of Section
163(f) of the Code, or in a manner such that the uncertificated Notes are
described in Section 163(f)(2)(B) of the Code), to add further Guarantees with
respect to the Notes, to secure the Notes, to add to the covenants of the
Company for the benefit of the Noteholders or to surrender any right or power
conferred upon Company, to make any change that does not adversely affect the
rights of any holder or to comply with any requirement of the Commission in
connection with the qualification of the Indenture under the Trust Indenture
Act. However, no amendment may be made to the subordination provisions of the
Indenture that adversely affects the rights of any holder of Senior Indebtedness
then outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.
The consent of the holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to the holders a notice briefly describing such amendment.
However, the failure to give such notice to all the holders, or any defect
therein, will not impair or affect the validity of the amendment.
DEFEASANCE
The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under covenants
described under "Certain Covenants" (other than "Merger and Consolidation"), the
operation of the cross acceleration provision, the bankruptcy provisions with
respect to Significant Subsidiaries and the judgment default provision described
under "Defaults" above and the limitations contained in clauses (iii) and (iv)
under "Certain Covenants -- Merger and Consolidation" above ("covenant
defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (vi), (vii) (with respect only to
Significant Subsidiaries), or (viii) under "Defaults" above or because of the
failure of the Company to comply with clause (iii) or (iv) under "Certain
Covenants -- Merger and Consolidation" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the Trustee of an
Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and defeasance and will be subject to Federal income tax on the same amount and
in the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such Opinion of Counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable Federal income tax law).
CONCERNING THE TRUSTEE
IBJ Schroder Bank & Trust is the Trustee under the Indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the Notes.
The Trustee is also the trustee under the 11 3/4% Notes Indenture and the
11 3/4% Series B Notes Indenture.
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GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"11 3/4% Notes" means the Company's 11 3/4% Senior Subordinated Notes due
2005 issued pursuant to the 11 3/4% Notes Indenture.
"11 3/4% Notes Guarantee" means the Guarantee of the Subsidiary Guarantors
(as defined in the 11 3/4% Notes Indenture) set forth in Article XI of the
11 3/4% Notes Indenture.
"11 3/4% Notes Indenture" means the Indenture, dated June 12, 1995, among
the Company, the Subsidiary Guarantors (as therein defined) and IBJ Schroder
Bank & Trust Company, as Trustee, as the same may be amended, supplemented or
otherwise modified from time to time.
"Acquired Preferred Stock" means Preferred Stock of any Person which was
issued and outstanding at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries and not issued by such Person in connection with, or in
anticipation or contemplation of, such acquisition, merger or consolidation.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock of
a Person that becomes a Subsidiary as a result of the acquisition of such
Capital Stock by the Company or a Subsidiary of the Company; (iii) Capital Stock
constituting a minority interest in any Person that at such time is a Subsidiary
of the Company; or (iv) Permitted Investments of the type and in the amounts
described in clause (viii) of the definition thereof; provided, however, that,
in the case of clauses (ii) and (iii), such Subsidiary is primarily engaged in a
Related Business.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Subsidiary (other than directors' qualifying shares), property or other assets
(each referred to for the purposes of this definition as a "disposition") by the
Company or any of its Subsidiaries (including any disposition by means of a
merger, consolidation or similar transaction) other than (i) a disposition by a
Subsidiary to the Company or by the Company or a Subsidiary to a Wholly-Owned
Subsidiary, (ii) a disposition of inventory in the ordinary course of business,
(iii) a disposition of obsolete or worn out equipment or equipment that is no
longer useful in the conduct of the business of the Company and its Subsidiaries
and that is disposed of in each case in the ordinary course of business, (iv)
dispositions of property for net proceeds less than $2.5 million in the
aggregate in any calendar year, and (v) transactions permitted under "Certain
Covenants -- Merger and Consolidation" above.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness, the quotient obtained by dividing (i) the sum of the products of
the numbers of years from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness or redemption
multiplied by the amount of such payment by (ii) the sum of all such payments.
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"Bank Indebtedness" means any and all amounts, whether outstanding on the
Issue Date or thereafter incurred, payable by the Company under or in respect of
the Credit Agreement and any related notes, collateral documents, letters of
credit and guarantees, including principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post filing interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP, and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date such lease may be terminated without penalty.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Consolidated Cash Flow" for any period means the Consolidated Net Income
for such period plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense, (ii) Consolidated Interest
Expense, (iii) depreciation expense, (iv) amortization expense, (v) exchange or
translation losses on foreign currencies, and (vi) all other non-cash items
reducing Consolidated Net Income (excluding any non-cash item to the extent it
represents an accrual of or reserve for cash disbursements for any subsequent
period prior to the Stated Maturity of the Notes) and less, to the extent added
in calculating Consolidated Net Income (x) exchange or translation gains on
foreign currencies and (y) non-cash items (excluding non-cash items to the
extent they represent an accrual for cash receipts reasonably expected to be
received prior to the Stated Maturity of the Notes), in each case for such
period. Notwithstanding the foregoing, the income tax expense, depreciation
expense and amortization expense of a Subsidiary of the Company shall be
included in Consolidated Cash Flow only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
Consolidated Net Income.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated Cash Flow for the period of
the most recent four consecutive fiscal quarters ending prior to the date of
such determination and as to which financial statements are available to (ii)
Consolidated Interest Expense for such four fiscal quarters: provided, however,
that (1) if the Company or any of its Subsidiaries has Incurred any Indebtedness
since the beginning of such period that remains outstanding or if the
transaction giving rise to the need calculate Consolidated Coverage Ratio is an
Incurrence of Indebtedness, or both, Consolidated Cash Flow and Consolidated
Interest Expense for such period shall be calculated after giving effect on a
pro forma basis to (A) such Indebtedness as if such Indebtedness had been
Incurred on the first day of such period (provided that if such Indebtedness is
Incurred under a revolving credit facility (or similar arrangement or under any
predecessor revolving credit or similar arrangement) only that portion of such
Indebtedness that constitutes the one year projected minimum balance of such
Indebtedness (as determined in good faith by senior management of the Company
and assuming a constant level of sales) shall be deemed outstanding for purposes
of this calculation) and (B) the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of such period,
(2) if since the beginning of such period any Indebtedness of the Company or any
of its Subsidiaries has been repaid, repurchased, defeased or otherwise
discharged (other than Indebtedness under a revolving credit or similar
arrangement unless such revolving credit Indebtedness has been permanently
repaid and has not been replaced), Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such
Indebtedness had been repaid, repurchased, defeased or otherwise discharged on
the first day of such period, (3) if since the beginning of such period the
Company or any of its Subsidiaries shall have made any Asset Disposition or if
the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Asset Disposition, Consolidated Cash Flow for such period shall be
reduced by an amount equal to the Consolidated Cash Flow (if positive)
attributable to the assets which are the subject of such Asset Disposition for
such period or
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increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be (i) reduced by an amount equal to the Consolidated Interest
Expense attributable to any Indebtedness of the Company or any of its
Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect
to the Company and its continuing Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Subsidiary of the
Company is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Subsidiary to the extent the Company
and its continuing Subsidiaries are no longer liable for such Indebtedness after
such sale) and (ii) increased by interest income attributable to the assets
which are the subject of such Asset Disposition for such period, (4) if since
the beginning of such period the Company or any of its Subsidiaries (by merger
or otherwise) shall have made an Investment in any Subsidiary of the Company (or
any Person which becomes a Subsidiary of the Company) or an acquisition of
assets, including any Investment in a Subsidiary of the Company or any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
an operating unit of a business, Consolidated Cash Flow and Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period and (5) if
since the beginning of such period any Person (that subsequently became a
Subsidiary of the Company or was merged with or into the Company or any
Subsidiary of the Company since the beginning of such period) shall have made
any Asset Disposition, Investment or acquisition of assets that would have
required an adjustment pursuant to clause (3) or (4) above if made by the
Company or a Subsidiary of the Company during such period, Consolidated Cash
Flow and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Asset Disposition, Investment or
acquisition occurred on the first day of such period. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its Subsidiaries, plus, to the extent not included in
such interest expense, (i) interest expense attributable to capital leases, (ii)
amortization of debt discount, (iii) capitalized interest, (iv) non-cash
interest expense, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi)
interest actually paid by the Company or any such Subsidiary under any Guarantee
of Indebtedness or other obligation of any other Person, (vii) net payments
(whether positive or negative) pursuant to Interest Rate Agreements, and (viii)
the cash contributions to any employee stock ownership plan or similar trust to
the extent such contributions are used by such plan or trust to pay interest or
fees to any Person (other than the Company) in connection with Indebtedness
Incurred by such plan or trust and less (a) to the extent included in such
interest expense, the amortization of capitalized debt issuance costs and (b)
interest income. Notwithstanding the foregoing, the Consolidated Interest
Expense with respect to any Subsidiary of the Company, that was not a
Wholly-Owned Subsidiary, shall be included only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its consolidated Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income: (i) any net income (loss)
of any person acquired by the Company or any of its Subsidiaries in a pooling of
interests transaction for any period prior to the date of such acquisition, (ii)
any net income of any Subsidiary of the Company if such Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Subsidiary directly or indirectly, to the Company
(other than restrictions in effect on the Issue Date with respect to a
Subsidiary of the Company and other than restrictions that are created or exist
in compliance with the "Limitation on Restrictions on Distributions from
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Subsidiaries covenant), (iii) any gain or loss realized upon the sale or other
disposition of any assets of the Company or its consolidated Subsidiaries
(including pursuant to any Sale/Leaseback Transaction) which are not sold or
otherwise disposed of in the ordinary course of business and any gain or loss
realized upon the sale or other disposition of any Capital Stock of any Person,
(iv) any extraordinary gain or loss, (v) the cumulative effect of a change in
accounting principles, and (vi) the net income of any Person, other than a
Subsidiary, except to the extent of the lesser of (A) dividends or distributions
paid to the company or any of its Subsidiaries by such Person and (B) the net
income of such Person (but in no event less than zero), and the net loss of such
Person shall be included only to the extent of the aggregate Investment of the
Company or any of its Subsidiaries in such Person.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending prior to the taking of any action for the
purpose of which the determination is being made and for which financial
statements are available (but in no event ending more than 135 days prior to the
taking of such action), as (i) the par or stated value of all outstanding
Capital Stock of the Company plus (ii) paid-in capital or capital surplus
relating to such Capital Stock plus (iii) any retained earnings or earned
surplus less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock.
"Continuing Director" means, as of the date of determination, any person
who (i) was a member of the Board of Directors of Holding or the Company on the
date of the Indenture, (ii) was nominated for election or elected to the Board
of Directors of Holding or the Company with the affirmative vote of a majority
of the continuing Directors who were members of such Board of Directors at the
time of such nomination or election, or (iii) is a representative of a Permitted
Holder.
"Credit Agreement" means (i) the Credit Agreement, dated as of March 5,
1996, among Holding, the Company, Chemical Bank, as Administrative Agent,
Bankers Trust Company, as Documentation Agent, and the lenders party thereto
from time to time, as the same may be amended, supplemented or otherwise
modified from time to time and (ii) any renewal, extension, refunding,
restructuring, replacement or refinancing thereof (whether with the original
Administrative Agent and lenders or another administrative agent or agents or
other lenders and whether provided under the original Credit Agreement or any
other credit or other agreement or indenture).
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii)
any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $20
million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of the Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
of such Person which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock (excluding capital stock which is convertible or exchangeable
solely at the option of the Company or a Subsidiary) or (iii) is redeemable at
the option of the holder thereof, in whole or in part, in each case on or prior
to the Stated Maturity of the Notes, provided, that only the portion of Capital
Stock which so matures or is mandatorily redeemable, is so convertible or
exchangeable or is so redeemable at the option of the holder thereof prior to
such Stated Maturity shall be deemed to be Disqualified Stock.
"Equity Offering" means an offering for cash by Holding or the Company of
its common stock, or options, warrants or rights with respect to its common
stock.
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"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of the Indenture, including those 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. All ratios and computations based on GAAP contained in
the Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor Senior Indebtedness" means, with respect to a Subsidiary
Guarantor, whether outstanding on the Issue Date or thereafter issued, the
Guarantee of the Bank Indebtedness by such Subsidiary Guarantor, all other
Guarantees by such Subsidiary Guarantor of Senior Indebtedness of the Company
and all Indebtedness of such Subsidiary Guarantor, including interest and fees
thereon, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that the obligations of such
Subsidiary Guarantor in respect of such Indebtedness are not superior in right
of payment to the obligations of such Subsidiary Guarantor under the Subsidiary
Guarantee; provided, however, that Guarantor Senior Indebtedness shall not
include (1) any obligation of such Subsidiary Guarantor to the Company or any
other Subsidiary of the Company, (2) any liability for Federal, state, local or
other taxes owed or owing by such Subsidiary Guarantor, (3) any accounts payable
or other liability to trade creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such liabilities) or (4)
any Indebtedness, Guarantee or obligation of such Subsidiary Guarantor that is
expressly subordinate or junior in right of payment to any other Indebtedness,
Guarantee or obligation of such Subsidiary Guarantor, including any Guarantor
Senior Subordinated Indebtedness and Guarantor Subordinated Obligations of such
Subsidiary Guarantor.
"Guarantor Senior Subordinated Indebtedness" means, with respect to a
Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the
11 3/4% Subsidiary Guarantee, the Subsidiary Guarantee and any other
Indebtedness of such Subsidiary Guarantor that specifically provides that such
Indebtedness is to rank pari passu in right of payment with the obligations of
such Subsidiary Guarantor under the Subsidiary Guarantee and is not subordinated
by its terms in right of payment to any Indebtedness or other obligation of such
Subsidiary Guarantor which is not Guarantor Senior Indebtedness of such
Subsidiary Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a Subsidiary
Guarantor, any Indebtedness of such Subsidiary Guarantor (whether outstanding on
the Issue Date or thereafter Incurred) which is subordinate or junior in right
of payment to the obligations of such Subsidiary Guarantor under the Subsidiary
Guarantee pursuant to a written agreement.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be incurred by such
Subsidiary at the time it becomes a Subsidiary.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
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obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except trade payables and accrued expenses incurred in the
ordinary course of business), which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services, (v) all Capitalized Lease
Obligations and all Attributable Indebtedness of such Person, (vi) all
Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person, (vii) all
Indebtedness of other Persons to the extent Guaranteed by such Person and (viii)
to the extent not otherwise included in this definition, obligations under
Currency Agreements and Interest Rate Agreements. The amount of Indebtedness of
any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations at such date.
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts payable on the balance sheet of such Person) or other
extension of credit (including by way of Guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person.
"Issue Date" means the date on which the Notes are originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Monitoring and Oversight Agreement" means the Monitoring and Oversight
Agreement among Hicks Muse Partners, the Company and Holding as in effect on the
Issue Date.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to such properties or assets or received in any other noncash form) therefrom,
in each case net of (i) all legal, title and recording tax expenses, commissions
and other fees and expenses incurred, and all Federal, state, foreign and local
taxes required to be paid or accrued as a liability under GAAP, as a consequence
of such Asset Disposition, (ii) all payments made on any Indebtedness which is
secured by any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law, be
repaid out of the proceeds from such Asset Disposition, (iii) all distributions
and other payments required to be made to any Person owning a beneficial
interest in assets subject to sale or minority interest holders in Subsidiaries
or joint ventures as a result of such Asset Disposition, (iv) the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities associated with the assets disposed of in
such Asset Disposition and retained by the Company or any Subsidiary of the
Company after such Asset Disposition and (v) any portion of the purchase price
from an Asset Disposition placed in escrow (whether as a reserve for adjustment
of the purchase price, for satisfaction of indemnities in respect of such Asset
Disposition or otherwise in connection with such Asset Disposition); provided,
however, that upon the termination of such
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escrow, Net Available Cash shall be increased by any portion of funds therein
released to the Company or any Subsidiary.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale.
"Permitted Indebtedness" means (i) Indebtedness of the Company owing to and
held by any Wholly-Owned Subsidiary or Indebtedness of a Subsidiary owing to and
held by the Company or any Wholly-Owned Subsidiary; provided, however, that any
subsequent issuance or transfer of any Capital Stock or any other event which
results in any such Wholly-Owned Subsidiary ceasing to be a Wholly-Owned
Subsidiary or any subsequent transfer of any such Indebtedness (except to the
Company or a Wholly-Owned Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the issuer thereof; (ii)
Indebtedness represented by (x) the Notes, (y) any Indebtedness (other than the
Indebtedness described in clauses (i), (ii) and (iv) of paragraph (b) of the
covenant described under "Limitation on Indebtedness" and other than
Indebtedness Incurred pursuant to clause (i) above or clauses (iv), (v) or (vi)
below) outstanding on the Issue Date and (z) any Refinancing Indebtedness
Incurred in respect of any Indebtedness described in this clause (ii) or
Incurred pursuant to paragraph (a) of the covenant described under "Limitation
on Indebtedness"; (iii) (A) Indebtedness of a Subsidiary Incurred and
outstanding on the date on which such Subsidiary was acquired by the Company
(other than Indebtedness Incurred as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the transaction
or series of related transactions pursuant to which such Subsidiary became a
Subsidiary or was otherwise acquired by the Company); provided, however, that at
the time such Subsidiary is acquired by the Company, the Company would have been
able to Incur $1.00 of additional Indebtedness pursuant to paragraph (a) of the
description of "Limitation on Indebtedness" above after giving effect to the
Incurrence of such Indebtedness pursuant to this clause (iii) and (B)
Refinancing Indebtedness Incurred by a Subsidiary in respect of Indebtedness
Incurred by such Subsidiary pursuant to this clause (iii); (iv) Indebtedness (A)
in respect of performance bonds, bankers' acceptances and surety or appeal bonds
provided by the Company or any of its Subsidiaries to their customers in the
ordinary course of their business, (B) in respect of performance bonds or
similar obligations of the Company or any of its Subsidiaries for or in
connection with pledges, deposits or payments made or given in the ordinary
course of business in connection with or to secure statutory, regulatory or
similar obligations, including obligations under health, safety or environmental
obligations, (C) arising from Guarantees to suppliers, lessors, licensees,
contractors, franchisees or customers of obligations (other than Indebtedness)
incurred in the ordinary course of business and (D) under Currency Agreements
and Interest Rate Agreements; provided, however, that in the case of Currency
Agreements and Interest Rate Agreements, such Currency Agreements and Interest
Rate Agreements are entered into for bona fide hedging purposes of the Company
or its Subsidiaries (as determined in good faith by the Board of Directors or
senior management of the Company) and correspond in terms of notional amount,
duration, currencies and interest rates, as applicable, to Indebtedness of the
Company or its Subsidiaries Incurred without violation of the Indenture or to
business transactions of the Company or its Subsidiaries on customary terms
entered into in the ordinary course of business; (v) Indebtedness arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from Guarantees or letters of credits, surety bonds or
performance bonds securing any obligations of the Company or any of its
Subsidiaries pursuant to such agreements, in each case incurred in connection
with the disposition of any business assets or Subsidiary of the Company (other
than Guarantees of Indebtedness or other obligations Incurred by any person
acquiring all or any portion of such business assets or Subsidiary of the
Company for the purpose of financing such acquisition) in a principal amount not
to exceed the gross proceeds actually received by the Company or any of its
Subsidiaries in connection with such disposition; provided, however, that the
principal amount of any Indebtedness Incurred pursuant to this clause (v), when
taken together with all Indebtedness Incurred pursuant to this clause (v) and
then outstanding, shall not exceed $10 million; and (vi) Indebtedness consisting
of (A) Guarantees by the Company or a Subsidiary of Indebtedness Incurred by a
Wholly-Owned Subsidiary without violation of the Indenture and (B) Guarantees by
a Subsidiary of Senior Indebtedness Incurred by the Company without
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violation of the Indenture (so long as such Subsidiary could have Incurred such
Indebtedness directly without violation of the Indenture).
"Permitted Investment" means an Investment by the Company or any of its
Subsidiaries in (i) a Wholly-Owned Subsidiary of the Company; provided, however,
that the primary business of such Subsidiary is a Related Business; (ii) another
Person if as a result of such Investment such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all its
assets to, the Company or a Subsidiary of the Company; provided, however, that
such Person's primary business is a Related Business; (iii) Temporary Cash
Investments; (iv) receivables owing to the Company or any of its Subsidiaries,
if created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (v) payroll, travel and
similar advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business; (vi) loans or advances to employees for
purposes of purchasing the Company's common stock in an aggregate amount
outstanding at any one time not to exceed $5 million and other loans and
advances to employees made in the ordinary course of business consistent with
past practices of the Company or such Subsidiary; (vii) stock, obligations or
securities received in settlement of debts created in the ordinary course of
business and owing to the Company or any of its Subsidiaries or in satisfaction
of judgments or claims; (viii) a Person engaged in a Related Business or a loan
or advance to the Company the proceeds of which are used solely to make an
Investment in a Person engaged in a Related Business or a Guarantee by the
Company of Indebtedness of any Person in which such Investment has been made;
provided, however, that no Permitted Investments may be made pursuant to this
clause (viii) to the extent the amount thereof would, when taken together with
all other Permitted Investments made pursuant to this clause (viii), exceed $20
million in the aggregate (plus, to the extent not previously reinvested, any
return of capital realized on Permitted Investments made pursuant to this clause
(viii), or any release or other cancellation of any Guarantee constituting such
Permitted Investment); (ix) Persons to the extent such Investment is received by
the Company or any Subsidiary as consideration for asset dispositions effected
in compliance with "Limitations on Sales of Assets and Subsidiary Stock"; (x)
prepayments and other credits to suppliers made in the ordinary course of
business consistent with the past practices of the Company and its Subsidiaries;
and (xi) Investments in connection with pledges, deposits, payments or
performance bonds made or given in the ordinary course of business in connection
with or to secure statutory, regulatory or similar obligations, including
obligations under health, safety or environmental obligations.
"Person" means any individual, corporation, partnerships joint venture,
association, joint-stock company, trust, unincorporated organizations government
or any agency or political subdivision thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
A "Public Market" exists at any time with respect to the common stock of
Holding or the Company if (a) the common stock of Holding or the Company, as
applicable, is then registered with the Securities Exchange Commission pursuant
to Section 12(b) or 12(g) of Exchange Act and traded either on a national
securities exchange or in the National Association of Securities Dealers
Automated Quotation System and (b) at least 15% of the total issued and
outstanding common stock of Holding or the Company, as applicable, has been
distributed prior to such time by means of an effective registration statement
under the Securities Act of 1933.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances,
replaces, renews, repays or extends (including pursuant to any defeasance or
discharge mechanism) (collectively "refinances," and "refinanced" shall have a
correlative meaning) any Indebtedness existing on the date of the Indenture or
Incurred in compliance with the Indenture (including Indebtedness of the Company
that refinances Indebtedness of any Subsidiary and Indebtedness of any
Subsidiary that refinances Indebtedness of another Subsidiary) including
Indebtedness that refinances Refinancing Indebtedness; provided, however, that
(i) the
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Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being refinanced, (ii) the Refinancing Indebtedness
has an Average Life at the time such Refinancing Indebtedness is Incurred that
is equal to or greater than the Average Life of the Indebtedness being
refinanced, and (iii) such Refinancing Indebtedness is Incurred in an aggregate
principal amount (or if issued with original issue discount, an aggregate issue
price) that is equal to (or 101% of, in the case of a refinancing of the Notes
in connection with a Change of Control) or less than the sum of the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being refinanced.
"Related Business" means any business which is the same as or related,
ancillary or complementary to any of the businesses of the Company and its
Subsidiaries on the date of the Indenture, as reasonably determined by the
Company's Board of Directors.
"Representative" means any trustee, agent or representative (if any) of an
issue of Senior Indebtedness.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Subsidiary transfers such
property to a Person and the Company or a Subsidiary leases it from such Person.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Senior Subordinated Indebtedness" means the 11 3/4% Notes, the Notes and
any other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Notes in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness.
"Significant Subsidiary" means any Subsidiary that would be a "Significant
Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X
promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision.
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person. Unless otherwise specified herein, each reference to a Subsidiary shall
refer to a Subsidiary of the Company.
"Subsidiary Guarantors" means each Subsidiary of the Company in existence
on the Issue Date (other than ECM and Wirekraft Mexico) and each Subsidiary
(other than foreign Subsidiaries) created or acquired by the Company after the
Issue Date and which becomes a party to the Indenture pursuant to Section 11.7
thereof.
"Temporary Cash Investments" means any of the following: (i) any Investment
in direct obligations of the United States of America or any agency thereof or
obligations Guaranteed by the United States of America or any agency thereof,
(ii) Investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America having capital, surplus and undivided profits
aggregating in excess of $250 million (or the foreign currency equivalent
thereof) and whose long-term debt, or whose parent holding company's long-term
debt, is rated "A" (or such similar equivalent rating) or higher by at least one
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nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act), (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (i)
above entered into with a bank meeting the qualifications described in clause
(ii) above, (iv) Investments in commercial paper, maturing not more than 180
days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Ratings Group, (v) Investments in
securities with maturities of six months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by Standard & Poor's Ratings Group or "A" by Moody's
Investors Service, Inc. and (vi) Investments in mutual funds whose investment
guidelines restrict such funds' investments to those satisfying the provisions
of clauses (i) through (v) above.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
"Wholly-Owned Subsidiary" means a Subsidiary of the Company, at least 99%
of the Capital Stock of which (other than directors' qualifying shares) is owned
by the Company or another Wholly-Owned Subsidiary.
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SELLING SECURITYHOLDER AND PLAN OF DISTRIBUTION
The following table sets forth the names of the Selling Securityholder, the
principal amount of the securities that the Selling Securityholder may offer and
sell pursuant to this Prospectus, and the securities beneficially owned by the
Selling Securityholder. Because the Selling Securityholder may sell all or a
portion of its securities at any time and from time to time after the date
hereof, no estimate can be made of the amount of securities offered hereby that
the Selling Securityholder may retain upon completion of the offering to which
this Prospectus relates. The Selling Securityholder has not had any material
relationship with the Company except as set forth in the notes to the table
below and as more fully described elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF SECURITIES
-------------------------------
BENEFICIAL
OWNERSHIP OF
NAME OF BENEFICIAL OWNER NOTES OFFERED NOTES
------------------------ -------------- -------------
<S> <C> <C>
Chase Equity Associates(1).................................. $5,000,000 $5,000,000
</TABLE>
- ---------------
(1) Chase Equity Associates owns warrants to purchase less than 4% of the
outstanding shares of Holding Common Stock and is an affiliate of the Chase
Manhattan Bank, which is Administrative Agent and a lender under the Senior
Bank Facility. Chase Securities Inc., an affiliate of Chase Equity
Associates, served as an initial purchaser in the Rule 144A Offering. An
affiliate of Chase Equity Associates is a limited partner of HM Fund II. In
addition, the Chase Manhattan Bank and its affiliates participate on a
regular basis in various general financing, advisory and banking
transactions for Hicks, Muse and its affiliates, including the Company. See
"Description of Senior Bank Facility."
The Company will not receive any proceeds from the offering to which this
Prospectus relates. The Selling Securityholder may sell the securities offered
hereby through underwriters or dealers, through brokers or other agents, or
directly to one or more purchasers in one or more transactions in the
over-the-counter market, if such a market develops, or in privately negotiated
transactions, or in a combination of such transactions. Such transactions may be
effected by the Selling Securityholder at market prices prevailing at the time
of sale, at prices related to such prevailing market prices, at negotiated
prices, or at fixed prices, which may be changed. Such underwriters, dealers,
brokers or other agents may receive compensation in the form of discounts or
commissions from the Selling Securityholder and may receive commissions from the
purchasers of such securities for whom they act as agent.
The Selling Securityholder and any dealer, broker or other agent selling
securities offered hereby for the Selling Securityholder or purchasing any such
securities from the Selling Securityholder for purposes of resale may be deemed
to be an underwriter under the Securities Act and any compensation received by
the Selling Securityholder, dealer, broker or other agent may be deemed
underwriting compensation. Neither the Company nor the Selling Securityholder
can presently estimate the amount of such compensation. The Company knows of no
existing arrangements between the Selling Securityholder and any dealer, or
broker or other agent.
To comply with certain states' securities laws, if applicable, the
securities offered hereby may be sold in such states only through brokers or
dealers. In addition, in certain states the securities may not be sold unless
they have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.
In accordance with the provisions contained in the Preferred Stock and
Warrant Purchase Agreement dated as of March 5, 1996, by and among Holding, the
Company, Chase Equity Associates and HM Fund II ("the Preferred Stock and
Warrant Purchase Agreement") pursuant to which the Registration Statement of
which this Prospectus is a part has been filed, the Company is obligated under
certain circumstances to indemnify the Selling Securityholder, its officers,
directors and agents, and controlling persons, and each underwriter in an
offering or sale of such securities, against certain liabilities related to such
sale or disposition, including liabilities arising under the Securities Act or
to contribute to payments which such persons or
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<PAGE> 82
entities may be required to make in respect thereof. In accordance with the
Preferred Stock and Warrant Purchase Agreement, the Company may, in certain
circumstances, also be entitled to indemnification or contribution by the
Selling Securityholder or underwriters participating in an offering of the
securities to which this Prospectus relates.
Pursuant to the Preferred Stock and Warrant Purchase Agreement, the Company
has agreed to pay, with certain limited exceptions, all the expenses incurred in
connection with the preparation and filing of this Prospectus and the related
Registration Statement, including without limitation, all registration, filing,
securities exchange listing and fees of any applicable stock exchange, all
registration, filing, qualification and other fees and expenses of complying
with securities or blue sky laws, all word processing duplicating and printing
expenses, messenger and delivery expenses, and the fees and disbursements of
counsel for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, but excluding underwriting discounts and
commissions, the fees and disbursements of counsel retained by the holders of
the Notes being registered and transfer taxes, if any, in respect of Notes,
which shall be borne by the sellers of the Notes. The Company estimates that the
foregoing expenses in connection with the registration of the securities will be
approximately $143,000.
The Notes are a new issue of securities for which there is no public
market. The Company does not intend to list the Notes on any securities
exchange. Accordingly, no assurance can be given as to (i) the likelihood that
an active market for the Notes will develop, (ii) the liquidity of any such
market, (iii) the ability of holders to sell their Notes or (iv) the prices that
they may obtain for their Notes upon any sale. Future trading prices for the
Notes will depend upon many factors, including, among others, the Company's
operating results, the market for similar securities and fluctuating interest
rates.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material United States Federal
income tax considerations generally applicable to holders acquiring the Notes,
but does not purport to be a complete analysis of all potential consequences.
The discussion is based upon the Code, Treasury regulations, Internal Revenue
Service ("IRS") rulings and judicial decisions now in effect, all of which are
subject to change at any time by legislative, judicial or administrative action.
Any such changes may be applied retroactively in a manner that could adversely
affect a holder of the Notes.
The discussion assumes that the holders of the Notes will hold them as
"capital assets" within the meaning of Section 1221 of the Code. The Company
intends to treat the Notes as indebtedness for federal income tax purposes, and
the balance of the discussion is based on the assumption that such treatment
will be respected. The discussion is not binding on the IRS or the courts. The
Company has not sought and will not seek any rulings from the IRS with respect
to the positions of the Company discussed herein, and there can be no assurance
that the IRS will not take a different position concerning the tax consequences
of the purchase, ownership or disposition of the Notes or that any such position
would not be sustained.
The tax treatment of a holder of the Notes may vary depending on such
holder's particular situation or status. Certain holders (including S
corporations, insurance companies, tax-exempt organizations, financial
institutions, broker-dealers and taxpayers subject to alternative minimum tax)
may be subject to special rules not discussed below. The following discussion is
limited to the United States Federal income tax consequences relevant to a
holder of the Notes that is an individual who is a citizen or resident of the
United States, a corporation or partnership created or organized under the laws
of the United States, or any political subdivision thereof, or an estate or
trust otherwise subject to U.S. Federal income taxation of its worldwide income.
The following discussion does not consider all aspects of United States Federal
income tax that may be relevant to the purchase, ownership and disposition of
the Notes by a holder in light of such holder's personal circumstances. In
addition, the discussion does not consider the effect of any applicable foreign,
state, local or other tax laws or estate or gift tax considerations.
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STATED INTEREST ON NOTES
A holder of a Note will be required for federal income tax purposes to
report stated interest on the Note as income in accordance with the holder's
method of accounting for tax purposes.
ISSUE PRICE OF NOTES
The "issue price" of a debt instrument issued in exchange for property
generally should equal its stated principal amount, as long as the debt
instrument provides for "adequate stated interest." In certain "potentially
abusive" situations, such as when a debt instrument provides for "clearly
excessive" interest, the "issue price" of a debt instrument may be determined by
reference to the fair market value of the property acquired in exchange
therefor. Because the Notes provide for "adequate stated interest," the Company
believes that the issue price of the Notes is their stated principal amount.
Accordingly, because interest payments with respect to the Notes should qualify
as "qualified stated interest," the "stated redemption price at maturity" of the
Notes should equal the "issue price" of the Notes, and therefore the Notes
should not have any original issue discount.
AMORTIZABLE BOND PREMIUM ON NOTES
If the holder's basis in the Notes exceeds the amount payable at the
maturity date (or earlier call date, if appropriate), such excess will be
deductible by the holder of the Notes as amortizable bond premium over the term
of the Notes (taking into account earlier call dates, as appropriate), under a
yield-to-maturity formula, if an election by the holder under section 171 of the
Code is made or is already in effect. An election under section 171 of the Code
is available only if the Notes are held as capital assets. This election is
revocable only with the consent of the IRS and applies to all obligations owned
or acquired by the holder on or after the first day of the taxable year to which
the election applies. To the extent the excess is deducted as amortizable bond
premium, the holder's adjusted tax basis in the Notes will be reduced. Except
any may otherwise be provided in future Treasury Regulations, the amortizable
bond premium will be treated as an offset to interest income on the Exchange
Debentures rather than as a separate deduction item. Recently proposed Treasury
Regulations, which are not yet effective, would modify the described rules under
section 171 in order to coordinate such rules with the rules relating to
original issue discount.
MARKET DISCOUNT
The market discount rules generally provide that, if a holder of a debt
instrument purchases it at a "market discount" and thereafter realizes gain upon
a disposition or a retirement of the debt instrument, the lesser of such gain or
the portion of the market discount that has accrued on a straight-line basis (or
on a constant interest rate basis, if such alternative rate of accrual has been
elected by the holder under section 1276(b) of the Code) while the debt
instrument was held by such holder will be taxed as ordinary income at the time
of such disposition. "Market discount" with respect to a Note will be the
amount, if any, by which the "stated redemption price at maturity" of the Note
exceeds the holder's basis in the Note immediately after such holder's
acquisition, subject to a de minimis exception.
A holder who acquires a Note at a market discount will also be required to
defer a portion of any interest expense that otherwise may be deductible on any
indebtedness incurred or maintained to purchase or carry such Note until the
holder disposes of the Note in a taxable transaction. Moreover, to the extent of
any accrued market discount on such Notes, any partial principal payment with
respect to the Notes will be includible as ordinary income upon receipt, as will
the Note's fair market value on certain otherwise non-taxable transfers (such as
gifts).
A holder of Notes acquired at a market discount may elect for federal
income tax purposes to include market discount in gross income as the discount
accrues, either on a straight-line basis or on a constant interest rate basis.
This current inclusion election, once made, applies to all market discount
obligations acquired 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
IRS. If a holder of Notes makes such an election, the foregoing rules with
respect to the recognition of ordinary income on sales and other disposition of
such debt instruments, and with respect
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to the deferral of interest deductions on indebtedness incurred or maintained to
purchase or carry such Notes, would not apply.
REDEMPTION, SALE OR EXCHANGE OF NOTES
Generally, any redemption, sale or exchange of Notes by a holder would
result in taxable gain or loss equal to the difference between the sum of amount
of cash and the fair market value of other property received (except to the
extent that cash received is attributable to accrued interest, which portion of
the consideration would be taxed as ordinary income if such interest was
previously untaxed) and the holder's adjusted tax basis in the Notes. Subject to
the above discussion of market discount, such gain or loss would be capital gain
or loss, long-term if the holder's holding period for the Notes exceeds one
year.
BACKUP WITHHOLDING
Under the Code, a holder of Notes may be subject, under certain
circumstances, to "backup withholding" at a 31% rate with respect to interest
payments or gross proceeds. This withholding generally applies only if the
holder (i) fails to furnish its social security or other taxpayer identification
number ("TIN") within a reasonable time after the request therefor, (ii)
furnishes an incorrect TIN, (iii) is notified by the Internal Revenue Service
that it has failed to report properly interest or dividends, or (iv) fails,
under certain circumstances, to provide a certified statement, signed under
penalty of perjury, that the TIN provided is its correct number and that it is
not subject to backup withholding. Any amount withheld from a payment to a
holder under the backup withholding rules is allowable as a credit against such
holder's federal income tax liability, provided that the required information is
furnished to the Internal Revenue Service. Corporations and certain other
entities described in the Code and Treasury Regulations are exempt from such
withholding if their exempt status is properly established. Holders of Notes
should consult their tax advisors as to their qualifications for exemption from
withholding and the procedure for obtaining such exemption.
THE FOREGOING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY.
ACCORDINGLY, EACH PURCHASER OF NOTES SHOULD CONSULT WITH ITS OWN TAX ADVISOR AS
TO THE SPECIFIC TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF THE NOTES,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby has been
passed upon for the Company by Weil, Gotshal & Manges LLP (a limited liability
partnership including professional corporations), Dallas, Texas. R. Scott Cohen,
who is a partner in Weil, Gotshal & Manges LLP owns 12,000 shares of Holding
Common Stock. Other than the foregoing, no attorney of Weil, Gotshal & Manges
LLP owns any shares of Holding Common Stock or otherwise has a substantial
interest in the Company.
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EXPERTS
The consolidated financial statements of the Company as of December 31,
1996 and 1995, for the year ended December 31, 1996 and the seven months ended
December 31, 1995, have been included herein in reliance on the report of
Coopers & Lybrand L.L.P., independent certified public accountants, given on the
authority of that firm as experts in accounting and auditing. The combined
financial statements of Dekko as of December 28, 1995 and for each of the years
ended December 28, 1995 and December 29, 1994, have been included herein in
reliance on the report of Coopers & Lybrand L.L.P., independent certified public
accountants, given on the authority of that firm as experts in accounting and
auditing. The consolidated financial statements of Wirekraft Holdings Corp. for
the six months ended May 31, 1995 and for the year ended November 30, 1994, have
been included herein in reliance on the Report of Coopers & Lybrand L.L.P.,
independent certified public accountants, given on the authority of that firm as
experts in accounting and auditing. The statement of direct revenues and
expenses for ECM for the period January 1, 1994 through November 30, 1994, have
been included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent certified public accountants, given an authority of that firm as
experts in accounting and auditing.
83
<PAGE> 86
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTERNATIONAL WIRE GROUP, INC.
Report of Coopers & Lybrand L.L.P., Independent Public
Accountants............................................
Consolidated Balance Sheets as of December 31, 1996 and
December 31, 1995......................................
Consolidated Statements of Operations for the year ended
December 31, 1996 and seven months ended December 31,
1995...................................................
Consolidated Statements of Stockholder's Equity for the
year ended December 31, 1996 and seven months ended
December 31, 1995......................................
Consolidated Statements of Cash Flows for the year ended
December 31, 1996 and seven months ended December 31,
1995...................................................
Notes to Consolidated Financial Statements................
Consolidated Balance Sheet as of March 31, 1997
(unaudited)............................................
Consolidated Statements of Operations for the three months
ended March 31, 1997 and 1996 (unaudited)..............
Consolidated Statements of Stockholder's Equity for the
three months ended March 31, 1997 (unaudited)..........
Consolidated Statements of Cash Flows for the three months
ended March 31, 1997 and 1996 (unaudited)..............
Notes to Consolidated Financial Statements (unaudited)....
DEKKO WIRE TECHNOLOGIES
Report of Coopers & Lybrand L.L.P., Independent Public
Accountants............................................
Combined Balance Sheet as of December 28, 1995............
Combined Statements of Income, for the two years ended
December 28, 1995 and December 29, 1994................
Combined Statements of Shareholders' Equity for the two
years ended December 28, 1995 and December 29, 1994....
Combined Statements of Cash Flows for the two years ended
December 28, 1995 and December 29, 1994................
Notes to Combined Financial Statements....................
WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.)
Report of Coopers & Lybrand L.L.P., Independent Public
Accountants............................................
Consolidated Statements of Operations for the six months
ended May 31, 1995 and the year ended November 30,
1994...................................................
Consolidated Statements of Stockholders' Equity for the
six months ended May 31, 1995 and the year ended
November 30, 1994......................................
Consolidated Statements of Cash Flows for the six months
ended May 31, 1995 and the year ended November 30,
1994...................................................
Notes to Consolidated Financial Statements................
</TABLE>
OMEGA WIRE CORP.
Report of Coopers & Lybrand L.L.P., Independent Public
Accountants............................................
Consolidated Statement of Operations for the two months
ended May 31, 1995.....................................
Consolidated Statement of Stockholders' Equity for the two
months ended May 31, 1995..............................
Consolidated Statement of Cash Flows for the two months
ended May 31, 1995.....................................
Notes to Consolidated Financial Statements................
THL-OMEGA HOLDING CORPORATION
Report of Coopers & Lybrand L.L.P., Independent Public
Accountants............................................
Consolidated Statement of Operations and Retained Earnings
for the three months ended March 31, 1995..............
Consolidated Statement of Cash Flows for the three months
ended March 31, 1995...................................
F-1
<PAGE> 87
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Notes to Consolidated Financial Statements................
ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND CERTAIN
RELATED ASSETS OF GENERAL ELECTRIC COMPANY
Report of Coopers & Lybrand L.L.P., Independent Public
Accountants............................................
Statement of Direct Revenues and Expenses for the eleven
months ended November 30, 1994.........................
Notes to Financial Statements.............................
</TABLE>
F-2
<PAGE> 88
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
International Wire Group, Inc.:
We have audited the accompanying consolidated balance sheets of
International Wire Group, Inc. and subsidiaries as of December 31, 1996 and
December 31, 1995, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the year ended December 31, 1996 and
seven months ended December 31, 1995. 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, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of International
Wire Group, Inc. and subsidiaries as of December 31, 1996 and December 31, 1995,
and the consolidated results of their operations and their cash flows for the
year ended December 31, 1996 and the seven months ended December 31, 1995, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
February 28, 1997
F-3
<PAGE> 89
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Current assets:
Accounts receivable, less allowance of $1,363, and $860... $ 71,181 $ 47,180
Inventories............................................... 60,362 57,777
Prepaid expenses and other................................ 5,060 2,733
Deferred income taxes..................................... 4,741 125
-------- --------
Total current assets.............................. 141,344 107,815
Property, plant and equipment, net........................ 118,551 82,259
Deferred financing costs, net............................. 21,222 16,688
Intangible assets, net.................................... 244,655 215,400
Other assets.............................................. 5,248 5,758
-------- --------
Total assets...................................... $531,020 $427,920
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term obligations............... $ 20,948 $ 12,662
Accounts payable.......................................... 45,832 37,627
Accrued and other liabilities............................. 33,150 20,323
Customers' deposits....................................... 8,033 5,688
Accrued interest.......................................... 4,648 2,516
-------- --------
Total current liabilities......................... 112,611 78,816
Long-term obligations, less current maturities.............. 426,719 326,015
Deferred income taxes....................................... 14,719 8,194
Other long-term liabilities................................. 12,162 4,897
-------- --------
Total liabilities................................. 566,211 417,922
-------- --------
Stockholders' equity:
Common stock, $.01 par value, 1,000 shares authorized,
issued and outstanding................................. -- --
Series A senior cumulative exchangeable redeemable
preferred stock, $.01 par value, $25 liquidation value,
400,000 shares authorized, issued and outstanding...... 4 --
Contributed capital....................................... 125,340 81,051
Carryover of predecessor basis............................ (67,762) (67,762)
Accumulated deficit....................................... (92,773) (3,291)
-------- --------
Total stockholders' equity........................ (35,191) 9,998
-------- --------
Total liabilities and stockholders' equity........ $531,020 $427,920
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
F-4
<PAGE> 90
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
Net sales.................................................. $546,981 $245,583
Operating expenses:
Cost of goods sold....................................... 420,823 195,221
Selling, general and administrative...................... 43,885 17,129
Depreciation and amortization............................ 31,341 11,020
Impairment, unusual and plant closing charges............ 84,250 1,750
Inventory valuation adjustment........................... 8,500 --
-------- --------
Operating income (loss).................................... (41,818) 20,463
Other income (expense):
Interest expense......................................... (43,013) (19,931)
Amortization of deferred financing costs................. (3,701) (1,468)
Other, net............................................... 312 (158)
-------- --------
Loss before income tax provision........................... (88,220) (1,094)
Income tax provision....................................... 1,262 2,197
-------- --------
Net loss................................................... $(89,482) $ (3,291)
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
F-5
<PAGE> 91
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE
SEVEN MONTHS ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
CARRYOVER
OF
COMMON PREFERRED CONTRIBUTED PREDECESSOR ACCUMULATED
STOCK STOCK CAPITAL BASIS DEFICIT TOTAL
------- --------- ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital contributed.......... $ -- $-- $ 81,951 $ -- $ -- $ 81,951
Issuance costs............... -- -- (900) -- -- (900)
Carryover of predecessor
basis...................... -- -- -- (67,762) -- (67,762)
Net loss..................... -- -- -- -- (3,291) (3,291)
------- --- -------- -------- -------- --------
Balance December 31, 1995.... -- -- 81,051 (67,762) (3,291) 9,998
Capital contributed.......... -- -- 35,493 -- -- 35,493
Issuance of preferred
stock...................... -- 4 9,996 -- -- 10,000
Issuance costs............... -- -- (1,200) -- -- (1,200)
Net loss..................... -- -- -- -- (89,482) (89,482)
------- --- -------- -------- -------- --------
Balance December 31, 1996.... $ -- $ 4 $125,340 $(67,762) $(92,773) $(35,191)
======= === ======== ======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
F-6
<PAGE> 92
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
Cash flows provided by (used in)
operating activities:
Net loss.............................. $ (89,482) $ (3,291)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization......... 31,341 11,020
Impairment and unusual charges........ 78,250 --
Amortization of deferred financing
costs.............................. 3,701 1,468
Inventory valuation adjustment........ 8,500 --
Deferred income taxes................. 3,184 274
Change in assets and liabilities, net
of acquisitions:
Accounts receivable................ (1,878) 12,094
Inventories........................ (3,645) (9,590)
Prepaid expenses and other......... (4,829) (846)
Accounts payable................... 1,216 1,232
Accrued and other liabilities...... 2,299 (2,084)
Accrued interest................... 2,132 2,516
Income taxes payable/refundable.... 1,914 778
Other long-term liabilities........ (723) (237)
--------- ---------
Net cash from operating activities...... 31,980 13,334
--------- ---------
Cash flows provided by (used in)
investing activities:
Acquisitions, net of cash............. (160,259) (341,046)
Capital expenditures, net............. (15,849) (5,751)
--------- ---------
Net cash used in investing activities... (176,108) (346,797)
--------- ---------
Cash flows provided by (used in)
financing activities:
Equity proceeds....................... 45,039 15,048
Proceeds from issuance of long-term
obligations........................ 128,200 337,500
Repayment of long-term obligations.... (21,311) (5,085)
Financing fees and other.............. (7,800) (14,000)
--------- ---------
Net cash from financing activities...... 144,128 333,463
--------- ---------
Net change in cash...................... -- --
Cash at beginning of the period......... -- --
--------- ---------
Cash at end of the period............... $ -- $ --
========= =========
</TABLE>
See accompanying notes to the consolidated financial statements
F-7
<PAGE> 93
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996 AND
SEVEN MONTHS ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE DATA)
1. THE COMPANY
International Wire Group, Inc. ("Group" or the "Company"), a Delaware
corporation, was formed to participate in the transactions contemplated by the
Wirekraft/Omega Acquisitions (as described below). On June 12, 1995, Wirekraft
Holdings Corp. ("Wirekraft"), Omega Wire Corp. ("Omega"), International Wire
Holding Company ("Holding"), the sole common stockholder of Group, Wirekraft
Acquisition Company and certain shareholders of Wirekraft and Omega entered into
a series of acquisitions and mergers (the "Acquisitions") pursuant to which
Group acquired all of the common equity securities (and all securities
convertible into such securities) of Wirekraft and all of the common equity
securities of Omega. The Company has designated June 1, 1995, as the effective
date of the Acquisitions for financial reporting purposes. The Company through
its two segments, the Wire segment and the Harness segment, is engaged in the
design, manufacture and marketing of non-insulated and insulated copper wire and
wire harnesses. The Company's products are used by a wide variety of customers
primarily in the appliance, computer and data communications, automotive and
industrial equipment industries.
The total purchase price of the Acquisitions was approximately $420,591,
which included the redemption of certain equity securities, the retirement of
existing indebtedness of Wirekraft and Omega and the payment of related fees and
costs, is summarized as follows:
<TABLE>
<S> <C>
Redemption of common stock, equity
rights, warrants and options.......... $104,810
Repayment of existing indebtedness...... 275,460
Redemption of preferred stock........... 26,321
Fees and costs.......................... 14,000
--------
$420,591
========
</TABLE>
In accordance with EITF 88-16, "Basis in Leveraged Buy Out Transactions,"
the Acquisitions have been accounted for at "predecessor basis". The total
acquisition costs have been allocated to the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets.......................... $117,504
Property, plant and equipment........... 83,253
Goodwill................................ 209,818
Fees and costs.......................... 19,000
Other assets............................ 3,749
Current liabilities..................... (58,707)
Other liabilities....................... (21,788)
Carryover predecessor basis............. 67,762
--------
$420,591
========
</TABLE>
Unaudited pro forma data, which present condensed results of operations for
the twelve months ended December 31, 1995 as though the Acquisitions and related
financing had occurred at the beginning of the period, is as follows:
<TABLE>
<S> <C>
Net sales.................................................. $454,693
Net income................................................. $ 3,406
</TABLE>
F-8
<PAGE> 94
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. DWT ACQUISITION
On March 5, 1996, Wire Technologies, Inc. ("Wire Technologies"), a
wholly-owned subsidiary of the Company, acquired the businesses of Hoosier Wire,
Inc., Dekko Automotive Wire, Inc., Albion Wire, Inc. and Silicones, Inc., a
group of affiliated companies operating together under the trade name Dekko Wire
Technology Group (the "DWT Acquisition"). The total consideration of $173,239
paid in connection with the DWT Acquisition including fees, expenses and certain
adjustments consisted of (i) cash and (ii) warrants for the purchase of
2,000,000 shares of Common Stock, par value $.01 per share, of Holding. The DWT
Acquisition and the related transaction fees and expenses were funded with (i)
$128,200 of senior debt under the Amended Credit Agreement, (ii) $35,000 from
the issuance of 35,000,000 shares of Common Stock, par value $.01 per share, of
Holding, (iii) $39 from the issuance of 3,888,889 shares of Class A Common
Stock, par value $.01 per share, of Holding, and (iv) $10,000 from the issuance
of 400,000 shares of Series A Senior Cumulative Exchangeable Redeemable
Preferred Stock, par value $.01 per share, of the Company (sold in units
together with warrants for the purchase of shares of Common Stock, par value
$.01 per share, of Holding).
The DWT Acquisition was accounted for using the purchase method of
accounting whereby the total acquisition cost has been allocated to the
consolidated assets and liabilities based upon their estimated respective fair
values. The total acquisition cost is allocated to the acquired net assets as
follows:
<TABLE>
<S> <C>
Current assets............................................. $ 37,669
Property, plant and equipment.............................. 36,020
Goodwill................................................... 105,041
Other, non-current......................................... 3,515
Fees and costs............................................. 7,800
Current liabilities........................................ (15,306)
Other liabilities.......................................... (1,500)
--------
$173,239
========
</TABLE>
Unaudited pro forma results of operations of the Company for the years
ended December 31, 1996 and December 31, 1995, are included below. Such pro
forma presentation has been prepared assuming that the DWT Acquisition and
related financing had occurred as of January 1, 1996 and January 1, 1995,
respectively, and that the Acquisitions (as described in Note 1) had occurred as
of January 1, 1995.
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Net sales................................................... $574,827 $601,709
Net income (loss)........................................... $(85,394) $ 4,960
</TABLE>
3. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Group and its
wholly-owned subsidiaries. All material intercompany balances and transactions
have been eliminated in consolidation.
Revenue Recognition
Sales and related cost of goods sold are included in income when goods are
shipped to customers.
Inventories
Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method.
F-9
<PAGE> 95
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is calculated
using the straight-line method. The average estimated lives utilized in
calculating depreciation are as follows: building -- 25 to 40 years; building
improvements -- 15 years; machinery and equipment -- 3 to 11 years; and
furniture and fixtures -- 5 years. Leasehold improvements are amortized over the
shorter of the term of the respective lease or the life of the respective
improvement. In fiscal 1996, the Company adopted the provisions of 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". SFAS No. 121
requires impairment losses to be recorded on long-lived assets used in
operations when indications of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount.
Intangible Assets
Intangible assets consist principally of goodwill arising from the excess
of cost over the value of net assets acquired which is amortized using the
straight-line method over forty years and a supply agreement (the "Agreement")
which was entered into on December 31, 1995. The Company estimates its
obligation under this Agreement to be approximately $7,609 and $8,700 at
December 31, 1996 and December 31, 1995, respectively. Accordingly the Company
recorded a liability and corresponding intangible asset for $8,700 which will be
amortized using the straight-line method over eleven years. In connection with
this Agreement, Holding issued 50,000 shares of preferred stock having a
liquidation value of $5,000, which is amortized as expense and contributed
capital in the Company's financial statements over the period of the Agreement.
Contributed capital recognized by the Company in connection with this agreement
for the year ended December 31, 1996 was $454. In fiscal 1996, the Company
completed a review of the carrying value of goodwill, which resulted in an
impairment charge (see Note 10). Accumulated amortization aggregated $18,182 and
$8,783 at December 31, 1996 and December 31, 1995, respectively.
Deferred Financing Costs
Deferred financing costs, consisting of fees and other expenses associated
with the debt financing are amortized over the term of the related debt using
the effective interest method and the straight-line method which approximates
the effective interest method. Accumulated amortization aggregated $5,169 and
$1,468 at December 31, 1996 and December 31, 1995, respectively.
Foreign Currency
For operations in Mexico, the Company's functional currency is the U.S.
dollar. Gains and losses from translation and transactions are determined using
a combination of current and historical rates and are included in net income.
Interest Rate Hedging Arrangement
In 1996, the Company entered into an interest rate hedging arrangement for
the purpose of hedging against rising interest rates. The company paid a fee of
approximately $200 for the arrangement. This fee is included in deferred
financing fees and amortized on a straight-line basis over the life of the
arrangement, through May 1998. The interest rate hedging arrangement provides a
ceiling interest rate of 7.0% on $55,000 of indebtedness through May 1997 and a
ceiling interest rate of 8.0% on $63,500 of indebtedness thereafter through May
1998. The Company estimates that fair value approximates carrying value of the
interest rate hedging arrangement, due to the short life of the arrangement and
the relative stability of interest rates in 1996.
F-10
<PAGE> 96
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Fair Value of Financial Instruments
The Company's financial instruments, excluding the Senior Notes (as
hereinafter defined) are carried at fair value or amounts that approximate fair
value. The Company has estimated the fair value of the Senior Notes using
current market data. At December 31, 1996, the estimated fair market value of
the Senior Notes was $162,000.
Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
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 those estimates.
Statement of Cash Flows
For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest paid for the year ended December
31, 1996 and seven months ended December 31, 1995 was $40,881 and $17,415,
respectively. Taxes refunded, net of payments for the year ended December 31,
1996 and taxes paid for the seven months ended December 31, 1995 were $4,073 and
$1,145, respectively.
During the year ended December 31, 1996 and seven months ended December 31,
1995, the Company entered into certain non-cash investing and financing
activities. In connection with the Acquisitions, certain shares of Omega and
Wirekraft common stock and Class A common stock were exchanged for shares of
Holding common stock. The total amount of shares exchanged was $66,903. In
fiscal 1996 and 1995, the Company recorded capital lease obligations of $2,348
and $680 respectively, for property, plant and equipment.
Significant Customer
A significant portion of the Company's sales were to a major customer
within the Harness segment. Sales to this customer represented 18% and 19% of
net sales for the year ended December 31, 1996 and the seven months ended
December 31, 1995, respectively.
4. INVENTORIES
The composition of inventories is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Raw materials.............................................. $26,191 $19,451
Work-in-process............................................ 14,908 15,916
Finished goods............................................. 19,263 22,410
------- -------
Total inventories................................ $60,362 $57,777
======= =======
</TABLE>
The current cost of inventories is approximately $57,267 and $56,035 at
December 31, 1996 and December 31, 1995.
In connection with the decline in the average price of copper during fiscal
1996 the Company recorded an $8,500 pre-tax inventory valuation charge to reduce
the LIFO valuation of copper in inventory.
F-11
<PAGE> 97
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. PROPERTY, PLANT AND EQUIPMENT
The composition of property, plant and equipment is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Land....................................................... $ 2,797 $ 2,061
Buildings and improvements................................. 31,546 20,848
Machinery and equipment.................................... 121,013 76,668
-------- --------
155,356 99,577
Less: accumulated depreciation............................. (36,805) (17,318)
-------- --------
$118,551 $ 82,259
======== ========
</TABLE>
6. FINANCING COSTS AND RELATED PARTY TRANSACTIONS
In connection with the Acquisitions, the Company incurred aggregate fees
and costs of $14,000. Costs of $13,100 related to the Senior Notes and Credit
Agreement (see Note 7) are included in deferred financing costs and are being
amortized over the terms of the related borrowings. Costs of $900 related to the
issuance of Holding's common stock have been deducted from the proceeds to
reduce the carrying value of the common stock. In connection with the DWT
Acquisition, the Company incurred aggregate fees and costs of $7,800. Costs of
$6,600 related to the Amended Credit Agreement (as hereinafter defined) are
included in deferred financing costs and are being amortized over the terms of
the related borrowings. Costs of $1,200 related to the issuance of Holding's
common stock and the Preferred Stock (as defined in Note 8) have been deducted
from the proceeds to reduce the carrying value of the common and preferred
stock.
In connection with the Acquisitions and the related financing, the Company
entered into a Monitoring and Oversight Agreement ("Agreement") with Hicks, Muse
& Co. Partners, L.P. ("Hicks, Muse") (an affiliate of the Company) pursuant to
which the Company paid Hicks, Muse a cash fee of $3,725 as compensation for
financial advisory services. Pursuant to the Agreement, the Company paid Hicks,
Muse a cash fee of $2,500 as compensation for financial advisory services
received in connection with the DWT Acquisition. The fees have been allocated
based upon the issuance proceeds to the debt and equity securities issued in
connection with the Acquisitions and the DWT Acquisition as deferred financing
costs or as a deduction from the cash proceeds received from the sale of the
common stock of Holding. The Agreement further provides that the Company shall
pay Hicks, Muse an annual fee of $500, for ten years for monitoring and
oversight services adjusted annually at the end of each fiscal year to an amount
equal to .1% of the consolidated net sales of the Company, but in no event less
than $500 annually. The obligation under the Agreement and the related deferred
financing costs have been recorded in the consolidated balance sheets.
F-12
<PAGE> 98
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. LONG-TERM OBLIGATIONS
The composition of long-term obligations is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1996
------------ ------------
<S> <C> <C>
Credit Agreement:
Revolver................................................. $ 18,990 $ 19,000
Term Facility............................................ 271,404 163,813
Senior Subordinated Notes.................................. 150,000 150,000
Capital lease and other obligations........................ 7,273 5,864
-------- --------
447,667 338,677
Less, current maturities................................... (20,948) (12,662)
-------- --------
$426,719 $326,015
======== ========
</TABLE>
The schedule of principal payments for long-term obligations at December
31, 1996 is as follows:
<TABLE>
<S> <C>
1997...................................................... $ 20,948
1998...................................................... 23,782
1999...................................................... 29,123
2000...................................................... 58,568
2001...................................................... 41,457
Thereafter................................................ 273,789
--------
Total........................................... $447,667
========
</TABLE>
Credit Agreement
In connection with the DWT Acquisition, Group and Holding entered into an
Amended Credit Agreement (the "Amended Credit Agreement") dated as of March 5,
1996 with certain financial institutions. Borrowings under the Amended Credit
Agreement are collateralized by first priority mortgages and liens on all of the
assets of Group. In addition, borrowings under the Amended Credit Agreement are
guaranteed by Holding.
The Amended Credit Agreement consists of an $111,000 term loan (the "Term A
Loan"), an $82,500 term loan (the "Term B Loan"), a $95,000 term loan (the "Term
C Loan", collectively, the "Term Facility") and a $75,000 revolving credit
facility (the "Revolver"). The Revolver provides that up to $10,000 of such
facilities may be used for the issuance of letters of credit. At December 31,
1996, Group had $930 in outstanding letters of credit and $55,966 of unused
borrowing capacity under the Amended Credit Agreement. A commitment fee on the
unused portion of the Revolver of .5% is payable quarterly. The Amended Credit
Agreement contains several financial covenants which, among other things,
require Group to maintain certain financial ratios and restrict Group's ability
to incur indebtedness, make capital expenditures and pay dividends.
Mandatory principal payments of the Term Facility are due in quarterly
installments. The final installment on the Term A Loan is due on September 30,
2000 at which time the Revolver is also due. The final installment on the Term B
Loan is due on September 30, 2002, and the final installment on the Term C Loan
is due on September 30, 2003. The Amended Credit Agreement requires annual
prepayments of the Term Facility based on "Excess Cash Flow" (as defined in the
Amended Credit Agreement).
Borrowings under the Term A Loan and Revolver bear interest, at the option
of Group, at a rate per annum equal to (a) the Alternate Base Rate (as defined
in the Amended Credit Agreement) plus 1.5% or (b) the Eurodollar Rate (as
defined in the Amended Credit Agreement) plus 2.5%. Borrowings under the
F-13
<PAGE> 99
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Term B Loan bear interest, at the option of Group, at a rate per annum equal to
(a) the Alternate Base Rate (as defined in the Amended Credit Agreement) plus
2.0% or (b) the Eurodollar Rate (as defined in the Amended Credit Agreement)
plus 3.0%. Borrowings under the Term C Loan bear interest, at the option of
Group, at a rate per annum equal to (a) the Alternate Base Rate (as defined in
the Amended Credit Agreement plus 2.5% or (b) the Eurodollar Rate (as defined in
the Amended Credit Agreement) plus 3.5%. The Alternate Base Rate and Eurodollar
Rate margins are established quarterly based on a formula as defined in the
Amended Credit Agreement. Interest payment dates vary depending on the interest
rate option to which the Term Facility and the Revolver are tied, but generally
interest is payable quarterly. The weighted average interest rate on outstanding
borrowings was 8.75% and 8.59% at December 31, 1996 and December 31, 1995,
respectively.
Senior Subordinated Notes
The Senior Subordinated Notes due 2005 ("the Senior Notes") were issued
under an indenture, dated June 12, 1995 (the "Indenture") in connection with the
Acquisitions. The Senior Notes represent unsecured general obligations of Group
and are subordinated to all Senior Debt (as defined in the Indenture) of Group.
The Senior Notes, which were originally sold pursuant to an exemption from the
registration requirements of the Securities Act of 1933, as amended, were
exchanged for identical notes registered under such Act in November 1995.
The Senior Notes are fully and unconditionally (as well as jointly and
severally) guaranteed on an unsecured, senior subordinated basis by each
subsidiary of the Company (the "Guarantor Subsidiaries") other than Electro
Componentes de Mexico, S.A. de C.V. and Wirekraft Industries de Mexico, S.A. de
C.V. (The "Non-Guarantor Subsidiaries"). Each of the Guarantor Subsidiaries and
Non-Guarantor Subsidiaries is wholly owned by the Company. Separate financial
statements for the respective Guarantor Subsidiaries are not contained herein
because the aggregate net assets, liabilities, earnings and equity of the
Guarantor Subsidiaries is substantially equivalent to the net assets,
liabilities, earnings and equity of the Company on a consolidated basis.
The Senior Notes mature on June 1, 2005. Interest on the Senior Notes is
payable semi-annually on each June 1 and December 1. The Senior Notes bear
interest at the rate of 11 3/4% per annum. The Senior Notes may not be redeemed
prior to June 1, 2000, except in the event of a Change of Control (as defined)
or Initial Public Offering (as defined) and at such applicable premium (as
defined). The Senior Notes are redeemable, at the Company's option, at the
redemption prices of 105.875% at June 1, 2000, and at decreasing prices to 100%
at June 1, 2003, and thereafter, with accrued interest. In addition, prior to
June 1, 1998, the Company may redeem, within guidelines specified in the
Indenture, up to $50,000 of the Senior Notes with the proceeds of one or more
Equity Offerings (as defined) by the Company or Holding at a redemption price of
110%, with accrued interest.
The Senior Notes restrict, among other things, the incurrence of additional
indebtedness by the Company, the payment of dividends and other distributions in
respect of the Company's capital stock, the payment of dividends and other
distributions by the Company's subsidiaries, the creating of liens on the
properties and the assets of the Company to secure certain subordinated debt and
certain mergers, sales of assets and transactions with affiliates.
8. PREFERRED STOCK
In connection with the DWT Acquisition, the Company issued 400,000 shares
of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock (the
"Preferred Stock"). In accordance with the Certificate of Designation of the
Preferred Stock (the "Certificate of Designation"), cumulative dividends are
payable quarterly at the rate of 14% per annum. Dividend rates could increase
upon the occurrence of any Event of Non-Compliance (as defined in the
Certificate of Designation). At December 31, 1996, dividends in
F-14
<PAGE> 100
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
arrears were $1,200 or $2.99 per share. The Preferred Stock has a liquidation
preference of $25.00 per share and a par value of $.01 per share. The Preferred
Stock is exchangeable, at the option of the Company, for 14.0% Senior
Subordinated Exchange Notes due June 1, 2005 (the "Exchange Notes") (see Note
14). The Preferred Stock ranks with respect to the payment of dividends and the
distribution of assets upon dissolution, liquidation, or winding up of the
Company, prior to all other capital stock of the Company.
The Company may redeem the Preferred Stock, in whole or in part, at any
time. If such redemption occurs prior to December 31, 1997, the redemption price
shall equal the Makewhole Price (as defined in the Certificate of Designation).
If such redemption occurs on or after December 31, 1997, the redemption price
shall equal the product of the liquidation preference plus all accrued and
unpaid dividends, multiplied by the applicable Redemption Percentage (as defined
in the Certificate of Designation).
9. INCOME TAXES
The Company accounts for income taxes in accordance with the provisions of
SFAS No. 109. The provision (benefit) for income taxes is as follows:
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Current:
State.................................................. $ 935 $1,262
Foreign................................................ 264 661
------ ------
1,199 1,923
------ ------
Deferred:
Federal................................................ (64) (530)
State.................................................. 127 804
------ ------
63 274
------ ------
Total:......................................... $1,262 $2,197
====== ======
</TABLE>
Reconciliation between the statutory income tax rate and effective tax rate
is summarized below:
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
U.S. Federal statutory rate.............................. $(30,877) $ (372)
State taxes, net of federal effect....................... 690 1,364
Foreign taxes............................................ (430) 789
Nondeductible expenses................................... 31,814 397
Other.................................................... 65 19
-------- ------
$ 1,262 $2,197
======== ======
</TABLE>
F-15
<PAGE> 101
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The tax effects of significant temporary differences representing deferred
tax assets and liabilities are as follows:
<TABLE>
<S> <C> <C>
Deferred tax assets:
Accounts receivable reserves.............................. $ 477 $ 298
Accrued liabilities not yet deductible.................... 3,497 2,540
Inventories............................................... 3,381 --
Net operating loss carry forward.......................... -- 3,544
Other..................................................... 227 87
------- -------
7,582 6,469
------- -------
Deferred tax liabilities:
Depreciation and amortization............................. 14,684 11,809
Inventories............................................... 2,176 2,523
Other..................................................... 700 206
------- -------
17,560 14,538
------- -------
Net deferred tax liability................................ $ 9,978 $ 8,069
======= =======
</TABLE>
10. IMPAIRMENT, UNUSUAL AND PLANT CLOSING CHARGES
Commencing in the first quarter of 1996, the Company began a comprehensive
review of the strategic position of its individual business units. The original
goodwill related to the original Wirekraft acquisition recognized long-term
customer relationships and plant locations that were strategically sized,
located and customer focused. Due to intense competition in the appliance and
automotive markets and the loss of a major appliance customer in 1995, the
Company developed and executed new business strategies, including the DWT
Acquisition, to maintain customer volume levels, meet competitive pressures and
address key changes within the marketplace. As a result, the Company embarked on
a major plant consolidation program including the utilization of facilities
purchased in the DWT Acquisition and transitioning of business from the Midwest
to the Southwest and Mexico. To this end, six plants were closed in 1995 and
another six plants were closed in 1996. In connection with this review and
impairment charge, the Company has provided for anticipated losses related to
product liability claims associated with the period preceding the original
acquisition of Wirekraft in 1992. In December 1996, the Company completed this
review, resulting in an impairment charge of $78,250, principally related to the
acquisition of Wirekraft.
In determining the goodwill impairment charge, the Company completed
financial projections through the year 2000. These projections reflect the
Company's business strategies and were based on current industry trends,
forecasts and expected developments. A discounted cash flow analysis of the
consolidated entity was used to calculate the fair market value of the Company
and was based upon the Company's acquisition strategy which focuses on the
identification and realization of certain synergies existing between the
acquired businesses. The calculated fair market value was compared to net
tangible assets (net working capital and net property, plant and equipment). The
difference between net tangible assets and the fair market value was compared to
net goodwill to determine the goodwill impairment charge.
F-16
<PAGE> 102
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company recorded a pre-tax charge to operations of $6,000 in 1996 and
$1,750 in 1995 to provide for plant closing costs. The plant closing costs
include provisions for shut-down costs from the period of the plant closure to
the date of disposal, commitment costs for leased property and key personnel and
severance related costs. During 1996 and 1995, plant closing actions resulted in
the reduction of approximately 45 and 55 employees, respectively. Plant closing
costs accrued at December 31, 1996 and December 31, 1995 were $2,462 and $700,
respectively. There have been no adjustments to amounts charged to expense.
Following is a summary of activity in the accounts related to the plant closing
costs accrued:
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Balance, beginning of year................................. $ 700 $ --
Charges to operations:
Facility shut-down costs................................. 3,872 731
Lease commitments........................................ 773 67
Key personnel and severance costs........................ 1,355 952
------- ------
6,000 1,750
Costs incurred:
Facility shut-down costs................................. (3,017) (339)
Lease commitments........................................ (134) (67)
Key personnel and severance costs........................ (1,087) (644)
------- ------
(4,238) (1,050)
Balance, end of year....................................... $ 2,462 $ 700
======= ======
</TABLE>
11. RETIREMENT BENEFITS AND STOCK OPTION PLANS
The Company sponsors a number of defined contribution retirement plans
which provide retirement benefits for eligible employees. Company contribution
expense related to these retirement plans for the year ended December 31, 1996
and seven months ended December 31, 1995 amounted to approximately $1,208 and
$902, respectively.
Holding's Qualified and Non-qualified Stock Option Plan (the "Option Plan")
provides for the granting of up to 4,795,322 shares of common stock to officers
and key employees of Holding and the Company. Under the plan, options granted
approximate market value of the common stock at the date of grant. Such options
vest ratably over a five year period commencing on the first anniversary date
after the date of grant, and vested options are exercisable at the discretion of
the committee appointed to administer the Option Plan. Generally, an option may
be exercised only if the holder is an officer or employee of Holding or the
Company at the time of exercise. Options granted under the Option Plan are not
transferable, except by will and the laws of descent and distribution.
Holding and the Company have also granted Performance Options (the
"Performance Options") to certain key executives. The Performance Options are
exercisable only on the occurrence of certain events. The exercise price for the
Performance Options is initially equal to $1.00 per share and, effective each
anniversary of the grant date, the per share exercise price for the Performance
Options is equal to the per share exercise price for the prior year multiplied
by 1.09. The Performance Options terminate on the tenth anniversary date of the
date of grant.
In accordance with SFAS No. 123, "Accounting for Stock-Based Compensation",
the Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and related Interpretations in accounting for the Option Plan.
Accordingly, no compensation cost has been recognized for the Option Plan and
the
F-17
<PAGE> 103
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Performance Options. There may be compensation expense in future periods when
the Performance Options become exercisable to the extent that the fair value of
the stock exceeds the exercise price of the Performance Options. Had
compensation cost for the Option Plan and the Performance Options been
determined based upon the fair value at the grant date for awards under these
plans consistent with the methodology prescribed under SFAS No. 123, the
Company's net loss would approximate the following:
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
As reported........................................ $(89,482) $(3,291)
Pro forma.......................................... $(89,759) $(3,329)
</TABLE>
The minimum value of each option grant is estimated on the date of grant
with the following assumptions in 1996 and 1995, respectively: (i) risk-free
interest rates of 5.9% in 1995 and ranging from 5.9% to 6.5% in 1996 and (ii)
expected life of 10 years.
The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts. Additional awards in future years are anticipated.
Changes in the status of the Option Plan are summarized below:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE PRICE OPTIONS OPTIONS
PER SHARE GRANTED VESTED
-------------- ---------- -------
<S> <C> <C> <C>
June 1, 1995............................ -- -- --
Granted............................... $1.00 3,400,000 --
Vested................................ -- -- --
----- ---------- -------
December 31, 1995....................... $1.00 3,400,000 --
Granted............................... $1.02 1,865,249
Vested................................ $1.00 -- 495,249
Forfeiture............................ $1.00 (1,250,000) --
----- ---------- -------
December 31, 1996....................... $1.01 4,015,249 495,249
===== ========== =======
</TABLE>
Changes in the status of the Performance Options are summarized below:
<TABLE>
<S> <C> <C> <C>
June 1, 1995............................ -- -- --
Granted............................... $1.00 2,966,178
----- ---------- -------
December 31, 1995....................... $1.00 2,966,178 --
Granted............................... $1.00 1,236,566 --
----- ---------- -------
December 31, 1996....................... $1.06 4,202,744 --
===== ========== =======
</TABLE>
The weighted average grant-date fair value of options granted during 1996
and 1995 was $0.48 and $0.44 per share, respectively. Of the options outstanding
under the Option Plan at December 31, 1996, 4,350,000 and 65,249 have exercise
prices of $1.00 and $1.625 respectively, and have weighted average remaining
contractual lives of between 9 and 10 years. The weighted average exercise price
of options vested at December 31, 1996 is $1.00 per share.
Of the Performance Options outstanding at December 31, 1996, 2,966,178 and
1,235,566 have exercise prices of $1.09 and $1.00 respectively, and have
weighted average remaining contractual lives of between 9 and 10 years.
F-18
<PAGE> 104
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. COMMITMENTS AND CONTINGENCIES
The Company leases certain property, transportation vehicles and other
equipment. Total rental expense under operating leases was $2,237 and $1,420 for
the year ended December 31, 1996 and seven months ended December 31, 1995.
Future minimum lease payments under capital and operating leases for years
ending are:
<TABLE>
<CAPTION>
CAPITAL OPERATING
------- ---------
<S> <C> <C>
1997........................................................ $ 1,416 $2,706
1998........................................................ 1,416 2,401
1999........................................................ 1,416 1,453
2000........................................................ 1,376 1,128
2001........................................................ 970 927
Thereafter.................................................. 3,010 437
------- ------
Total minimum lease payments...................... 9,604 $9,052
======
Less amount representing interest................. (2,705)
-------
Present value of net minimum lease payments....... $ 6,899
=======
</TABLE>
The Company is subject to legal proceedings and claims which arise in the
normal course of business. In the opinion of management, the ultimate
liabilities with respect to these actions will not have a material adverse
effect on the Company's financial condition, results of operations or cash
flows.
The Company has agreed in principal to participate in an international
expansion project with one of the Wire segment's largest customers. The Company
estimates its financial commitment for property, plant and equipment to be
approximately $13,000.
F-19
<PAGE> 105
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. BUSINESS SEGMENT INFORMATION
Certain information concerning the Company's operating segments for the
year ended December 31, 1996 and the seven months ended December 31, 1995 is
presented below. Total revenue by segment includes both sales to customers and
intersegment sales, which are accounted for at prices charged to customers and
eliminated in consolidation.
<TABLE>
<CAPTION>
WIRE HARNESS CONSOLIDATED
---- ------- ------------
<S> <C> <C> <C>
Year Ended December 31, 1996
Total revenue................................... $406,026 $161,354
Intersegment sales.............................. 20,399 --
-------- --------
Sales to customers.............................. $385,627 $161,354 $546,981
Operating loss.................................. $(29,443) $(12,375) $(41,818)
Identifiable assets............................. $437,524 $ 93,496 $531,020
Depreciation and amortization................... $ 24,880 $ 6,461 $ 31,341
Capital expenditures, net....................... $ 13,060 $ 2,789 $ 15,849
Seven Months Ended December 31, 1995
Total revenue................................... $167,082 $ 84,288
Intersegment sales.............................. 5,341 446
-------- --------
Sales to customers.............................. $161,741 $ 83,842 $245,583
Operating income................................ $ 10,937 $ 9,526 $ 20,463
Identifiable assets............................. $295,671 $132,249 $427,920
Depreciation and amortization................... $ 7,442 $ 3,578 $ 11,020
Capital expenditures, net....................... $ 4,991 $ 760 $ 5,751
</TABLE>
14. SUBSEQUENT EVENTS
On February 4, 1997, the Board of Directors approved the exchange of the
Preferred Stock for Exchange Notes, and voted to pay all dividends in arrears
related to the Preferred Stock.
On February 12, 1997, the Company completed the purchase of the stock and
business activities of Camden Wire Co. for approximately $65,000, including fees
and expenses, subject to certain purchase price adjustments (the "Camden
Acquisition"). The Camden Acquisition and related transaction fees and expenses
were funded with $65,000 of senior debt under the Amended Credit Agreement
pursuant to an amendment dated February 12, 1997 (the "Credit Agreement").
F-20
<PAGE> 106
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
MARCH 31,
1997
---------
<S> <C>
Current assets:
Cash...................................................... $ 3,825
Accounts receivable, less allowance of $1,343............. 106,032
Inventories............................................... 72,830
Prepaid expenses and other................................ 9,679
Deferred income taxes..................................... 4,741
--------
Total current assets.............................. 197,107
Property, plant and equipment, net........................ 158,719
Deferred financing costs, net............................. 23,401
Intangible assets, net.................................... 247,980
Other assets.............................................. 7,100
--------
Total assets...................................... $634,307
--------
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term obligations............... $ 21,944
Accounts payable.......................................... 45,155
Accrued and other liabilities............................. 56,512
Accrued interest.......................................... 9,649
--------
Total current liabilities......................... 133,260
Long-term obligations, less current maturities............ 510,818
Deferred income taxes..................................... 15,532
Other long-term liabilities............................... 18,856
--------
Total liabilities................................. 678,466
--------
Stockholder's equity (deficit):
Common stock, $.01 par value, 1,000 shares authorized,
issued and outstanding................................. 0
Contributed capital....................................... 114,080
Carryover of predecessor basis............................ (67,762)
Accumulated deficit....................................... (90,477)
--------
Total stockholder's equity (deficit).............. (44,159)
--------
Total liabilities and stockholder's equity
(deficit)......................................... $634,307
--------
</TABLE>
See accompanying notes to the consolidated financial statements
F-21
<PAGE> 107
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED MARCH ENDED MARCH
31, 1997 31, 1996
-------------- --------------
<S> <C> <C>
Net sales............................... $176,153 $118,807
Operating expenses:
Cost of goods sold.................... 137,913 93,475
Selling, general and administrative... 13,308 9,721
Depreciation and amortization......... 7,511 6,044
Inventory valuation adjustment........ -- 2,000
Expenses related to plant closings.... 500 4,000
-------- --------
Operating income........................ 16,921 3,567
Other income (expense):
Interest expense...................... (12,011) (9,572)
Amortization of deferred financing
costs.............................. (995) (723)
Other, net............................ 11 89
-------- --------
Income (loss) before income tax
provision............................. 3,926 (6,639)
Income tax provision.................... 1,630 255
-------- --------
Net income (loss)....................... $ 2,296 $ (6,894)
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
F-22
<PAGE> 108
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
CARRYOVER
OF
COMMON PREFERRED CONSOLIDATED PREDECESSOR ACCUMULATED
STOCK STOCK CAPITAL BASIS DEFICIT TOTAL
------ --------- ------------ ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1996.... $ -- $ 4 $125,340 $(67,762) $(92,773) $(35,191)
Capital contributed.......... -- -- 114 -- -- 114
Conversion of Preferred
Stock...................... -- (4) (9,996) -- -- (10,000)
Preferred Stock Dividend..... -- -- (1,378) -- -- (1,378)
Net Income................... -- -- -- -- 2,296 2,296
---- --- -------- -------- -------- --------
Balance March 31, 1997....... $ -- $-- $114,080 $(67,762) $(90,477) $(44,159)
==== === ======== ======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
F-23
<PAGE> 109
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss)......................................... $ 2,296 $ (6,894)
Adjustment to reconcile net loss (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization.......................... 7,511 6,044
Amortization of deferred financing costs............... 995 723
Inventory valuation adjustment......................... -- 2,000
Change in assets and liabilities, net of acquisitions:
Accounts receivable.................................. (19,379) (8,568)
Inventories.......................................... 12,958 292
Prepaid expenses and other........................... (1,159) (335)
Accounts payable..................................... (14,655) (3,150)
Accrued and other liabilities........................ 1,963 2,743
Accrued interest..................................... 5,001 6,517
Other long-term liabilities.......................... (139) (101)
-------- ---------
Net cash used in operating activities....................... (4,608) (729)
-------- ---------
Cash flows provided by (used in) investing activities:
Acquisitions, net of cash................................. (58,996) (160,259)
Capital expenditures...................................... (3,038) (2,537)
-------- ---------
Net cash from investing activities.......................... (62,034) (162,796)
-------- ---------
Cash flows provided by (used in) financing activities:
Equity proceeds........................................... -- 45,039
Proceeds from issuance of long-term obligations........... 65,000 128,200
Borrowing of long-term obligations........................ 10,095 3,100
Cash dividends paid on preferred stock.................... (1,378) --
Financing fees and other.................................. (3,250) (7,800)
-------- ---------
Net cash from financing activities.......................... 70,467 168,539
-------- ---------
Net change in cash.......................................... 3,825 5,014
Cash at beginning of the period............................. -- --
-------- ---------
Cash at end of the period................................... $ 3,825 $ 5,014
======== =========
</TABLE>
See accompanying notes to the consolidated financial statements
F-24
<PAGE> 110
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
1. THE COMPANY
International Wire Group, Inc. ("Group" or the "Company"), a Delaware
corporation, was formed to participate in the transactions contemplated by the
IW Acquisitions (as described below). On June 12, 1995, Wirekraft Holdings Corp.
("Wirekraft"), Omega Wire Corp. ("Omega"), International Wire Holding Company
("Holding", the parent company of Group), Group, Wirekraft Acquisition Company
and certain shareholders of Wirekraft and Omega entered into a series of
acquisitions and mergers (the "IW Acquisition") pursuant to which Group acquired
all of the common equity securities (and all securities convertible into such
securities) of Wirekraft and all of the common equity securities of Omega. On
March 5, 1996, Wire Technologies, Inc. ("Wire Technologies"), a wholly-owned
subsidiary of the Company, acquired the businesses of Hoosier Wire, Inc., Dekko
Automotive Wire, Inc., Albion Wire, Inc. and Silicones, Inc., a group of
affiliated companies operating together under the trade name Dekko Wire
Technology Group (the "DWT Acquisition"). On February 12, 1997, the Company
acquired all of the issued and outstanding common stock of Camden Wire Co., Inc.
("Camden") a wholly-owned subsidiary of Oneida LTD. (the "Camden Acquisition").
See Note 3.
The Company through its two segments, the wire segment and the harness
segment, is engaged in the design, manufacture and marketing of non-insulated
and insulated copper wire and wire harnesses. The Company's products are used by
a wide variety of customers primarily in the automotive, appliance, computer and
data communications and industrial equipment industries.
2. BASIS OF PRESENTATION
Unaudited Interim Consolidated Financial Statements
The unaudited interim consolidated financial statements reflect all
adjustments consisting only of normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of financial position
and results of operations. The results for the three months ended March 31, 1997
are not necessarily indicative of the results that may be expected for a full
fiscal year.
Statement of Cash Flows
Interest and taxes paid for the three months ended March 31, 1997 were
$7,010 and $166, respectively.
3. CAMDEN ACQUISITION
On February 12, 1997, the Company completed the Camden Acquisition. The
total consideration of $65,000 paid in connection with the Camden Acquisition,
including fees and expenses, consisted of (i) cash and (ii) the assumption of
debt related to Industrial Revenue Bonds. The cash portion of the consideration
paid and the transaction fees and expenses incurred in connection with the
Camden Acquisition were funded with $65,000 of senior debt under the Amended and
Restated Credit Agreement.
F-25
<PAGE> 111
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Camden Acquisition was accounted for using the purchase method of
accounting whereby the total acquisition cost has been preliminarily allocated
to the consolidated assets and liabilities based upon their estimated respective
fair values. The purchase price allocations are still in process. It is not
expected that the final allocation of the purchase cost will result in a
materially different allocation than is presented herein. The total acquisition
cost is preliminarily allocated to the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets............................................ $ 49,666
Property, plant & equipment............................... 42,041
Goodwill.................................................. 3,572
Other, non-current........................................ 1,728
Fees and costs............................................ 3,250
Current liabilities....................................... (27,612)
Other liabilities......................................... (7,645)
--------
$ 65,000
========
</TABLE>
Unaudited pro forma results of operations of the Company for the three
months ended March 31, 1997 and March 31, 1996, are included below. Such pro
forma presentation has been prepared assuming that the Camden Acquisition and
related financing had occurred as of January 1, 1997 and January 1, 1996,
respectively, and that the DWT Acquisition and related financing had occurred as
of January 1, 1996.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Net sales................................................... $195,144 $180,568
Net income (loss)........................................... 2,731 (3,939)
</TABLE>
4. INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method.
The composition of inventories at March 31, 1997, is as follows:
<TABLE>
<S> <C>
Raw materials.............................................. $33,946
Work-in-progress........................................... 16,743
Finished goods............................................. 22,141
-------
Total............................................ $72,830
=======
</TABLE>
5. LONG-TERM OBLIGATIONS
The composition of long-term obligations at March 31, 1997 is as follows:
<TABLE>
<S> <C>
Credit Agreement:
Revolving credit facility............................... $ 18,800
Term facility........................................... 331,488
Senior subordinated and exchange notes.................... 160,000
Industrial revenue bonds.................................. 15,500
Other..................................................... 6,974
--------
$532,762
Less current maturities................................... (21,944)
--------
$510,818
========
</TABLE>
F-26
<PAGE> 112
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The schedule of principal payments for long-term obligations at March 31,
1997 is as follows:
<TABLE>
<S> <C>
1997...................................................... $ 16,173
1998...................................................... 24,153
1999...................................................... 29,493
2000...................................................... 62,669
2001...................................................... 57,508
Thereafter................................................ 342,766
--------
Total........................................... $532,762
========
</TABLE>
In connection with the Camden Acquisition, Holding and the Company entered
in to an Amended and Restated Credit Agreement dated as of February 12, 1997
with certain financial institutions. The Amended and Restated Credit Agreement
provides senior secured financing of up to $428.5 million, consisting of an
$111.0 million, Term A loan, an $115.0 million Term B loan, an $127.5 million
Term C loan (collectively the "Term Facility") and a $75.0 million revolving
loan and letter of credit facility (the "Revolver"). Mandatory principal
payments of the Term Facility are due in quarterly installments. The final
installment on the Term A Loan is due September 30, 2000 at which time the
Revolver is also due. The final installments on the Term B Loan and Term C Loan
are due September 30, 2002 and September 30, 2003, respectively.
Borrowings under the Term A Loan and Revolver bear interest, at the option
of Group, at a rate per annum equal to (a) the Alternate Base Rate (as defined
in the Amended and Restated Credit Agreement) plus 1.5% or (b) the Eurodollar
Rate (as defined in the Amended and Restated Credit Agreement) plus 2.5%.
Borrowings under the Term B Loan bear interest, at the option of Group, at a
rate per annum equal to (a) the Alternate Base Rate (as defined in the Amended
and Restated Credit Agreement) plus 2.0% or (b) the Eurodollar Rate (as defined
in the Amended and Restated Credit Agreement) plus 3.0%. Borrowings under the
Term C Loan bear interest, at the option of Group, at a rate per annum equal to
(a) the Alternate Base Rate (as defined in the Amended and Restated Credit
Agreement plus 2.5% or (b) the Eurodollar Rate (as defined in the Amended an
Restated Credit Agreement) plus 3.5%. The Alternate Base Rate and Eurodollar
Rate margins are established quarterly based on a formula as defined in the
Amended and Restated Credit Agreement. Interest payment dates vary depending on
the interest rate option to which the Term Facility and Revolver are tied, but
generally interest is payable quarterly. The Amended and Restated Credit
Agreement contains several financial covenants which, among other things,
require Group to maintain certain financial ratios and restrict Group's ability
to incur indebtedness, make capital expenditures and pay dividends.
Senior Subordinated Notes
The Senior Subordinated Notes due 2005 ("the Senior Notes") were issued
under an indenture, dated June 12, 1995 (the "Indenture") in connection with the
Acquisitions. The Senior Notes represent unsecured general obligations of Group
and are subordinated to all Senior Debt (as defined in the Indenture) of Group.
The Senior Notes, which were originally sold pursuant to an exemption from the
registration of the Securities Act of 1993, as amended, were exchanged for
identical notes registered under such Act in November 1995.
The Senior Notes are fully and unconditionally (as well as jointly and
severally) guaranteed on an unsecured, senior subordinated basis by each
subsidiary of the Company (the "Guarantor Subsidiaries") other than Electro
Componentes de Mexico, S.A. de C.V. and Wirekraft Industries de Mexico, S.A. de
C.V. (The "Non-Guarantor Subsidiaries"). Each of the Guarantor Subsidiaries and
Non-Guarantor Subsidiaries is wholly owned by the Company. Separate financial
statements for the respective Guarantor Subsidiaries are not contained herein
because the aggregate net assets, liabilities, earnings and equity of the
Guarantor Subsidiaries is substantially equivalent to the net assets,
liabilities, earnings and equity of the Company on a consolidated basis.
F-27
<PAGE> 113
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Exchange Notes
In February 1997, the Company exchanged $10,000 of Series A Senior
Cumulative Exchangeable Redeemable Preferred Stock (the "Preferred Stock") for
14.0% Senior Subordinated Notes due June 1, 2005 (the "Exchange Notes") and paid
all dividends in arrears related to the Preferred Stock. The Exchange Notes were
issued under an indenture dated February 12, 1997 (the "Exchange Indenture").
The Exchange Notes represent unsecured general obligations of Group, are
subordinated to all Senior Indebtedness (as defined in the Exchange Indenture)
of Group and rank on equal terms with the Senior Notes.
The Exchange Notes are fully and unconditionally (as well as jointly and
severally) guaranteed on an unsecured, senior subordinated basis by each
subsidiary of the Company (the "Guarantor Subsidiaries") other than Electro
Componentes de Mexico, S.A. de C.V. and Wirekraft Industries de Mexico, S.A. de
C.V. (The "Non-Guarantor Subsidiaries"). Each of the Guarantor Subsidiaries and
Non-Guarantor Subsidiaries is wholly owned by the Company. Separate financial
statements for the respective Guarantor Subsidiaries are not contained herein
because the aggregate net assets, liabilities, earnings and equity of the
Guarantor Subsidiaries is substantially equivalent to the net assets,
liabilities, earnings and equity of the Company on a consolidated basis.
The Exchange Notes mature on June 1, 2005. Interest on the Exchange Notes
is payable semi-annually on each June 1 and December 1. The Exchange Notes bear
interest at the rate of 14.0% per annum. The Exchange Notes may not be redeemed
prior to June 1, 2000, except in the event of a Change of Control (as defined)
or Initial Public Offering (as defined) and at such applicable premium (as
defined). The Exchange Notes are redeemable, at the Company's option, at the
redemption prices of 105.875% at June 1, 2000, and at decreasing prices to 100%
at June 1, 2003, and thereafter, with accrued interest. In addition, prior to
June 1, 1998, the Company may redeem within guidelines specified in the
Indenture, up to $3,000 of the Exchange Notes with the proceeds of one or more
Equity Offerings (as defined) by the Company or Holding at a redemption price of
110%, with accrued interest.
Industrial Revenue Bonds
In connection with the Camden Acquisition the company assumed debt related
to two Industrial Revenue Bonds (the "IRB's"), totalling $15,500. The IRB's are
due in August 2005 and March 2016 in the amounts of $9,000 and $6,500
respectively. The IRB's bear interest at a rate per annum which is tied to the
Tax Exempt Money Market Index. Rates change weekly and interest is paid monthly.
6. PLANT CLOSING EXPENSE
In March 1997, the Company recorded a pretax charge to operations of $500
to provide for plant closing costs. The plant closing costs relate to
consolidating a wire segment facility and include provisions for certain
shut-down costs of $375 and severance related costs of $125.
F-28
<PAGE> 114
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of each of the Companies comprising
Dekko Wire Technologies:
We have audited the accompanying combined balance sheet of Dekko Wire
Technologies (the "Company") as of December 28, 1995 and the related combined
statements of income, shareholders' equity and cash flows for each of the years
in the two years ended December 28, 1995. 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, the financial statements of the Company referred to above
present fairly, in all material respects, the financial position of Dekko Wire
Technologies as of December 28, 1995 and the results of their operations and
their cash flows for each of the two years in the period ended December 28,
1995.
Coopers & Lybrand L.L.P.
Fort Wayne, Indiana
January 30, 1996, except for
Note 10, as to which the date
is February 6, 1996
F-29
<PAGE> 115
DEKKO WIRE TECHNOLOGIES
COMBINED BALANCE SHEET
AS OF DECEMBER 28, 1995
(DOLLAR AMOUNTS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
1995
-------
<S> <C>
Current assets:
Cash and cash equivalents................................. $ 2,949
Accounts receivable, trade................................ 19,295
Inventories:
Raw materials.......................................... 8,945
Work in progress....................................... 160
Finished goods......................................... 4,459
-------
13,564
LIFO reserve........................................... 2,292
-------
11,272
Prepaid expenses.......................................... 209
-------
Total current assets.............................. 33,725
Property, plant and equipment:
Land...................................................... 1,339
Buildings................................................. 10,581
Machinery and equipment................................... 26,190
Construction in progress.................................. 677
-------
38,787
Less accumulated depreciation............................. 8,636
-------
30,151
Intangible assets........................................... 400
Undisbursed bond funds...................................... 2,108
Other assets................................................ 305
-------
$66,689
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt, current portion........................... $ 2,545
Accounts payable, trade................................... 7,695
Accrued expenses.......................................... 2,787
Customer deposits......................................... 912
-------
Total current liabilities......................... 13,939
Long-term debt, less current portion...................... 26,403
-------
Total liabilities................................. 40,342
Redeemable common stock................................... 289
Shareholders' Equity
Common stock.............................................. 5,055
Paid-in capital........................................... 2,263
Retained earnings......................................... 21,381
-------
28,699
-------
Less treasury stock....................................... (2,641)
-------
26,058
-------
$66,689
=======
</TABLE>
The accompanying notes are an integral part of the financial statements
F-30
<PAGE> 116
DEKKO WIRE TECHNOLOGIES
COMBINED STATEMENTS OF INCOME
FOR EACH OF THE TWO YEARS IN THE
PERIOD ENDED DECEMBER 28, 1995
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Net sales................................................... $154,321 $131,832
Cost of sales............................................... 127,898 107,228
-------- --------
Gross profit.............................................. 26,423 24,604
Other operating revenues, rentals and administrative
services............................................... 437 458
Selling, general and administrative expenses.............. 6,889 5,506
-------- --------
Operating income.......................................... 19,971 19,556
Other income (expenses):
Interest income........................................... 438 134
Interest expense.......................................... (1,679) (1,314)
Gain (loss) on sale of property, plant and equipment...... (14) 51
Other income (expense).................................... (200) (114)
-------- --------
Net income............................................. $ 18,516 $ 18,313
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements
F-31
<PAGE> 117
DEKKO WIRE TECHNOLOGIES
COMBINED STATEMENT OF SHAREHOLDERS' EQUITY
FOR EACH OF THE TWO YEARS ENDED DECEMBER 28, 1995
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON PAID-IN TREASURY SUBSCRIBED SUBSCRIPTIONS RETAINED
STOCK CAPITAL STOCK STOCK RECEIVABLE EARNINGS TOTAL
------ ------- -------- ---------- ------------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance on December 30, 1993... 1,410 116 (1,396) 2,411 (2,411) 11,432 11,562
Net income................... 18,313 18,313
Distributions to
shareholders.............. (11,987) (11,987)
Common stock issued.......... 229 1,792 390 (2,411) 2,411 2,411
Common stock subscribed...... 483 (483)
Stock redemption............. 357 (26) (1,613) 851 (431)
Elimination of El Paso Wire
Division Retained
Earnings.................. (3,532) (3,532)
------ ------ ------- ------- ------- -------- --------
Balance on December 29, 1994... 1,996 1,882 (2,619) 483 (483) 15,077 16,336
Net income................... 18,516 18,516
Distributions to
shareholders.............. (10,409) (10,409)
Common stock issued.......... 3,022 406 55 (483) 483 3,483
Common stock subscribed...... 3 (3) --
Stock redemption............. 34 (25) (74) (223) (288)
Elimination of Albion Wire
Division Retained
Earnings.................. (1,580) (1,580)
------ ------ ------- ------- ------- -------- --------
Balance on December 28, 1995... $5,055 $2,263 $(2,641) $ -- $ -- $ 21,381 $ 26,058
====== ====== ======= ======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements
F-32
<PAGE> 118
DEKKO WIRE TECHNOLOGIES
COMBINED STATEMENT OF CASH FLOWS
FOR EACH OF THE TWO YEARS ENDED DECEMBER 28, 1995
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................. $ 18,516 $ 18,313
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 2,729 1,189
(Gain) loss on sale of property, plant and equipment...... 14 (51)
(Gain) loss on investment in Group Dekko Services LLC..... (362) 179
Change in assets and liabilities:
Accounts receivable.................................... 643 (3,994)
Inventory.............................................. (760) 3,454
Prepaid expenses....................................... 291 19
Accounts payable....................................... (670) 1,614
Accrued expenses....................................... 1,235 130
Customer deposits...................................... (91) 180
-------- --------
Net cash provided by operating activities......... 21,545 21,033
-------- --------
Cash flows from investing activities:
Property, plant and equipment acquired.................... (4,792) (751)
Proceeds from sale of property, plant and equipment....... 136 124
Investment in Group Dekko Services LLC.................... (100)
Distribution from investment in Group Dekko Services
LLC.................................................... 392
Other assets acquired..................................... (59) (109)
Acquisition of businesses................................. (6,550) (2,790)
Change in undisbursed bond funds.......................... 4,745
-------- --------
Net cash used in investing activities............. (6,128) (3,626)
-------- --------
Cash flows from financing activities:
Net borrowings (payments) on lines of credit.............. (1,640) (300)
Proceeds from short-term debt............................. 2,671
Payments on short-term debt............................... (1,671) (1,500)
Proceeds from long-term debt.............................. 3,100 6,200
Payments on long-term debt................................ (5,521) (7,176)
Stock redemption.......................................... (431) (5,243)
Proceeds from sale of stock............................... 3,483 2,411
Distribution to shareholders.............................. (10,409) (11,987)
-------- --------
Net cash used in financing activities............. (13,089) (14,924)
-------- --------
Acquisition adjustment...................................... (1,580) (3,532)
-------- --------
Net change in cash and cash equivalents..................... 748 (1,049)
Cash and cash equivalents, beginning of year................ 2,201 3,250
-------- --------
Cash and cash equivalents, end of year...................... $ 2,949 $ 2,201
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements
F-33
<PAGE> 119
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS)
1. BASIS OF PRESENTATION
These combined financial statements and the accompanying notes for the
years ended December 28, 1995 ("1995") and December 29, 1994 ("1994"), reflect
the operations of Dekko Wire Technologies ("DWT"). DWT supplies high-quality
insulated wire products and fabricated bare wire products primarily to the
automotive, appliance, marine and electronic industries. DWT is part of a
federation of companies known as "Group Dekko" and is comprised of the
following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C>
- - Albion Wire, Inc. - Albion Wire, a division of Group
- - Dekko Automotive Wire, Inc. Dekko International, Inc.
- - Hoosier Wire, Inc. - Dekko Automotive Wire, Inc.
- - Silicones, Inc. - Hoosier Wire, Inc.
- Silicones, Inc.
</TABLE>
Albion Wire, a division of Group Dekko International, Inc. (GDI), was
purchased by Albion Wire, Inc. on December 30, 1994, the first day of 1995, by
leveraged buy-out. The product lines of El Paso Wire, a division of GDI, were
purchased by Dekko Automotive Wire, Inc. on December 31, 1993, the first day of
1994. For comparability, the operations of Albion Wire (1994) have been included
in these combined financial statements. As a division of GDI, Albion Wire shared
common management with DWT during 1994. Wire Tech, Inc. was merged into Hoosier
Wire, Inc. on the first day of 1994 and continues to operate as a division of
Hoosier Wire, Inc.
DWT businesses are also known in their industries as "Wire Tech,"
"Masterwire," and "National Reel Services."
2. RELATED PARTY TRANSACTIONS
DWT and the other Group Dekko companies have common executive management
and most have common ownership. DWT owns 26.5% of Group Dekko Services LLC, a
company providing administrative services to its members.
With the exception of Wire Tech, Inc., each of the entitles comprising DWT
was once owned GDI. DWT entitles separated from GDI in several transactions as
follows:
1994 and 1995
- Albion Wire, a division of GDI, was purchased by Albion Wire, Inc. on the
first day of 1995, by leveraged buy-out totaling $19,663. The purchase of
product lines and property, plant and equipment were financed with the
assumption of certain industrial revenue bonds totaling $9,800 from GDI,
capital from shareholders, and cash flows from operations. The accounts
receivable and inventory associated with the product lines were acquired
at GDI's basis which approximated fair market value. The property, plant
and equipment were acquired at fair market value.
- The product lines of El Paso Wire, a division of GDI, were purchased by
Dekko Automotive Wire, Inc. on the first day of 1994 for $3,885. The
accounts receivable and inventory associated with these product lines
were acquired at GDI's basis which approximated fair market value. The
purchase was financed with a $2,671 note payable to GDI, cash flows from
operations and draws on the revolving credit agreement. Dekko Automotive
Wire, Inc. continued to lease property, plant and equipment used by the
El Paso Wire Division from GDI under one-year renewable operating leases.
F-34
<PAGE> 120
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
- The property, plant and equipment leased from GDI by Dekko Automotive
Wire, Inc.'s Alabama Wire Division was purchased by Dekko Automotive
Wire, Inc. on the first day of 1994 for $13,751. The purchase was
financed with the assumption of certain industrial revenue bonds totaling
$11,105 from GDI, cash flows from operations and draws on the revolving
line of credit. The property, plant and equipment were acquired at fair
market value.
- Certain property, plant and equipment leased by Hoosier Wire, Inc. from
GDI was purchased by Hoosier Wire, Inc. on the first day of 1994 for
$4,131. The purchase was financed with the transfer of an industrial
revenue bond in the amount of $3,945 and cash flows from operations. The
property, plant and equipment were acquired at fair market value.
The following table summaries non-cash investing and financing activities
related to the acquisitions described above:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Fair value of assets acquired............................... $19,663 21,767
Less: cash paid............................................. 9,863 4,046
------- -------
Liabilities incurred or assumed............................. $ 9,800 $17,721
======= =======
</TABLE>
DWT continues to lease certain equipment and manufacturing facilities from
GDI under one-year renewable operating leases. Rent expense paid to GDI is
included in the table below. Total rent expense charged to operations is
disclosed in Note 8.
DWT has significant transactions with Group Dekko companies described as
follows:
- Group Dekko Services LLC, a company wholly-owned by DWT and the other
Group Dekko companies, provides DWT with certain administrative services,
including: financial, tax, and accounting; employee benefit
administration; legal counsel; facilities management; marketing and
corporate planning; human resources management; information and
communication systems; environmental and safety; risk management; and
corporate records.
- Group Dekko Logistics LLC, owned by Group Dekko Services LLC and GDI,
provides transportation management and trucking services to DWT.
- Certain DWT companies make payments to GDI on sales agreements for the
purchase of intangible assets such as customer lists, trade names,
patents, etc.
F-35
<PAGE> 121
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DWT transactions with other Group Dekko companies are summarized as
follows:
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
INCOME STATEMENT
Trade sales................................................. $7,605 $5,256
Rent paid on facilities and equipment....................... 1,203 2,617
Rental income............................................... 334 349
Administrative services purchased........................... 1,822 2,403
Interest expense on notes payable........................... 91 339
Materials purchased......................................... 4,889 2,582
Labor purchased............................................. 269 1,078
Transportation services purchased........................... 506 876
Accrual on intangible assets................................ 59 64
Capital distribution from Group Dekko Services LLC.......... 392 --
Gain/(loss) on investment in Group Dekko Services LLC....... 362 (179)
BALANCE SHEET
Notes payable, balance at year end.......................... -- 1,671
Accounts payable, balance at year end....................... 1,088 747
Accounts receivable, balance at year end.................... 637 601
</TABLE>
3. ACCOUNTING POLICIES
Principles of Combination -- The combined financial statements include the
accounts of the companies comprising DWT as detailed in Note 1. All significant
intercompany transactions have been eliminated in combination.
Cash and Cash Equivalents -- Cash and cash equivalents include all cash
balances and highly liquid investments with original maturities of three months
or less. Interest paid during 1995 and 1994 was $1,657 and $1,270, respectively.
Inventories -- DWT used the last-in, first-out (LIFO) cost method of
valuing its inventories for approximately 86% and 95% of total inventories at
December 28, 1995 and December 29, 1994, respectively. The remainder are stated
at cost using the first-in, first-out (FIFO) method. On the first day of 1994,
Dekko Automotive Wire, Inc., adopted the LIFO method of accounting. The
cumulative effect of this accounting change for years prior to 1994 is not
determinable, nor are the pro forma effects of retroactive application of the
LIFO method to prior years. This change decreased 1994 net income by $1,565.
Property, Plant and Equipment -- Assets are recorded at cost. Upon sale or
retirement of property, plant and equipment, the asset cost and related
accumulated depreciation are removed from the accounts and any resulting gain or
loss is included in income.
Depreciation on assets is calculated by declining balance and straight-line
methods over estimated lives principally as follows: buildings -- 15 to 39
years; machinery and equipment -- 5 to 7 years.
Intangible Assets -- As part of various sales agreements, DWT has purchased
customer lists, trade names, patents, etc., from GDI. Acceleration clauses in
the agreements dictate that unpaid amounts are due immediately upon sale,
liquidation, merger or other triggering event The assets are amortized over 15
years. Unpaid amounts under these agreements approximated $200 as of December
28, 1995.
Financial Instruments -- The carrying amounts of financial instruments
including cash equivalents, certificates of deposit, receivables, and accounts
payable approximated fair value as of December 28, 1995, because of the
relatively short maturities of these instruments. The carrying value of
long-term debt, including
F-36
<PAGE> 122
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
current maturities, approximated fair value as of December 28, 1995, based upon
terms and conditions currently available to the Company in comparison to terms
and conditions of the long-term debt.
Use of Estimates in the Preparation of Financial Statements -- The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
4. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1995
-------
<S> <C>
Unsecured revolving and reducing line of credit Available
$5,500, of which $3,850 was unused at December 28, 1995.
Bank advances on the line of credit carry an interest rate
of the bank's Reference Rate. Agreement was refinanced on
April 25, 1995 and the new interest rate is the bank's
Reference Rate minus one percent. At December 28, 1995,
the effective rate was 7.5%. ............................. $ 1,650
Unsecured revolving and reducing line of credit Available:
$5,000 of which $1,900 was unused at December 28, 1995.
Bank advances on the line of credit carry an interest rate
of the bank's Reference Rate minus three-quarters of a
percent. Effective rate at December 28, 1995 was
7.75%. ................................................... 3,100
Unsecured revolving line of credit Available for one year:
$500 of which $340 was unused at December 28, 1995. Bank
advances on the line of credit are payable on demand and
carry an interest rate based on prime minus one percent.
Effective rate at December 28, 1995 was 7.5%. ............ 160
Harris Bank, El Paso County, Texas, Series 1994 Variable
Rate Demand Industrial Development Revenue Bonds Interest
payable monthly, repriced weekly. Effective rate: December
28, 1995: 5.4% Average rate: 1995: 4.15% Principal due
annually through December 1, 2007, in payment ranging from
$500 to $800. ............................................ 8,000
Town of Avilla, Indiana, Series "A" and "B" 1990 Adjustable
Rates Industrial Refunding Revenue Bonds. Interest payable
monthly, repriced weekly. Effective rate: December 28,
1995: 5.35% Average rate: 1995: 3.86% Principal due
annually through September 1, 2005, in payments ranging
from $260 to $455. ....................................... 3,478
Indiana Development Finance Authority -- Dekalb County
Adjustable Rate Industrial Development Refunding Bonds
Interest payable monthly, repriced weekly Effective rate:
December 28, 1995: 5.2% Average rate: 1995: 3.50%
Principal due annually through March 1, 2006, in payments
ranging from $115 to $210. ............................... 1,750
Harris Bank, Town of Elkmont, Alabama, Series 1989
Variable/Fixed Rate Industrial Development Bonds Interest
payable monthly, repriced weekly Effective rate: December
28, 1995: 5.4% Average rate: 1995: 4.17% Principal due
annually through September 1, 2004, in payments ranging
from $525 to $765. ....................................... 5,500
Harris Bank, City of Kendallville, Indiana, Series 1987
Variable/Fixed Rate Economic Development Revenue Bonds
Interest payable monthly, repriced weekly. Effective rate:
December 28, 1995: 5.25% Average rate: 1995: 4.69%
Principal due annually through February 1, 2000 in
payments of $300 each. ................................... 1,500
</TABLE>
F-37
<PAGE> 123
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1995
-------
<S> <C>
Bank One, Town of Ardmore, Alabama, Series 1989
Variable/Fixed Rate Industrial Development Bonds Interest
payable monthly, repriced weekly. Effective rate: December
28, 1995: 5.35% Average rate: 1995: 4.34% Principal due
annually through June 1, 2004, in payments ranging from
$460 to $660. ............................................ $ 3,810
-------
28,948
Less current portion...................................... 2,545
-------
$26,403
=======
</TABLE>
The industrial revenue bonds are collateralized by land, buildings and
machinery and equipment of the Company totaling $30,132 at December 28, 1995. As
additional collateral on all bonds, all rights and interest on leases entered
into with respect to the above land, buildings and machinery and equipment have
been assigned to the holders of the bonds.
Certain of the debt agreements contain restrictive covenants which include,
among other things, minimum tangible net worth, maintenance of minimum working
capital and requirements to maintain certain financial ratios. At certain
measurement dates in 1994, DWT was not in compliance with certain covenants.
These events of noncompliance were waived by the lending institutions.
The aggregate amount of long-term debt maturing in each of the five years
following December 28, 1995, is as follows $2,545, $3,345, $4,310, $4,050, and
$2,610.
5. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
DEKKO AUTOMOTIVE
HOOSIER WIRE, INC. SILICONES, INC. WIRE, INC. ALBION WIRE, INC.
------------------- ---------------- ------------------- -----------------
SHARE COMMON TREASURY COMMON TREASURY COMMON TREASURY COMMON TREASURY
INFORMATION: STOCK STOCK STOCK STOCK STOCK STOCK STOCK STOCK
------------ -------- --------- ------ -------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Par value................ No Par $10 $10 $10
Shares authorized........ 500,00 60,000 1,000,000 500,000
======= ====== ========= ======= =======
Shares issued as of
December 29, 1994...... 359,059 248,074 45,953 13,834 97,910 -- -- --
Redemption............... 5,050 2,333 333
Sale..................... (3,266) (1,917) 2,225 (333) 300,000
------- ------- ------ ------ --------- ---- ------- -------
Shares issued as of
December 28, 1995...... 359,059 249,858 45,953 14,250 100,135 -- 300,000 --
======= ======= ====== ====== ========= ==== ======= =======
</TABLE>
The amounts corresponding to the common stock redemption and sale
transactions in the schedule above are reflected as redeemable common stock and
subscribed stock, respectively, in the balance sheet in the year immediately
prior to the redemption or sale transaction, as these transactions had been
approved by the Board of Directors. Common stock redemptions are reflected in
the statement of shareholders' equity in the year the transaction was approved
by the Board of Directors. Common stock sales are reflected as common stock
subscribed in the statement of shareholders' equity in the year the transaction
was approved by the Board of Directors and as common stock issued in the year
the transaction was executed.
As discussed in Note 1, two divisions of GDI have been included in these
combined financial statements for comparability. The acquisition of these
divisions by DWT requires the elimination of the amounts accumulated by the
division as retained earnings. These eliminations are reflected in the statement
of shareholders' equity during the year the division was acquired by DWT.
F-38
<PAGE> 124
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
6. INCOME TAXES
The shareholders of each of the respective companies comprising DWT have
elected S Corporation status for federal and state income tax purposes, whereby
profits and losses are passed directly to them for inclusion in their personal
tax returns. Accordingly, no liability or provision for federal or state income
taxes is included in the accompanying financial statements. The pro forma
amounts below reflect the income taxes that would have been reported had DWT
been subject to federal and state income taxes and if the DWT companies had
filed separate income tax returns during those years. There are no material
timing differences which would give rise to deferred tax assets or liabilities.
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Combined income before income taxes......................... $18,516 $18,313
Pro forma federal and state income taxes.................... 7,272 7,430
------- -------
Pro forma net income........................................ $11,244 $10,883
======= =======
</TABLE>
Texas franchise taxes included in selling, general and administrative
expenses were $491 and $10 in 1995 and 1994, respectively.
7. PROFIT SHARING RETIREMENT PLAN
DWT participates in a profit sharing retirement plan of GDI which covers
substantially all employees. Under the plan employees may, but are not required
to, make contributions. DWT contributions under the plan are at the discretion
of the Board of Directors and cannot exceed 15% of the annual compensation of
the participating employees.
Total profit sharing plan expense charged to operations in fiscal years
1995 and 1994 amounted to approximately $1,066 and $892, respectively.
8. LEASING TRANSACTIONS
DWT leases certain equipment and manufacturing facilities under renewable
operating leases. Total rent expense charged to operations was $1,712 and $3,059
in 1995 and 1994, respectively. Rent paid to related parties is summarized in
Note 2. The aggregate amount of minimum operating lease payments in each of the
four years following December 28, 1995, is as follows: $353, $352, $299, and
$114.
9. SIGNIFICANT CUSTOMER
Sales to a single customer approximated 39% and 29% of total 1995 and 1994,
sales, respectively. Accounts receivable from this customer at December 28, 1995
approximated 29% of total trade receivables. Sales to the automotive and
appliance industries were 51% and 47%, of total sales, respectively, in 1995 and
1994.
10. SUBSEQUENT EVENTS
On February 6, 1996, the Boards of Directors of each of the companies
comprising DWT approved, subject to approval by the shareholders of the
respective companies, certain Purchase Agreements whereby International Wire
Group, Inc. (International Wire) would:
- acquire substantially all of the assets and assume certain of the
liabilities of Dekko Automotive Wire, Inc., Albion Wire, Inc., and
Silicones, Inc.
- acquire all of the issued and outstanding common shares of Hoosier Wire,
Inc.
F-39
<PAGE> 125
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Consideration for the above mentioned acquisition is to be in the form of
cash and warrants to purchase shares in International Wire Holding Company, the
parent of International Wire as follows:
<TABLE>
<CAPTION>
GROSS CASH WARRANTS
---------- --------
<S> <C> <C>
Dekko Automotive Wire, Inc.................................. $ 64,665 779,092
Albion Wire, Inc............................................ 47,288 569,732
Silicones, Inc.............................................. 7,624 91,850
Hoosier Wire, Inc........................................... 46,423 559,326
-------- ---------
Total............................................. $166,000 2,000,000
</TABLE>
The consideration described above is subject to certain adjustments
prescribed by the Purchase Agreements and the payment of all outstanding debt
and certain retained liabilities at the date of closing, as well as an aggregate
escrow amount of $10 million. Closing is expected to occur prior to March 31,
1996.
F-40
<PAGE> 126
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Wirekraft Holdings Corp.:
We have audited the accompanying consolidated statements of operations,
stockholders' equity, and cash flows of Wirekraft Holdings Corp. and
subsidiaries (formerly WB Holdings, Inc.) for the six months ended May 31, 1995
and the year ended November 30, 1994. 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, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of Wirekraft Holdings Corp. and subsidiaries for the six months ended May 31,
1995 and the year ended November 30, 1994, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
January 27, 1996
F-41
<PAGE> 127
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30, 1994
---------------- -----------------
<S> <C> <C>
Net sales................................................... $168,053 $240,972
Operating expenses:
Cost of goods sold........................................ 138,851 201,602
Selling, general and administrative....................... 13,301 14,319
Depreciation and amortization............................. 6,474 6,435
Compensation expense...................................... 895 --
Expenses related to sale.................................. 501 --
Expenses related to plant closings........................ 2,000 --
-------- --------
Operating income............................................ 6,031 18,616
Other income (expense):
Interest expense.......................................... (8,020) (10,565)
Amortization of deferred financing costs.................. (1,657) (1,995)
-------- --------
Income (loss) before income tax provision and extraordinary
item...................................................... (3,646) 6,056
Income tax provision (benefit).............................. (2,114) 3,023
-------- --------
Income (loss) before extraordinary item..................... (1,532) 3,033
Extraordinary item -- loss due to early extinguishment of
debt, net of income tax of $4,930......................... (7,835) --
-------- --------
Net income (loss)........................................... $ (9,367) $ 3,033
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
F-42
<PAGE> 128
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED MAY 31, 1995 AND
THE YEAR ENDED NOVEMBER 30, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A ADDITIONAL RETAINED
PREFERRED COMMON COMMON PAID-IN EARNINGS
STOCK STOCK STOCK CAPITAL (DEFICIT) TOTAL
--------- ------ ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance November 30, 1993....... $-- $200 $24 $22,576 $ 2,541 $25,341
Net income...................... -- -- -- -- 3,033 3,033
--- ---- --- ------- ------- -------
Balance November 30, 1994....... -- 200 24 22,576 5,574 28,374
Issuance of preferred stock..... 10 -- -- 24,990 -- 25,000
Issuance of common stock........ -- 3 -- 747 -- 750
Issuance costs.................. -- -- -- (300) -- (300)
Net loss........................ -- -- -- -- (9,367) (9,367)
--- ---- --- ------- ------- -------
Balance May 31, 1995............ $10 $203 $24 $48,013 $(3,793) $44,457
=== ==== === ======= ======= =======
</TABLE>
See accompanying notes to the consolidated financial statements
F-43
<PAGE> 129
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30, 1994
---------------- -----------------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss)......................................... $ (9,367) $ 3,033
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Extraordinary item.......................................... 12,765 --
Depreciation and amortization............................... 6,474 6,435
Amortization of deferred financing costs.................... 1,493 1,667
Accretion of debt discount.................................. 164 328
Deferred income taxes....................................... (4,282) (325)
Change in assets and liabilities, net of acquisitions:
Accounts receivable....................................... (9,863) (7,928)
Inventories............................................... (824) (6,622)
Prepaid expenses and other................................ (166) (2,951)
Accounts payable.......................................... (617) 8,231
Accrued and other liabilities............................. 2,628 (281)
Accrued interest.......................................... 1,276 (1,217)
Income taxes payable/refundable........................... (3,366) 2,443
Other long-term liabilities............................... (236) (495)
-------- --------
Net cash from operating activities................ (3,921) 2,318
-------- --------
Cash flows provided by (used in) financing activities:
Acquisitions, net of cash................................. (44,973) (11,754)
Capital expenditures, net................................. (2,914) (6,248)
-------- --------
Net cash from investing activities................ (47,887) (18,002)
-------- --------
Cash flows provided by (used in) financing activities:
Proceeds from issuance of long-term obligations........... 24,000 12,674
Equity proceeds........................................... 25,750 --
Borrowings of long-term obligations....................... 19,639 22,995
Repayment of long-term obligations........................ (14,226) (17,481)
Financing fees and other.................................. (3,500) (691)
-------- --------
Net cash from financing activities................ 51,663 17,497
-------- --------
Net change in cash and cash equivalents..................... (145) 1,813
Cash and cash equivalents at beginning of the period........ 2,053 240
-------- --------
Cash and cash equivalents at end of the period.............. $ 1,908 $ 2,053
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
F-44
<PAGE> 130
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED MAY 31, 1995, AND
THE YEAR ENDED NOVEMBER 30, 1994
(IN THOUSANDS, EXCEPT SHARE DATA)
1. THE COMPANY
WB Holdings Inc. ("Holdings"), a Delaware corporation, was formed to
participate in the December 21, 1992 Acquisition (defined below). Holdings had
no operations prior to December 21, 1992.
On December 2, 1994, Holdings, through a series of mergers, became a
wholly-owned subsidiary of Wirekraft Holdings Corp. ("New Holdings" together
with Holdings, the "Company"). Pursuant to the mergers, the existing
stockholders of Holdings exchanged their Holdings securities for New Holdings
securities that have terms identical to the exchanged Holdings securities. New
Holdings, a Delaware corporation, was formed to participate in the acquisition
of Electro Componentes de Mexico S.A. de C.V. ("ECM") as discussed in Note 2.
New Holdings had no operations prior to December 2, 1994. Holdings and New
Holdings have a fiscal year-end of November 30.
On December 21, 1992, Holdings, through a series of acquisitions and
mergers, acquired all of the issued and outstanding common stock of Bristol
Holding Corporation and Burcliff Holdings Corporation, the parent companies of
the general partners of Kirtland Indiana, Limited Partnership for a total
consideration of $116,997 (the "Acquisition"). Through a related series of
mergers after the Acquisition, Bristol Holding Corporation became the surviving
entity. Bristol Holding Corporation was later renamed Wirekraft Industries, Inc.
("Wirekraft") (together with Holdings, the "Company"). Wirekraft through its two
segments, the Wire segment and the Harness segment, is engaged in the
manufacture, design and distribution of insulated wire and wire harnesses used
primarily in the appliance and automobile markets. The Company markets and
distributes its products through a combination of internal sales representatives
and independent sales representatives, selling primarily to original equipment
manufacturers.
The total cost of the Acquisition consisted of $57,967 for issued and
outstanding common stock, $42,877 for the retirement of existing indebtedness,
$1,175 for outstanding warrants and $14,978 for fees and expenses. The
Acquisition was accounted for using the purchase method of accounting whereby
the total acquisition cost was allocated to the acquired net assets based on
their respective fair values.
The total acquisition cost was allocated to the acquired net assets as
follows:
<TABLE>
<S> <C>
Current assets............................................ $ 29,461
Property, plant and equipment............................. 19,980
Goodwill.................................................. 80,319
Fees and costs............................................ 9,580
Other non-current assets.................................. 386
Current liabilities....................................... (16,365)
Other liabilities......................................... (6,364)
--------
$116,997
--------
</TABLE>
2. ECM ACQUISITION
On December 2, 1994, through a series of acquisitions and transfers from
New Holdings, Wirekraft acquired the stock of ECM and certain assets from
General Electric Company. The purchase price, including fees and expenses, was
approximately $49,550. The purchase price consisted of $20,000 in cash,
1,000,000 shares of Series A Senior Preferred Stock, par value $.01 per share,
$25 liquidation preference and 275,758 shares of common stock on New Holdings.
F-45
<PAGE> 131
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The acquisition of ECM was accounted for using the purchase method of
accounting whereby the total acquisition cost was allocated to the acquired net
assets based on their respective fair values. The total acquisition cost was
allocated to the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets............................................. $ 8,211
Property, plant and equipment.............................. 8,288
Intangibles................................................ 37,958
Fees and costs............................................. 3,500
Current liabilities and other reserves..................... (8,407)
-------
$49,550
=======
</TABLE>
Unaudited pro forma data, which show condensed results of operations for
the year ended November 30, 1994 as though the acquisition and related financing
of ECM had occurred at the beginning of the period is as follows:
<TABLE>
<S> <C>
Net sales................................................. $319,486
Net income................................................ $ 5,758
</TABLE>
3. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements for the year ended November 30, 1994
include the accounts of Holdings and its wholly-owned subsidiary, Wirekraft. The
consolidated financial statements for the six months ended May 31, 1995 include
the accounts of New Holdings and its wholly-owned subsidiary, Holdings. All
material intercompany balances and transactions have been eliminated in
consolidation.
Revenue Recognition
Sales and related costs of goods sold are included in income when goods are
shipped to customers.
Inventories
Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is calculated
using the straight-line method. The average estimated lives utilized in
calculating depreciation are as follows: building and improvements -- 25 years;
machinery and equipment -- 7 years; and furniture and fixtures -- 5 years.
Leasehold improvements are amortized over the shorter of the term of the
respective lease or life of the respective improvement.
Intangible Assets
Intangible assets, which consist principally of goodwill arising from the
excess of cost over the value of net assets acquired, are amortized using the
straight-line method over forty years. Accumulated amortization aggregated
$4,040 at November 30, 1994.
F-46
<PAGE> 132
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred Financing Costs
Deferred financing costs, which consists of fees and other expenses
associated with the debt financing, are amortized over the term of the related
debt using the effective interest method and the straight-line method which
approximates the effective interest method.
Income Taxes
Deferred income taxes are determined using the liability method.
Statement of Cash Flows
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest paid for the six months ended
May 31, 1995 and the year ended November 30, 1994 was approximately $6,744 and
$11,803, respectively. Taxes paid for the six months ended May 31, 1995 and the
year ended November 30, 1994 were approximately $604 and $905, respectively. In
connection with the Acquisition, the Company assumed liabilities aggregating
$22,729, which is a non-cash investing activity.
During the six months ended May 31, 1995, the Company entered into a
capital lease obligation of $4,714 for new equipment.
Fair Value of Financial Instruments
The fair market values of the financial instruments included in the
consolidated financial statements approximate the carrying values of the
financial instruments.
Concentration of Credit Risk
Accounts receivable from companies located throughout the United States in
the appliance and automotive industries amounted to approximately $12,397 and
$15,684, respectively at November 30, 1994. Sales to the Company's five largest
customers represented 61% of net sales for the six months ended May 31, 1995 and
51% and 56% of net sales in 1994 and 1993, respectively. A significant portion
of the Company's sales are to three major customers within the Harness Segment.
Sales to one of these customers represented 25% of net sales for the six months
ended May 31, 1995. The Company has entered into a supply contract with this
customer expiring in 2002. Sales to the Company's two other major customers
represented 12% and 7% of net sales for the six months ended May 31, 1995, 17%
and 11% of net sales in 1994. In 1995, a supply contract with one of the above
mentioned customers expired. A supply contract was subsequently renegotiated
through December, 1998.
4. FINANCING COSTS AND RELATED PARTY TRANSACTIONS
In connection with the Acquisition and ECM acquisition, the Company
incurred aggregate fees and costs of $11,900. Costs of $11,100 related to the
12% Senior Subordinated Notes due 2003 and Credit Agreement are included in
deferred financing costs and are amortized over the term of the related
borrowings. Costs of $800 related to the issuance of Holding's common stock have
been deducted from the proceeds to reduce the carrying value of the common
stock.
In connection with the Acquisition and the related financing, Holdings and
Wirekraft entered into a Monitoring and Oversight Agreement ("Agreement") with
Hicks, Muse & Co., Incorporated ("Hicks, Muse") (an affiliate of the Company)
pursuant to which the Company paid Hicks, Muse a financial advisory fee of
$1,725. The fees, which also include $200 paid in connection with the
acquisition of Ristance and $750
F-47
<PAGE> 133
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
paid in connection with the acquisition of ECM, have been allocated to the
Company's debt and equity securities as deferred financing costs or as a
deduction from the cash proceeds received from the sale of stock. The Agreement
further provides that the Company shall pay Hicks, Muse an annual fee of $115
(subject to adjustment), for ten years, for monitoring and oversight services.
Such Agreement was amended and restated in connection with the acquisition of
ECM to increase the annual fee for financial advisory services to $200 (subject
to adjustment). The obligation under the Agreement, as amended, and the related
deferred financing costs have been recorded in the consolidated balance sheet.
5. STOCKHOLDERS' EQUITY
The authorized capital stock of the Company at May 31, 1995 consists of
50,000,000 shares of common stock, 3,000,000 shares of Class A common stock, and
10,000,000 shares of preferred stock. In connection with the financing of the
Acquisition, the Company issued 20,000,000 shares of common stock, 2,402,402
shares of Class A common stock and 1,621,622 warrants to purchase common stock.
Each warrant represents the right to purchase one share of the Company's common
stock for $1.00 per warrant. The warrants expire on December 31, 2002. As of May
31, 1995, no warrants had been exercised. On December 2, 1994, in connection
with the acquisition of ECM, the Company issued 1,000,000 shares of Series A
Senior Preferred Stock and 275,758 shares of common stock.
The Class A common stock may be converted into shares of common stock at
the option of the holder at any time. In addition, shares of the Class A common
stock (i) may be converted into common stock at the option of the Company
effective immediately prior to the occurrence of a Triggering Event (as defined
in the Company's Certificate of Incorporation) or (ii) shall automatically be
converted on December 31, 2002. Such conversions are based on a formula set
forth in the Company's Certificate of Incorporation.
Dividends are payable to holders of the common stock and Class A common
stock in amounts as and when declared by the Company's board of directors,
subject to legally available funds and certain agreements governing the
Company's indebtedness. In the event of any liquidation, dissolution or winding
up of the Company, before any payment or distribution of the assets of the
Company shall be made to the holders of the Class A common stock, each share of
common stock shall be entitled to a liquidation preference based on a formula
set forth in the Company's Certificate of Incorporation. The common stock and
the Class A common stock are entitled to one vote per share on all matters
submitted to a vote of stockholders.
The Company has adopted a qualified and non-qualified incentive stock
option plan (the "Option Plan") for officers and key employees of Holdings. A
total of 1,471,000 shares of the Company's common stock has been reserved for
issuance under the Option Plan. Under the Option Plan, eligible participants may
receive qualified and non-qualified options to purchase shares of the Company's
common stock.
Options are exercisable at such time and on such terms as the committee
appointed to administer the Option Plan (the "Committee") determines. The
exercise price for the options granted under the Option Plan may not be less
than the fair market value of the underlying share, as determined by the
Committee on the date of grant. Generally, an option may be exercised only if
the holder is an officer or employee of the Company at the time of exercise.
Options granted under the Option Plan are not transferable, except by will and
the laws of descent and distribution. During the year ended November 30, 1994,
the Company granted options to purchase 75,000 shares of common stock at $2.74
per share and canceled 235,200 options. No options were exercised during the
year. During the six months ended May 31, 1995, the Company granted options to
purchase 100,000 shares of common stock at $2.74 per share, canceled 188,800
shares and 20,000 options were exercised. At May 31, 1995, there were 764,000
options available for issuance under the Option Plan.
F-48
<PAGE> 134
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. INCOME TAXES
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30, 1994
---------------- -----------------
<S> <C> <C>
Current:
Federal........................................... $ 1,022 $2,741
State............................................. 892 607
Foreign........................................... 254 --
------- -------
2,168 3,348
------- -------
Deferred:
Federal........................................... (3,159) (124)
State............................................. (1,123) (201)
------- -------
(4,282) (325)
------- -------
Total..................................... $(2,114) $3,023
======= =======
</TABLE>
Reconciliation between the Federal statutory income tax rate and the
effective tax rate is summarized below:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30, 1994
---------------- -----------------
<S> <C> <C>
Federal taxes at statutory rate (34%)............... $(1,240) $2,059
State taxes, net of federal effect.................. 210 268
Foreign............................................. (1,468) --
Nondeductible assets................................ 340 680
Other............................................... 44 16
------- -------
Provision (benefit) for income taxes................ $(2,114) $3,023
======= =======
</TABLE>
7. PLANT CLOSING EXPENSE
In May 1995, the Company recorded a pretax charge to operations of $2,000
to provide for plant closing costs. The Company's decision to shut-down certain
harness segment plants was the result of a customer transitioning certain wire
harness purchases to its own captive operations in Mexico and other third party
suppliers. The plant closing costs include provisions for shut-down costs from
the period of the plant closure to the date of disposal, commitment costs for
leased equipment and severance related costs.
8. RETIREMENT BENEFITS
Employees of Wire division, who are eligible under Section 414(q) of the
Internal Revenue Code, may participate in the profit sharing plan sponsored by
the Company. The plan qualifies under the Internal Revenue Code section 401(k),
and the Company may at its discretion make contributions on a matching or
non-matching basis. Employees of the Wire Division with approximately one year
of service may also participate in a money purchase pension plan sponsored by
the Company. The Company is required to make contributions to the money purchase
pension plan equal to 3% of an employee's eligible compensation as defined in
the plan document. Expense under these two plans amounted to approximately $363
and $451 for the six months ended May 31, 1995 and the year ended November 30,
1994, respectively.
F-49
<PAGE> 135
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. LEASES
The Company leases certain of its manufacturing facilities and equipment
under long-term lease agreements with lease terms expiring through February
2004. Rent expense applicable to the noncancelable operating leases aggregated
$505, $436 and $431 for the six months ended May 31, 1995 and for the year ended
November 30, 1994.
The schedule of future minimum lease payments by calendar year under
operating leases at November 30, 1994 is as follows:
<TABLE>
<S> <C>
1995........................................................ $1,645
1996........................................................ 1,607
1997........................................................ 1,567
1998........................................................ 1,324
1999........................................................ 1,234
Thereafter.................................................. 1,723
</TABLE>
10. CONTINGENCIES
The Company is subject to various lawsuits and claims with respect to such
matters as patents, product liabilities, government regulations, and other
actions arising in the normal course of business. In the opinion of management,
the ultimate liabilities resulting from such lawsuits and claims will not have a
material adverse effect on the Company's consolidated financial conditions and
results of operations.
11. OTHER ACQUISITIONS
On December 10, 1993, Wirekraft acquired certain assets and related
liabilities of the wire business of the Ristance division of Echlin Corporation
("Ristance"). The purchase price, including fees and expenses, paid in cash, was
approximately $11,800 which was funded through additional borrowings under the
Credit Agreement. The acquisition of Ristance was accounted for using the
purchase method of accounting and, accordingly, the purchase price was allocated
to assets and liabilities acquired based upon their fair value at the date of
the acquisition.
F-50
<PAGE> 136
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. BUSINESS SEGMENT INFORMATION
Certain information concerning the Company's operating segments for the six
months ended May 31, 1995 and the year ended November 30, 1994 is presented
below. Total revenue by segment includes both sales to customers and
intersegment sales, which are accounted for at prices charged to customers and
eliminated in consolidation.
<TABLE>
<CAPTION>
WIRE HARNESS CONSOLIDATED
-------- -------- ------------
<S> <C> <C> <C>
Six Months Ended May 31, 1995
Total revenue........................................... $ 88,488 $ 88,620
Intersegment sales...................................... 7,807 1,248
-------- --------
Sales to customers...................................... $ 80,681 $ 87,372 $168,053
======== ========
Operating income........................................ 1,320 4,711 6,031
Depreciation and amortization........................... 2,534 3,940 6,474
Capital expenditures, net............................... 1,636 1,278 2,914
Year Ended November 30, 1994 Total revenue................ $153,014 $101,167
Intersegment sales...................................... 13,209 --
-------- --------
Sales to customers...................................... $139,805 $101,167 $240,972
======== ========
Operating income........................................ 9,433 9,183 18,616
Depreciation and amortization........................... 4,451 1,984 6,435
Capital expenditures, net............................... 5,819 429 6,248
</TABLE>
13. SUBSEQUENT EVENT
On June 12, 1995, International Wire Holding Company, through a series of
mergers and acquisitions acquired all of the outstanding common stock of New
Holdings (the "Transaction"). The Company has designated June 1, 1995, as the
effective date of the Transaction for financial reporting purposes. In
connection with the Transaction, the majority of the Company's long-term debt
was repaid, the common stock of New Holdings was redeemed at $51,751, the Series
A Senior Preferred Stock issued as part of the ECM acquisition (see Note 2) was
redeemed at a liquidation value of $26,250 plus accrued dividends of $71 and the
warrants and equity rights were retired at $10,133. As a result of the early
repayment of certain long-term debt, $7,909 of deferred financing costs and
$2,456 of OID were charged off and included as an extraordinary item in the
accompanying Statements of Operations for the six months ended May 31, 1995. In
addition, the Company paid a prepayment penalty of $2,400 to holders of
subordinated notes. This amount has also been included in the accompanying
statements of operations as an extraordinary item. The stock options granted
pursuant to the Company's stock option plan were canceled for payment to the
option holders who received cash. This amount totaled approximately $895 and has
been included in the Statements of Operations as compensation expense for the
six months ended May 31, 1995. In connection with the sale, the Company incurred
expenses of $501 which has been recorded in the Statements of Operations as
expenses related to sale.
F-51
<PAGE> 137
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Omega Wire Corp.:
We have audited the accompanying consolidated statements of operations,
stockholders' equity, and cash flows of Omega Wire Corp. and subsidiaries for
the two months ended May 31, 1995. 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.
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, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of Omega Wire Corp. and subsidiaries for the two months ended May 31, 1995, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
January 27, 1996
F-52
<PAGE> 138
OMEGA WIRE CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
TWO MONTHS ENDED MAY 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
Net sales................................................... $23,295
Operating expenses:
Cost of goods sold........................................ 17,512
Selling, general and administrative....................... 1,639
Depreciation and amortization............................. 1,233
-------
Operating income............................................ 2,911
Other income (expense):
Interest expense.......................................... (1,797)
Amortization of deferred financing costs.................. (238)
-------
Income before income tax provision and extraordinary item... 876
Income tax provision........................................ 171
-------
Income before extraordinary item............................ 705
Extraordinary item -- loss due to early extinguishment of
debt net of income tax of $2,082.......................... (4,044)
-------
Net loss.................................................... $(3,339)
=======
</TABLE>
See accompanying notes to the consolidated financial statements
F-53
<PAGE> 139
OMEGA WIRE CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
TWO MONTHS ENDED MAY 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A CARRYOVER OF
COMMON COMMON PAID-IN PREDECESSOR ACCUMULATED
STOCK STOCK CAPITAL BASIS DEFICIT TOTAL
------ ------- ------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock... $420 $-- $41,580 $ -- $ -- $ 42,000
Issuance of Class A common
stock.................... -- 63 -- -- -- 63
Issuance costs............. -- -- (675) -- -- (675)
Carryover of predecessor
basis.................... -- -- -- (20,000) -- (20,000)
Net loss................... -- -- -- -- (3,339) (3,339)
---- --- ------- -------- ------- --------
Balance May 31, 1995....... $420 $63 $40,905 $(20,000) $(3,339) $ 18,049
==== === ======= ======== ======= ========
</TABLE>
See accompanying notes to the consolidated financial statements
F-54
<PAGE> 140
OMEGA WIRE CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
TWO MONTHS ENDED MAY 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows provided by (used in) operating activities:
Net loss.................................................. $ (3,339)
Adjustment to reconcile net loss to net cash provided by
(used in) operating activities:
Extraordinary item........................................ 6,126
Depreciation and amortization............................. 1,233
Amortization of deferred financing costs.................. 238
Deferred income taxes..................................... 120
Change in assets and liabilities, net of acquisitions:
Accounts receivable.................................... 1,528
Inventories............................................ (510)
Prepaid expenses and other............................. (231)
Accounts payable....................................... 919
Accrued and other liabilities.......................... 10
Accrued interest....................................... 952
Income taxes payable/refundable........................ (2,033)
Other long-term liabilities............................ (26)
---------
Net cash from operating activities................ 4,987
---------
Cash flows provided by (used in) investing activities:
Acquisition, net of cash.................................. (159,080)
Capital expenditures, net................................. (581)
---------
Net cash from investing activities................ (159,661)
---------
Cash flows provided by (used in) financing activities:
Proceeds from issuance of long-term obligations........... 135,000
Contributed capital....................................... 34,653
Repayment of long-term obligations........................ (7,979)
Financing fees and other.................................. (7,000)
---------
Net cash from financing activities................ 154,674
---------
Net change in cash.......................................... --
Cash at beginning of the period............................. --
---------
Cash at end of the period................................... $ --
=========
</TABLE>
See accompanying notes to the consolidated financial statements
F-55
<PAGE> 141
OMEGA WIRE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWO MONTHS ENDED MAY 31, 1995
(IN THOUSANDS, EXCEPT SHARE DATA)
1. THE COMPANY
Omega Wire Corp. ("Omega" or the "Company"), a Delaware corporation, was
formed to participate in the Acquisition (defined below). Omega had no
operations prior to the Acquisition.
On March 31, 1995, Omega acquired all of the issued and outstanding common
stock of THL-Omega Holding Corporation ("THL-Omega") for a total consideration
$167,300 (the "Acquisition"). Omega, through its subsidiaries, is engaged in the
manufacturing and marketing of non-insulated copper wire and cable products. The
Company's products are used by a wide variety of customers primarily in the
automotive and computer and data communications industries. Omega has a fiscal
year-end of December 31.
The total purchase price of the Acquisition of approximately $174,300,
which included the retirement of existing indebtedness and related fees and
costs, is summarized as follows:
<TABLE>
<S> <C>
Cash paid for all issued and outstanding common stock..... $102,762
Cash paid to retire existing indebtedness................. 55,439
Common stock of Omega issued.............................. 7,410
Fees and costs............................................ 8,689
--------
$174,300
========
</TABLE>
The Acquisition was accounted for using the purchase method of accounting
whereby the total acquisition cost has been preliminarily allocated to the
consolidated assets and liabilities based on their estimated respective fair
values. In accordance with EITF 88-16, "Basis in Leveraged Buyout Transactions",
a portion of the Acquisition has been accounted for at "predecessor basis". The
application of predecessor basis reduced stockholders' equity and goodwill by
$20,000. The purchase price allocations are still in process. It is not expected
that the final allocation of the purchase cost will result in a materially
different allocation than is presented herein.
The total acquisition costs have been preliminarily allocated to the
acquired net assets as follows:
<TABLE>
<S> <C>
Current assets............................................ $ 40,802
Property, plant and equipment............................. 38,974
Goodwill.................................................. 96,701
Fees and costs............................................ 9,000
Other assets.............................................. 54
Current liabilities....................................... (21,906)
Other liabilities......................................... (9,325)
Carryover of predecessor basis............................ 20,000
--------
$174,300
========
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Omega and its
wholly-owned subsidiaries. All material intercompany balances and transactions
have been eliminated in consolidation.
Revenue Recognition
Sales and related cost of goods sold are included in income when goods are
shipped to customers.
F-56
<PAGE> 142
OMEGA WIRE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Inventories
Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is calculated
using the straight-line method. The average estimated lives utilized in
calculating depreciation are as follows: buildings -- 25 to 40 years; building
improvements 15 years; machinery and equipment -- 3 to 11 years; and furniture
and fixtures -- 5 years. Leasehold improvements are amortized over the shorter
of the term of the respective lease or the life of the respective improvement.
Intangible Assets
Intangible assets consist principally of goodwill arising from the excess
of cost over the value of net assets acquired, which is being amortized using
the straight-line method over forty years. Amortization of intangible assets
amounted to $384 for the two months ended May 31, 1995.
Deferred Financing Costs
Deferred financing costs, consisting of fees and other expenses associated
with the debt financing are amortized over the term of the related debt using
the effective interest method and the straight-line method which approximates
the effective interest method.
Statement of Cash Flows
For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest and taxes paid for the two
months ended May 31, 1995 were $845 and $2, respectively.
In connection with the Acquisition, certain shares of common stock of
THL-Omega were exchanged for common stock of Omega. The total amount of shares
exchanged were $7,410, which was a non-cash investing and financing activity.
3. FINANCING COSTS AND RELATED PARTY TRANSACTIONS
In connection with the Acquisition, the Company incurred aggregate fees and
costs of $7,000. Costs of $6,325 related to the debt financing are being
amortized over the terms of the related borrowings. Costs of $675 related to the
issuance of Omega's common stock have been deducted from the proceeds to reduce
the carrying value of the common stock.
In connection with the Acquisition and obtaining the related financing,
Omega entered into a Monitoring and Oversight Agreement ("Agreement") with
Hicks, Muse & Co. Partners, L.P. ("Hicks, Muse") (an affiliate of the Company)
pursuant to which the Company paid Hicks, Muse a cash fee of $2,525 as
compensation for financial advisory services. The fees have been allocated to
the debt and equity securities issued in connection with the Acquisition as
deferred financing costs or as a deduction from the cash proceeds received from
the sale of the common stock of Omega. The agreement further provides that the
Company shall pay Hicks, Muse an annual fee of $200, for ten years for
monitoring and oversight services adjusted annually at the end of each fiscal
year to an amount equal to .1% of the consolidated net sales of the Company, but
in no event less than $200 annually.
F-57
<PAGE> 143
OMEGA WIRE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. STOCKHOLDERS' EQUITY
The authorized capital stock of the Company consists of 100,000,000 shares
of common stock, 6,333,333 shares of Class A common stock, and 10,000,000 shares
of preferred stock. In connection with the financing of the Acquisition, the
Company issued 42,000,000 shares of common stock and 6,333,333 shares of Class A
common stock.
The Class A common stock may be converted into shares of common stock at
the option of the holder at any time. In addition, shares of the Class A common
stock (i) may be converted into common stock at the option of the Company
effective immediately prior to the occurrence of a Triggering Event (as defined
in the Company's Certificate of Incorporation) or (ii) shall automatically be
converted on March 31, 2005. Such conversions are based on a formula set forth
in the Company's Certificate of Incorporation.
Dividends are payable to holders of the common stock and Class A common
stock in amounts as and when declared by the Company's board of directors,
subject to legally available funds and certain agreements governing the
Company's indebtedness. In the event of any liquidation, dissolution or winding
up of the Company, before any payment or distribution of the assets of the
Company shall be made to the holders of the Class A common stock, each share of
common stock shall be entitled to a liquidation preference based on a formula
set forth in the Company's Certificate of Incorporation. The common stock and
the Class A common stock are entitled to one vote per share on all matters
submitted to a vote of stockholders.
5. INCOME TAXES
The Company accounts for income taxes in accordance with provisions of SFAS
No. 109. The provision for income taxes for the two months ended May 31, 1995 is
as follows:
<TABLE>
<S> <C>
Current:
Federal................................................... $ 51
----
Deferred:
Federal................................................... 55
State..................................................... 65
----
120
----
$171
====
</TABLE>
Reconciliation between the federal statutory income tax rate and the
effective tax rate is summarized below:
<TABLE>
<S> <C>
Federal taxes at statutory rate (34%)....................... $ 297
State taxes, net of federal effect.......................... 43
Other....................................................... (169)
-----
Provision for income taxes.................................. $ 171
=====
</TABLE>
6. RETIREMENT PLANS
The Company has a profit sharing plan covering substantially all employees
of Omega Wire Corp. Contributions are made to a trusteed fund to accumulate as a
retirement benefit for employees. The profit sharing expense amounted to $113
for the two months ended May 31, 1995.
Effective January 1, 1995, the Company implemented a savings plan
permitting substantially all employees to contribute up to 15% of their salary
on a pre-tax basis to any of the six investment options available. There are no
required Company contributions to the plan.
F-58
<PAGE> 144
OMEGA WIRE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. COMMITMENTS
The Company leases certain property, transportation vehicles and other
equipment under operating leases. Total lease expense for the two months ended
May 31, 1995 was approximately $290.
Under the terms of the agreements in effect at May 31, 1995, the Company
has future minimum lease commitments as follows:
<TABLE>
<S> <C>
1995....................................................... $ 979
1996....................................................... 1,262
1997....................................................... 1,202
1998....................................................... 1,159
1999....................................................... 1,108
Later years................................................ 9,198
-------
Total minimum lease commitments............................ $14,908
=======
</TABLE>
8. CONTINGENCIES
The Company is subject to various lawsuits and claims with respect to such
matters as patents, product liabilities, government regulations, and other
actions arising in the normal course of business. In the opinion of management,
the ultimate liabilities resulting from such lawsuits and claims will not have a
material adverse effect on the Company's consolidated financial conditions and
results of operations.
9. SUBSEQUENT EVENT
On June 12, 1995, International Wire Holding Company ("Holdings"), through
a series of mergers and acquisitions acquired all of the outstanding common
stock of the Company in exchange for certain of its common equity securities
(the "Transaction"). In connection with the Transaction the Company has been
renamed "International Wire Group, Inc." The Company has designated June 1,
1995, as the effective date of the Transaction for financial reporting purposes.
In connection with the Transaction the Company's long-term debt was repaid. As a
result of the early repayment of long-term debt, approximately $6,126 of
deferred financing costs were charged off and included as an extraordinary item
in the accompanying Statement of Operations.
F-59
<PAGE> 145
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
THL-Omega Holding Corporation:
We have audited the accompanying consolidated statements of operations and
retained earnings and cash flows of THL-Omega Holding Corporation and its
subsidiaries for the three months ended March 31, 1995. 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.
We conducted our audit of these statements 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,
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 the opinion expressed
above.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of THL-Omega Holding Corporation and subsidiaries for the three months ended
March 31, 1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND, L.L.P.
St. Louis, Missouri
January 27, 1996
F-60
<PAGE> 146
THL-OMEGA HOLDING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
THREE MONTHS ENDED MARCH 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
Net sales................................................... $38,736
Costs and expenses:
Cost of products sold..................................... 30,638
Selling expenses.......................................... 1,430
General and administrative expenses....................... 1,493
Compensation expense...................................... 9,715
Expenses related to sale of Company....................... 1,689
-------
Loss from operations........................................ (6,229)
Interest expense............................................ (1,478)
Other income................................................ 32
-------
Loss before income taxes and extraordinary item............. (7,675)
Provision for income taxes.................................. 484
-------
Loss before extraordinary item.............................. (8,159)
Extraordinary item -- loss due to early extinguishment of
debt net of income tax of $765............................ (1,148)
-------
Net loss.................................................... (9,307)
Retained earnings -- beginning of the year.................. 13,284
-------
Retained earnings -- March 31, 1995......................... $ 3,977
=======
</TABLE>
See accompanying notes to the consolidated financial statements
F-61
<PAGE> 147
THL-OMEGA HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows provided by (used in) operating activities:
Net loss.................................................. $(9,307)
Adjustment to reconcile net loss to net cash provided by
(used in) operating activities:
Extraordinary item..................................... 1,913
Compensation expense................................... 9,715
Depreciation and amortization.......................... 1,509
Change in assets and liabilities:
Accounts receivable.................................. 1,222
Inventories.......................................... 2,826
Prepaid and other current assets..................... (485)
Accounts payable..................................... (3,714)
Accrued expenses..................................... (90)
Income taxes payable................................. (5)
Deferred compensation................................ 20
-------
Net cash from operating activities.......................... 3,604
-------
Cash flows provided by (used) investing activities:
Capital expenditures, net................................. (1,597)
-------
Net cash from investing activities.......................... (1,597)
-------
Cash flows provided by (used in) financing activities:
Repayment of long-term debt............................... (1,500)
Net borrowing (repayment) under revolving credit
facility............................................... (656)
Issuance of notes payable, net............................ 678
Redemption of common stock................................ (58)
-------
Net cash from financing activities.......................... (1,536)
-------
Net increase in cash........................................ 471
Cash at beginning of period................................. 339
-------
Cash at end of period....................................... $ 810
=======
</TABLE>
See accompanying notes to the consolidated financial statements
F-62
<PAGE> 148
THL-OMEGA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(IN THOUSANDS)
1. THE COMPANY
THL-Omega Holding Corporation and its subsidiaries ("THL-Omega" or the
"Company") are engaged in the manufacturing and marketing of non-insulated
copper wire and cable products. The Company's products are used by a wide
variety of customers primarily in the automotive and computer and data
communications industries. THL-Omega has a fiscal year-end of December 31.
2. SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the accounts of THL-Omega and
its wholly-owned subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation.
Revenue Recognition
Sales and related cost of goods sold are included in income when goods are
shipped to customers.
Inventories
Inventories are valued at the lower of cost or market. Cost is determined
primarily using the last-in, first-out ("LIFO") method.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is calculated
using the straight-line method. The average estimated lives utilized in
calculating depreciation are as follows: buildings -- 25 to 40 years; building
improvements -- 15 years; machinery and equipment -- 3 to 11 years; and
furniture and fixtures -- 5 years. Leasehold improvements are amortized over the
shorter of the term of the respective lease or the life of the respective
improvement.
Intangible Assets
Intangible assets consist principally of goodwill arising from the excess
of cost over the value of net assets acquired, which is being amortized using
the straight-line method over forty years.
Deferred Financing Costs
Deferred financing costs, consisting of fees and other expenses associated
with the debt financing are amortized over the term of the related debt using
the effective interest method and the straight-line method which approximates
the effective interest method.
Statement of Cash Flows
For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest and taxes paid for the three
months ended March 31, 1995 were $1,548 and $33, respectively.
F-63
<PAGE> 149
THL-OMEGA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. INCOME TAXES
The Company accounts for income taxes in accordance with the provisions of
SFAS No. 109. The provision for income taxes for the three months ended March
31, 1995 is as follows:
<TABLE>
<S> <C>
Current:
Federal................................................... $384
State..................................................... 100
----
$484
====
</TABLE>
Reconciliation between the statutory income tax rate and effective tax rate
for the three months ended March 31, 1995 is summarized below:
<TABLE>
<S> <C>
Statutory U.S. federal tax rate............................ $(2,610)
State taxes, net of federal benefit........................ 66
Amortization on non-deductible goodwill and non-deductible
expenses................................................. 3,028
-------
$ 484
=======
</TABLE>
4. RETIREMENT PLANS
The Company has a profit sharing plan covering substantially all employees
of THL-Omega. Contributions are made to a trusteed fund to accumulate as a
retirement benefit for employees. The profit sharing expense amounted to $249
for the three months ended March 31, 1995.
5. COMMITMENTS AND CONTINGENCIES
The Company leases certain property, transportation vehicles and other
equipment under operating leases. Rent expense for these operating leases for
the three months ended March 31, 1995 was approximately $433.
Under the terms of the agreements in effect at March 31, 1995, the Company
has future minimum lease commitments as follows:
<TABLE>
<S> <C>
1995....................................................... $ 979
1996....................................................... 1,262
1997....................................................... 1,202
1998....................................................... 1,159
1999....................................................... 1,108
Later years................................................ 9,198
-------
Total minimum lease commitments.......................... $14,908
=======
</TABLE>
The Company is subject to legal proceedings and claims which arise in the
normal course of business. In the opinion of management, the ultimate
liabilities with respect to these actions will not have a material adverse
effect on the Company's financial condition or results of operations.
6. ACQUISITION
On March 31, 1995, ownership of the Company transferred pursuant to the
terms of a Stock Purchase Agreement. Substantially all of the Company's
long-term debt has been repaid. As a result of the early repayment of certain
long-term debt, $1,013 of deferred financing costs was charged off and included
as an
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<PAGE> 150
THL-OMEGA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
extraordinary item in the accompanying Statement of Operations and Retained
Earnings for the three months ended March 31, 1995. In addition, the Company
paid a prepayment penalty of $900 to holders of the subordinated notes. This
amount also has been included in the accompanying Statement of Operations and
Retained Earnings as an extraordinary item. Immediately prior to the sale of the
Company, the Company sold common stock and granted stock options to certain
officers and shareholders for consideration less than the fair value of the
common stock. The difference between the fair value and the amount paid by the
officers and shareholders has been included in the Statement of Operations and
Retained Earnings as compensation expense for the three months ended March 31,
1995. In connection with the sale, the Company incurred expenses of $1,689 which
has been included in the Statement of Operations and Retained Earnings as
expenses related to the sale of the Company.
F-65
<PAGE> 151
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholder of
Electro Componentes de Mexico S.A. de C.V.:
We have audited the accompanying statement of direct revenues and expenses
of Electro Componentes de Mexico S.A. de C.V. (collectively, "ECM") for the
eleven months ended November 30, 1994. This statement is the responsibility of
the Company's management. Our responsibility is to express an opinion on this
statement based on our audit.
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 statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial statements. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying financial statement was prepared to present the results of
the direct revenues and expenses of ECM pursuant to the acquisition agreement
described in Note 1, and are not intended to be a complete presentation of ECM's
results of operations or cash flows.
In our opinion, the accompanying financial statements referred to above
present fairly, in all material respects, the statement of direct revenues and
expenses for the eleven months ended November 30, 1994, pursuant to the
acquisition agreement referred to in Note 1, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
El Paso, Texas
April 24, 1995
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<PAGE> 152
ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND
CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY
STATEMENT OF DIRECT REVENUES AND EXPENSES
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1994
(IN THOUSANDS)
<TABLE>
<S> <C>
Direct revenues............................................. $73,549
Direct expenses:
Cost of goods sold........................................ 51,981
Selling, general and administrative....................... 14,588
-------
Direct revenues in excess of direct expenses................ 6,980
Other income................................................ 242
-------
Direct revenues in excess of direct expenses before income
tax provision............................................. 7,222
Income tax provision at statutory rate...................... 2,787
-------
Net direct revenues in excess of direct expenses............ $ 4,435
=======
</TABLE>
See accompanying notes to the consolidated financial statements.
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<PAGE> 153
ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND
CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1994
(IN THOUSANDS)
1. BACKGROUND AND BASIS OF PRESENTATION
Pursuant to an Acquisition Agreement (the "Agreement") dated December 2,
1994, between General Electric Company ("GE"), Wirekraft Industries, Inc.
("Wirekraft") and certain affiliates of GE and Wirekraft, Wirekraft acquired the
stock of Electro Componentes de Mexico S.A., de C.V. ("Electro Componentes de
Mexico") and certain related assets from GE (collectively, "ECM").
Electro Componentes de Mexico, a "maquiladora," operates under Mexico's
in-bond manufacturing program. ECM manufactures wire harnesses used in the
appliance industry solely for GE.
The accompanying Statement of Direct Revenue and Expenses for the eleven
months ended November 30, 1994, has been derived from the historical books and
records of Electro Componentes de Mexico and GE. This statement has been
prepared to reflect certain historical information relating to the direct
revenues and expenses of ECM for the purpose of meeting certain reporting
requirements of the Securities and Exchange Commission. Separate records of
ECM's assets and liabilities and revenues and expenses have not been maintained
by GE. As such, it is impracticable to prepare full financial statements for
ECM. The accompanying financial statement has been prepared on a basis which
includes certain costs which have been charged or allocated by GE, and excludes
certain other costs which have not been charged or allocated by GE, such as
corporate overhead, employee benefits, interest and financing costs. The
financial statement does not purport to present the results of operations of ECM
as if it had been operated as a separate, unaffiliated entity, rather than as a
wholly-owned subsidiary of GE during the period presented.
2. SIGNIFICANT ACCOUNTING POLICIES
Inventories
Inventories are valued at the lower of cost or market. Cost is determined
using the first-in, first-out ("FIFO") method.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is calculated
using a modified sum of the years digits method. The average estimated lives
utilized in calculating depreciation are as follows: buildings and
improvements -- 25 years; machinery and equipment -- 10 years; and furniture and
fixtures -- 10 years. Leasehold improvements are amortized on the straight-line
method over the shorter of the term of the respective lease or the life of the
respective improvement.
Foreign Currency Translation
The "functional" currency of ECM is U.S. dollars. The historical books and
records of Electro Componentes de Mexico are maintained in Mexican pesos and
have been translated into U.S. dollars in accordance with the Statement of
Financial Accounting Standards No. 52, "Foreign Currency Translation."
Monetary assets and liabilities are converted at the rate of exchange in
effect at the date of acquisition of the asset, and revenue and expense accounts
are converted using a weighted average exchange rate for the period. Translation
gains and losses are included in income currently.
Income Taxes
ECM is not a separate taxable entity for federal, state or local income tax
purposes. Mexican income taxes, amounting to $649, are included in the provision
for income taxes based upon the separate tax return calculation of Electro
Componentes de Mexico for the period presented. ECM's U.S. operations are
included in the consolidated GE tax returns and GE has not historically
allocated U.S. income taxes to ECM. For purposes of the income tax computation,
the provision for income taxes for ECM's U.S. operations,
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<PAGE> 154
ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND
CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
amounting to $2,138, is based on an assumed combined statutory federal and state
tax rate of 40% for the period presented. Current and deferred portions of the
provision for income taxes have not been determined.
3. TRANSACTIONS WITH AFFILIATES
ECM, through the normal course of business, conducts transactions with GE
and its affiliates. All of ECM's sales and cost of goods sold relate to sales to
GE and its affiliates.
Receipts and disbursements of ECM have been managed by GE through a
centralized treasury system. Accordingly, cash generated by ECM flow directly to
GE and cash requirements are disbursed directly by GE. There is no direct
interest cost allocation to ECM with respect to borrowings, if any, and,
accordingly, the Statement of Direct Revenues and Expenses do not include any
financing costs.
4. RETIREMENT BENEFITS
Seniority premiums to which Mexican employees are entitled upon retirement
after fifteen years or more of service, in accordance with the Mexican Federal
Labor Law, are recognized as cost over the years in which services are rendered,
based on actuarial computations. To this effect, Electro Componentes de Mexico
has established an irrevocable trust fund. Payments to this fund, charged to
operations, were $46 for the eleven months ended November 30, 1994.
5. LEASES
ECM leases certain of its manufacturing facilities and equipment under
long-term lease agreements with lease terms expiring through 2002. Rent expense
applicable to these noncancelable leases aggregated $657 for the eleven months
ended November 30, 1994.
Future minimum lease payments under operating leases for the years ended
November 30 are:
<TABLE>
<S> <C>
1995........................................................ $ 671
1996........................................................ 582
1997........................................................ 536
1998........................................................ 486
1999........................................................ 468
Thereafter.................................................. 1,279
------
$4,022
======
</TABLE>
Total lease expense under operating leases, including amounts previously
noted as well as month-to-month leases, aggregated $1,276 for the eleven months
ended November 30, 1994.
6. CONTINGENCIES
ECM is subject to various lawsuits and claims with respect to such matters
as patents, product liabilities, government regulations, and other actions
arising in the normal course of business. In the opinion of management, the
ultimate liabilities resulting from such lawsuits and claims will not have a
material adverse effect on ECM's financial condition or results of operations.
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<PAGE> 155
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses payable in connection with the
offering of the securities to be registered and offered hereby. All of such
expenses are estimates, other than the registration fee payable to the
Securities and Exchange Commission. The Company has agreed to pay all expenses
related to the registration of the Notes.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee..... $ 3,030.30
Printing and Engraving Expenses......................... 15,000.00
Legal Fees and Expenses................................. 75,000.00
Accounting Fees and Expenses............................ 30,000.00
Miscellaneous........................................... 20,000.00
-----------
Total......................................... $143,030.30
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Delaware law authorizes corporations to limit or to eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of directors' fiduciary duty of care. The Certificate of
Incorporation of the Company limits the liability of the Company's directors to
the Company or its stockholders to the fullest extent permitted by the Delaware
statute as in effect from time to time. Specifically, directors of the Company
will not be personally liable for monetary damages for breach of a director's
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for unlawful payments of dividends or unlawful stock
repurchases or redemptions as provided in Delaware law, or (iv) for any
transaction from which the director derived an improper personal benefit.
The Certificate of Incorporation the Company provides that Company shall
indemnify its officers and directors and former officers and directors to the
fullest extent permitted by the General Corporation Law of the State of
Delaware. Pursuant to the provisions of Section 145 of the General Corporation
Law of the State of Delaware, the Company has the power to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding (other than an action by or in
the right of the Company) by reason of the fact that he is or was a director,
officer, employee, or agent of the Company, against any and all expenses,
judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit, or proceeding. The power to
indemnify applies only if such person acted in good faith and in a manner he
reasonably believed to be in the best interest, or not opposed to the best
interest, of the Company and with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful.
The power to indemnify applies to actions brought by or in the right of the
Company as well, but only to the extent of defense and settlement expenses and
not to any satisfaction of a judgment or settlement of the claim itself, and
with the further limitation that in such actions no indemnification shall be
made in the event of any adjudication of negligence or misconduct unless the
court, in its discretion, believes that in light of all the circumstances
indemnification should apply.
The statute further specifically provides that the indemnification
authorized thereby shall not be deemed exclusive of any other rights to which
any such officer or direct may be entitled under any bylaws, agreements, vote of
stockholders or disinterested directors, or otherwise.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such indemnifica-
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<PAGE> 156
tion 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 Company of expenses incurred or paid
by a director, officer or controlling person thereof in the successful defense
of any action, suit or proceeding) is asserted by a director, officer or
controlling person in connection with the securities being registered, the
Company 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 of 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.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On March 31, 1995, the Company (then known as Omega Wire Corp.) issued and
sold 42,000,000 shares of its common stock, 6,333,333 shares of its class A
common stock and $15,000,000 aggregate principal amount of its 13% Junior
Subordinated Notes due 2010 ("Junior Notes") to affiliates of, and persons
associated with, Hicks, Muse and Mills & Partners in connection with the
acquisition of THL-Omega Holding Corporation. The consideration for the issuance
of the common stock consisted of $34,590,000 in cash and certain equity
securities of THL-Omega Holding Corporation. The consideration for the issuance
of the class A common stock and the Junior Notes consisted of $63,333 in cash
and $15,000,000 in cash, respectively.
Exemption from registration with respect to the above-described sales by
the Company was claimed under Section 4(2) of the Securities Act regarding
transactions by an issuer not involving any public offering.
On June 12, 1995, the Company sold $150,000,000 aggregate principal amount
of 11 3/4% Senior Subordinated Notes due 2005 (the "11 3/4% Notes") in a private
placement in reliance of Section 4(2) under the Securities Act, at a price equal
to 100% of the stated principal amount of such 11 3/4% Notes. The 11 3/4% Notes
were immediately resold by the initial purchasers thereof in reliance on Rule
144A promulgated under the Securities Act.
On March 5, 1996, the Company sold 35,000,000 shares of Holding Common
Stock, 3,888,889 shares of Class A Common Stock and 400,000 shares of Preferred
Stock sold in units together with warrants for the purchase of shares of Common
Stock of Holding ("Units") to Chase Equity Associates and to certain affiliates
of, and persons associated with, Hicks, Muse. The consideration for the issuance
of the Holding Common Stock consisted of $35,000,000 in cash. The consideration
for the issuance of the Class A Common Stock consisted of $38,889 in cash. The
consideration for the issuance of the Units consisted of $10,000,000 in cash.
Exemption from registration with respect to the sales was claimed under Section
4(2) of the Securities Act.
On February 12, 1997, the Company exchanged the Preferred Stock for the
Notes to be registered and offered hereby. Exemption from registration with
respect to such exchange was claimed under Section 3(a)(9) of the Securities
Act.
On June 17, 1997, the Company sold $150,000,000 aggregate principal amount
of 11 3/4% Series B Senior Subordinated Notes due 2005 ("11 3/4% Series B
Notes") in a private placement in reliance on Section 4(2) under the Securities
Act, at a price equal to 108 3/4% of the stated principal amount of such 11 3/4%
Series B Notes. The 11 3/4% Series B Notes were immediately resold by the
initial purchasers thereof in reliance on Rule 144A promulgated under the
Securities Act.
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<PAGE> 157
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
<TABLE>
<CAPTION>
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of June 2, 1995,
among Omega Wire Corp., Wirekraft Holdings Corp.,
International Wire Holding Company, International Wire
Group, Inc. and Wirekraft Acquisition Company.(1)
2.2 -- Agreement and Plan of Merger, dated as of March 5, 1996,
among Hoosier Wire, Inc., International Wire Group, Inc.,
and Wire Technologies, Inc.(2)
2.3 -- Asset Purchase Agreement, dated as of March 5, 1996,
among Dekko Automotive Wire, Inc., International Wire
Holding Company, International Wire Group, Inc., and Wire
Technologies, Inc.(2)
2.4 -- Asset Purchase Agreement, dated as of March 5, 1996,
among Albion Wire, Inc. International Wire Holding
Company, International Wire Group, Inc., and Wire
Technologies, Inc.(2)
2.5 -- Asset Purchase Agreement, dated as of March 5, 1996,
among Silicones, International Wire Holding Company,
International Wire Group, Inc., and Wire Technologies,
Inc.(2)
2.6 -- Stock Purchase Agreement dated as of January 2, 1997,
among International Wire Group, Inc., Camden Wire Co.,
Inc. and Oneida Ltd.*
3.1 -- Restated Certificate of Incorporation of International
Wire Group, Inc.(4)
3.2 -- By-Laws of International Wire Group, Inc.(1)
3.7 -- Certificate of Incorporation of Camden Wire Co., Inc.*
3.8 -- Bylaws of Camden Wire Co., Inc.*
3.9 -- Certificate of Incorporation of ECM Holding Company.(1)
3.10 -- Bylaws of ECM Holding Company.(1)
3.11 -- Certificate of Incorporation, as amended, of Omega Wire,
Inc. (formerly known as THL-Omega Holding
Corporation).(1)
3.12 -- Bylaws, as amended, of Omega Wire, Inc. (formerly known
as THL-Omega Holding Corporation).(1)
3.13 -- Certificate of Incorporation, as amended, of OWI
Corporation.(1)
3.14 -- Bylaws of OWI Corporation.(1)
3.15 -- Certificate of Incorporation of Wirekraft Employment
Company.(1)
3.16 -- Bylaws of Wirekraft Employment Company.(1)
3.17 -- Certificate of Incorporation of Wire Harness Industries,
Inc.*
3.18 -- Bylaws of Wire Harness Industries, Inc.*
3.19 -- Certificate of Incorporation, as amended, of Wirekraft
Industries, Inc.(1)
3.20 -- Bylaws of Wirekraft Industries, Inc.(1)
3.21 -- Articles of Incorporation of Wire Technologies, Inc.*
3.22 -- Bylaws of Wire Technologies, Inc.*
4.1 -- Indenture, dated as of June 12, 1995, among International
Wire Group, Inc., as Issuer, the Subsidiary Guarantors
(as therein defined) and IBJ Schroder Bank & Trust
Company, as Trustee.(1)
4.2 -- Form of the 11 3/4% Note (included in Exhibit 4.1,
Exhibit B).
4.3 -- Exchange and Registration Rights Agreement, dated as of
June 12, 1995, among International Wire Group, Inc., the
Subsidiary Guarantors (as therein defined), Chemical
Securities Inc. and BT Securities Corporation.(1)
</TABLE>
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<PAGE> 158
<TABLE>
<CAPTION>
<C> <S>
4.4 -- First Supplemental Indenture, dated as of March 5, 1996,
by and among International Wire Group, Inc., Wire
Technologies, Inc., the subsidiary guarantors party
thereto, and IBJ Schroder Bank & Trust Company, as
Trustee.(2)
4.5 -- Certificate of Designation of Series A Senior Cumulative
Exchangeable Redeemable Preferred Stock of International
Wire Group, Inc.(2)
4.6 -- Second Supplemental Indenture, dated as of December 20,
1996, by International Wire Group, Inc. the subsidiary
guarantors party thereto, and IBJ Schroder Bank and Trust
Company, as Trustee.(5)
4.7 -- Indenture, dated as of February 12, 1997, among
International Wire Group, Inc., as Issuer, the Subsidiary
Guarantors (as therein defined) and IBJ Schroder Bank &
Trust Company, as Trustee.**
4.8 -- Form of 14% Note (included in Exhibit 4.7, Exhibit A).
4.9 -- Preferred Stock and Warrant Purchase Agreement dated as
of March 5, 1996, by and among International Wire Holding
Company, International Wire Group, Inc., Chemical Equity
Associates and Hicks, Muse, Tate & First Equity Fund II,
L.P.*
4.10 -- Third Supplemental Indenture, dated as of February 12,
1997, by and among International Wire Group, Inc., the
subsidiary guarantors party thereto, and IBJ Schroder
Bank & Trust Company, as Trustee.**
4.11 -- First Supplemental Indenture, dated as of June 10, 1997,
by and among International Wire Group, Inc., the
subsidiary guarantors party thereto, and IBJ Schroder
Bank & Trust Company, as Trustee.**
4.12 -- Indenture, dated as of June 17, 1997, among International
Wire Group, Inc., as Issuer, the Subsidiary Guarantors
(as therein defined) and IBJ Schroder Bank & Trust
Company, as Trustee.**
4.13 -- Form of 11 3/4% Series B Note (included in Exhibit 4.11,
Exhibit A).
5.1 -- Opinion of Weil, Gotshal & Manges LLP as to the
securities registered hereby.+
10.1 -- Parts Sourcing Contract, dated as of December 2, 1994,
among Wirekraft Industries, Inc. and General Electric
Company (Confidential treatment has been granted with
respect to certain portions of this exhibit).(1)
10.2 -- Schedule of Substantially Industrial Domestic Subsidiary
Security Agreements.(1)
10.3 -- Agreement of Sublease, dated as of December 31, 1991,
between Oneida County Industrial Development Agency and
OWI Corporation.(1)
10.4 -- Agreement of Sublease, dated as of December 31, 1991,
between Onondaga County Industrial Development Agency and
OWI Corporation.(1)
10.5 -- Sublease Agreement, dated as of March 31, 1994, between
Productos de Control, S.A. de C.V. and Wirekraft
Industries, Inc.(1)
10.6 -- Lease Contract, dated as of August 1, 1994, between
Parques Industriales Mexicanos, S.A. de C.V. and Electro
Componentes de Mexico, S.A. de C.V.(1)
10.7 -- Employment Agreement, dated as of June 12, 1995, among
International Wire Holding Company, International Wire
Group Inc. and certain of its subsidiaries and James N.
Mills.(4)
10.8 -- Employment Agreement, dated as of June 12, 1995, among
International Wire Holding Company, International Wire
Group Inc. and certain of its subsidiaries and David M.
Sindelar.(4)
10.9 -- Employment Agreement, dated as of March 14, 1995, between
Omega Wire, Inc. and Rodney D. Kent.(1)
10.10 -- Employment Agreement, dated as of February 6, 1995,
between Wirekraft Holdings Corp. and William J. Kriss.(1)
</TABLE>
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<PAGE> 159
<TABLE>
<CAPTION>
<C> <S>
10.11 -- Option Agreement, dated as of March 31, 1995, between Omega Wire Corp. and
James N. Mills.(1)
10.12 -- Option Agreement, dated as of March 31, 1995, between Omega Wire Corp. and
David M. Sindelar.(1)
10.13 -- Option Agreement dated as of June 12, 1995, between Omega Wire Corp. and
David M. Sindelar.(1)
10.14 -- Option Agreement dated as of June 12, 1995, between International Wire
Group, Inc. and David M. Sindelar.(1)
10.15 -- Option Agreement dated as of August 28, 1995, between International Wire
Group, Inc. and Larry S. Bacon.(3)
10.16 -- Stockholders Agreement dated as of June 12, 1995, among International Wire
Holding Company and the Stockholders signatories thereto.(1)
10.17 -- Monitoring and Oversight Agreement dated as of June 12, 1995, among
International Wire Holding Company, International Wire Group, Inc. and
Hicks, Muse & Co. Partners, L.P.(1)
10.18 -- Option Agreement dated as of August 28, 1995 between International Wire
Group, Inc. and W. Thomas McGhee.(3)
10.19 -- 1995 Stock Option Plan of International Wire Holding Company.(4)
10.20 -- Form of Option Agreement of International Wire Holding Company under 1995
Stock Option Plan.(4)
10.21 -- Agreement dated as of December 29, 1995 among Wirekraft Industries, Inc.
and General Electric Company (Confidential treatment has been granted with
respect to certain portions of this exhibit).(4)
10.22 -- Amended and Restated Credit Agreement, dated as of February 12, 1997,
among International Wire Group, Inc., International Wire Holding Company,
the several lenders from time to time parties thereto, The Chase Manhattan
Bank, as Administrative Agent, and Bankers Trust Company, as Documentation
Agent.(5)
10.23 -- Employment Agreement, dated as of September 25, 1996, among International
Wire Holding Company and International Wire Group, Inc. and Joseph M.
Fiamingo.(5)
10.24 -- Employment Agreement, dated as of March 5, 1996, among International Wire
Holding Company and International Wire Group, Inc. and Robert C.
Kozlowski. (5)
10.25 -- Option Agreement, dated as of November 5, 1995, between International Wire
Holding Company and Joseph M. Fiamingo.(5)
10.26 -- Option Agreement, dated as of March 5, 1996, between International Wire
Holding Company and Robert C. Kozlowski.(5)
10.27 -- Option Agreement, dated as of November 6, 1996, between International Wire
Holding Company and Joseph M. Fiamingo.(5)
10.28 -- First Amendment to Amended and Restated Credit Agreement, dated as of June
17, 1997, among International Wire Group, Inc., International Wire Holding
Company, the Several Lenders from time to time parties thereto, The Chase
Manhattan Bank, as Administrative Agent, and Bankers Trust Company, as
Documentation Agent.**
12.1 -- Computation of Ratio of Earnings to Fixed Charges of Wirekraft Holdings
Corporation.(1)
12.2 -- Computation of Ratio of Earnings to Fixed Charges of THL-Omega Holding
Corporation.(1)
</TABLE>
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<PAGE> 160
<TABLE>
<CAPTION>
<C> <S>
12.3 -- Computation of Ratio of Earnings to Fixed Charges of
Omega Wire Corporation.(1)
12.4 -- Computation of Deficiency of Earnings to Cover Fixed
Charges of International Wire Group, Inc.(1)
12.5 -- Computation of Ratio of Earnings to Fixed Charges of
International Wire Group, Inc.*
21.1 -- Subsidiaries of International Wire Group, Inc.(5)
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in the
opinion filed as Exhibit 5.1 to this Registration
Statement).
23.2 -- Consent of Coopers & Lybrand L.L.P., independent
certified public accountants.**
23.3 -- Consent of Coopers & Lybrand L.L.P., independent
certified public accountants.**
23.4 -- Consent of Coopers & Lybrand L.L.P., independent
certified public accountants.**
23.5 -- Consent of Coopers & Lybrand L.L.P., independent
certified public accountants.**
23.6 -- Consent of Coopers & Lybrand L.L.P., independent
certified public accountants.**
23.7 -- [Item Intentionally Omitted]
23.8 -- Consent of Coopers & Lybrand L.L.P., independent
certified public accountants.**
24.1 -- Powers of Attorney.*
25.1 -- Form T-1 of IBJ Schroder Bank & Trust Company, as Trustee
under the Indenture filed as Exhibit 4.7.*
</TABLE>
- ---------------
(1) Incorporated by reference to the Registration Statement on Form S-1
(33-93970) of International Wire Group, Inc. as declared effective by the
Securities and Exchange Commission on September 29, 1995.
(2) Incorporated by reference to the Current Report on Form 8-K of International
Wire Group, Inc. as filed with the Securities Exchange Commission on March
20, 1996.
(3) Incorporated by reference to the Quarterly Report on Form 10-Q of
International Wire Group, Inc. for the fiscal quarter ended September 30,
1995.
(4) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1995.
(5) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1996.
* Previously filed.
** Filed herewith.
+ To be filed by amendment.
(b) FINANCIAL STATEMENT SCHEDULES
The following Financial Statement Schedules are included in Part II of this
Registration Statement:
INTERNATIONAL WIRE GROUP, INC.
Report of Independent Accountants
Schedule II -- Valuation and Qualifying Accounts
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<PAGE> 161
ITEM 17. UNDERTAKINGS.
(a) The undersigned Co-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;
(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; and
(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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) 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 becomes effective.
(b) See Item 14.
II-7
<PAGE> 162
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of St.
Louis, State of Missouri, on the 30th day of June, 1997.
INTERNATIONAL WIRE GROUP, INC.
By: /s/ DAVID M. SINDELAR
----------------------------------
David M. Sindelar
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board, Chief June 30, 1997
- ----------------------------------------------------- Executive Officer and Director of
James N. Mills the Co-Registrant listed above
(Principal Executive Officer)
/s/ DAVID M. SINDELAR Senior Vice President of each of the June 30, 1997
- ----------------------------------------------------- Co-Registrants listed above
David M. Sindelar (Principal Financial and Accounting
Officer)
* President, Chief Operating Officer June 30, 1997
- ----------------------------------------------------- and Director of the Co-Registrant
Joseph M. Fiamingo listed above
* Director of the Co-Registrant listed June 30, 1997
- ----------------------------------------------------- above
Richard W. Vieser
* Director of the Co-Registrant listed June 30, 1997
- ----------------------------------------------------- above
Thomas P. Danis
* Director of the Co-Registrant listed June 30, 1997
- ----------------------------------------------------- above
Jack D. Furst
* Director of the Co-Registrant listed June 30, 1997
- ----------------------------------------------------- above
John A. Gavin
* Director of the Co-Registrant listed June 30, 1997
- ----------------------------------------------------- above
Rodney D. Kent
* Director of the Co-Registrant listed June 30, 1997
- ----------------------------------------------------- above
Charles W. Tate
*/s/ DAVID M. SINDELAR
- -----------------------------------------------------
David M. Sindelar
Attorney-In-Fact
</TABLE>
II-8
<PAGE> 163
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of St.
Louis, State of Missouri, on the 30th day of June, 1997.
OMEGA WIRE, INC.
OWI CORPORATION
By: /s/ DAVID M. SINDELAR
----------------------------------
David M. Sindelar
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* President, Chief Executive Officer June 30, 1997
- ----------------------------------------------------- and Director of each of the
Rodney D. Kent Co-Registrants listed above
(Principal Executive Officer)
/s/ DAVID M. SINDELAR Senior Vice President and Director of June 30, 1997
- ----------------------------------------------------- each of the Co-Registrants listed
David M. Sindelar above (Principal Financial and
Accounting Officer)
* Director of each of the June 30, 1997
- ----------------------------------------------------- Co-Registrants listed above
James N. Mills
*/s/ DAVID M. SINDELAR
- -----------------------------------------------------
David M. Sindelar
Attorney-In-Fact
</TABLE>
II-9
<PAGE> 164
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of St.
Louis, State of Missouri, on the 30th day of June, 1997.
ECM HOLDING COMPANY
WIRE HARNESS INDUSTRIES, INC.
WIREKRAFT EMPLOYMENT COMPANY
WIREKRAFT INDUSTRIES, INC.
WIRE TECHNOLOGIES, INC.
By: /s/ DAVID M. SINDELAR
----------------------------------
David M. Sindelar
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board, Chief June 30, 1997
- ----------------------------------------------------- Executive Officer and Director of
James N. Mills each of the Co-Registrants listed
above (Principal Executive Officer)
/s/ DAVID M. SINDELAR Senior Vice President of each of the June 30, 1997
- ----------------------------------------------------- Co-Registrants listed above
David M. Sindelar (Principal Financial and Accounting
Officer)
* /s/ DAVID M. SINDELAR
- -----------------------------------------------------
David M. Sindelar
Attorney-In-Fact
</TABLE>
II-10
<PAGE> 165
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Co-Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of St.
Louis, State of Missouri, on the 30th day of June, 1997.
CAMDEN WIRE CO., INC.
By: /s/ DAVID M. SINDELAR
----------------------------------
David M. Sindelar
President and Director
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID M. SINDELAR President and Director of each of the June 30, 1997
- ----------------------------------------------------- Co-Registrants listed above
David M. Sindelar (Principal Executive, Financial and
Accounting Officer)
</TABLE>
II-11
<PAGE> 166
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
International Wire Group, Inc.:
Our report on the consolidated financial statements of International Wire
Group, Inc. and subsidiaries is included on page S-2 of this Form S-1. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in the index on page F-1 of this
Form S-1.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
February 28, 1997
S-1
<PAGE> 167
INTERNATIONAL WIRE GROUP, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ALLOWANCE FOR DOUBTFUL COLLECTION OF
ACCOUNTS -- DEDUCTED BALANCE AT PREVIOUSLY BALANCE AT
FROM RECEIVABLES IN THE BEGINNING WRITTEN OFF END OF
BALANCE SHEET OF PERIOD PROVISION WRITEOFFS ACCOUNTS ACQUISITIONS PERIOD
----------------------- ---------- --------- --------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Seven months ended December 31,
1995............................ $845 $ 33 $(53) $35 $ -- $ 860
Year ended December 31, 1996...... $860 $337 $(71) $12 $225 $1,363
</TABLE>
S-2
<PAGE> 168
INTERNATIONAL WIRE GROUP, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ALLOWANCE FOR DOUBTFUL COLLECTION OF
ACCOUNTS -- DEDUCTED BALANCE AT PREVIOUSLY BALANCE AT
FROM RECEIVABLES IN THE BEGINNING WRITTEN OFF END OF
BALANCE SHEET OF PERIOD PROVISION WRITEOFFS ACCOUNTS ACQUISITIONS PERIOD
----------------------- ---------- --------- --------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Three months ended March 31,
1997............................ $1,363 $100 $320 $-- $200 $1,343
</TABLE>
S-3
<PAGE> 169
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of June 2, 1995,
among Omega Wire Corp., Wirekraft Holdings Corp.,
International Wire Holding Company, International Wire
Group, Inc. and Wirekraft Acquisition Company.(1)
2.2 -- Agreement and Plan of Merger, dated as of March 5, 1996,
among Hoosier Wire, Inc., International Wire Group, Inc.,
and Wire Technologies, Inc.(2)
2.3 -- Asset Purchase Agreement, dated as of March 5, 1996,
among Dekko Automotive Wire, Inc., International Wire
Holding Company, International Wire Group, Inc., and Wire
Technologies, Inc.(2)
2.4 -- Asset Purchase Agreement, dated as of March 5, 1996,
among Albion Wire, Inc. International Wire Holding
Company, International Wire Group, Inc., and Wire
Technologies, Inc.(2)
2.5 -- Asset Purchase Agreement, dated as of March 5, 1996,
among Silicones, International Wire Holding Company,
International Wire Group, Inc., and Wire Technologies,
Inc.(2)
2.6 -- Stock Purchase Agreement dated as of January 2, 1997,
among International Wire Group, Inc., Camden Wire Co.,
Inc. and Oneida Ltd.*
3.1 -- Restated Certificate of Incorporation of International
Wire Group, Inc.(4)
3.2 -- By-Laws of International Wire Group, Inc.(1)
3.7 -- Certificate of Incorporation of Camden Wire Co., Inc.*
3.8 -- Bylaws of Camden Wire Co., Inc.*
3.9 -- Certificate of Incorporation of ECM Holding Company.(1)
3.10 -- Bylaws of ECM Holding Company.(1)
3.11 -- Certificate of Incorporation, as amended, of Omega Wire,
Inc. (formerly known as THL-Omega Holding
Corporation).(1)
3.12 -- Bylaws, as amended, of Omega Wire, Inc. (formerly known
as THL-Omega Holding Corporation).(1)
3.13 -- Certificate of Incorporation, as amended, of OWI
Corporation.(1)
3.14 -- Bylaws of OWI Corporation.(1)
3.15 -- Certificate of Incorporation of Wirekraft Employment
Company.(1)
3.16 -- Bylaws of Wirekraft Employment Company.(1)
3.17 -- Certificate of Incorporation of Wire Harness Industries,
Inc.*
3.18 -- Bylaws of Wire Harness Industries, Inc.*
3.19 -- Certificate of Incorporation, as amended, of Wirekraft
Industries, Inc.(1)
3.20 -- Bylaws of Wirekraft Industries, Inc.(1)
3.21 -- Articles of Incorporation of Wire Technologies, Inc.*
3.22 -- Bylaws of Wire Technologies, Inc.*
4.1 -- Indenture, dated as of June 12, 1995, among International
Wire Group, Inc., as Issuer, the Subsidiary Guarantors
(as therein defined) and IBJ Schroder Bank & Trust
Company, as Trustee.(1)
4.2 -- Form of the 11 3/4% Note (included in Exhibit 4.1,
Exhibit B).
4.3 -- Exchange and Registration Rights Agreement, dated as of
June 12, 1995, among International Wire Group, Inc., the
Subsidiary Guarantors (as therein defined), Chemical
Securities Inc. and BT Securities Corporation.(1)
</TABLE>
<PAGE> 170
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
4.4 -- First Supplemental Indenture, dated as of March 5, 1996,
by and among International Wire Group, Inc., Wire
Technologies, Inc., the subsidiary guarantors party
thereto, and IBJ Schroder Bank & Trust Company, as
Trustee.(2)
4.5 -- Certificate of Designation of Series A Senior Cumulative
Exchangeable Redeemable Preferred Stock of International
Wire Group, Inc.(2)
4.6 -- Second Supplemental Indenture, dated as of December 20,
1996, by International Wire Group, Inc. the subsidiary
guarantors party thereto, and IBJ Schroder Bank and Trust
Company, as Trustee.(5)
4.7 -- Indenture, dated as of February 12, 1997, among
International Wire Group, Inc., as Issuer, the Subsidiary
Guarantors (as therein defined) and IBJ Schroder Bank &
Trust Company, as Trustee.**
4.8 -- Form of 14% Note (included in Exhibit 4.7, Exhibit A).
4.9 -- Preferred Stock and Warrant Purchase Agreement dated as
of March 5, 1996, by and among International Wire Holding
Company, International Wire Group, Inc., Chemical Equity
Associates and Hicks, Muse, Tate & First Equity Fund II,
L.P.*
4.10 -- Third Supplemental Indenture, dated as of February 12,
1997, by and among International Wire Group, Inc., the
subsidiary guarantors party thereto, and IBJ Schroder
Bank & Trust Company, as Trustee.**
4.11 -- First Supplemental Indenture, dated as of June 10, 1997,
by and among International Wire Group, Inc., the
subsidiary guarantors party thereto, and IBJ Schroder
Bank & Trust Company, as Trustee.**
4.12 -- Indenture, dated as of June 17, 1997, among International
Wire Group, Inc., as Issuer, the Subsidiary Guarantors
(as therein defined) and IBJ Schroder Bank & Trust
Company, as Trustee.**
4.13 -- Form of 11 3/4% Series B Note (included in Exhibit 4.11,
Exhibit A).
5.1 -- Opinion of Weil, Gotshal & Manges LLP as to the
securities registered hereby.+
10.1 -- Parts Sourcing Contract, dated as of December 2, 1994,
among Wirekraft Industries, Inc. and General Electric
Company (Confidential treatment has been granted with
respect to certain portions of this exhibit).(1)
10.2 -- Schedule of Substantially Industrial Domestic Subsidiary
Security Agreements.(1)
10.3 -- Agreement of Sublease, dated as of December 31, 1991,
between Oneida County Industrial Development Agency and
OWI Corporation.(1)
10.4 -- Agreement of Sublease, dated as of December 31, 1991,
between Onondaga County Industrial Development Agency and
OWI Corporation.(1)
10.5 -- Sublease Agreement, dated as of March 31, 1994, between
Productos de Control, S.A. de C.V. and Wirekraft
Industries, Inc.(1)
10.6 -- Lease Contract, dated as of August 1, 1994, between
Parques Industriales Mexicanos, S.A. de C.V. and Electro
Componentes de Mexico, S.A. de C.V.(1)
10.7 -- Employment Agreement, dated as of June 12, 1995, among
International Wire Holding Company, International Wire
Group Inc. and certain of its subsidiaries and James N.
Mills.(4)
10.8 -- Employment Agreement, dated as of June 12, 1995, among
International Wire Holding Company, International Wire
Group Inc. and certain of its subsidiaries and David M.
Sindelar.(4)
10.9 -- Employment Agreement, dated as of March 14, 1995, between
Omega Wire, Inc. and Rodney D. Kent.(1)
10.10 -- Employment Agreement, dated as of February 6, 1995,
between Wirekraft Holdings Corp. and William J. Kriss.(1)
</TABLE>
<PAGE> 171
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------------------------- ------------------------------------------------------------------------------------------
<S> <C>
10.11 -- Option Agreement, dated as of March 31, 1995, between Omega Wire Corp. and
James N. Mills.(1)
10.12 -- Option Agreement, dated as of March 31, 1995, between Omega Wire Corp. and David M.
Sindelar.(1)
10.13 -- Option Agreement dated as of June 12, 1995, between Omega Wire Corp. and David M.
Sindelar.(1)
10.14 -- Option Agreement dated as of June 12, 1995, between International Wire Group, Inc. and
David M. Sindelar.(1)
10.15 -- Option Agreement dated as of August 28, 1995, between International Wire Group, Inc.
and Larry S. Bacon.(3)
10.16 -- Stockholders Agreement dated as of June 12, 1995, among International Wire Holding
Company and the Stockholders signatories thereto.(1)
10.17 -- Monitoring and Oversight Agreement dated as of June 12, 1995, among International Wire
Holding Company, International Wire Group, Inc. and Hicks, Muse & Co. Partners, L.P.(1)
10.18 -- Option Agreement dated as of August 28, 1995 between International Wire Group, Inc. and
W. Thomas McGhee.(3)
10.19 -- 1995 Stock Option Plan of International Wire Holding Company.(4)
10.20 -- Form of Option Agreement of International Wire Holding Company under 1995 Stock Option
Plan.(4)
10.21 -- Agreement dated as of December 29, 1995 among Wirekraft Industries, Inc. and General
Electric Company (Confidential treatment has been granted with respect to certain
portions of this exhibit).(4)
10.22 -- Amended and Restated Credit Agreement, dated as of February 12, 1997, among
International Wire Group, Inc., International Wire Holding Company, the several lenders
from time to time parties thereto, The Chase Manhattan Bank, as Administrative Agent,
and Bankers Trust Company, as Documentation Agent.(5)
10.23 -- Employment Agreement, dated as of September 25, 1996, among International Wire Holding
Company and International Wire Group, Inc. and Joseph M. Fiamingo.(5)
10.24 -- Employment Agreement, dated as of March 5, 1996, among International Wire Holding
Company and International Wire Group, Inc. and Robert C. Kozlowski. (5)
10.25 -- Option Agreement, dated as of November 5, 1995, between International Wire Holding
Company and Joseph M. Fiamingo.(5)
10.26 -- Option Agreement, dated as of March 5, 1996, between International Wire Holding Company
and Robert C. Kozlowski.(5)
10.27 -- Option Agreement, dated as of November 6, 1996, between International Wire Holding
Company and Joseph M. Fiamingo.(5)
10.28 -- First Amendment to Amended and Restated Credit Agreement, dated as of June 17, 1997,
among International Wire Group, Inc., International Wire Holding Company, the Several
Lenders from time to time parties thereto, The Chase Manhattan Bank, as Administrative
Agent, and Bankers Trust Company, as Documentation Agent.**
12.1 -- Computation of Ratio of Earnings to Fixed Charges of Wirekraft Holdings Corporation.(1)
12.2 -- Computation of Ratio of Earnings to Fixed Charges of THL-Omega Holding Corporation.(1)
</TABLE>
<PAGE> 172
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
12.3 -- Computation of Ratio of Earnings to Fixed Charges of
Omega Wire Corporation.(1)
12.4 -- Computation of Deficiency of Earnings to Cover Fixed
Charges of International Wire Group, Inc.(1)
12.5 -- Computation of Ratio of Earnings to Fixed Charges of
International Wire Group, Inc.*
21.1 -- Subsidiaries of International Wire Group, Inc.(5)
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in the
opinion filed as Exhibit 5.1 to this Registration
Statement).
23.2 -- Consent of Coopers & Lybrand L.L.P., independent
certified public accountants.**
23.3 -- Consent of Coopers & Lybrand L.L.P., independent
certified public accountants.**
23.4 -- Consent of Coopers & Lybrand L.L.P., independent
certified public accountants.**
23.5 -- Consent of Coopers & Lybrand L.L.P., independent
certified public accountants.**
23.6 -- Consent of Coopers & Lybrand L.L.P., independent
certified public accountants.**
23.7 -- [Item Intentionally Omitted]
23.8 -- Consent of Coopers & Lybrand L.L.P., independent
certified public accountants.**
24.1 -- Powers of Attorney.*
25.1 -- Form T-1 of IBJ Schroder Bank & Trust Company, as Trustee
under the Indenture filed as Exhibit 4.7.*
</TABLE>
- ---------------
(1) Incorporated by reference to the Registration Statement on Form S-1
(33-93970) of International Wire Group, Inc. as declared effective by the
Securities and Exchange Commission on September 29, 1995.
(2) Incorporated by reference to the Current Report on Form 8-K of International
Wire Group, Inc. as filed with the Securities Exchange Commission on March
20, 1996.
(3) Incorporated by reference to the Quarterly Report on Form 10-Q of
International Wire Group, Inc. for the fiscal quarter ended September 30,
1995.
(4) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1995.
(5) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1996.
* Previously filed.
** Filed herewith.
+ To be filed by amendment.
<PAGE> 1
EXHIBIT 4.7
================================================================================
INTERNATIONAL WIRE GROUP, INC.
14.00% Senior Subordinated Notes due 2005
=====================
INDENTURE
Dated as of February 12, 1997
====================
IBJ Schroder Bank & Trust Company,
Trustee
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(b) .............................. 7.8; 7.10
(c) .............................. N.A.
311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
312(a) .............................. 2.5
(b) .............................. 11.3
(c) .............................. 11.3
313(a) .............................. 7.6
(b)(1) .............................. N.A.
(b)(2) .............................. 7.6
(c) .............................. 7.6
(d) .............................. 7.6
314(a) .............................. 4.2
4.11; 12.2
(b) .............................. N.A.
(c)(1) .............................. 12.4
(c)(2) .............................. 12.4
(c)(3) .............................. N.A.
(d) .............................. N.A.
(e) .............................. 12.5
(f) .............................. 4.10
315(a) .............................. 7.1
(b) .............................. 7.5; 12.2
(c) .............................. 7.1
(d) .............................. 7.1
(e) .............................. 6.11
316(a)(last sentence)...................... 12.6
(a)(1)(A)............................... 6.5
(a)(1)(B)............................... 6.4
(a)(2) .............................. N.A.
(b) .............................. 6.7
317(a)(1) .............................. 6.8
(a)(2) .............................. 6.9
(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
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Definitions and Incorporation by Reference . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Definitions . . . . . . . . . . . . . . . . 24
SECTION 1.3. Incorporation by Reference of Trust Indenture Act . 25
SECTION 1.4. Rules of Construction . . . . . . . . . . . . . . 26
ARTICLE II
The Securities . . . . . . . . . . . . . 26
SECTION 2.1. Form and Dating . . . . . . . . . . . . . . . . . 26
SECTION 2.2. Execution and Authentication . . . . . . . . . . . 28
SECTION 2.3. Registrar and Paying Agent . . . . . . . . . . . . 29
SECTION 2.4. Paying Agent To Hold Money in Trust . . . . . . . 30
SECTION 2.5. Securityholder Lists . . . . . . . . . . . . . . . 30
SECTION 2.6. Transfer and Exchange . . . . . . . . . . . . . . 30
SECTION 2.7. Replacement Securities . . . . . . . . . . . . . . 40
SECTION 2.8. Outstanding Securities . . . . . . . . . . . . . . 41
SECTION 2.9. Temporary Securities . . . . . . . . . . . . . . . 41
SECTION 2.10. Cancellation . . . . . . . . . . . . . . . . . . . 42
SECTION 2.11. Defaulted Interest . . . . . . . . . . . . . . . . 42
SECTION 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . 43
ARTICLE III
Redemption . . . . . . . . . . . . . . 43
SECTION 3.1. Notices to Trustee . . . . . . . . . . . . . . . . 43
SECTION 3.2. Selection of Securities To Be Redeemed . . . . . . 43
SECTION 3.3. Notice of Redemption . . . . . . . . . . . . . . . 44
SECTION 3.4. Effect of Notice of Redemption . . . . . . . . . . 45
SECTION 3.5. Deposit of Redemption Price . . . . . . . . . . . 45
SECTION 3.6. Securities Redeemed in Part . . . . . . . . . . . 45
ARTICLE IV
Covenants . . . . . . . . . . . . . . . 46
SECTION 4.1. Payment of Securities . . . . . . . . . . . . . . 46
SECTION 4.2. SEC Reports . . . . . . . . . . . . . . . . . . . 46
SECTION 4.3. Limitation on Indebtedness . . . . . . . . . . . . 47
SECTION 4.4. Limitation on Restricted Payments . . . . . . . . 48
SECTION 4.5. Limitation on Restrictions on Distributions from
Subsidiaries . . . . . . . . . . . . . . . . . . . 52
SECTION 4.6. Limitation on Sales of Assets and Subsidiary
Stock . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 4.7. Limitation on Affiliate Transactions . . . . . . . 57
SECTION 4.8. Change of Control . . . . . . . . . . . . . . . . 58
</TABLE>
- i -
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.9. Limitation on Preferred Stock of Subsidiaries . . 59
SECTION 4.10. Limitation on Capital Stock of Subsidiaries . . . 60
SECTION 4.11. Compliance Certificate . . . . . . . . . . . . . . 60
SECTION 4.12. Further Instruments and Acts . . . . . . . . . . . 60
ARTICLE V
Successor Company . . . . . . . . . . . . . 60
SECTION 5.1. When Company May Merge or Transfer Assets . . . . 60
ARTICLE VI
Defaults and Remedies . . . . . . . . . . . . 62
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . 62
SECTION 6.2. Acceleration . . . . . . . . . . . . . . . . . . . 64
SECTION 6.3. Other Remedies . . . . . . . . . . . . . . . . . . 65
SECTION 6.4. Waiver of Past Defaults . . . . . . . . . . . . . 65
SECTION 6.5. Control by Majority . . . . . . . . . . . . . . . 65
SECTION 6.6. Limitation on Suits . . . . . . . . . . . . . . . 66
SECTION 6.7. Rights of Holders to Receive Payment . . . . . . . 66
SECTION 6.8. Collection Suit by Trustee . . . . . . . . . . . . 67
SECTION 6.9. Trustee May File Proofs of Claim . . . . . . . . . 67
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . 68
ARTICLE VII
Trustee . . . . . . . . . . . . . . . 68
SECTION 7.1. Duties of Trustee . . . . . . . . . . . . . . . . 68
SECTION 7.2. Rights of Trustee . . . . . . . . . . . . . . . . 70
SECTION 7.3. Individual Rights of Trustee . . . . . . . . . . . 70
SECTION 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . 71
SECTION 7.5. Notice of Defaults . . . . . . . . . . . . . . . . 71
SECTION 7.6. Reports by Trustee to Holders . . . . . . . . . . 71
SECTION 7.7. Compensation and Indemnity . . . . . . . . . . . . 72
SECTION 7.8. Replacement of Trustee . . . . . . . . . . . . . . 73
SECTION 7.9. Successor Trustee by Merger . . . . . . . . . . . 74
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . 74
SECTION 7.11. Preferential Collection of Claims Against Company . 75
ARTICLE VIII
Discharge of Indenture; Defeasance . . . . . . . . . . . 75
SECTION 8.1. Discharge of Liability on Securities; Defeasance . 75
SECTION 8.2. Conditions to Defeasance . . . . . . . . . . . . . 76
SECTION 8.3. Application of Trust Money . . . . . . . . . . . . 78
SECTION 8.4. Repayment to Company . . . . . . . . . . . . . . . 78
</TABLE>
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<TABLE>
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SECTION 8.5. Indemnity for U.S. Government Obligations . . . . 78
SECTION 8.6. Reinstatement . . . . . . . . . . . . . . . . . . 78
ARTICLE IX
Amendments . . . . . . . . . . . . . . 79
SECTION 9.1. Without Consent of Holders . . . . . . . . . . . . 79
SECTION 9.2. With Consent of Holders . . . . . . . . . . . . . 80
SECTION 9.3. Compliance with Trust Indenture Act . . . . . . . 81
SECTION 9.4. Revocation and Effect of Consents and Waivers . . 81
SECTION 9.5. Notation on or Exchange of Securities . . . . . . 82
SECTION 9.6. Trustee To Sign Amendments . . . . . . . . . . . . 82
ARTICLE X
Subordination . . . . . . . . . . . . . . 83
SECTION 10.1. Agreement To Subordinate . . . . . . . . . . . . . 83
SECTION 10.2. Liquidation, Dissolution, Bankruptcy . . . . . . . 83
SECTION 10.3. Default on Senior Indebtedness or Guarantor Senior
Indebtedness . . . . . . . . . . . . . . . . . . . 84
SECTION 10.4. Acceleration of Payment of Securities . . . . . . 85
SECTION 10.5. When Distribution Must Be Paid Over . . . . . . . 86
SECTION 10.6. Subrogation . . . . . . . . . . . . . . . . . . . 86
SECTION 10.7. Relative Rights . . . . . . . . . . . . . . . . . 86
SECTION 10.8. Subordination May Not Be Impaired by Company or the
Subsidiary Guarantors . . . . . . . . . . . . . . 87
SECTION 10.9. Rights of Trustee and Paying Agent . . . . . . . . 87
SECTION 10.10. Distribution or Notice to Representative . . . . . 88
SECTION 10.11. Article X Not To Prevent Events of Default
or Limit Right To Accelerate . . . . . . . . . . 88
SECTION 10.12. Trust Moneys Not Subordinated . . . . . . . . . . 88
SECTION 10.13. Trustee Entitled To Rely . . . . . . . . . . . . . 88
SECTION 10.14. Trustee To Effectuate Subordination . . . . . . . 89
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness and Guarantor
Senior Indebtedness . . . . . . . . . .. . . . . . 89
SECTION 10.16. Reliance by Holders of Senior Indebtedness
and Guarantor Senior Indebtedness on
Subordination Provisions . . . . . . . . . . . . . 89
ARTICLE XI
Subsidiary Guarantee . . . . . . . . . . . . 90
SECTION 11.1. Subsidiary Guarantee . . . . . . . . . . . . . . . 90
SECTION 11.2. Limitation on Liability . . . . . . . . . . . . . 93
SECTION 11.3. Successors and Assigns . . . . . . . . . . . . . . 93
SECTION 11.4. No Waiver . . . . . . . . . . . . . . . . . . . . 93
</TABLE>
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SECTION 11.5. Right of Contribution . . . . . . . . . . . . . . 94
SECTION 11.6. No Subrogation . . . . . . . . . . . . . . . . . . 94
SECTION 11.7. Additional Subsidiary Guarantors . . . . . . . . . 94
SECTION 11.8. Modification . . . . . . . . . . . . . . . . . . . 95
ARTICLE XII
Miscellaneous . . . . . . . . . . . . . . 95
SECTION 12.1. Trust Indenture Act Controls . . . . . . . . . . . 95
SECTION 12.2. Notices . . . . . . . . . . . . . . . . . . . . . 95
SECTION 12.3. Communication by Holders with other Holders . . . 96
SECTION 12.4. Certificate and Opinion as to Conditions
Precedent . . . . . . . . . . . . . . . . . . . . . 96
SECTION 12.5. Statements Required in Certificate or Opinion . . 97
SECTION 12.6. When Securities Disregarded . . . . . . . . . . . 97
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar . . . 98
SECTION 12.8. Legal Holidays . . . . . . . . . . . . . . . . . . 98
SECTION 12.9. Governing Law . . . . . . . . . . . . . . . . . . 98
SECTION 12.10. No Recourse Against Others . . . . . . . . . . . . 98
SECTION 12.11. Successors . . . . . . . . . . . . . . . . . . . . 98
SECTION 12.12. Multiple Originals . . . . . . . . . . . . . . . . 99
SECTION 12.13. Variable Provisions . . . . . . . . . . . . . . . 99
SECTION 12.14. Qualification of Indenture . . . . . . . . . . . . 99
SECTION 12.15. Table of Contents; Headings . . . . . . . . . . . 99
</TABLE>
- iv -
<PAGE> 7
INDENTURE dated as of February 12, among INTERNATIONAL WIRE
GROUP, INC., a Delaware corporation (the "Company"), the Subsidiary Guarantors
(as defined herein), and IBJ Schroder Bank & Trust Company (the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Company's 14.00%
Senior Subordinated Notes due 2005 (the "Initial Exchange Notes") and, if and
when issued in exchange for Initial Exchange Notes as provided in the Purchase
Agreement (as hereinafter defined), the Company's 14.00% Senior Subordinated
Notes due 2005 (the "Registered Exchange Notes" and, together with the Initial
Exchange Notes, the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Acquired Preferred Stock" means Preferred Stock of any Person
which was issued and outstanding at the time such Person becomes a Subsidiary
of the Company or at the time it merges or consolidates with the Company or any
of its Subsidiaries and not issued by such Person in connection with, or in
anticipation or contemplation of, such acquisition, merger or consolidation.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock
of a Person that becomes a Subsidiary as a result of the acquisition of such
Capital Stock by the Company or a Subsidiary of the Company; (iii) Capital
Stock constituting a minority interest in any Person that at such time is a
Subsidiary of the Company; or (iv) Permitted Investments of the type and in the
amounts described in clause (viii) of the definition thereof; provided,
however, that, in the case of clauses (ii) and (iii) of this definition, such
Subsidiary is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the
<PAGE> 8
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Applicable Premium" means, with respect to a Security at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such time of (1)
105.875% of the principal amount of such Security plus (2) all required
interest payments due on such Security through June 1, 2000, computed using a
discount rate equal to the Treasury Rate plus 100 basis points, over (B) the
principal amount of such Security.
"Asset Disposition" means any sale, lease, transfer, issuance or
other disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Subsidiary (other than directors' qualifying shares), property or other assets
(each referred to for the purposes of this definition as a "disposition") by
the Company or any of its Subsidiaries (including any disposition by means of a
merger, consolidation or similar transaction) other than (i) a disposition by a
Subsidiary to the Company or by the Company or a Subsidiary to a Wholly Owned
Subsidiary, (ii) a disposition of inventory in the ordinary course of business,
(iii) a disposition of obsolete or worn out equipment that is no longer useful
in the conduct of the business of the Company and its Subsidiaries and that is
disposed of in each case in the ordinary course of business, (iv) dispositions
of property for net proceeds less than $2.5 million in aggregate in any
calendar year and (v) transactions permitted under Section 5.1.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
2
<PAGE> 9
"Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption multiplied by the amount of such payment by (ii) the sum of all such
payments.
"Bank Indebtedness" means any and all amounts, whether
outstanding on the Issue Date or thereafter incurred, payable by the Company
under or in respect of the Credit Agreement and any related notes, collateral
documents, letters of credit and guarantees, including principal, premium (if
any), interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the Company
or any committee thereof duly authorized to act on behalf of such Board of
Directors.
"Business Day" means each day which is not a Legal Holiday.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP, and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date such lease may be terminated without
penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
3
<PAGE> 10
"Certificate of Designation" means the Certificate of Designation
of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock of the
Company.
"Change of Control" means the occurrence of any of the following
events:
(i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially
all of the assets of the Company and its Subsidiaries to any Person or
group of related Persons for purposes of Section 13(d) of the Exchange
Act (a "Group") (whether or not otherwise in compliance with the
provisions of this Indenture), other than to Permitted Holders; or
(ii) a majority of the Board of Directors of Holding or
the Company shall consist of Persons who are not Continuing Directors;
or
(iii) the acquisition by any Person or Group (other than
the Permitted Holders) of the power, directly or indirectly, to vote or
direct the voting of securities having more than 50% of the ordinary
voting power for the election of directors of Holding or the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means International Wire Group, Inc., a Delaware
corporation, until a successor replaces it and, thereafter, means the successor
and, for purposes of any provision contained herein and required by the TIA,
each other obligor on the indenture securities.
"Consolidated Cash Flow" for any period means the Consolidated
Net Income for such period, plus the following to the extent deducted in
calculating such Consolidated Net Income: (i) income tax expense, (ii)
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization
expense, (v) exchange or translation losses on foreign currencies, and (vi) all
other non-cash items reducing Consolidated Net Income (excluding any non-cash
item to the extent it represents an accrual of or reserve
4
<PAGE> 11
for cash disbursements for any subsequent period prior to the Stated Maturity
of the Securities) and less, to the extent added in calculating Consolidated
Net Income, (x) exchange or translation gains on foreign currencies, and (y)
non-cash items (excluding such non-cash items to the extent they represent an
accrual for cash receipts reasonably expected to be received prior to the
Stated Maturity of the Securities), in each case for such period.
Notwithstanding the foregoing, the income tax expense, depreciation expense and
amortization expense of a Subsidiary of the Company shall be included in
Consolidated Cash Flow only to the extent (and in the same proportion) that the
net income of such Subsidiary was included in calculating Consolidated Net
Income.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of Consolidated Cash Flow for the
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination and as to which financial statements are available
to (ii) Consolidated Interest Expense for such four fiscal quarters; provided,
however, that (1) if the Company or any of its Subsidiaries has Incurred any
Indebtedness since the beginning of such period that remains outstanding or if
the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence of Indebtedness, or both, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to (A) such Indebtedness as if such Indebtedness
had been Incurred on the first day of such period (provided that if such
Indebtedness is Incurred under a revolving credit facility (or similar
arrangement or under any predecessor revolving credit or similar arrangement)
only that portion of such Indebtedness that constitutes the one year projected
minimum balance of such Indebtedness (as determined in good faith by senior
management of the Company and assuming a constant level of sales) shall be
deemed outstanding for purposes of this calculation) and (B) the discharge of
any other Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such period, (2) if since the beginning of such period any
Indebtedness of the Company or any of its Subsidiaries has been repaid,
repurchased, defeased or otherwise discharged (other than Indebtedness under a
revolving credit or similar arrangement
5
<PAGE> 12
unless such revolving credit Indebtedness has been permanently repaid and has
not been replaced), Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Indebtedness had
been repaid, repurchased, defeased or otherwise discharged on the first day of
such period, (3) if since the beginning of such period the Company or any of
its Subsidiaries shall have made any Asset Disposition or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio is an
Asset Disposition, Consolidated Cash Flow for such period shall be reduced by
an amount equal to the Consolidated Cash Flow (if positive) attributable to the
assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for
such period shall be (i) reduced by an amount equal to the Consolidated
Interest Expense attributable to any Indebtedness of the Company or any of its
Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect
to the Company and its continuing Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Subsidiary of the
Company is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Subsidiary to the extent the Company
and its continuing Subsidiaries are no longer liable for such Indebtedness
after such sale) and (ii) increased by interest income attributable to the
assets which are the subject of such Asset Disposition for such period, (4) if
since the beginning of such period the Company or any of its Subsidiaries (by
merger or otherwise) shall have made an Investment in any Subsidiary of the
Company (or any Person which becomes a Subsidiary of the Company) or an
acquisition of assets, including any Investment in a Subsidiary of the Company
or any acquisition of assets occurring in connection with a transaction causing
a calculation to be made hereunder, which constitutes all or substantially all
of an operating unit of a business, Consolidated Cash Flow and Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period and (5) if
since the beginning of such period any Person (that subsequently became a
Subsidiary of the Company or was merged with or into the Company or any
Subsidiary of the Company since the beginning of such period) shall have made
any Asset
6
<PAGE> 13
Disposition, Investment or acquisition of assets that would have required an
adjustment pursuant to clause (3) or (4) above if made by the Company or a
Subsidiary of the Company during such period, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition, Investment or
acquisition occurred on the first day of such period. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting Officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate Agreement applicable
to such Indebtedness if such Interest Rate Agreement has a remaining term in
excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its Subsidiaries, plus, to the extent not
included in such interest expense, (i) interest expense attributable to capital
leases, (ii) amortization of debt discount, (iii) capitalized interest, (iv)
non-cash interest expense, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) interest actually paid by the Company or any such Subsidiary
under any Guarantee of Indebtedness or other obligation of any other Person,
(vii) net payments (whether positive or negative) pursuant to Interest Rate
Agreements, and (viii) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust and less, (a) to
the extent included in such interest expense, the amortization of capitalized
debt issuance costs and (b) interest income. Notwithstanding the foregoing,
the Consolidated Interest Expense with respect to any Subsidiary of the Company
that was not a Wholly Owned Subsidiary, shall be included only to the extent
7
<PAGE> 14
(and in the same proportion) that the net income of such Subsidiary was
included in calculating Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net income
(loss) of the Company and its consolidated Subsidiaries; provided, however,
that there shall not be included in such Consolidated Net Income: (i) any net
income (loss) of any Person acquired by the Company or any of its Subsidiaries
in a pooling of interests transaction for any period prior to the date of such
acquisition; (ii) any net income of any Subsidiary of the Company if such
Subsidiary is subject to restrictions, directly or indirectly, on the payment
of dividends or the making of distributions by such Subsidiary, directly or
indirectly, to the Company (other than restrictions in effect on the Issue Date
with respect to a Subsidiary of the Company and other than restrictions that
are created or exist in compliance with Section 4.5); (iii) any gain or loss
realized upon the sale or other disposition of any assets of the Company or its
consolidated Subsidiaries (including pursuant to any Sale/Leaseback
Transaction) which are not sold or otherwise disposed of in the ordinary course
of business and any gain or loss realized upon the sale or other disposition of
any Capital Stock of any Person; (iv) any extraordinary gain or loss; (v) the
cumulative effect of a change in accounting principles; and (vi) the net income
of any Person, other than a Subsidiary, except to the extent of the lesser of
(A) dividends or distributions paid to the Company or any of its Subsidiaries
by such Person and (B) the net income of such Person (but in no event less than
zero), and the net loss of such Person shall be included only to the extent of
the aggregate Investment of the Company or any of its Subsidiaries in such
Person.
"Consolidated Net Worth" means the total of the amounts shown on
the balance sheet of the Company and its consolidated Subsidiaries, determined
on a consolidated basis in accordance with GAAP, as of the end of the most
recent fiscal quarter of the Company ending prior to the taking of any action
for the purpose of which the determination is being made and for which
financial statements are available (but in no event ending more than 135 days
prior to the taking of such action), as (i) the par or stated value of all
outstanding Capital Stock of the Company plus (ii) paid-in capital or capital
surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (A)
8
<PAGE> 15
any accumulated deficit and (B) any amounts attributable to Disqualified Stock.
"Continuing Director" means, as of the date of determination, any
Person who (i) was a member of the Board of Directors of Holding or the Company
on the Issue Date, (ii) was nominated for election or elected to the Board of
Directors of Holding or the Company with the affirmative vote of a majority of
the Continuing Directors who were members of such Board of Directors at the
time of such nomination or election, or (iii) is a representative of a
Permitted Holder.
"Credit Agreement" means (i) the Amended Credit Agreement, dated
as of March 5, 1996, among Holding, the Company, Chemical Bank, as
Administrative Agent, Bankers Trust Company, as Documentation Agent, and the
lenders parties thereto from time to time, as the same may be amended,
supplemented or otherwise modified from time to time and (ii) any renewal,
extension, refunding, restructuring, replacement or refinancing thereof
(whether with the original Administrative Agent and lenders or another
administrative agent or agents or other lenders and whether provided under the
original Credit Agreement or any other credit or other agreement or indenture).
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness
in the case of the Company, (ii) any Guarantee by a Subsidiary Guarantor of the
Bank Indebtedness in the case of such Subsidiary Guarantor and (iii) any other
Senior Indebtedness in the case of the Company or Guarantor Senior Indebtedness
of a Subsidiary Guarantor in the case of such Subsidiary Guarantor which, at
the date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of
9
<PAGE> 16
determination, the holders thereof are committed to lend up to, at least $20
million and is specifically designated by the Company or such Subsidiary
Guarantor in the instrument evidencing or governing such Senior Indebtedness or
Guarantor Senior Indebtedness as "Designated Senior Indebtedness" for purposes
of this Indenture.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock of such Person which by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable) or upon
the happening of any event (i) matures or is mandatorily redeemable pursuant to
a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock (excluding capital stock which is
convertible or exchangeable solely at the option of the Company or a
Subsidiary) or (iii) is redeemable at the option of the holder thereof, in
whole or in part, in each case on or prior to the Stated Maturity of the
Securities, provided, that only the portion of Capital Stock which so matures
or is mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder thereof prior to such Stated Maturity
shall be deemed to be Disqualified Stock.
"ECM" means Electro Componentes de Mexico, S.A. de C.V., a
Mexican corporation and a Wholly-Owned Subsidiary.
"Equity Offering" means an offering for cash by Holding or the
Company of its common stock, or options, warrants or rights with respect to its
common stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted principles in the United States
of America as in effect as of the date of this Indenture, including those 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 entity as are approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
10
<PAGE> 17
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor Senior Indebtedness" means, with respect to a
Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter
issued, the Guarantee of the Bank Indebtedness by such Subsidiary Guarantor,
all other Guarantees by such Subsidiary Guarantor of Senior Indebtedness of the
Company and all Indebtedness of such Subsidiary Guarantor, including interest
and fees thereon, unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that the obligations
of such Subsidiary Guarantor in respect of such Indebtedness are not superior
in right of payment to the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee; provided, however, that Guarantor Senior Indebtedness
shall not include (1) any obligation of such Subsidiary Guarantor to the
Company or any other Subsidiary of the Company, (2) any liability for Federal,
state, local or other taxes owed or owing by such Subsidiary Guarantor, (3) any
accounts payable or other liability to trade creditors arising in the ordinary
course of business (including Guarantees thereof or instruments evidencing such
liabilities) or (4) any Indebtedness, Guarantee or obligation of such
Subsidiary Guarantor that is expressly subordinate or junior in right of
payment to any other Indebtedness, Guarantee or obligation of such Subsidiary
Guarantor, including any Guarantor Senior Subordinated Indebtedness and
Guarantor Subordinated Obligations of such Subsidiary Guarantor.
11
<PAGE> 18
"Guarantor Senior Subordinated Indebtedness" means, with respect
to a Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under
the Subsidiary Guarantee and any other Indebtedness of such Subsidiary
Guarantor that specifically provides that such Indebtedness is to rank pari
passu in right of payment with the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee and is not subordinated by its terms in right of
payment to any Indebtedness or other obligation of such Subsidiary Guarantor
which is not Guarantor Senior Indebtedness of such Subsidiary Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee pursuant to a written agreement.
"Hicks Muse" means Hicks, Muse, Tate & Furst Incorporated.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holding" means International Wire Holding Company, a Delaware
corporation and the owner of all the outstanding Capital Stock of the Company
on the Issue Date.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be incurred
by such Subsidiary at the time it becomes a Subsidiary.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations
12
<PAGE> 19
with respect thereto) (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (i), (ii) and
(v)) entered into in the ordinary course of business of such Person to the
extent that such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third business day
following receipt by such Person of a demand for reimbursement following
payment on the letter of credit), (iv) all obligations of such Person to pay
the deferred and unpaid purchase price of property or services (except trade
payables and accrued expenses incurred in the ordinary course of business),
which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, (v) all Capitalized Lease Obligations and all Attributable
Indebtedness of such Person, (vi) all Indebtedness of other Persons secured by
a Lien on any asset of such Person, whether or not such Indebtedness is assumed
by such Person, (vii) all Indebtedness of other Persons to the extent
Guaranteed by such Person and (viii) to the extent not otherwise included in
this definition, obligations under Currency Agreements and Interest Rate
Agreements. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts payable on the balance sheet of such Person) or other
extension of credit (including by way of Guarantee or similar arrangement, but
13
<PAGE> 20
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person.
"Issue Date" means the date on which the Initial Exchange Notes
are originally issued.
"Legal Holiday" has the meaning ascribed in Section 12.8.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"Mills & Partners" means Mills & Partners, Inc.
"Monitoring and Oversight Agreement" means the Monitoring and
Oversight Agreement, dated as of June 12, 1995 among the Company, Holding and
Hicks Muse & Co. Partners, L.P., as in effect on the Issue Date.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received
in the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to such properties or assets or received in any other non-
cash form) therefrom, in each case net of (i) all legal, title and recording
tax expenses, commissions and other fees and expenses incurred, and all
Federal, state, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (ii) all
payments made on any Indebtedness which is secured by any assets subject to
such Asset Disposition, in accordance with the terms of any Lien upon such
assets, or which must by its terms, or in order to obtain a necessary consent
to such Asset Disposition, or by applicable law, be repaid out of the proceeds
from such Asset Disposition, (iii) all distributions and other
14
<PAGE> 21
payments required to be made to any Person owning a beneficial interest in
assets subject to sale or minority interest holders in Subsidiaries or joint
ventures as a result of such Asset Disposition, (iv) the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities associated with the assets disposed of in
such Asset Disposition and retained by the Company or any Subsidiary of the
Company after such Asset Disposition and (v) any portion of the purchase price
from an Asset Disposition placed in escrow (whether as a reserve for adjustment
of the purchase price, for satisfaction of indemnities in respect of such Asset
Disposition or otherwise in connection with such Asset Disposition); provided,
however, that upon the termination of such escrow, Net Available Cash shall be
increased by any portion of funds therein released to the Company or any
Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result of such issuance or sale.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company, as applicable.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal counsel
who is acceptable to the Trustee. The counsel may be an employee of or counsel
to the Company or the Trustee.
"Permitted Holders" means Hicks Muse, Mills & Partners or any of
their Affiliates, officers or directors.
"Permitted Indebtedness" means (i) Indebtedness of the Company
owing to and held by any Wholly Owned Subsidiary or Indebtedness of a
Subsidiary owing to and held by the Company or any Wholly Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any Capital
Stock or any other
15
<PAGE> 22
event which results in any such Wholly Owned Subsidiary ceasing to be a Wholly
Owned Subsidiary or any subsequent transfer of any such Indebtedness (except to
the Company or a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the issuer thereof; (ii)
Indebtedness represented by (x) the Securities, (y) any Indebtedness (other
than the Indebtedness described in clauses (i), (ii) and (iv) of Section 4.3(b)
and other than Indebtedness incurred pursuant to clause (i) above or clauses
(iv), (v) or (vi) below) outstanding on the Issue Date and (z) any Refinancing
Indebtedness Incurred in respect of any Indebtedness described in this clause
(ii) or Incurred pursuant to Section 4.3(a); (iii) (A) Indebtedness of a
Subsidiary Incurred and outstanding on the date on which such Subsidiary was
acquired by the Company (other than Indebtedness incurred as consideration in,
or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Subsidiary became a Subsidiary or was otherwise acquired by the Company);
provided, however, that at the time such Subsidiary is acquired by the Company,
the Company would have been able to Incur $1.00 of additional Indebtedness
pursuant to Section 4.3(a) after giving effect to the Incurrence of such
Indebtedness pursuant to this clause (iii) and (B) Refinancing Indebtedness
Incurred by a Subsidiary in respect of Indebtedness Incurred by such Subsidiary
pursuant to this clause (iii); (iv) Indebtedness (A) in respect of performance
bonds, bankers' acceptances and surety or appeal bonds provided by the Company
or any of its Subsidiaries to their customers in the ordinary course of their
business, (B) in respect of performance bonds or similar obligations of the
Company or any of its Subsidiaries for or in connection with pledges, deposits
or payments made or given in the ordinary course of business in connection with
or to secure statutory, regulatory or similar obligations, including
obligations under health, safety or environmental obligations, (C) arising from
Guarantees to suppliers, lessors, licensees, contractors, franchisees or
customers of obligations (other than Indebtedness) Incurred in the ordinary
course of business and (D) under Currency Agreements and Interest Rate
Agreements; provided, however, that in the case of Currency Agreements and
Interest Rate Agreements, such Currency Agreements and Interest Rate Agreements
are entered into for bona fide hedging purposes of the Company or its
Subsidiaries (as determined in good faith by the Board of Directors or senior
16
<PAGE> 23
management of the Company) and correspond in terms of notional amount,
duration, currencies and interest rates, as applicable, to Indebtedness of the
Company or its Subsidiaries Incurred without violation of the Indenture or to
business transactions of the Company or its Subsidiaries on customary terms
entered into in the ordinary course of business; (v) Indebtedness arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from Guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any of its
Subsidiaries pursuant to such agreements, in any case incurred in connection
with the disposition of any business assets or Subsidiary of the Company (other
than Guarantees of Indebtedness or other obligations Incurred by any Person
acquiring all or any portion of such business assets or Subsidiary of the
Company for the purpose of financing such acquisition) in a principal amount
not to exceed the gross proceeds actually received by the Company or any of its
Subsidiaries in connection with such disposition; provided, however, that the
principal amount of any Indebtedness Incurred pursuant to this clause (v), when
taken together with all Indebtedness Incurred pursuant to this clause (v) and
then outstanding, shall not exceed $10.0 million; and (vi) Indebtedness
consisting of (A) Guarantees by the Company or a Subsidiary of Indebtedness
Incurred by a Wholly Owned Subsidiary without violation of this Indenture, (B)
Guarantees by a Subsidiary of Senior Indebtedness Incurred by the Company
without violation of this Indenture (so long as such Subsidiary could have
Incurred such Indebtedness directly without violation of this Indenture) and
(C) Guarantees by the Company or a Subsidiary of Guarantor Senior Indebtedness
of a Subsidiary Guarantor (so long as the Company or such Subsidiary could have
Incurred such Indebtedness directly without violation of this Indenture).
"Permitted Investment" means an Investment by the Company or any
of its Subsidiaries in (i) a Wholly Owned Subsidiary of the Company; provided,
however, that the primary business of such Subsidiary is a Related Business;
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Subsidiary of the Company;
provided, however, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
of its Subsidiaries,
17
<PAGE> 24
if created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (v) payroll, travel and
similar advances to cover matters that are expected at the time of such
advances ultimately to be treated as expenses for accounting purposes and that
are made in the ordinary course of business; (vi) loans or advances to
employees for purposes of purchasing the common stock of the Company in an
aggregate amount outstanding at any one time not to exceed $5.0 million and
other loans and advances to employees made in the ordinary course of business
consistent with past practices of the Company or such Subsidiary; (vii) stock,
obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any of its Subsidiaries
or in satisfaction of judgments or claims; (viii) a Person engaged in a Related
Business or a loan or advance to the Company the proceeds of which are used
solely to make an Investment in a Person engaged in a Related Business or a
Guarantee by the Company of Indebtedness of any Person in which such Investment
has been made; provided, however, that no Permitted Investments may be made
pursuant to this clause (viii) to the extent the amount thereof would, when
taken together with all other Permitted Investments made pursuant to this
clause (viii), exceed $20.0 million in the aggregate (plus, to the extent not
previously reinvested, any return of capital realized on Permitted Investments
made pursuant to this clause (viii), or any release or other cancellation of
any Guarantee constituting such Permitted Investment); (ix) Persons to the
extent such Investment is received by the Company or any Subsidiary as
consideration for asset dispositions effected in compliance with Section 4.6;
(x) prepayments and other credits to suppliers made in the ordinary course of
business consistent with the past practices of the Company and its
Subsidiaries; and (xi) Investments in connection with pledges, deposits,
payments or performance bonds made or given in the ordinary course of business
in connection with or to secure statutory, regulatory or similar obligations,
including obligations under health, safety or environmental obligations.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
18
<PAGE> 25
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
A "Public Market" exists at any time with respect to the common
stock of Holding or the Company if (a) the common stock of Holding or the
Company, as applicable, is then registered with the SEC pursuant to Section
12(b) or 12(g) of the Exchange Act and traded either on a national securities
exchange or in the National Association of Securities Dealers Automated
Quotation System and (b) at least 15% of the total issued and outstanding
common stock of the Company or Holding, as applicable, has been distributed
prior to such time by means of an effective registration statement under the
Securities Act of 1933.
"Purchase Agreement" means the Preferred Stock and Warrant
Purchase Agreement dated as of March 5, 1996, among the Company, Holding,
Chemical Equity Associates and Hicks, Muse, Tate & Furst Equity Fund II, L.P.,
as amended, supplemented and otherwise in effect from time to time.
"QIB" means any "qualified institutional buyer" (as defined under
the Securities Act).
"Redemption Date" means the date specified by the Company in a
notice delivered pursuant to Section 3.3 as the date on which the Company has
elected to redeem all of the Securities pursuant to paragraph 5 of the
Securities after the occurrence of a Change of Control.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances, replaces, renews, repays or extends (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of the Indenture or Incurred in compliance with the Indenture (including
Indebtedness of the Company that refinances Indebtedness of any Subsidiary and
Indebtedness of any Subsidiary that refinances
19
<PAGE> 26
Indebtedness of another Subsidiary) including Indebtedness that refinances
Refinancing Indebtedness; provided, however, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an Average
Life at the time such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being refinanced and (iii)
such Refinancing Indebtedness is Incurred in an aggregate principal amount (or
if issued with original issue discount, an aggregate issue price) that is equal
to (or 101% of, in the case of a refinancing of the Securities in connection
with a Change of Control) or less than the sum of the aggregate principal
amount (or if issued with original issue discount, the aggregate accreted
value) then outstanding of the Indebtedness being refinanced.
"Related Business" means any business which is the same as or
related, ancillary or complementary to any of the businesses of the Company and
its Subsidiaries on the Issue Date, as reasonably determined by the Board of
Directors.
"Representative" means any trustee, agent or representative (if
any) of an issue of Senior Indebtedness or Guarantor Senior Indebtedness;
provided that, with respect to any Guarantor Senior Indebtedness consisting of
a Guarantee of Senior Indebtedness, the Representative of such Guarantor Senior
Indebtedness shall be deemed to be the Representative of such Senior
Indebtedness.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company or
any Subsidiary secured by a Lien.
"Securities" means the Securities issued under this Indenture.
20
<PAGE> 27
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depositary), or any successor Person
thereto and shall initially be the Trustee.
"Senior Indebtedness" means, whether outstanding on the Issue
Date or thereafter issued, the Bank Indebtedness and all Indebtedness of the
Company, including interest and fees thereon, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that the obligations in respect of such Indebtedness are not
superior in right of payment to the Securities; provided, however, that Senior
Indebtedness shall not include (1) any obligation of the Company to any
Subsidiary, (2) any liability for Federal, state, local or other taxes owed or
owing by the Company, (3) any accounts payable or other liability to trade
creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities) or (4) any Indebtedness,
Guarantee or obligation of the Company that is expressly subordinate or junior
in right of payment to any other Indebtedness, Guarantee or obligation of the
Company, including any Senior Subordinated Indebtedness and any Subordinated
Obligations.
"Senior Subordinated Indebtedness" means the Securities and any
other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Securities in right of payment and
is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of the Company which is not Senior Indebtedness.
"Shelf Registration" has the meaning ascribed thereto in the
Purchase Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which
21
<PAGE> 28
the payment of principal of such security is due and payable, including
pursuant to any mandatory redemption provision.
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Company.
"Subsidiary Guarantee" means the Guarantee of the Securities by
the Subsidiary Guarantors set forth in Article XI.
"Subsidiary Guarantors" means each Subsidiary of the Company in
existence on the Issue Date (other than ECM and Wirekraft Industries de Mexico,
S.A. de C.V.) and each Subsidiary (other than foreign subsidiaries) created or
acquired by the Company after the Issue Date and which becomes a party hereto
pursuant to Section 11.7.
"Temporary Cash Investments" means any of the following: (i) any
Investment in direct obligations of the United States of America or any agency
thereof or obligations Guaranteed by the United States of America or any agency
thereof, (ii) Investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States of America having capital, surplus and
undivided profits aggregating in excess of $250.0 million (or the foreign
currency equivalent thereof) and whose long-term debt, or whose parent holding
company's long-term debt, is rated "A" (or such similar
22
<PAGE> 29
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act), (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above, (iv) Investments in
commercial paper, maturing not more than 180 days after the date of
acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or
any foreign country recognized by the United States of America with a rating at
the time as of which any investment therein is made of "P-1" (or higher)
according to Moody's Investors Services, Inc. or "A-1" (or higher) according to
Standard and Poor's Ratings Group, (v) Investments in securities with
maturities of six months or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by Standard & Poor's Ratings Group or "A" by Moody's Investors
Service, Inc., and (vi) Investments in mutual funds whose investment guidelines
restrict such funds' investments to those satisfying the provisions of clauses
(i) through (v) above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of this Indenture.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.6(g) hereof.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two business days prior
to the Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to June 1, 2000; provided, however, that if the
period from the Redemption Date to June 1, 2000 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by
23
<PAGE> 30
linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such
yields are given, except that if the period from the Redemption Date to June 1,
2000 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or
any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial
Code as in effect from time to time.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Subsidiary of the Company, at
least 99% of the Capital Stock of which (other than directors qualifying
shares) is owned by the Company or another Wholly Owned Subsidiary.
24
<PAGE> 31
SECTION 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . . 4.7
"Agent Member" . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Blockage Notice" . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
"covenant defeasance option" . . . . . . . . . . . . . . . . . . . 8.1(b)
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Definitive Securities" . . . . . . . . . . . . . . . . . . . . . . 2.1
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Global Security" . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"legal defeasance option" . . . . . . . . . . . . . . . . . . . . . 8.1(b)
"Non-Global Purchaser" . . . . . . . . . . . . . . . . . . . . . . 2.1
"Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
"pay the Securities" . . . . . . . . . . . . . . . . . . . . . . . 10.3
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Payment Blockage Period" . . . . . . . . . . . . . . . . . . . . . 10.3
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Restricted Payment" . . . . . . . . . . . . . . . . . . . . . . . 4.4
"Rule 144A" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Successor Company" . . . . . . . . . . . . . . . . . . . . . . . . 5.1
</TABLE>
SECTION 1.3. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by the TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
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SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater.
ARTICLE II
The Securities
SECTION 2.1. Form and Dating. (a) The Initial Exchange Notes
and the Trustee's certificate of authentication shall be substantially in the
form of Exhibit A, which is hereby incorporated in and expressly made a part of
this Indenture. The Registered Exchange Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B, which is hereby
incorporated by reference and expressly made a part of this Indenture. The
Securities may have notations,
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legends or endorsements required by law, stock exchange rule or usage, in
addition to those set forth on Exhibits A and B. The Company and the Trustee
shall approve the forms of the Securities and any notation, endorsement or
legend on them. Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in Exhibits A and B are part of the terms
of this Indenture and, to the extent applicable, the Company, the Subsidiary
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to be bound by such terms.
(b) Global Securities. The Initial Exchange Notes are being
issued by the Company in exchange for Preferred Stock of the Company pursuant
to the terms and conditions of the Certificate of Designation and the Purchase
Agreement.
Initial Exchange Notes issued to a QIB in reliance on Rule 144A
under the Securities Act ("Rule 144A") shall be issued initially in the form of
one or more permanent global Securities in definitive, fully registered form
without interest coupons with the Global Securities Legend and Restricted
Securities Legend set forth in Exhibit A hereto (each, a "Global Security"),
which shall be deposited on behalf of the purchasers of the Initial Exchange
Notes represented thereby with the Trustee, at its New York office, as
custodian for the Depositary, and registered in the name of the Depositary or a
nominee of the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the
Global Securities may from time to time be increased or decreased by
endorsements made on such Global Securities by the Trustee and the Depositary
or its nominee as hereinafter provided.
(c) Book-Entry Provisions. This Section 2.1(c) shall apply
only to Global Securities deposited with the Trustee, as custodian for the
Depositary.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary or by the Trustee as the custodian of
the Depositary or under such Global Security, and the Depositary may be treated
by the Company, the Trustee and any agent of the Company or the Trustee
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<PAGE> 34
as the absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices of the Depositary governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(d) Certificated Securities. Except as provided in Section
2.6, owners of beneficial interests in Global Securities will not be entitled
to receive Definitive Securities (as defined in Section 2.6). Initial Exchange
Notes issued to Persons who are not QIBs (referred to herein as the "Non-Global
Purchasers") shall be issued initially to such Person in the form of
certificated Initial Exchange Notes bearing the Restricted Securities Legend
set forth in Exhibit A hereto; provided, however, that upon transfer of such
Definitive Securities to a QIB, such Definitive Securities will, unless the
Global Security has previously been exchanged, be exchanged for an interest in
a Global Security pursuant to the provisions of Section 2.6 hereof. Definitive
Securities will bear the Restricted Securities Legend set forth on Exhibit A
unless removed in accordance with Section 2.6(g) hereof.
SECTION 2.2. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually authenticates the Security. The signature of the Trustee
on a Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture.
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<PAGE> 35
The Trustee shall authenticate and deliver: (1) Initial Exchange
Notes for original issue in an aggregate principal amount of $10,000,000 and
(2) Registered Exchange Notes for issue only on any date on which, pursuant to
the Purchase Agreement, the Shelf Registration is effective, in exchange for
Initial Exchange Notes of an equal principal amount, in each case upon a
written order of the Company signed by two Officers or by an Officer and either
an Assistant Treasurer or an Assistant Secretary of the Company. Such order
shall specify the amount of the Securities to be authenticated and the date on
which the original issue of Securities is to be authenticated and whether the
Securities are to be Initial Exchange Notes or Registered Exchange Notes. The
aggregate principal amount of Securities outstanding at any time may not exceed
$10,000,000 except as provided in Section 2.7.
The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Securities. Unless
limited by the terms of such appointment, any such 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.
SECTION 2.3. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange.
The Company may have one or more co-registrars and one or more additional
paying agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement
the provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of each such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to Section
7.7. The Company or
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<PAGE> 36
any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent for the Securities.
SECTION 2.4. Paying Agent To Hold Money in Trust. By at least
12:00 noon (New York City time) on the date on which any principal of or
interest on any Security is due and payable, the Company shall deposit with the
Paying Agent a sum sufficient to pay such principal or interest when due. The
Company shall require each Paying Agent (other than the Trustee) to agree in
writing that such Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by such Paying Agent for the
payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate the money held
by it as Paying Agent and hold it as a separate trust fund. The Company at any
time may require a Paying Agent (other than the Trustee) to pay all money held
by it to the Trustee and to account for any funds disbursed by such Paying
Agent. Upon complying with this Section, the Paying Agent (if other than the
Company or a Subsidiary) shall have no further liability for the money
delivered to the Trustee. Upon any bankruptcy, reorganization or similar
proceeding with respect to the Company, the Trustee shall serve as Paying Agent
for the Securities.
SECTION 2.5. 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 Securityholders. If the Trustee
is not the Registrar, the Company shall furnish to the Trustee, in writing at
least seven Business Days before 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 may reasonably require of the names and addresses of
Securityholders.
SECTION 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
certificated Securities ("Definitive Securities") are
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<PAGE> 37
presented by a Holder to the Registrar or a co-registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(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:
(i) such Definitive Securities shall be duly endorsed
or accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar or co-registrar, duly
executed by such Holder or his attorney duly authorized in writing; and
(ii) if such Definitive Securities are Transfer
Restricted Securities, such Definitive Securities shall also 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 the form set forth on the reverse of
the Security); or
(B) if such Transfer Restricted Securities are being
transferred (x) to the Company or to a QIB in accordance with
Rule 144A under the Securities Act or (y) pursuant to an
effective registration statement under the Securities Act, a
certification from such Holder to that effect (in the form set
forth on the reverse of the Security); or
(C) if such Transfer Restricted Securities are being
transferred (w) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation
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<PAGE> 38
S under the Securities Act; or (x) 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 the Securities of $250,000 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 (y) in reliance on another exemption from the
registration requirements of the Securities Act: (i) a
certification to that effect from such Holder (in the form set
forth on the reverse of the Security), (ii) if the Company or the
Trustee so requests, an Opinion of Counsel reasonably acceptable
to the Company and to the Trustee to the effect that such
transfer is in compliance with the Securities Act and (iii) in
the case of clause (x), a signed letter from the transferee
substantially in the form of Exhibit C hereto.
(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 Trustee
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse
of the Security, to the effect that such Definitive Security is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act; and
(ii) written instructions from the Holder thereof
directing the Trustee 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 Trustee 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 Depositary and the Securities Custodian, the
aggregate principal
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<PAGE> 39
amount of Securities represented by the Global Security to be increased
accordingly. If no Global Securities are then outstanding, the Company shall
issue and the Trustee shall authenticate, upon written order of the Company in
the form of an Officers' Certificate, a new Global Security in the appropriate
principal amount. The Trustee shall deliver copies of each certification and
instruction received by it pursuant to clauses (i) and (ii) above to the
Depositary and, upon receipt thereof, the Depositary shall make appropriate
adjustments to its books and records to reflect exchange of such Definitive
Security for an interest in the Global Security in accordance with Section
2.6(c).
(c) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depositary, in accordance with this Indenture
(including applicable restrictions on transfer set forth herein, if any) and
the procedures of the Depositary therefor.
(ii) A Global Security deposited with the Depositary or
with the Trustee as custodian for the Depositary pursuant to Section 2.1 shall
be transferred to the beneficial owners thereof only if such transfer complies
with this Section 2.6 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or if at
any time such Depositary ceases to be a "clearing agency" registered under the
Exchange Act and a successor depositary is not appointed by the Company within
90 days of such notice, or (ii) an Event of Default has occurred and is
continuing.
(iii) Any Global Security that is transferable to the
beneficial owners thereof pursuant to this Section shall be surrendered by the
Depositary to the Trustee to be so transferred, in whole or from time to time
in part, without charge, and the Company shall sign and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Security, an equal aggregate principal amount of Definitive Securities of
authorized denominations. Each Definitive Security delivered in exchange for
any portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of
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<PAGE> 40
$1,000 and any integral multiple thereof and shall be registered in such names
as the Depositary shall direct. Any Definitive Security delivered in exchange
for an interest in the Global Security shall, except as otherwise provided in
Section 2.6(g), bear the Restricted Securities Legend set forth in Exhibit A
hereto.
(iv) The registered Holder of a Global Security may
grant proxies and otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take any action which
a Holder is entitled to take under this Indenture or the Securities.
(v) In the event of the occurrence of either of the
events specified in Section 2.6(c)(ii), the Company will promptly make
available to the Trustee a reasonable supply of certificated Securities in
definitive, fully registered form without interest coupons.
(d) Restriction on 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 of the same aggregate principal amount; provided
that such request is accompanied by the information specified below.
Upon receipt by the Trustee of written instructions (or such other form
of instructions as is customary for the Depositary) from the Depositary
or its nominee on behalf of any Person having a beneficial interest in a
Global Security and, in the case of a Transfer Restricted Security, the
following additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being transferred to
the Person designated by the Depositary as being the owner of a
beneficial interest in a Global Security, a certification from
such Person to that effect (in the form set forth on the reverse
of the Security); or
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<PAGE> 41
(B) if such beneficial interest is being transferred
(x) to a QIB in accordance with Rule 144A under the Securities
Act or (y) pursuant to an effective registration statement under
the Securities Act, a certification from such person to that
effect (in the form set forth on the reverse of the Security); or
(C) if such beneficial interest is being transferred
(w) pursuant to an exemption from registration in accordance with
Rule 144 or Regulation S under the Securities Act; or (x) 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 the Securities of $250,000 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 (y) in reliance on another exemption from the
registration requirements of the Securities Act: (i) a
certification to that effect from the transferee (in the form set
forth on the reverse of the Security), (ii) if the Company or the
Trustee so requests, an Opinion of Counsel reasonably acceptable
to the Company and to the Trustee to the effect that such
transfer is in compliance with the Securities Act, and (iii) in
the case of clause (x), a signed letter from the transferee in
the form of Exhibit C hereto;
then the Securities Custodian, at the direction of the Trustee, will
cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Securities Custodian, the
aggregate principal amount of the Global Security to be reduced
accordingly and, following such reduction, the Company will execute and
the Trustee will authenticate and deliver to the transferee one or more
Definitive Securities in accordance with clause (ii) below.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to
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<PAGE> 42
this Section 2.6(d) shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct
the Trustee in writing. The Trustee shall deliver such Definitive
Securities to the Persons in whose names such Securities are so
registered in accordance with the instructions of the Depositary.
(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 Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
(f) [Intentionally Omitted];
(g) Legend.
(i) Except as permitted by the following paragraph (ii)
each Security certificate evidencing Global Securities and Definitive
Securities (and all Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the following
form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE
LAST DATE ON
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WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO
THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG
AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
ACCREDITED INVESTOR WITHIN THE MEANING OF 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 THE SECURITIES OF $250,000, 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 (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH CASE, ONLY
IF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act:
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<PAGE> 44
(A) in the case of any Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security for
a Definitive Security that does not bear the legend set forth in
paragraph (i) above and rescind any restriction on the transfer
of such Security; and
(B) in the case of any such Transfer Restricted
Security represented by a Global Security, such Transfer
Restricted Security shall not be required to bear the legend set
forth in paragraph (i) above, although it shall continue to be
subject to the provisions of Section 2.6(c) hereof; provided,
however, that with respect to any request for an exchange of a
Transfer Restricted Security that is represented by a Global
Security for a Definitive Security that does not bear the legend
set forth in paragraph (i) above, which request is made in
reliance upon Rule 144, the Holder thereof shall certify in
writing to the Trustee that such request is being made pursuant
to Rule 144 (such certification to be in the form set forth on
the reverse of the Security).
(h) Cancellation 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 canceled, such
Global Security shall be returned to the Depositary for cancellation or
retained and canceled 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 canceled, 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 Securities Custodian
to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall
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authenticate Definitive Securities and Global Securities at the
Registrar's or co-registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company 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 or similar governmental charges payable upon
exchange or transfer pursuant to Sections 4.6, 4.8 or 9.5 or pursuant to
paragraph 5 of the Securities).
(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 (1) 15 Business Days
before the mailing of a notice of an offer to repurchase or redeem
Securities and ending at the close of business on the day of such
mailing or (2) 15 Business Days before an interest payment date and
ending on such interest payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in whose
name a Security is registered as the absolute owner of such Security for
the purpose of receiving payment of principal of and interest on such
Security and for all other purposes whatsoever, whether or not such
Security is overdue, and none of the Company, the Trustee, the Paying
Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt and
shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(j) No Obligation of the Trustee. (i) The Trustee shall have
no responsibility or obligation to any beneficial
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owner of a Global Security, a member of, or a participant in the Depositary or
other Person with respect to the accuracy of the records of the Depositary or
its nominee or of any participant or member thereof, with respect to any
ownership interest in the Securities or with respect to the delivery to any
participant, member, beneficial owner or other Person (other than the
Depositary) of any notice (including any notice of redemption) or the payment
of any amount or delivery of any Securities (or other security or property)
under or with respect to such Securities. All notices and communications to be
given to the Holders and all payments to be made to Holders in respect of the
Securities shall be given or made only to or upon the order of the registered
Holders (which shall be the Depositary or its nominee in the case of a Global
Security). The rights of beneficial owners in any Global Security shall be
exercised only through the Depositary subject to the applicable rules and
procedures of the Depositary. The Trustee may rely and shall be fully
protected in relying upon information furnished by the Depositary with respect
to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers between
or among Depositary participants, members or beneficial owners in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and
when expressly required by, the terms of this Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.
SECTION 2.7. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements
of Section 8-405 of the Uniform Commercial Code are met and the Holder
satisfies any other reasonable requirements of the Trustee. If required by the
Trustee or the Company, such Holder shall furnish an indemnity bond sufficient
in the judgment of the Company and the Trustee to protect the Company, the
Trustee, the Paying Agent, the Registrar and any co-registrar from any loss
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which any of them may suffer if a Security is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.8. Outstanding Securities. Securities outstanding at
any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.7, it ceases to
be outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and interest payable on that date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case may
be, and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.9. Temporary Securities. Until definitive Securities
are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive
Securities. After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of
the temporary Securities at any office or agency maintained by the Company for
that purpose and such exchange shall be without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute, and the Trustee shall authenticate and deliver in exchange
therefor, one
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or more definitive Securities representing an equal principal amount of
Securities. Until so exchanged, the Holder of temporary Securities shall in
all respects be entitled to the same benefits under this Indenture as a holder
of a definitive Securities.
SECTION 2.10. Cancellation. The Company 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
registration of transfer, exchange or payment. The Trustee and no one else
shall cancel and destroy (subject to the record retention requirements of the
Exchange Act) all Securities surrendered for registration of transfer,
exchange, payment or cancellation and deliver a certificate of such destruction
to the Company unless the Company directs the Trustee to deliver canceled
Securities to the Company. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed (or upon the Company's failure to do so the Trustee shall
fix) any such special record date and payment date to the reasonable
satisfaction of the Trustee which specified record date shall not be less than
10 days prior to the payment date for such defaulted interest and shall
promptly mail or cause to be mailed to each Securityholder a notice that states
the special record date, the payment date and the amount of defaulted interest
to be paid. The Company shall notify the Trustee in writing of the amount of
defaulted interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such defaulted interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when so deposited to be held in trust for the benefit of the Person
entitled to such defaulted interest as provided in this Section.
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SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders, provided, however, 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.
ARTICLE III
Redemption
SECTION 3.1. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify
the Trustee in writing of the redemption date and the principal amount of
Securities to be redeemed.
The Company shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from the Company to the effect that such redemption will comply
with the conditions herein. If fewer than all the Securities are to be
redeemed, the record date relating to such redemption shall be selected by the
Company and set forth in the related notice given to the Trustee, which record
date shall be not less than 15 days after the date of such notice.
SECTION 3.2. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of
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Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple
of $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed.
SECTION 3.3. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Securities
(or portion thereof) called for redemption ceases to accrue on and after
the redemption date;
(7) the CUSIP number, if any, printed on the Securities being
redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
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At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.4. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to 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 shall be payable to
the Securityholder of the redeemed Securities registered on the relevant record
date. Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.
SECTION 3.5. Deposit of Redemption Price. By at least 12:00
noon (New York City time) on the date on which any principal of or intent on
any Security is due and payable, the Company shall deposit with the Paying
Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which are owned by the Company or
a Subsidiary and have been delivered by the Company or such Subsidiary to the
Trustee for cancellation.
If the Company complies with the preceding paragraph, then,
unless the Company defaults in the payment of such redemption price, interest
on the Securities to be redeemed will cease to accrue on and after the
applicable redemption date, whether or not such Securities are presented for
payment.
SECTION 3.6. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in a principal amount to the unredeemed portion of the Security
surrendered.
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ARTICLE IV
Covenants
SECTION 4.1. Payment of Securities. The Company shall promptly
pay the principal of and interest on the Securities on the dates and in the
manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee
or the Paying Agent holds in accordance with this Indenture money sufficient to
pay all principal and interest then due and the Trustee or the Paying Agent, as
the case may be, is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law,
deduct or withhold income or other similar taxes imposed by the United States
of America from principal or interest payments hereunder.
SECTION 4.2. SEC Reports. Notwithstanding that the Company may
not be required to be subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall file with the SEC and within 15
days after such reports are filed, provide the Trustee and the Holders (at
their addresses as set forth in the register of Securities) with the annual and
quarterly reports and the information, documents and other reports which are
otherwise required pursuant to Section 13 of the Exchange Act. In addition,
following the registration of the common stock of the Company pursuant to
Section 12(b) or 12(g) of the Exchange Act, the Company shall furnish to the
Trustee and the Holders, promptly upon their becoming available, copies of the
Company's annual report to shareholders and any other information provided by
the Company to its public shareholders generally. The Company shall also
comply with the other provisions of TIA Section 314(a).
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SECTION 4.3. Limitation on Indebtedness. (a) The Company shall
not, and shall not permit any of its Subsidiaries to, Incur any Indebtedness;
provided, however, that the Company and any of its Subsidiaries may Incur
Indebtedness if on the date thereof the Consolidated Coverage Ratio would be
greater than 2.00:1.00, if such Indebtedness is Incurred on or prior to the
second anniversary of the Issue Date, and 2.25:1:00, if such Indebtedness is
Incurred thereafter.
(b) Notwithstanding Section 4.3(a), the Company and its
Subsidiaries may Incur the following Indebtedness: (i) Indebtedness Incurred
pursuant to (A) the Credit Agreement (including any renewal, extension,
refunding, restructuring, replacement or refinancing thereof referred to in
clause (ii) of the definition thereof) or (B) any other agreements or
indentures governing Senior Indebtedness or Guarantor Senior Indebtedness;
provided that the aggregate principal amount of all Indebtedness Incurred
pursuant to this clause (i) does not exceed $240.0 million at any time
outstanding, less the aggregate principal amount thereof repaid with the net
proceeds of Asset Dispositions (to the extent, in the case of a repayment of
revolving credit Indebtedness, the commitment to advance the loans repaid has
been terminated); (ii) Indebtedness represented by Capitalized Lease
Obligations, mortgage financings or purchase money obligations, in each case
Incurred for the purpose of financing all or any part of the purchase price or
cost of construction or improvement of property used in a Related Business or
Incurred to Refinance any such purchase price or cost of construction or
improvement, in each case Incurred no later than 365 days after the date of
such acquisition or the date of completion of such construction or improvement;
provided, however, that the principal amount of any Indebtedness Incurred
pursuant to this Section 4.3(b)(ii) shall not exceed $10.0 million at any time
outstanding; (iii) Permitted Indebtedness; and (iv) Indebtedness (other than
Indebtedness described in clauses (i)-(iii)) in a principal amount which, when
taken together with the principal amount of all other Indebtedness Incurred
pursuant to this Section 4.3(b)(iv) and then outstanding, will not exceed $25.0
million.
(c) The Company shall not Incur any Indebtedness under Section
4.3(b) if the proceeds thereof are used, directly or indirectly, to Refinance
any Subordinated Obligations unless such
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Indebtedness shall be subordinated to the Securities to at least the same
extent as such Subordinated Obligations. No Subsidiary Guarantor shall Incur
any Indebtedness under Section 4.3(b) if the proceeds thereof are used,
directly or indirectly, to Refinance any Guarantor Subordinated Indebtedness of
such Subsidiary Guarantor unless such Indebtedness shall be subordinated to the
obligations of such Subsidiary Guarantor under the Subsidiary Guarantee to at
least the same extent as such Guarantor Subordinated Indebtedness.
(d) The Company shall not Incur any Secured Indebtedness which
is not Senior Indebtedness unless contemporaneously therewith effective
provision is made to secure the Securities equally and ratably with such
Secured Indebtedness for so long as such Secured Indebtedness is secured by a
Lien. No Subsidiary Guarantor shall Incur any Secured Indebtedness which is
not Guarantor Senior Indebtedness of such Subsidiary Guarantor unless
contemporaneously therewith effective provision is made to secure the
obligations of such Subsidiary Guarantor under the Subsidiary Guarantee equally
and ratably with such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
(e) The Company shall not Incur any Indebtedness if such
Indebtedness is subordinate or junior in ranking in any respect to any Senior
Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is
expressly subordinated in right of payment to Senior Subordinated Indebtedness.
No Subsidiary Guarantor shall Incur any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Guarantor Senior
Indebtedness of such Subsidiary Guarantor unless such Indebtedness is Guarantor
Senior Subordinated Indebtedness of such Subsidiary Guarantor or is expressly
subordinated in right of payment to Guarantor Senior Subordinated Indebtedness
of such Subsidiary Guarantor.
SECTION 4.4. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any of its Subsidiaries, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company or any of its Subsidiaries)
except (A) dividends or distributions payable in its Capital
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Stock (other than Disqualified Stock) or in options, warrants or other rights
to purchase such Capital Stock and (B) dividends or distributions payable to
the Company or a Subsidiary of the Company (and, if such Subsidiary is not a
Wholly Owned Subsidiary, to its other stockholders on a pro rata basis or on a
basis no more favorable to such other stockholders), (ii) purchase, redeem,
retire or otherwise acquire for value any Capital Stock of the Company held by
Persons other than a Subsidiary of the Company or any Capital Stock of a
Subsidiary of the Company held by any Affiliate of the Company, other than
another Subsidiary (in either case, other than in exchange for its Capital
Stock (other than Disqualified Stock)), (iii) purchase, repurchase, redeem,
defease or otherwise acquire or retire for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment, any Subordinated
Obligations (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within
one year of the date of acquisition) or (iv) make any Investment (other than a
Permitted Investment) in any Person (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or Investment
being herein referred to as a "Restricted Payment"), if at the time the Company
or such Subsidiary makes such Restricted Payment: (1) a Default or Event of
Default shall have occurred and be continuing (or would result therefrom); or
(2) the Company is not able to incur an additional $1.00 of Indebtedness
pursuant to Section 4.3(a); or (3) the aggregate amount of such Restricted
Payment and all other Restricted Payments declared or made subsequent to the
Issue Date would exceed the sum of: (A) 50% of the Consolidated Net Income
accrued during the period (treated as one accounting period) from the Issue
Date to the end of the most recent fiscal quarter ending prior to the date of
such Restricted Payment as to which financial results are available (but in no
event ending more than 135 days prior to the date of such Restricted Payment)
(or, in case such Consolidated Net Income shall be a deficit, minus 100% of
such deficit); (B) the aggregate Net Cash Proceeds received by the Company from
the issue or sale of its Capital Stock (other than Disqualified Stock) or other
cash contributions to its capital subsequent to the Issue Date (other than an
issuance or sale to a Subsidiary of the Company or an employee stock ownership
plan or similar trust); (C) the aggregate Net Cash
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Proceeds received by the Company from the issue or sale of its Capital Stock
(other than Disqualified Stock) to an employee stock ownership plan or similar
trust subsequent to the Issue Date; provided, however, that if such plan or
trust Incurs any Indebtedness to or Guaranteed by the Company or any of its
Subsidiaries to finance the acquisition of such Capital Stock, such aggregate
amount shall be limited to such Net Cash Proceeds less such Indebtedness
Incurred or Guaranteed by the Company or any of its Subsidiaries and any
increase in the Consolidated Net Worth of the Company resulting from principal
repayments made by such plan or trust with respect to Indebtedness Incurred by
it to finance the purchase of such Capital Stock; (D) the amount by which
Indebtedness of the Company is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Subsidiary of the Company) subsequent
to the Issue Date of any Indebtedness of the Company convertible or
exchangeable for Capital Stock of the Company (less the amount of any cash, or
other property, distributed by the Company upon such conversion or exchange);
and (E) the amount equal to the net reduction in Investments (other than
Permitted Investments) made by the Company or any of its Subsidiaries in any
Person resulting from repurchases or redemptions of such Investments by such
Person, proceeds realized upon the sale of such Investment to an unaffiliated
purchaser, repayments of loans or advances or other transfers of assets by such
Person to the Company or any Subsidiary of the Company; provided, however, that
no amount shall be included under this clause (E) of this Section 4.4(a) to the
extent it is already included in Consolidated Net Income.
(b) The provisions of Section 4.4(a) shall not prohibit: (i)
any purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary or an employee
stock ownership plan or similar trust); provided, however, that (A) such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale shall be
excluded from clause (3)(B) of Section 4.4(a); (ii) any purchase or redemption
of Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Obligations of
the Company; provided, however, that
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such purchase or redemption shall be excluded in the calculation of the amount
of Restricted Payments; (iii) any purchase or redemption of Subordinated
Obligations from Net Available Cash to the extent permitted under Section 4.6;
provided, however, that such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments; (iv) dividends paid within 60
days after the date of declaration if at such date of declaration such dividend
would have complied with this provision; provided, however, that such dividend
shall be included in the calculation of the amount of Restricted Payments; (v)
[Intentionally Omitted]; (vi) payments by the Company to fund (A) out of pocket
expenses of Holding for administrative, legal and accounting services provided
by third parties, or to pay franchise fees and similar costs; provided,
however, any such administrative expenses shall not exceed an aggregate amount
of $1.0 million per annum, and (B) taxes of Holding; (vii) payments by the
Company to Holding pursuant to the Monitoring and Oversight Agreement; (viii)
payments of dividends on the Company's common stock after an initial public
offering of common stock of the Company or of Holding in an annual amount not
to exceed 6% of the gross proceeds (before deducting underwriting discounts and
commissions and other fees and expenses of the offering) received by the
Company (directly or as a common equity contribution from Holding) from such
initial public offering; (ix) payments by the Company to repurchase, or to
enable Holding to repurchase, Capital Stock or other securities of Holding from
members of management of Holding or the Company in an aggregate amount not to
exceed $7,500,000; (x) payments to enable Holding to redeem or repurchase stock
purchase or similar rights granted by Holding with respect to its Capital Stock
in an aggregate amount not to exceed $500,000; (xi) payments, not to exceed
$100,000 in the aggregate, to enable Holding to make cash payments to holders
of its Capital Stock in lieu of the issuance of fractional shares of its
Capital Stock; and (xii) payments made pursuant to any merger, consolidation or
sale of assets effected in accordance with Section 5.1; provided, however, that
no such payment may be made pursuant to this clause (xii) unless, after giving
effect to such transaction, the Consolidated Coverage Ratio of the Company
would be greater than 3.5:1.0; provided, further, that in the case of clauses
(vii), (viii), (ix), (x), (xi) and (xii) no Default or Event of Default (in the
case of clause (vii) such Default or Event of Default shall be limited to items
(1) and (2) under Section 6.1) shall have
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occurred or be continuing at the time of such payment or as a result thereof.
SECTION 4.5. Limitation on Restrictions on Distributions from
Subsidiaries. The Company shall not, and shall not permit any of its
Subsidiaries to, create or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on its Capital Stock or pay any
Indebtedness or other obligation owed to the Company, (ii) make any loans or
advances to the Company or (iii) transfer any of its property or assets to the
Company; except: (a) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date, including the Credit Agreement;
(b) any encumbrance or restriction with respect to such a Subsidiary pursuant
to an agreement relating to any Indebtedness issued by such Subsidiary on or
prior to the date on which such Subsidiary was acquired by the Company and
outstanding on such date (other than Indebtedness issued as consideration in,
or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Subsidiary became a Subsidiary of the Company or was acquired by the
Company); (c) any encumbrance or restriction with respect to such a Subsidiary
pursuant to an agreement evidencing Indebtedness Incurred without violation of
this Indenture or effecting a refinancing of Indebtedness issued pursuant to an
agreement referred to in clauses (a) or (b) or this clause (c) or contained in
any amendment to an agreement referred to in clauses (a) or (b) or this clause
(c); provided, however, that the encumbrances and restrictions with respect to
such Subsidiary contained in any of such agreement, refinancing agreement or
amendment, taken as a whole, are no less favorable to the Holders in any
material respect, as determined in good faith by the senior management of the
Company or the Board of Directors, than encumbrances and restrictions with
respect to such Subsidiary contained in agreements in effect at, or entered
into on, the Issue Date; (d) in the case of clause (iii) of this Section 4.5,
any encumbrance or restriction (A) that restricts in a customary manner the
subletting, assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B) by virtue of
any transfer of, agreement to transfer, option or right with respect to, or
Lien on, any
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property or assets of the Company or any Subsidiary not otherwise prohibited by
this Indenture, (C) that is included in a licensing agreement to the extent
such restrictions limit the transfer of the property subject to such licensing
agreement or (D) arising or agreed to in the ordinary course of business and
that does not, individually or in the aggregate, detract from the value of
property or assets of the Company or any of its Subsidiaries in any manner
material to the Company or any such Subsidiary; (e) in the case of clause (iii)
of this Section 4.5, restrictions contained in security agreements, mortgages
or similar documents securing Indebtedness of a Subsidiary to the extent such
restrictions restrict the transfer of the property subject to such security
agreements; (f) any restriction with respect to such a Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Subsidiary pending the
closing of such sale or disposition and (g) encumbrances or restrictions
arising or existing by reason of applicable law.
SECTION 4.6. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any of its Subsidiaries to,
make any Asset Disposition unless (i) the Company or such Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by the Company's senior management or
the Board of Directors (including as to the value of all non-cash
consideration), of the shares and assets subject to such Asset Disposition;
(ii) at least 75% of the consideration thereof received by the Company or such
Subsidiary is in the form of cash or cash equivalents; and (iii) an amount
equal to 100% of the Net Available Cash from such Asset Disposition is applied
by the Company (or such Subsidiary, as the case may be) (A) first, to the
extent the Company or any Subsidiary elects (or is required by the terms of any
Senior Indebtedness or Guarantor Senior Indebtedness), to prepay, repay or
purchase (x) Senior Indebtedness or Guarantor Senior Indebtedness or (y)
Indebtedness of a Wholly Owned Subsidiary (in each case other than Indebtedness
owed to the Company) within 180 days from the later of the date of such Asset
Disposition or the receipt of such Net Available Cash; (B) second, within one
year from the receipt of such Net Available Cash, to the extent of the balance
of such Net Available Cash after application in accordance with clause (A), at
the Company's election either (x) to the investment in or
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acquisition of Additional Assets or (y) to prepay, repay or purchase (1) Senior
Indebtedness or Guarantor Senior Indebtedness or (2) Indebtedness of a Wholly
Owned Subsidiary (in each case other than Indebtedness owed to the Company);
(C) third, within 45 days after the later of the application of Net Available
Cash in accordance with clauses (A) and (B) and the date that is one year from
the receipt of such Net Available Cash, to the extent of the balance of such
Net Available Cash after application and in accordance with clauses (A) and
(B), to make an offer to purchase 11 3/4% Senior Subordinated Notes at par plus
accrued and unpaid interest, if any, thereon in accordance with the provisions
of the 11 3/4% Senior Subordinated Indenture; (D) fourth, within 45 days of the
later of the Application of Net Available Cash in accordance with clauses (A),
(B) and (C) and the date that is one year from the receipt of such Net
Available Cash, to the extent if the balance of such Net Available Cash after
application and in accordance with clause (A), (B) and (C), to make an offer to
purchase Securities at par plus accrued and unpaid interest, if any, thereon;
and (E) fifth, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A), (B), (C) and (D), to (w) the
investment in or acquisition of Additional Assets; (x) the making of Temporary
Cash Investments, (y) the prepayment, repayment or purchase of Indebtedness of
the Company or Indebtedness of any Subsidiary (other than Indebtedness owed to
the Company) or (z) any other purpose otherwise permitted under this Indenture,
in each case within the later of 45 days after the application of Net Available
Cash in accordance with clauses (A), (B), (C) and (D) and the date that is one
year from the receipt of such Net Available Cash; provided, however, that, in
connection with any prepayment, repayment or purchase of Indebtedness pursuant
to clauses (A), (B), (C), (D) or (E) above, the Company or such Subsidiary
shall retire such Indebtedness and shall cause the related loan commitment (if
any) to be permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased. Notwithstanding the foregoing provisions, the
Company and its Subsidiaries shall not be required to apply any Net Available
Cash in accordance herewith except to the extent that the aggregate Net
Available Cash from all Asset Dispositions which are not applied in accordance
with this covenant at any time exceed $10.0 million. The Company shall not be
required to make an offer for Securities pursuant to this covenant if the Net
Available Cash available therefor (after application of the
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proceeds as provided in clauses (A), (B) and (C)) is less than $10.0 million
for any particular Asset Disposition (which lesser amounts shall be carried
forward for purposes of determining whether an offer is required with respect
to the Net Available Cash from any subsequent Asset Disposition).
For the purposes of this covenant, the following will be deemed
to be cash: (x) the assumption by the transferee of Senior Indebtedness of the
Company or Indebtedness of any Subsidiary of the Company and the release of the
Company or such Subsidiary from all liability on such Senior Indebtedness or
Indebtedness in connection with such Asset Disposition (in which case the
Company shall, without further action, be deemed to have applied cash to repay
such assumed Indebtedness in accordance with clause (A) of the preceding
paragraph) and (y) securities received by the Company or any Subsidiary from
the transferee that are promptly converted by the Company or such Subsidiary
into cash.
(b) In the event of an Asset Disposition that requires the
purchase of Securities pursuant to Section 4.6(a)(iii)(D), the Company will be
required to purchase Securities tendered pursuant to an offer by the Company
for the Securities (the "Offer") at a purchase price of 100% of their principal
amount plus accrued and unpaid interest, if any, to the purchase date in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in Section 4.6(c). If the aggregate purchase price
of the Securities tendered pursuant to the Offer is less than the Net Available
Cash allotted to the purchase of the Securities, the Company will apply the
remaining Net Available Cash in accordance with Section 4.6(a)(iii)(E).
(c) (1) Promptly, and in any event within 10 days after the
Company is required to make an Offer, the Company shall deliver to the Trustee
and send, by first-class mail to each Holder, a written notice stating that the
Holder may elect to have his Securities purchased by the Company either in
whole or in part (subject to prorating as hereinafter described in the event
the Offer is oversubscribed) in integral multiples of $1,000 of principal
amount, at the applicable purchase price. The notice shall specify a purchase
date not less than 30 days nor more than 60 days after the date of such notice
(the "Purchase Date").
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(2) Not later than the date upon which such written notice of an
Offer is delivered to the Trustee and the Holders, the Company shall deliver to
the Trustee an Officers' Certificate setting forth (i) the amount of the Offer
(the "Offer Amount"), (ii) the allocation of the Net Available Cash from the
Asset Dispositions as a result of which such Offer is being made and (iii) the
compliance of such allocation with the provisions of Section 4.6(a). Upon the
expiration of the period (the "Offer Period") for which the Offer remains open,
the Company shall deliver to the Trustee for cancellation the Securities or
portions thereof which have been properly tendered to and are to be accepted by
the Company. The Trustee shall, on the Purchase Date, mail or deliver payment
to each tendering Holder in the amount of the purchase price of the Securities
tendered by such Holder to the extent such funds are available to the Trustee.
(3) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice prior to the expiration of
the Offer Period. Each Holder will be entitled to withdraw its election if the
Trustee or the Company receives, not later than one Business Day prior to the
expiration of the Offer Period, a telegram, telex, facsimile transmission or
letter from such Holder setting forth the name of such Holder, the principal
amount of the Security or Securities which were delivered for purchase by such
Holder and a statement that such Holder is withdrawing his election to have
such Security or Securities purchased. If at the expiration of the Offer
Period the aggregate principal amount of Securities surrendered by Holders
exceeds the Offer Amount, the Company shall select the Securities to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of $1,000,
or integral multiples thereof, shall be purchased). Holders whose Securities
are purchased only in part will be issued new Securities equal in principal
amount to the unpurchased portion of the Securities surrendered.
(d) The Company will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 4.6. To the extent that the provisions of any securities laws or
regulations
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conflict with provisions of this Section 4.6, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under this Indenture by virtue thereof.
SECTION 4.7. Limitation on Affiliate Transactions. (a) The
Company will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into or conduct any transaction (including the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Affiliate of the Company other than a Wholly Owned Subsidiary (an
"Affiliate Transaction") unless: (i) the terms of such Affiliate Transaction
are no less favorable to the Company or such Subsidiary, as the case may be,
than those that could be obtained at the time of such transaction in arm's-
length dealings with a Person who is not such an Affiliate; (ii) in the event
such Affiliate Transaction involves an aggregate amount in excess of $2.5
million, the terms of such transaction have been approved by a majority of the
members of the Board of Directors and by a majority of the disinterested
members of such Board of Directors, if any (and such majority or majorities, as
the case may be, determine(s) that such Affiliate Transaction satisfies the
criteria in clause (i) above); and (iii) in the event such Affiliate
Transaction involves an aggregate amount in excess of $10.0 million, the
Company has received a written opinion from an independent investment banking
firm of nationally recognized standing that such Affiliate Transaction is fair
to the Company or such Subsidiary, as the case may be, from a financial point
of view.
(b) The provisions of Section 4.7(a) shall not prohibit (i)
any Restricted Payment permitted to be made pursuant to Section 4.4, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors, (iii)
loans or advances to employees in the ordinary course of business of the
Company or any of its Subsidiaries, (iv) any transaction between Wholly Owned
Subsidiaries, (v) the payment of fees and indemnities to directors, officers
and employees of the Company and its Subsidiaries in the ordinary course of
business, (vi) transactions pursuant to agreements as in existence on the Issue
Date, (vii) any employment agreements
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entered into by the Company or any of its Subsidiaries in the ordinary course
of business, (viii) the issuance of Capital Stock of the Company (other than
Disqualified Stock) and (ix) any obligation of the Company pursuant to the
Monitoring and Oversight Agreement.
SECTION 4.8. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require that the Company
repurchase all or any part of such Holder's Securities at a purchase price in
cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest on the relevant interest
payment date), such repurchase to be made in accordance with Section 4.8(b).
(b) Within 30 days following any Change of Control, unless the
Company has mailed a redemption notice with respect to all the outstanding
Securities in connection with such Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on a record date to
receive interest on the relevant interest payment date);
(2) the repurchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed); and
(3) the procedures determined by the Company, consistent with
this Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Each Holder will be entitled to withdraw its
election if the
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Company receives, not later than one Business Day prior to the purchase date, a
telegram, telex, facsimile transmission or letter from such Holder setting
forth the name of such Holder, the principal amount of the Security or
Securities which were delivered for purchase by such Holder and a statement
that such Holder is withdrawing his election to have such Security or
Securities purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered to the Trustee for cancellation,
and the Company shall pay the purchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 4.8. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.8, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Indenture by virtue thereof.
SECTION 4.9. Limitation on Preferred Stock of Subsidiaries. The
Company will not permit any of its Subsidiaries to issue any Preferred Stock
(other than to the Company or to a Wholly Owned Subsidiary of the Company) or
permit any Person (other than the Company or a Wholly Owned Subsidiary of the
Company) to own any such Preferred Stock (other than Acquired Preferred Stock);
provided that at the time the issuer of such Acquired Preferred Stock becomes a
Subsidiary of the Company or merges with the Company or any of its
Subsidiaries, and after giving effect to such transaction, the Company shall be
able to incur an additional $1.00 of Indebtedness pursuant to Section 4.3(a)
(treating the amount of all obligations of such Subsidiary with respect to the
redemption, repayment or other repurchase of such Acquired Preferred Stock (but
excluding any accrued dividends thereon) as Indebtedness solely for purpose of
such calculation, but only to the extent that such obligations arise on or
prior to the first anniversary of the Stated Maturity of the Securities).
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SECTION 4.10. Limitation on Capital Stock of Subsidiaries. The
Company will not permit any of its Subsidiaries to issue any Capital Stock
(other than Preferred Stock) to any Person (other than to the Company or a
Wholly Owned Subsidiary) or permit any Person (other than the Company or a
Wholly-Owned Subsidiary) to own any Capital Stock (other than Preferred Stock)
of a Subsidiary of the Company, if in either case as a result thereof such
Subsidiary would no longer be a Subsidiary of the Company; provided, however,
that this Section 4.10 shall not prohibit the Company or any of its
Subsidiaries from selling, leasing or otherwise disposing of all of the Capital
Stock of any Subsidiary.
SECTION 4.11. Compliance Certificate. The Company shall deliver
to the Trustee within 120 days after the end of each fiscal year of the Company
an Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default or Event of Default and whether or not the signers
know of any Default or Event of Default that occurred during such period. If
they do, the certificate shall describe the Default or Event of Default, its
status and what action the Company is taking or proposes to take with respect
thereto. The Company also shall comply with TIA Section 314(a)(4).
SECTION 4.12. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE V
Successor Company
SECTION 5.1. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer
or lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation organized
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and existing under the laws of the United States of America, any State
thereof or the District of Columbia and the Successor Company (if not
the Company) shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of the Company under the Securities and
this Indenture;
(ii) immediately after giving effect to such transaction
(and treating any Indebtedness which becomes an obligation of the
Successor Company or any Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Subsidiary at the
time of such transaction), no Default or Event of Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such
transaction, the Successor Company would be able to incur an additional
$1.00 of Indebtedness pursuant to Section 4.3(a); and
(iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, transfer or lease and such supplemental indenture
(if any) comply with this Indenture.
The Successor Company shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture,
but the predecessor, the Company, in the case of a lease of all or
substantially all its assets shall not be released from the obligation to pay
the principal of and interest on the Securities.
Notwithstanding clauses (ii) and (iii) of the first sentence of
this Section 5.1: (1) any Subsidiary of the Company may consolidate with,
merge into or transfer all or part of its properties and assets to the Company,
and (2) the Company may merge with an Affiliate incorporated solely for the
purpose of reincorporating the Company in another jurisdiction to realize tax
or other benefits.
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ARTICLE VI
Defaults and Remedies
SECTION 6.1. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article X, and such default continues for
a period of 30 days;
(2) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity,
upon optional redemption, upon required repurchase, upon declaration or
otherwise, whether or not such payment shall be prohibited by Article X;
(3) the Company fails to comply with Section 5.1;
(4) the Company fails to comply with Section 4.2, 4.3, 4.4, 4.5,
4.6, 4.7, 4.8, 4.9 or 4.10 (in each case other than a failure to
repurchase Securities when required pursuant to Section 4.6 or 4.8 which
failure shall constitute an Event of Default under Section 6.1(2)) and
such failure continues for 30 days after the notice specified below;
(5) the Company or any Subsidiary Guarantor fails to comply with
any of its agreements in the Securities or this Indenture (other than
those referred to in (1), (2), (3) or (4) above) and such failure
continues for 60 days after the notice specified below;
(6) Indebtedness of the Company or any Subsidiary is not paid
within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such unpaid or accelerated Indebtedness exceeds $10.0 million
or its foreign currency equivalent at the time and such default shall
not have been cured or such acceleration rescinded within a 10 day
period;
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(7) the Company or a Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against
it in an involuntary case;
(C) consents to the appointment of a Custodian of it or
for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the Company
or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order,
decree or relief remains unstayed and in effect for 60 days; or
(9) any judgment or decree for the payment of money in excess of
$10.0 million or its foreign currency equivalent at the time (to the
extent not covered by insurance) is entered against the Company or any
Significant Subsidiary and such judgment or decree remains undischarged
or unstayed for a period of 60 days after such judgment becomes final
and non-appealable.
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The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code, or
any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under clause (4) or (5)
of this Section 6.1 will not constitute an Event of Default until the Trustee
or the Holders of at least 25% in principal amount of the outstanding
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified in said clause (4) or (5) after receipt of
such notice. Such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clauses (4), (5), (6) or (9) of this Section 6.1.
SECTION 6.2. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.1(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in outstanding principal amount of the Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
and unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.1(7) or (8) with respect to the
Company occurs, the principal of and accrued and unpaid interest on all the
Securities shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Securityholders.
The Holders of a majority in principal amount of the Securities by notice to
the Trustee may
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rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or Event of Default or impair any right consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. No
remedy is exclusive of any other remedy. All available remedies are
cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a majority
in principal amount of the Securities by notice to the Trustee may waive an
existing Default or Event of Default and its consequences except (i) a Default
or Event of Default in the payment of the principal of or interest on a
Security or (ii) a Default or Event of Default in respect of a provision that
under Section 9.2 cannot be amended without the consent of each Securityholder
affected. When a Default or Event of Default is waived, it is deemed cured,
but no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any consequent right.
SECTION 6.5. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture
or, subject to Section 7.1, that the Trustee determines is unduly prejudicial
to the rights of other Securityholders or would
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involve the Trustee in personal liability; provided, however, that the Trustee
may take any other action deemed proper by the Trustee that is not inconsistent
with such direction. Prior to taking any action hereunder, the Trustee shall
be entitled to indemnification satisfactory to it in its sole discretion
against all losses and expenses caused by taking or not taking such action.
SECTION 6.6. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that
an Event of Default is continuing;
(2) the Holders of at least 25% in outstanding principal amount
of the Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
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SECTION 6.8. Collection Suit by Trustee. If an Event of Default
specified in Section 6.1(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.7.
SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its Subsidiaries
or their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder
to make 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 its counsel, and any
other amounts due the Trustee under Section 7.7.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to holders of Senior Indebtedness and Guarantor Senior
Indebtedness to the extent required by Article X;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
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FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit
by Holders of more than 10% in outstanding principal amount of the Securities.
ARTICLE VII
Trustee
SECTION 7.1. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise 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 such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
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(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, 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 wilful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) 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; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of
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such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.2. Rights of Trustee. (a) The Trustee may 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.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through 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; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
SECTION 7.3. 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 Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-
registrar
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or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.5. Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if a Trust Officer has actual knowledge
thereof, the Trustee shall mail to each Securityholder notice of the Default or
Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment of principal of or interest on any
Security (including payments pursuant to the optional redemption or required
repurchase provisions of such Security, if any), the Trustee may withhold the
notice if and so long as its board of directors, the Executive Committee of its
board of directors or a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Securityholders.
SECTION 7.6. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports required
by TIA Section 313(c).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
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SECTION 7.7. Compensation and Indemnity. The Company shall pay
to the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, costs of preparing and reviewing reports,
certificates and other documents, costs of preparation and mailing of notices
to Securityholders and reasonable costs of counsel retained by the Trustee in
connection with the delivery of an Opinion of Counsel or otherwise, in addition
to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Company shall
indemnify the Trustee against any and all loss, liability or expense (including
reasonable attorneys' fees) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder,
including the costs and expenses of enforcing this Indenture (including this
Section 7.7) and of defending itself against any claims (whether asserted by
any Securityholder, the Company or otherwise). The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee may
have separate counsel and the Company shall pay the fees and expenses of such
counsel. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Section 7.7 shall not be
subordinate to any other liability or indebtedness of the Company.
The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default
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specified in Section 6.1(7) or (8) with respect to the Company, the expenses
are intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign at
any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon 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. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 7.7.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee or the Holders
of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
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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.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee
shall have a combined capital and surplus of at least $100 million as set forth
in its most recent published annual report of condition. The Trustee shall
comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
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SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities; Defeasance.
(a) When (i) the Company delivers to the Trustee all outstanding Securities
(other than Securities replaced pursuant to Section 2.7) for cancellation or
(ii) all outstanding Securities have become due and payable, whether at
maturity or as a result of the mailing of a notice of redemption pursuant to
Article III hereof and the Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity or upon redemption all outstanding Securities
(other than Securities replaced pursuant to Section 2.7), including interest
thereon to maturity or such redemption date, and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture
shall, subject to Section 8.1(c), cease to be of further effect. The Trustee
shall acknowledge satisfaction and discharge of this Indenture on demand of the
Company (accompanied by an Officers' Certificate and an Opinion of Counsel
stating that all conditions precedent specified herein relating to the
satisfaction and discharge of this Indenture have been complied with) and at
the cost and expense of the Company.
(b) Subject to Sections 8.1(c) and 8.2, the Company at any
time may terminate (i) all its obligations under the Securities and this
Indenture and all obligations of the Subsidiary Guarantors under the Subsidiary
Guarantee and this Indenture ("legal defeasance option") or (ii) its
obligations under Sections 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11,
5.1(iii) and 5.1(iv) and the operation of Sections 6.1(4), 6.1(5), 6.1(6),
6.1(7) (but only with respect to a Significant Subsidiary), 6.1(8) (but only
with respect to a Significant Subsidiary) and 6.1(9) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option.
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If the Company exercises its legal defeasance option, payment of
the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Sections 6.1(4),
6.1(5), 6.1(6), 6.1(7) (but only with respect to a Significant Subsidiary),
6.1(8) (but only with respect to a Significant Subsidiary) and 6.1(9) or
because of the failure of the Company to comply with Section 5.1(iii) and
Section 5.1(iv).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding the provisions of Sections 8.1(a) and (b),
the Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 7.7, 7.8, 8.4,
8.5 and 8.6 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.7, 8.4 and 8.5 shall
survive.
SECTION 8.2. Conditions to Defeasance. The Company may exercise
its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of and
interest on the Securities to maturity or redemption, as the case may
be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and
in such amounts as will be sufficient to pay principal and interest when
due on all the Securities to maturity or redemption, as the case may be;
(3) the Company shall have delivered to the Trustee an Opinion
of Counsel, subject to certain customary qualifications, to the effect
that (i) the funds so
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deposited will not be subject to any rights of any other holders of
Indebtedness of the Company, and (ii) the funds so deposited will not be
subject to avoidance under applicable Bankruptcy Law;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
(5) the Company delivers to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under the
Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of such
defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such legal defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders 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; and
(8) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance and discharge of the Securities and this Indenture as
contemplated by this Article VIII have been complied with.
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Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article III.
SECTION 8.3. Application of Trust Money. The Trustee shall hold
in trust money or U.S. Government Obligations deposited with it pursuant to
this Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article X.
SECTION 8.4. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them upon payment of all the obligations under this
Indenture.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal of or interest on the Securities that remains
unclaimed for two years, and, thereafter, Securityholders entitled to the money
must look to the Company for payment as general creditors.
SECTION 8.5. Indemnity for U.S. Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
this Article VIII by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company and the
Subsidiary Guarantors under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to this Article VIII
until such time as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article VIII;
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provided, however, that, if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
to receive such payment from the money or U.S. Government Obligations held by
the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.1. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article X that would limit or
terminate the benefits available to any holder of Senior Indebtedness or
Guarantor Senior Indebtedness (or Representatives therefor) under
Article X;
(5) to add guarantees with respect to the Securities or to
secure the Securities;
(6) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon the
Company;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA;
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(8) to make any change that does not adversely affect the rights
of any Securityholder; or
(9) to provide for the issuance of the Registered Exchange
Notes, which will have terms substantially identical in all material
respects to the Initial Exchange Notes (except that the transfer
restrictions contained in the Initial Exchange Notes will be modified or
eliminated, as appropriate), and which will be treated, together with
any outstanding Initial Exchange Notes, as a single issue of securities.
An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness or Guarantor Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness or Guarantor Senior Indebtedness (or any
group or representative thereof authorized to give a consent) consent to such
change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 9.2. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities. However, without the consent
of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption or repurchase
of any Security or change the time at which any
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Security may or shall be redeemed or repurchased in accordance with this
Indenture;
(5) make any Security payable in money other than that stated in
the Security;
(6) modify or affect in any manner adverse to the Holders the
terms and conditions of the obligation of the Company for the due and
punctual payment of the principal of or interest on Securities; or
(7) make any change in Section 6.4 or 6.7 or the second sentence
of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness or Guarantor Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness or Guarantor Senior Indebtedness (or any
group or representative thereof authorized to give a consent) consent to such
change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 9.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any
such Holder or subsequent Holder may revoke the consent or waiver as
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to such Holder's Security or portion of the Security if the Trustee receives
the notice of revocation before the date the amendment or waiver becomes
effective. After an amendment or waiver becomes effective, it shall bind every
Securityholder.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such
Persons continue to be Holders after such record date. No such consent shall
become valid or effective more than 120 days after such record date.
SECTION 9.5. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder
of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
SECTION 9.6. Trustee To Sign Amendments. The Trustee shall sign
any amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment
the Trustee shall be entitled to receive indemnity reasonably satisfactory to
it and to receive, and (subject to Section 7.1) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture.
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ARTICLE X
Subordination
SECTION 10.1. Agreement To Subordinate. The Company and each
Subsidiary Guarantor agree, and each Securityholder by accepting a Security and
the related Subsidiary Guarantee agrees, that the Indebtedness evidenced by the
Securities and the related Subsidiary Guarantee is subordinated in right of
payment, to the extent and in the manner provided in this Article X, to the
prior payment of (i) all Senior Indebtedness in the case of the Securities and
(ii) all Guarantor Senior Indebtedness of such Subsidiary Guarantor in the case
of its obligations under the Subsidiary Guarantee and that the subordination is
for the benefit of and enforceable by the holders of Senior Indebtedness and
such Guarantor Senior Indebtedness. The Securities shall in all respects rank
pari passu with all other Senior Subordinated Indebtedness of the Company, the
related Subsidiary Guarantee of each Subsidiary Guarantor shall in all respects
rank pari passu with all Guarantor Senior Subordinated Indebtedness of such
Subsidiary Guarantor and only Indebtedness of the Company which is Senior
Indebtedness will rank senior to the Securities and only Indebtedness of such
Subsidiary Guarantor which is Guarantor Senior Indebtedness of such Subsidiary
Guarantor shall rank senior to the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee in accordance with the provisions set forth
herein. All provisions of this Article X shall be subject to Section 10.12.
SECTION 10.2. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company or any Subsidiary
Guarantor to creditors upon a total or partial liquidation or a total or
partial dissolution of the Company or such Subsidiary Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or such Subsidiary Guarantor or their respective
properties:
(1) holders of Senior Indebtedness in the case of the Company or
holders of Guarantor Senior Indebtedness of such Subsidiary Guarantor in
the case of such Subsidiary Guarantor shall be entitled to receive
payment in full of all Senior Indebtedness in the case of the Company or
all
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such Guarantor Senior Indebtedness in the case of such Subsidiary
Guarantor before Securityholders shall be entitled to receive any
payment of principal of or interest on or other amounts with respect to
the Securities from the Company or such Subsidiary Guarantor, whether
directly by the Company or pursuant to the Subsidiary Guarantee; and
(2) until the Senior Indebtedness in the case of the Company or
such Guarantor Senior Indebtedness in the case of such Subsidiary
Guarantor is paid in full, any payment or distribution to which
Securityholders would be entitled but for this Article X shall be made
to holders of Senior Indebtedness in the case of payments or
distributions made by the Company or the holders of such Guarantor
Senior Indebtedness in the case of payments or distributions made by
such Subsidiary Guarantor, in each case as their respective interests
may appear.
SECTION 10.3. Default on Senior Indebtedness or Guarantor Senior
Indebtedness. Neither the Company nor any Subsidiary Guarantor may pay the
principal of, premium (if any) or interest on or other amounts with respect to
the Securities or make any deposit pursuant to Section 8.1 or repurchase,
redeem or otherwise retire any Securities, whether directly by the Company or
by such Subsidiary Guarantor under the Subsidiary Guarantee (collectively, "pay
the Securities") if (i) any Senior Indebtedness in the case of the Company or
any Guarantor Senior Indebtedness of such Subsidiary Guarantor in the case of
such Subsidiary Guarantor is not paid when due or (ii) any other default on
Senior Indebtedness in the case of the Company or such Guarantor Senior
Indebtedness in the case of such Subsidiary Guarantee occurs and the maturity
of such Senior Indebtedness in the case of the Company or such Guarantor Senior
Indebtedness in the case of such Subsidiary Guarantor is accelerated in
accordance with its terms unless, in either case, (x) the default has been
cured or waived and any such acceleration has been rescinded or (y) such Senior
Indebtedness in the case of the Company or such Guarantor Senior Indebtedness
in the case of such Subsidiary Guarantor has been paid in full; provided,
however, that the Company or such Subsidiary Guarantor may pay the Securities,
whether directly or pursuant to the Subsidiary Guarantee, without regard to the
foregoing if the Company or such Subsidiary Guarantor and the Trustee receive
written notice
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approving such payment from the Representative of the Senior Indebtedness in
the case of the Company or such Guarantor Senior Indebtedness in the case of
such Subsidiary Guarantor with respect to which either of the events set forth
in clause (i) or (ii) of the immediately preceding sentence has occurred or is
continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, neither the Company (in the case of Designated Senior Indebtedness of
the Company) nor any Subsidiary Guarantor (in the case of Designated Senior
Indebtedness of such Subsidiary Guarantor) may pay the Securities, either
directly or pursuant to the Subsidiary Guarantee, for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to
the Company or such Subsidiary Guarantor) of written notice (a "Blockage
Notice") of such default from the Representative of the holders of such
Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company or such Subsidiary Guarantor from the Person or Persons who gave such
Blockage Notice, (ii) by repayment in full of such Designated Senior
Indebtedness or (iii) because the default giving rise to such Blockage Notice
is no longer continuing). Notwithstanding the provisions of the immediately
preceding sentence, unless the holders of such Designated Senior Indebtedness
or the Representative of such holders shall have accelerated the maturity of
such Designated Senior Indebtedness, the Company or such Subsidiary Guarantor
may resume payments on the Securities, either directly or pursuant to the
Subsidiary Guarantee, after such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness during
such period.
SECTION 10.4. Acceleration of Payment of Securities. If payment
of the Securities is accelerated because of an Event of Default, the Company,
the Subsidiary Guarantors or the Trustee shall promptly notify the holders of
the Designated Senior Indebtedness (or their Representatives) of the
acceleration. If
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any Designated Senior Indebtedness is outstanding, neither the Company (in the
case of any Designated Senior Indebtedness of the Company) nor any Subsidiary
Guarantor (in the case of any Designated Senior Indebtedness of such Subsidiary
Guarantor) may pay the Securities, either directly or pursuant to the
Subsidiary Guarantee, until five Business days after the Representative of such
Designated Senior Indebtedness receives notice of such acceleration and,
thereafter, may pay the Securities, either directly or pursuant to the
Subsidiary Guarantee, only if this Article 10 otherwise permits payments at
that time.
SECTION 10.5. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article X should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness and Guarantor Senior
Indebtedness and promptly pay it over to them as their respective interests may
appear.
SECTION 10.6. Subrogation. After all Senior Indebtedness and
Guarantor Senior Indebtedness is paid in full and until the Securities are paid
in full, Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness and Guarantor Senior Indebtedness to receive distributions
applicable to Senior Indebtedness and Guarantor Senior Indebtedness. A
distribution made under this Article X to holders of Senior Indebtedness or
Guarantor Senior Indebtedness which otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a payment
by the Company of Senior Indebtedness or, as between a Subsidiary Guarantor and
Securityholders, a payment by such Subsidiary Guarantor of Guarantor Senior
Indebtedness.
SECTION 10.7. Relative Rights. This Article X defines the
relative rights of Securityholders and holders of Senior Indebtedness and
Guarantor Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company or the Subsidiary Guarantors,
as the case may be, and Securityholders, the obligation of the Company
or the Subsidiary Guarantors, as the case may be, which is absolute and
unconditional, to pay
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principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default or Event of Default, subject to
the rights of holders of Senior Indebtedness and Guarantor Senior
Indebtedness to receive distributions otherwise payable to
Securityholders.
SECTION 10.8. Subordination May Not Be Impaired by Company or
the Subsidiary Guarantors. No right of any holder of Senior Indebtedness or
Guarantor Senior Indebtedness to enforce the subordination of the Indebtedness
evidenced by the Securities or the related Subsidiary Guarantee shall be
impaired by any act or failure to act by the Company or any Subsidiary
Guarantor or by the failure of any of them to comply with this Indenture.
SECTION 10.9. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.3, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article X. The Company, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness or Guarantor
Senior Indebtedness may give the notice; provided, however, that, if an issue
of Senior Indebtedness or Guarantor Senior Indebtedness has a Representative,
only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness or Guarantor Senior Indebtedness with the same rights it
would have if it were not Trustee. The Registrar and co-registrar and the
Paying Agent may do the same with like rights. The Trustee shall be entitled
to all the rights set forth in this Article X with respect to any Senior
Indebtedness or Guarantor Senior Indebtedness which may at any time be held by
it, to the same extent as any other holder of Senior Indebtedness or Guarantor
Senior Indebtedness; and nothing in Article VII shall deprive the Trustee of
any of its rights as such holder. Nothing in this Article X shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 7.7.
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SECTION 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness or Guarantor Senior Indebtedness, the distribution may be made and
the notice given to their Representative (if any).
SECTION 10.11. Article X Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment in respect of the
Securities, whether directly or pursuant to the Subsidiary Guarantee, by reason
of any provision in this Article X shall not be construed as preventing the
occurrence of a Default or Event of Default. Nothing in this Article X shall
have any effect on the right of the Securityholders or the Trustee to
accelerate the maturity of the Securities or to make a claim for payment under
the Subsidiary Guarantee.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebtedness or Guarantor
Senior Indebtedness or subject to the restrictions set forth in this Article X,
and none of the Securityholders shall be obligated to pay over any such amount
to the Company, any Subsidiary Guarantor, any holder of Senior Indebtedness of
the Company, any holder of Guarantor Senior Indebtedness or any other creditor
of the Company or any Subsidiary Guarantor.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness or Guarantor Senior Indebtedness for the purpose of ascertaining
the Persons entitled to participate in such payment or distribution, the
holders of Senior Indebtedness, Guarantor Senior Indebtedness
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and other Indebtedness of the Company or the Subsidiary Guarantors, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article X. In the event that
the Trustee determines, in good faith, that evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness or Guarantor
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article X, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
or Guarantor Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article X, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.1 and 7.2 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article X.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Securityholders and the
holders of Senior Indebtedness and Guarantor Senior Indebtedness as provided in
this Article X and appoints the Trustee as attorney-in-fact for any and all
such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness and Guarantor Senior Indebtedness. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness or
Guarantor Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Company, the
Subsidiary Guarantors or any other Person, money or assets to which any holders
of Senior Indebtedness or Guarantor Senior Indebtedness shall be entitled by
virtue of this Article X or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness and
Guarantor Senior Indebtedness on Subordination Provisions. Each Securityholder
by accepting a Security
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acknowledges and agrees that the foregoing subordination provisions are, and
are intended to be, an inducement and a consideration to each holder of any
Senior Indebtedness or Guarantor Senior Indebtedness, whether such Senior
Indebtedness or Guarantor Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness or Guarantor Senior Indebtedness and
such holder of Senior Indebtedness or Guarantor Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness or Guarantor Senior Indebtedness.
ARTICLE XI
Subsidiary Guarantee
SECTION 11.1. Subsidiary Guarantee. Subject to the
subordination provisions contained in Article X, the Subsidiary Guarantors
hereby, jointly and severally, unconditionally and irrevocably, Guarantee to
each Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under this Indenture (including obligations
to the Trustee) and the Securities and (b) the full and punctual performance
within applicable grace periods of all other obligations of the Company under
this Indenture and the Securities (all the foregoing being hereinafter
collectively called the "Obligations"). The Subsidiary Guarantors further
agree that the Obligations may be extended or renewed, in whole or in part,
without notice or further assent from the Subsidiary Guarantors, and that the
Subsidiary Guarantors will remain bound under this Article XI notwithstanding
any extension or renewal of any Obligation.
The Subsidiary Guarantors waive presentation to, demand of,
payment from and protest to the Company of any of the Obligations and also
waive notice of protest for nonpayment. The Subsidiary Guarantors waive notice
of any default under the Securities or the Obligations. The obligations of the
Subsidiary Guarantors hereunder shall not be affected by (a) the failure of
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any Holder or the Trustee to assert any claim or demand or to enforce any right
or remedy against the Company or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (b) any extension or renewal of
any Obligation; (c) any rescission, waiver, amendment, modification or
supplement of any of the terms or provisions of this Indenture (other than this
Article XI), the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations or any of them;
(e) the failure of any Holder or Trustee to exercise any right or remedy
against any other guarantor of the Obligations; or (f) any change in the
ownership of the Company.
The Subsidiary Guarantors further agree that their Guarantees
herein constitute a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waive any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Obligations.
The Guarantee of each Subsidiary Guarantor is, to the extent and
in the manner set forth in Article X, subordinated and subject in right of
payment to the prior payment in full of the principal of and premium, if any,
and interest on all Guarantor Senior Indebtedness of such Subsidiary Guarantor
and this Guarantee is made subject to such provisions of this Indenture.
The obligations of the Subsidiary Guarantors hereunder shall not
be subject to any reduction, limitation, impairment or termination for any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense, setoff, counterclaim,
recoupment or termination whatsoever or by reason of the invalidity, illegality
or unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Subsidiary Guarantors
herein shall not be discharged or impaired or otherwise affected by the failure
of any Holder or the Trustee to assert any claim or demand or to enforce any
remedy under this Indenture, the Securities or any other agreement, by any
waiver or modification of any thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Obligations, or by any other
act or thing or omission or delay to do any other act or thing which may or
might in any manner or to any extent
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vary the risk of the Subsidiary Guarantors or would otherwise operate as a
discharge of the Subsidiary Guarantors as a matter of law or equity.
The Subsidiary Guarantors further agree that their Guarantees
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of any Obligation is rescinded or
must otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against the
Subsidiary Guarantors by virtue hereof, upon the failure of the Company to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, by redemption or otherwise, or to perform or comply with any
other Obligation, the Subsidiary Guarantors hereby promise to and will, upon
receipt of written demand by the Trustee, forthwith pay, or cause to be paid,
in cash, to the Holders or the Trustee an amount equal to the sum of (i) the
unpaid principal amount of such Obligations, (ii) accrued and unpaid interest
on such Obligations (but only to the extent not prohibited by law) and (iii)
all other monetary Obligations of the Company to the Holders and the Trustee.
The Subsidiary Guarantors agree that, as between the Subsidiary
Guarantors, on the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated
as provided in Article VI for the purposes of the Guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such Obligations as provided in
Article VI, such Obligations (whether or not due and payable) shall forthwith
become due and payable by the Subsidiary Guarantors for the purposes of this
Section.
The Subsidiary Guarantors also agree to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.
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SECTION 11.2. Limitation on Liability. Any term or provision of
this Indenture to the contrary notwithstanding, the maximum, aggregate
liability of each Subsidiary Guarantor hereunder shall not exceed the maximum
amount that can be guaranteed by such Subsidiary Guarantor under applicable
federal and state laws relating to insolvency of debtors.
SECTION 11.3. Successors and Assigns. This Article XI shall be
binding upon the Subsidiary Guarantors and their successors and assigns and
shall enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
(b) Notwithstanding the foregoing, all obligations of a
Subsidiary Guarantor under this Article XI shall be automatically and
unconditionally released and discharged upon any sale, exchange or transfer to
any Person which is not a Subsidiary of the Company, of all or substantially
all of the assets of such Subsidiary Guarantor or all of the Capital Stock of
such Subsidiary Guarantor owned by the Company or any Subsidiary; provided that
(i) such sale, exchange or transfer is not prohibited by this Indenture and
(ii) all obligations of such Subsidiary Guarantor in respect of the Bank
Indebtedness and under all of its Guarantees of, and in respect of all liens on
its assets securing, Indebtedness of the Company are also released and
discharged upon such sale, exchange or transfer.
SECTION 11.4. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article XI shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of
any right, power or privilege. The rights, remedies and benefits of the
Trustee and the Holders herein expressly specified are cumulative and not
exclusive of any other rights, remedies or benefits which either may have under
this Article XI at law, in equity, by statute or otherwise.
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SECTION 11.5. Right of Contribution. Each Subsidiary Guarantor
hereby agrees that to the extent that a Subsidiary Guarantor shall have paid
more than its proportionate share of any payment made hereunder, such
Subsidiary Guarantor shall be entitled to seek and receive contribution from
and against any other Subsidiary Guarantor hereunder who has not paid its
proportionate share of such payment. Each Subsidiary Guarantor's right of
contribution shall be subject to the terms and conditions of Section 11.6. The
provisions of this Section shall in no respect limit the obligations and
liabilities of any Subsidiary Guarantor to the Trustee and the Securityholders
and each Subsidiary Guarantor shall remain liable to the Trustee and the
Securityholders for the full amount guaranteed by such Subsidiary Guarantor
hereunder.
SECTION 11.6. No Subrogation. Notwithstanding any payment or
payments made by any of the Subsidiary Guarantors hereunder, no Subsidiary
Guarantor shall be entitled to be subrogated to any of the rights of the
Trustee or any Securityholder against the Company or any other Subsidiary
Guarantor or any collateral security or guarantee or right of offset held by
the Trustee or any Securityholder for the payment of the Obligations, nor shall
any Subsidiary Guarantor seek or be entitled to seek any contribution or
reimbursement from the Company or any other Subsidiary Guarantor in respect of
payments made by such Subsidiary Guarantor hereunder, until all amounts owing
to the Trustee and the Securityholders by the Company on account of the
Obligations are paid in full. If any amount shall be paid to any Subsidiary
Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by such
Subsidiary Guarantor in trust for the Trustee and the Securityholders,
segregated from other funds of such Subsidiary Guarantor, and shall, forthwith
upon receipt by such Subsidiary Guarantor, be turned over to the Trustee in the
exact form received by such Subsidiary Guarantor (duly indorsed by such
Subsidiary Guarantor to the Trustee, if required), to be applied against the
Obligations.
SECTION 11.7. Additional Subsidiary Guarantors. Concurrently
with the creation or acquisition by the Company of any Subsidiary (other than a
foreign subsidiary), the Company, such Subsidiary and the Trustee shall execute
and deliver a
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supplement to this Indenture providing that such Subsidiary will be a
Subsidiary Guarantor hereunder. Each such supplement shall be in a form
reasonably satisfactory to the Trustee.
SECTION 11.8. Modification. No modification, amendment or
waiver of any provision of this Article XI, nor the consent to any departure by
the Subsidiary Guarantors therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on the Subsidiary Guarantors in any
case shall entitle the Subsidiary Guarantors to any other or further notice or
demand in the same, similar or other circumstances.
ARTICLE XII
Miscellaneous
SECTION 12.1. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control.
SECTION 12.2. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
International Wire Group, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention of David M. Sindelar
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if to the Subsidiary Guarantors:
International Wire Group, Inc.
c/o 101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention of David M. Sindelar
if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention of Corporate Trust and
Agency Administration
The Company, any of the Subsidiary Guarantors, or the Trustee by
notice to the other may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
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. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 12.3. Communication by Holders with other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 12.4. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the
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Trustee to take or refrain from taking any action under this Indenture, the
Company 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 12.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(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 individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 12.6. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
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deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at
the time shall be considered in any such determination.
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 12.8. Legal Holidays. A "Legal Holiday" is a Saturday,
a Sunday or a day on which banking institutions are not required to be open in
the State of New York. If a payment date is a Legal Holiday, payment shall be
made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 12.9. Governing Law. This Indenture and the Securities
shall be governed by, and construed in accordance with, the laws of the State
of New York but without giving effect to applicable principles of conflicts of
law to the extent that the application of the laws of another jurisdiction
would be required thereby.
SECTION 12.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 12.11. Successors. All agreements of the Company and
the Subsidiary Guarantors in this Indenture and the Securities shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successors.
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SECTION 12.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough
to prove this Indenture.
SECTION 12.13. Variable Provisions. The Company initially
appoints the Trustee as Paying Agent and Registrar and custodian with respect
to any Global Securities.
SECTION 12.14. Qualification of Indenture. The Company shall
qualify this Indenture under the TIA in accordance with the terms and
conditions of the Purchase Agreement and shall pay all reasonable costs and
expenses (including attorneys' fees for the Company, the Trustee and the
Holders) incurred in connection therewith, including, but not limited to, costs
and expenses of qualification of the Indenture and the Securities and printing
this Indenture and the Securities. The Trustee shall be entitled to receive
from the Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 12.15. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
INTERNATIONAL WIRE GROUP, INC.
By: /s/ ELLEN LIPSITZ
-------------------------------
Name: Ellen Lipsitz
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ JAMES FREEMAN
-------------------------------
Name: James Freeman
Title: Vice President
OMEGA WIRE, INC.
By: /s/ ELLEN LIPSITZ
-------------------------------
Name: Ellen Lipsitz
Title: Vice President
OWI CORPORATION
By: /s/ ELLEN LIPSITZ
-------------------------------
Name: Ellen Lipsitz
Title: Vice President
WIREKRAFT INDUSTRIES, INC.
By: /s/ ELLEN LIPSITZ
-------------------------------
Name: Ellen Lipsitz
Title: Vice President
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WIRE TECHNOLOGIES, INC.
By: /s/ ELLEN LIPSITZ
-------------------------------
Name: Ellen Lipsitz
Title: Vice President
WIRE HARNESS INDUSTRIES, INC.
By: /s/ ELLEN LIPSITZ
-------------------------------
Name: Ellen Lipsitz
Title: Vice President
ECM HOLDING COMPANY
By: /s/ ELLEN LIPSITZ
-------------------------------
Name: Ellen Lipsitz
Title: Vice President
WIREKRAFT EMPLOYMENT COMPANY
By: /s/ ELLEN LIPSITZ
-------------------------------
Name: Ellen Lipsitz
Title: Vice President
CAMDEN WIRE CO., INC.
By: /s/ ELLEN LIPSITZ
-------------------------------
Name: Ellen Lipsitz
Title: Vice President
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EXHIBIT A
[FORM OF FACE OF INITIAL EXCHANGE NOTE]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR
ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT
TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO
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LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO
A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF 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 THE SECURITIES OF $250,000, 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 (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH CASE, ONLY IF A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUER AND
THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE.
2
<PAGE> 110
No. [___] Principal Amount $[______________]
CUSIP NO. [___________]
14.00% Senior Subordinated Note due 2005
International Wire Group, Inc., a Delaware corporation promises
to pay to [___________], or registered assigns, the principal sum of
[__________________] Dollars on June 1, 2005.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set forth on the other
side of this Security.
Dated: [____________] INTERNATIONAL WIRE GROUP, INC.
by
-----------------------------------
Senior Vice President
-----------------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
[NAME OF TRUSTEE]
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
--------------------------
Authorized Signatory
1
<PAGE> 111
[FORM OF REVERSE SIDE OF INITIAL EXCHANGE NOTE]
14.00% Senior Subordinated Note due 2005
1. Interest
International Wire Group, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company") promises to pay interest on the
principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on June 1 and December
1 of each year. Interest on the Securities will accrue from the most recent
date to which interest has been paid on the Securities or, if no interest has
been paid, from [_____].(1) The Company shall pay interest on overdue
principal or premium, if any, at the rate borne by the Securities to the extent
lawful. Interest will be computed on the basis of a 360-day year of twelve 30-
day months.
2. Method of Payment
By at least 12:00 noon (New York City time) on the date on which
any principal of or interest on any Security is due and payable, the Company
shall irrevocably deposit with the Trustee or the Paying Agent money sufficient
to pay such principal, premium, if any, and/or interest. The Company will pay
interest (except defaulted interest) to the Persons who are registered Holders
of Securities at the close of business on the May 15 or November 15 next
preceding the interest payment date even if Securities are cancelled,
repurchased or redeemed after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may pay principal and interest
by check payable in such money. It may mail an interest check to a Holder's
registered address.
- --------------------
(1) Insert the Issue Date.
1
<PAGE> 112
3. Paying Agent and Registrar
Initially, [ ](2) ("Trustee"), will act as Paying
Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice to any Securityholder. The Company or
any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of
[____________](3) (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors named therein (the "Subsidiary Guarantors") and the
Trustee. 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 of
1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the
Indenture (the "Act"). Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture
and the Act for a statement of those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $[____](4) aggregate principal amount
(subject to Section 2.7 of the Indenture). This Security is one of the Initial
Exchange Notes referred to in the Indenture. The Securities include the
Initial Exchange Notes and any Registered Exchange Notes issued in exchange for
the Initial Exchange Notes pursuant to the Indenture and the Purchase
Agreement. The Initial Exchange Notes and the Registered Exchange Notes are
treated as a single class of
- --------------------
(2) Insert the name of the Trustee
(3) Insert date of the Indenture
(4) Insert aggregate principal amount of Initial Exchange Notes on Issue Date.
2
<PAGE> 113
securities under the Indenture. The Indenture imposes certain limitations on
the Incurrence of Indebtedness by the Company and its Subsidiaries, the payment
of dividends and other distributions on the Capital Stock of the Company and
its Subsidiaries, the purchase or redemption of Capital Stock of the Company
and Capital Stock of such Subsidiaries, certain purchases or redemptions of
Subordinated Obligations, the sale or transfer of assets and Capital Stock of
Subsidiaries, the issuance or sale of Capital Stock of Subsidiaries, the
business activities and investments of the Company and its Subsidiaries and
transactions with Affiliates. In addition, the Indenture limits the ability of
the Company and its Subsidiaries to restrict distributions and dividends from
Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the
Company under the Indenture and the Securities when and as the same shall be
due and payable, whether at maturity, by acceleration or otherwise, according
to the terms of the Securities and the Indenture, the Subsidiary Guarantors
have unconditionally guaranteed such obligations on a senior subordinated basis
pursuant to the terms of the Indenture.
5. Optional Redemption
[Except as set forth in this paragraph 5, the Securities will not
be redeemable at the option of the Company prior to June 1, 2000. On and after
such date, the](5) [The] Securities will be redeemable, at the Company's option,
in whole or in part, upon not less than 30 nor more than 60 days' prior notice
mailed by first class mail to each Holder's registered address, at the
following redemption prices (expressed as percentages of principal amount) plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
- --------------------
(5) Delete bracketed text if Issue Date occurs after June 1, 2000.
3
<PAGE> 114
If redeemed during the 12-month period commencing on June 1 of
the years set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2000 . . . . . . . . . . 105.875%
2001 . . . . . . . . . . 103.917%
2002 . . . . . . . . . . 101.958%
2003 and thereafter . . . 100.000%(6)
</TABLE>
[Notwithstanding the foregoing, at any time or from time to time
prior to June 1, 1998, the Company may redeem in the aggregate up to
$[__________] principal amount of the Securities with the proceeds of one or
more Equity Offerings by the Company or Holding (to the extent, in the case of
Holding, the net cash proceeds thereof are contributed to the equity capital of
the Company) so long as there is a Public Market at the time of such
redemption, at a redemption price (expressed as a percentage of principal
amount) of 110% plus accrued and unpaid interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that after giving effect to such redemption, at least $[__________] principal
amount of the Securities remain outstanding.](7)
[At any time on or prior to June 1, 2000, the Securities may also
be redeemed in whole, but not in part, at the option of the Company upon the
occurrence of a Change of Control, upon not less than 30 nor more than 60 days'
prior notice (but in no event more than 90 days after the occurrence of such
Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of, and accrued but unpaid interest to, the date
of redemption (subject to the right
- --------------------
(6) Delete any period occurring in its entirety prior to the Issue Date.
(7) Delete bracketed text if Issue Date occurs after June 1, 2000.
4
<PAGE> 115
of holders of record on the relevant record date to receive interest due on the
relevant interest payment date).](8)
6. Notice of Redemption
Notice of redemption will be mailed 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. Securities in denominations of principal
amount larger than $1,000 may be redeemed in part but only in whole multiples
of $1,000. If money sufficient to pay the redemption price of and accrued and
unpaid interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the
right to cause the Company to repurchase all or any part of the Securities of
such Holder at a repurchase price equal to 101% of the principal amount thereof
plus accrued interest to the date of repurchase as provided in, and subject to
the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company
agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give
- --------------------
(8) Delete bracketed text if Issue Date occurs after June 1, 2000.
5
<PAGE> 116
them effect and appoints the Trustee as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or 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 (i) any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) for a period beginning 15 days before a selection of Securities
to be redeemed and ending on the date of such selection or (ii) any Securities
for a period beginning 15 days before an interest payment date and ending on
such interest payment date.
10. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the
6
<PAGE> 117
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount of the outstanding Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to add guarantees with
respect to the Securities or to secure the Securities, or to add additional
covenants or surrender rights and powers conferred on the Company, or to comply
with any request of the SEC in connection with qualifying the Indenture under
the Act, or to make any change that does not adversely affect the rights of any
Securityholder, or to provide for the issuance of Registered Exchange Notes.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph
5 of the Securities, upon required repurchase, upon declaration or otherwise;
(iii) failure by the Company to comply with other agreements in the Indenture
or the Securities, in certain cases subject to notice and lapse of time; (iv)
certain accelerations (including failure to pay within any grace period after
final maturity) of other indebtedness of the Company or its Subsidiaries if the
amount accelerated (or so unpaid) exceeds $10.0 million and such acceleration
or failure to pay is not
7
<PAGE> 118
rescinded or cured within a 10 day period; (v) certain events of bankruptcy or
insolvency with respect to the Company or any Significant Subsidiary; and (vi)
certain final, non-appealable judgments or decrees for the payment of money in
excess of $10.0 million. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Securities
may declare all the Securities to be due and payable immediately. Certain
events of bankruptcy or insolvency are Events of Default which will result in
the Securities being due and payable immediately upon the occurrence of such
Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or
security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default or Event of Default (except a Default or Event of Default in payment of
principal or interest) if it determines that withholding notice is in their
interest.
15. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its affiliates and may
otherwise deal with the Company or its affiliates with the same rights it would
have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company or any Subsidiary Guarantor under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives
8
<PAGE> 119
and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
This Security shall be governed by, and construed in accordance
with, the laws of the State of New York but without giving effect to applicable
principles of conflicts of law to the extent that the application of the laws
of another jurisdiction would be required thereby.
9
<PAGE> 120
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the
Indenture which has in it the text of this Security in larger type.
Requests may be made to: International Wire Group, Inc., 101 South
Hanley Road, Suite 400, St. Louis, Missouri 63105
Attention of General Counsel
10
<PAGE> 121
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of the Company. The agent may substitute another to act
for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
---------------------- ------------------------------------
Signature Guarantee:
-----------------------------------------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is three years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1[ ] acquired for the undersigned's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or
Section 2.6(d)(i)(A) of the Indenture); or
2[ ] transferred to the Company; or
3[ ] transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
4[ ] transferred pursuant to an effective registration
statement under the Securities Act; or
1
<PAGE> 122
5[ ] transferred pursuant to and in compliance with Regulation
S under the Securities Act of 1933; or
6[ ] transferred to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933), that has furnished to the Trustee
a signed letter containing certain representations and
agreements (the form of which letter appears as Exhibit C
to the Indenture); or
7[ ] transferred pursuant to another available exemption from
the registration requirements of the Securities Act of
1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering
any such transfer of the Securities, in their sole discretion, such legal
opinions, certifications and other information as the Trustee or the Company
may reasonably request to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
----------------------------------------
Signature
Signature Guarantee:
- --------------------------- ----------------------------------------
Signature
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
2
<PAGE> 123
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
<TABLE>
<CAPTION>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Security authorized officer of
Date of Principal Amount of Principal Amount of following such Trustee or Securities
Exchange this Global Security this Global Security decrease or increase Custodian
<S> <C> <C> <C> <C>
</TABLE>
3
<PAGE> 124
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security purchased
by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state the
amount in principal amount (must be integral multiple of $1,000): $
Date: Your Signature
------------ ------------------------------------------
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee:
----------------------------------------------------
(Signature must be guaranteed)
4
<PAGE> 125
EXHIBIT B
[FORM OF FACE OF REGISTERED EXCHANGE NOTE]
No. [_____] Principal Amount $[____________]
CUSIP NO. ___________
14.00% Senior Subordinated Notes due 2005
International Wire Group, Inc., a Delaware corporation, promises
to pay to [______________], or registered assigns, the principal sum of
[_______________] Dollars on June 1, 2005.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set forth on the other
side of this Security.
Date: INTERNATIONAL WIRE GROUP, INC.
by
------------------------------
Senior Vice President
by
------------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
[NAME OF TRUSTEE]
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
-----------------------------------
Authorized Signatory
5
<PAGE> 126
[FORM OF REVERSE SIDE OF REGISTERED EXCHANGE NOTE]
14.00% Senior Subordinated Note due 2005
1. Interest
International Wire Group, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company") promises to pay interest on the
principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on June 1 and December
1 of each year. Interest on the Securities will accrue from the most recent
date to which interest has been paid on the Securities or, if no interest has
been paid, from [_____](9). The Company shall pay interest on overdue
principal or premium, if any, at the rate borne by the Securities to the extent
lawful. Interest will be computed on the basis of a 360-day year of twelve 30-
day months.
2. Method of Payment
By at least 12:00 noon (New York City time) on the date on which
any principal of or interest on any Security is due and payable, the Company
shall irrevocably deposit with the Trustee or the Paying Agent money sufficient
to pay such principal, premium, if any, and/or interest. The Company will pay
interest (except defaulted interest) to the Persons who are registered Holders
of the Securities at the close of business on the May 15 or November 15 next
preceding the interest payment date even if Securities are cancelled,
repurchased or redeemed after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may pay principal and interest
by check payable in such money. It may mail an interest check to a Holder's
registered address.
- --------------------
(9) Insert the Issue Date.
1
<PAGE> 127
3. Paying Agent and Registrar
Initially, [ ](10) ("Trustee"), will act as Paying
Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice to any Securityholder. The Company or
any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of
[__________](11) (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors named therein (the "Subsidiary Guarantors") and the
Trustee. 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 of
1939 (15 U.S.C. Sections 77aaa-7bbbb) as in effect on the date of the
Indenture (the "Act"). Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture
and the Act for a statement of those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $[_________](12) aggregate principal
amount (subject to Section 2.7 of the Indenture). This Security is one of the
Registered Exchange Notes referred to in the Indenture. The Securities include
the Initial Exchange Notes and any Registered Exchange Notes issued in exchange
for the Initial Exchange Notes pursuant to the Indenture and the Purchase
Agreement. The Initial Exchange Notes and the Registered Exchange Notes are
treated as a
- --------------------
(10) Insert the name of the Trustee.
(11) Insert date of the Indenture.
(12) Insert aggregate principal amount of Initial Exchange Notes on Issue Date.
2
<PAGE> 128
single class of securities under the Indenture. The Indenture imposes certain
limitations on the Incurrence of Indebtedness by the Company and its
Subsidiaries, the payment of dividends and other distributions on the Capital
Stock of the Company and certain of its Subsidiaries, the purchase or
redemption of Capital Stock of the Company and Capital Stock of such
Subsidiaries, certain purchases or redemptions of Subordinated Obligations, the
sale or transfer of assets and Capital Stock of Subsidiaries, the issuance or
sale of Capital Stock of Subsidiaries, the business activities and investments
of the Company and its Subsidiaries and transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and its Subsidiaries
to restrict distributions and dividends from Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the
Company under the Indenture and the Securities when and as the same shall be
due and payable, whether at maturity, by acceleration or otherwise, according
to the terms of the Securities and such Indenture, the Subsidiary Guarantors
have unconditionally guaranteed the Obligations on a senior subordinated basis
pursuant to the terms of the Indenture.
5. Optional Redemption
[Except as set forth in this paragraph 5, the Securities will not
be redeemable at the option of the Company prior to June 1, 2005. On and after
such date, the](13) [the] Securities will be redeemable, at the Company's
option, in whole or in part, upon not less than 30 nor more than 60 days' prior
notice mailed by first-class mail to each Holder's registered address, at the
following redemption prices (expressed as percentages of principal amount) plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
- --------------------
(13) Delete bracketed text if the Issue Date occurs after June 1, 2000.
3
<PAGE> 129
If redeemed during the 12-month period commencing on June 1 of
the years set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2000 . . . . . . . . . . . 105.875%
2001 . . . . . . . . . . . 103.917%
2002 . . . . . . . . . . . 101.958%
2003 and thereafter . . . 100.000%(14)
</TABLE>
[Notwithstanding the foregoing, at any time or from time to time
prior to June 1, 1998, the Company may redeem in the aggregate up to
[__________] million principal amount of the Securities with the proceeds of
one or more Equity Offerings by the Company or Holding (to the extent, in the
case of Holding, the net cash proceeds thereof are contributed to the equity
capital of the Company) so long as there is a Public Market at the time of such
redemption, at a redemption price (expressed as a percentage of principal
amount) of 110% plus accrued and unpaid interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that after giving effect to such redemption, at least $[__________] million
principal amount of Securities remain outstanding.](15)
[At any time on or prior to June 1, 2000, the Securities may also
be redeemed in whole, but not in part, at the option of the Company upon the
occurrence of a Change of Control, upon not less than 30 nor more than 60 days'
prior notice (but in no event more than 90 days after the occurrence of such
Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of and accrued but unpaid interest to, the date
of redemption (subject to the right
- --------------------
(14) Delete any period occurring in its entirety prior to the Issue Date.
(15) Delete bracketed text if the Issue Date occurs after June 1, 2000.
4
<PAGE> 130
of holders of record on the relevant record date to receive interest due on the
relevant interest payment date).](16)
6. Notice of Redemption
Notice of redemption will be mailed 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. Securities in denominations of principal
amount larger than $1,000 may be redeemed in part but only in whole multiples
of $1,000. If money sufficient to pay the redemption price of and accrued and
unpaid interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the
right to cause the Company to repurchase all or any part of the Securities of
such Holder at a repurchase price equal to 101% of the principal amount thereof
plus accrued interest to the date of repurchase as provided in, and subject to
the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company
agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give them effect and appoints the Trustee as attorney-in-fact for such
purpose.
- --------------------
(16) Delete bracketed text if the Issue Date occurs after June 1, 2000.
5
<PAGE> 131
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or 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 (i) any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) or for a period beginning 15 days before a selection of
Securities to be redeemed and ending on the date of selection or (ii) any
Securities for a period beginning 15 days before an interest payment date and
ending on such interest payment date.
10. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
6
<PAGE> 132
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount of the outstanding Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to add guarantees with
respect to the Securities or to secure the Securities, or to add additional
covenants or surrender rights and powers conferred on the Company or
Communications or to comply with any request of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder, or to provide for the
issuance of Registered Exchange Notes.
14. Defaults and Remedies
Under the Indenture, Events or Default include (i) default for 30
days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon
required repurchase, upon redemption pursuant to paragraph 5 of the Securities,
upon required repurchase, upon declaration or otherwise; (iii) failure by the
Company to comply with other agreements in the Indenture or the Securities, in
certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of
other Indebtedness of the Company or its Subsidiaries if the amount accelerated
(or so unpaid) exceeds $10.0 million and such acceleration or failure to pay is
not rescinded or cured within a 10 day period; (v) certain events of bankruptcy
or insolvency with respect to the Company or any Significant Subsidiary; and
(vi) certain final, non-appealable judgments or decrees for the payment of
money in excess of $10.0 million. If an Event of Default occurs and is
continuing, the Trustee or Holders of at
7
<PAGE> 133
least 25% in principal amount of the Securities may declare all the Securities
to be due and payable immediately. Certain events of bankruptcy or insolvency
are Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or
security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default or Event of Default (except a Default or Event of Default in payment of
principal or interest) if it determines that withholding notice is in their
interest.
15. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its affiliates and may
otherwise deal with the Company or its affiliates with the same rights it would
have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company or any Subsidiary Guarantor under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent acting on
8
<PAGE> 134
its behalf) manually signs the certificate of authentication on the other side
of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
This Security shall be governed by, and construed in accordance
with, the laws of the State of New York but without giving effect to applicable
principles of conflicts of law to the extent that the application of the laws
of another jurisdiction would be required thereby.
The Company will furnish to any Securityholder upon
request and without charge to the Securityholder a copy of the
Indenture which has in it the text of this Security in larger
type. Requests may be made to: International Wire Group, Inc.,
101 South Hanley Road, Suite 400, St. Louis, Missouri 63105
Attention of General Counsel
9
<PAGE> 135
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature
---------------- ---------------------------------
Signature Guarantee:
--------------------------------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
1
<PAGE> 136
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security purchased
by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state the
amount in principal amount (must be integral multiple of $1,000): $
Date:
---------------
Your Signature:
---------------------------------
(Sign exactly as your name appears on the other
side of the Security)
Signature
Guarantee:
-----------------------------------------------
(Signature must be guaranteed)
1
<PAGE> 137
EXHIBIT C
Transferee Letter of Representation
International Wire Group, Inc.
c/o [Trustee]
Attention:
Dear Sirs:
This certificate is delivered to request a transfer of $
principal amount of the 14.00% Senior Subordinated Notes due 2005 (the "Notes")
of International Wire Group, Inc. (the "Company").
Upon transfer, the Notes would be registered in the name of the
new beneficial owner as follows:
Name:
-----------------------------------
Address:
--------------------------------
Taxpayer ID Number:
---------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor," at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Notes and
invest in or purchase securities similar to the Notes in the normal course of
our business. We and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.
1
<PAGE> 138
2. We understand that the Notes have not been registered
under the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf
of any investor account for which we are purchasing Notes to offer, sell or
otherwise transfer such Notes prior to the date which is three years after the
later of the date of original issue and the last date on which the Company or
any affiliate of the Company was the owner of such Notes (or any predecessor
thereto) (the "Resale Restriction Termination Date") only (a) to the Company,
(b) pursuant to a registration statement which has been declared effective
under the Securities Act, (c) in a transaction complying with the requirements
of Rule 144A under the Securities Act, to a person we reasonably believe is a
qualified institutional buyer under Rule 144A (a "QIB") that purchases for its
own account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales that occur outside the United States within the meaning of Regulation S
under the Securities Act, (e) to an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is
purchasing for its own account or for the account of such an institutional
"accredited investor", in each case in a minimum principal amount of Notes of
$250,000 or (f) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of our property or the property of
such investor account or accounts be at all times within our or their control
and in compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Notes is proposed to
be made pursuant to clause (e) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Company and the Trustee, which
shall provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act and that it is acquiring such Notes for investment
purposes and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that the Company and the Trustee reserve the right prior
to any offer, sale or other transfer prior to the Resale Termination Date of
the Notes
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<PAGE> 139
pursuant to clauses (d), (e) or (f) above to require the delivery of an opinion
of counsel, certifications and/or other information satisfactory to the Company
and the Trustee.
TRANSFEREE:
---------------------
BY
------------------------------
3
<PAGE> 1
EXHIBIT 4.10
- --------------------------------------------------------------------------------
INTERNATIONAL WIRE GROUP, INC.
CAMDEN WIRE CO., INC.
THE SUBSIDIARY GUARANTORS
AND
IBJ SCHRODER BANK & TRUST COMPANY, AS TRUSTEE
---------------
THIRD SUPPLEMENTAL INDENTURE
DATED AS OF FEBRUARY 12, 1997
TO
INDENTURE
DATED AS OF JUNE 12, 1995
AMONG
INTERNATIONAL WIRE GROUP, INC., AS ISSUER,
THE SUBSIDIARY GUARANTORS
AND
IBJ SCHRODER BANK & TRUST COMPANY, AS TRUSTEE
---------------
$150,000,000
11 3/4% SENIOR SUBORDINATED NOTES DUE 2005
- --------------------------------------------------------------------------------
<PAGE> 2
THIRD SUPPLEMENTAL INDENTURE, dated as of February 12, 1997,
among INTERNATIONAL WIRE GROUP, INC., a Delaware corporation (the "Company"),
CAMDEN WIRE CO., INC., a New York corporation ("Camden"), and IBJ SCHRODER BANK
& TRUST COMPANY, as Trustee (the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to
the Trustee an Indenture, dated as of June 12, 1995, as supplemented by that
certain First Supplemental Indenture, dated as of March 5, 1996, as further
supplemented by that certain Second Supplemental Indenture, dated as of
December 20, 1996 (as supplemented, the "Indenture"), providing for the
issuance of $150,000,000 aggregate principal amount of the Company's 11 3/4%
Senior Subordinated Notes due 2005 (the "Securities");
WHEREAS, the Company and Camden desire by this Third
Supplemental Indenture, pursuant to and as contemplated by Article XI of the
Indenture, that Camden become a Subsidiary Guarantor (as defined in the
Indenture) under the Indenture;
WHEREAS, the execution and delivery of this Third Supplemental
Indenture has been authorized by a resolution of the Board of Directors of each
of the Company and Camden; and
WHEREAS, all conditions and requirements necessary to make
this Third Supplemental Indenture a valid, binding and legal instrument in
accordance with its terms have been performed and fulfilled by the parties
hereto and the execution and delivery thereof have been in all respects duly
authorized by the parties hereto.
NOW, THEREFORE, in consideration of the above premises, each
party agrees, for the benefit of the other and for the equal and ratable
benefit of the Holders (as defined in the Indenture) of the Securities, as
follows:
ARTICLE I
ASSUMPTION OF OBLIGATIONS AS SUBSIDIARY GUARANTOR
Section 1.1. Assumption. Camden hereby expressly and
unconditionally assumes each and every covenant, agreement and undertaking of a
Subsidiary Guarantor in the Indenture as of the date of this Third Supplemental
Indenture, and also hereby expressly and unconditionally assumes each and every
covenant, agreement and undertaking of a Subsidiary Guarantor in each Security
outstanding on the date of this Third Supplemental Indenture.
2
<PAGE> 3
ARTICLE II
MISCELLANEOUS PROVISIONS
Section 2.1. Terms Defined. For all purposes of this Third
Supplemental Indenture, except as otherwise defined or unless the context
otherwise requires, terms used in capitalized form in this Third Supplemental
Indenture and defined in the Indenture have the meanings specified in the
Indenture.
Section 2.2. Indenture. Except as amended hereby, the
Indenture and the Securities are in all respects ratified and confirmed and all
the terms thereof shall remain in full force and effect.
Section 2.3. Governing Law. THIS THIRD SUPPLEMENTAL INDENTURE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE 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 CONFLICT OF LAWS.
Section 2.4. Successors. All agreements of the Company and
Camden in this Third Supplemental Indenture and the Securities shall bind each
of their successors. All agreements of the Trustee in this Third Supplemental
Indenture and in the Indenture shall bind its successors.
Section 2.5. Multiple Counterparts. The parties may sign
multiple counterparts of this Third Supplemental Indenture. Each signed
counterpart shall be deemed an original, but all of them together represent the
same agreement.
Section 2.6. Trustee Disclaimer. The Trustee accepts the
amendment of the Indenture effected by this Third Supplemental Indenture and
agrees to execute the trust created by the Indenture as hereby amended, but
only upon the terms and conditions set forth in the Indenture, including the
terms and provisions defining and limiting the liabilities and responsibilities
of the Trustee, which terms and provisions shall in like manner define and
limit its liabilities and responsibilities in the performance of the trust
created by the Indenture as hereby amended, and without limiting the generality
of the foregoing, the Trustee shall not be responsible in any manner whatsoever
for or with respect to any of the recitals or statements contained herein, all
of which recitals or statements are made solely by the Company, or for or with
respect to (i) the validity or sufficiency of this Third Supplemental Indenture
or any of the terms or provisions hereof, (ii) the proper authorization hereof
by the Company by corporate action or otherwise, (iii) the due execution hereof
by the Company or
3
<PAGE> 4
(iv) the consequences (direct or indirect and whether deliberate or
inadvertent) of any amendment herein provided for, and the Trustee makes no
representation with respect to any such matters.
Section 2.7. Indemnification. The indemnification provisions
of Section 7.7 of the Indenture shall include any and all loss, liability or
expense (including reasonable attorneys' fees) incurred by the Trustee in
connection with the execution and delivery of this Third Supplemental Indenture
and the performance of its duties hereunder.
[The remainder of this page is intentionally left blank.]
4
<PAGE> 5
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed as of the date first written above.
INTERNATIONAL WIRE GROUP, INC.
By: /s/ David M. Sindelar
---------------------------------
David M. Sindelar
Senior Vice President
CAMDEN WIRE CO., INC.
By: /s/ David M. Sindelar
---------------------------------
David M. Sindelar
Senior Vice President
IBJ SCHRODER BANK & TRUST COMPANY
By:
--------------------------------
Name: /s/ James P. Freeman
------------------------------
Title:
-----------------------------
5
<PAGE> 1
EXHIBIT 4.11
- --------------------------------------------------------------------------------
INTERNATIONAL WIRE GROUP, INC.,
AS ISSUER,
THE SUBSIDIARY GUARANTORS,
AS GUARANTORS,
AND
IBJ SCHRODER BANK & TRUST COMPANY,
AS TRUSTEE
---------------
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF JUNE 10, 1997
TO
INDENTURE
DATED AS OF FEBRUARY 12, 1997
---------------
$10,000,000
14% SENIOR SUBORDINATED NOTES DUE 2005
- --------------------------------------------------------------------------------
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE dated as of June 10, 1997, among
INTERNATIONAL WIRE GROUP, INC., a Delaware corporation (the "Company"); CAMDEN
WIRE CO., INC., a New York corporation, ECM HOLDING COMPANY, a Delaware
corporation, OMEGA WIRE, INC., a Delaware corporation, OWI CORPORATION, a New
York corporation, WIRE HARNESS INDUSTRIES, INC., a Delaware corporation,
WIREKRAFT EMPLOYMENT COMPANY, a Delaware corporation, WIREKRAFT INDUSTRIES,
INC., a Delaware corporation, WIRE TECHNOLOGIES, INC., an Indiana corporation,
(collectively, the "Subsidiary Guarantors"); and IBJ SCHRODER BANK & TRUST
COMPANY, a New York Banking corporation, as Trustee (the "Trustee").
WHEREAS, the Company and the Subsidiary Guarantors have
heretofore executed and delivered to the Trustee an Indenture, dated as of
February 12, 1997 (the "Indenture"), providing for the issuance of $10,000,000
aggregate principal amount of the Company's 14% Senior Subordinated Notes due
2005 (the "Securities");
WHEREAS, the Company, the Subsidiary Guarantors and the
Trustee desire by this First Supplemental Indenture, pursuant to and as
contemplated by Section 9.2 of the Indenture, to amend certain provisions
therein;
WHEREAS, the execution and delivery of this First Supplemental
Indenture has been authorized by resolutions of the Boards of Directors of the
Company and the Subsidiary Guarantors;
WHEREAS, the Company has received written consents to such
amendment from the holders of greater than a majority in aggregate principal
amount of the Securities outstanding; and
WHEREAS, all conditions and requirements necessary to make
this First Supplemental Indenture a valid, binding and legal instrument in
accordance with its terms have been performed and fulfilled by the parties
hereto and the execution and delivery thereof have been in all respects duly
authorized by the parties hereto.
NOW, THEREFORE, in consideration of the above premises, each
party agrees, for the benefit of the other and for the equal and ratable
benefit of the Holders (as defined in the Indenture) of the Securities, as
follows:
2
<PAGE> 3
ARTICLE I
AMENDMENT OF INDENTURE
The Indenture is hereby amended as follows:
Section 1.1 Addition of Certain Definitions. Section 1.1 of
the Indenture is amended to add thereto (immediately prior to the definition of
"Acquired Preferred Stock") the following definitions of "11 3/4% Notes," "11
3/4% Notes Guarantee" and "11 3/4% Notes Indenture."
"11 3/4% Notes" means the Company's 11 3/4% Senior
Subordinated Notes due 2005 issued pursuant to the 11 3/4% Notes
Indenture.
"11 3/4% Notes Guarantee" means the Guarantee of the
Subsidiary Guarantors (as defined in the 11 3/4% Notes Indenture) set
forth in Article XI of the 11 3/4% Notes Indenture.
"11 3/4% Notes Indenture" means the Indenture, dated
June 12, 1995, among the Company, the Subsidiary Guarantors (as
therein defined) and IBJ Schroder Bank & Trust Company, as Trustee, as
the same may be amended, supplemented or otherwise modified from time
to time.
Section 1.2 Amendment to Definition of "Senior Subordinated
Indebtedness." The definition of "Senior Subordinated Indebtedness" in Section
1.1 of the Indenture is amended to read in its entirety as follows:
"Senior Subordinated Indebtedness" means the 11 3/4%
Notes, the Securities and any other Indebtedness of the Company that
specifically provides that such Indebtedness is to rank pari passu
with the Securities in right of payment and is not subordinated by its
terms in right of payment to any Indebtedness or other obligation of
the Company which is not Senior Indebtedness.
Section 1.3 Amendment to Definition of "Guarantor Senior
Subordinated Indebtedness." The definition of "Guarantor Senior Subordinated
Indebtedness" in Section 1.1 of the Indenture is amended to read in its
entirety as follows:
"Guarantor Senior Subordinated Indebtedness" means,
with respect to a Subsidiary Guarantor, the obligations of such
Subsidiary Guarantor
3
<PAGE> 4
under the 11 3/4% Subsidiary Guarantee, the Subsidiary Guarantee and
any other Indebtedness of such Subsidiary Guarantor that specifically
provides that such Indebtedness is to rank pari passu in right of
payment with the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee and is not subordinated by its terms in right of
payment to any Indebtedness or other obligation of such Subsidiary
Guarantor which is not Guarantor Senior Indebtedness of such
Subsidiary Guarantor.
ARTICLE II
MISCELLANEOUS PROVISIONS
Section 2.1. Terms Defined. For all purposes of this First
Supplemental Indenture, except as otherwise defined or unless the context
otherwise requires, terms used in capitalized form in this First Supplemental
Indenture and defined in the Indenture have the meanings specified in the
Indenture.
Section 2.2. Indenture. Except as amended hereby, the
Indenture and the Securities are in all respects ratified and confirmed and all
the terms thereof shall remain in full force and effect.
Section 2.3. Governing Law. This First Supplemental Indenture
shall be governed by, and construed in accordance with, the laws of the State
of New York, as applied to contracts made and performed within the State of New
York, but without giving effect to applicable principles of conflicts of law to
the extent that the application of the laws of another jurisdiction would be
required thereby.
Section 2.4. Successors. All agreements of the Company and the
Subsidiary Guarantors in this First Supplemental Indenture and the Securities
shall bind of their respective successors. All agreements of the Trustee in
this First Supplemental Indenture and in the Indenture shall bind its
successors.
Section 2.5. Multiple Counterparts. The parties may sign
multiple counterparts of this First Supplemental Indenture. Each signed
counterpart shall be deemed an original, but all of them together represent the
same agreement.
Section 2.6. Trustee Disclaimer. The Trustee accepts the
amendment of the Indenture effected by this First Supplemental Indenture and
agrees to execute the trust created by the Indenture as hereby amended, but
only upon the terms and conditions set forth
4
<PAGE> 5
in the Indenture, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee, which terms and provisions
shall in like manner define and limit its liabilities and responsibilities in
the performance of the trust created by the Indenture as hereby amended, and
without limiting the generality of the foregoing, the Trustee shall not be
responsible in any manner whatsoever for or with respect to any of the recitals
or statements contained herein, all of which recitals or statements are made
solely by the Company, or for or with respect to (i) the validity or
sufficiency of this First Supplemental Indenture or any of the terms or
provisions hereof, (ii) the proper authorization hereof by the Company by
corporate action or otherwise, (iii) the due execution hereof by the Company or
(iv) the consequences (direct or indirect and whether deliberate or
inadvertent) of any amendment herein provided for, and the Trustee makes no
representation with respect to any such matters.
Section 2.7. Indemnification. The indemnification provisions
of Section 7.7 of the Indenture shall include any and all loss, liability or
expense (including reasonable attorneys' fees) incurred by the Trustee in
connection with the execution and delivery of this First Supplemental Indenture
and the performance of its duties hereunder.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the date first written above.
INTERNATIONAL WIRE GROUP, INC.
By: /s/ Ellen L. Lipsitz
---------------------------
Name: Ellen L. Lipsitz
Title: Vice President
CAMDEN WIRE CO., INC.
By: /s/ Ellen L. Lipsitz
---------------------------
Name: Ellen L. Lipsitz
Title: Vice President
ECM HOLDING COMPANY
By: /s/ Ellen L. Lipsitz
---------------------------
Name: Ellen L. Lipsitz
Title: Vice President
OMEGA WIRE, INC.
By: /s/ Ellen L. Lipsitz
---------------------------
Name: Ellen L. Lipsitz
Title: Vice President
6
<PAGE> 7
OWI CORPORATION
By: /s/ Ellen L. Lipsitz
---------------------------
Name: Ellen L. Lipsitz
Title: Vice President
WIRE HARNESS INDUSTRIES, INC.
By: /s/ Ellen L. Lipsitz
---------------------------
Name: Ellen L. Lipsitz
Title: Vice President
WIREKRAFT EMPLOYMENT COMPANY
By: /s/ Ellen L. Lipsitz
---------------------------
Name: Ellen L. Lipsitz
Title: Vice President
WIREKRAFT INDUSTRIES, INC.
By: /s/ Ellen L. Lipsitz
---------------------------
Name: Ellen L. Lipsitz
Title: Vice President
7
<PAGE> 8
WIRE TECHNOLOGIES, INC.
By: /s/ Ellen L. Lipsitz
---------------------------
Name: Ellen L. Lipsitz
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Barbara McCluskey
---------------------------
Name: Barbara McCluskey
Title: Vice President
8
<PAGE> 1
EXHIBIT 4.12
================================================================================
INTERNATIONAL WIRE GROUP, INC.
11 3/4% Series B Senior Subordinated Notes due 2005
--------------------
INDENTURE
Dated as of June 17, 1997
--------------------
IBJ SCHRODER BANK & TRUST COMPANY,
Trustee
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(b) .............................. 7.8; 7.10
(c) .............................. N.A.
311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
312(a) .............................. 2.5
(b) .............................. 11.3
(c) .............................. 11.3
313(a) .............................. 7.6
(b)(1) .............................. N.A.
(b)(2) .............................. 7.6
(c) .............................. 7.6
(d) .............................. 7.6
314(a) .............................. 4.2
4.11; 12.2
(b) .............................. N.A.
(c)(1) .............................. 12.4
(c)(2) .............................. 12.4
(c)(3) .............................. N.A.
(d) .............................. N.A.
(e) .............................. 12.5
(f) .............................. 4.10
315(a) .............................. 7.1
(b) .............................. 7.5; 12.2
(c) .............................. 7.1
(d) .............................. 7.1
(e) .............................. 6.11
316(a)(last sentence) .............................. 12.6
(a)(1)(A) .............................. 6.5
(a)(1)(B) .............................. 6.4
(a)(2) .............................. N.A.
(b) .............................. 6.7
317(a)(1) .............................. 6.8
(a)(2) .............................. 6.9
(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
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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ARTICLE I
<S> <C> <C>
Definitions and Incorporation by Reference . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 1.3. Incorporation by Reference of Trust
Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 1.4. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE II
The Securities . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.4. Paying Agent To Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.5. Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.7. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.8. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.9. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.10. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.11. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE III
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.2. Selection of Securities To Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.4. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.5. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.6. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IV
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.1. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.2. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.3. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.4. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.5. Limitation on Restrictions on
Distributions from Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.6. Limitation on Sales of Assets and
Subsidiary Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
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<S> <C> <C>
SECTION 4.7. Limitation on Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.8. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.9. Limitation on Preferred Stock of
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.10. Limitation on Capital Stock of
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 4.11. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 4.12. Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE V
Successor Company . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.1. When Company May Merge or Transfer
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VI
Defaults and Remedies . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.7. Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VII
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.5. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.6. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 7.9. Successor Trustee by Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 7.11. Preferential Collection of Claims
Against Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE VIII
Discharge of Indenture; Defeasance . . . . . . . . . . . . . . . . . . . 60
SECTION 8.1. Discharge of Liability on Securities;
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.2. Conditions to Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8.3. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.4. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 8.5. Indemnity for U.S. Government
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 8.6. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE IX
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.1. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.2. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.3. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 9.4. Revocation and Effect of Consents and
Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 9.5. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.6. Trustee To Sign Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE X
Subordination . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.1. Agreement To Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.2. Liquidation, Dissolution, Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 10.3. Default on Senior Indebtedness or
Guarantor Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 10.4. Acceleration of Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.5. When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.6. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.7. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.8. Subordination May Not Be Impaired by
Company or the Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.9. Rights of Trustee and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.10. Distribution or Notice to
Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.11. Article X Not To Prevent Events of
Default or Limit Right To Accelerate . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.12. Trust Moneys Not Subordinated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.13. Trustee Entitled To Rely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.14. Trustee To Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.15. Trustee Not Fiduciary for Holders of
Senior Indebtedness and Guarantor
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.16. Reliance by Holders of Senior
Indebtedness and Guarantor Senior
Indebtedness on Subordination
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
</TABLE>
- iii -
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<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE XI
Subsidiary Guarantee . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.1. Subsidiary Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.2. Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 11.3. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 11.4. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 11.5. Right of Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 11.6. No Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 11.7. Additional Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 11.8. Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE XII
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 12.1. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 12.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 12.3. Communication by Holders with other
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 12.4. Certificate and Opinion as to Conditions
Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 12.5. Statements Required in Certificate or
Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.6. When Securities Disregarded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.7. Rules by Trustee, Paying Agent and
Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.8. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.12. Multiple Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.13. Variable Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.14. Qualification of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.15. Table of Contents; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
</TABLE>
- iv -
<PAGE> 7
INDENTURE dated as of June 17, 1997, among INTERNATIONAL WIRE
GROUP, INC., a Delaware corporation (the "Company"), the Subsidiary Guarantors
(as defined herein), and IBJ Schroder Bank & Trust Company, a New York
corporation (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
11 3/4% Series B Senior Subordinated Notes due 2005 (the "Notes") and, if and
when issued in exchange for Notes as provided in the Registration Rights
Agreement (as hereinafter defined), the Company's 11 3/4% Series B Senior
Subordinated Notes due 2005 (the "Exchange Notes" and, together with the Notes,
the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"14% Notes" means the Company's 14% Senior Subordinated Notes
due 2005 issued pursuant to the 14% Notes Indenture.
"14% Notes Guarantee" means the Guarantee of the Subsidiary
Guarantors (as defined in the 14% Notes Indenture) set forth in Article XI of
the 14% Notes Indenture.
"14% Notes Indenture" means the Indenture, dated February 12,
1997, among the Company, the Subsidiary Guarantors (as therein defined) and IBJ
Schroder Bank & Trust Company, as Trustee, as the same may be amended,
supplemented or otherwise modified from time to time.
"Acquired Preferred Stock" means Preferred Stock of any Person
which was issued and outstanding at the time such Person becomes a Subsidiary
of the Company or at the time it merges or consolidates with the Company or any
of its Subsidiaries and not issued by such Person in connection with, or in
anticipation or contemplation of, such acquisition, merger or consolidation.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in a Related Business; (ii) the Capital
Stock of a Person that becomes a Subsidiary as a result of the acquisition of
such Capital Stock by the Company or a Subsidiary of the Company; (iii) Capital
Stock constituting a minority interest in any Person that at such time is a
Subsidiary of the Company; or (iv) Permitted Investments of the type and in the
amounts described in clause (viii) of the definition thereof; provided,
however, that, in the case of clauses (ii) and (iii) of this definition, such
Subsidiary is primarily engaged in a Related Business.
<PAGE> 8
2
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Premium" means, with respect to a Security at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such time of (1)
105.875% of the principal amount of such Security plus (2) all required
interest payments due on such Security through June 1, 2000, computed using a
discount rate equal to the Treasury Rate plus 100 basis points, over (B) the
principal amount of such Security. It shall be the obligation of the Company to
calculate the Applicable Premium.
"Asset Disposition" means any sale, lease, transfer, issuance
or other disposition (or series of related sales, leases, transfers, issuances
or dispositions that are part of a common plan) of shares of Capital Stock of a
Subsidiary (other than directors' qualifying shares), property or other assets
(each referred to for the purposes of this definition as a "disposition") by
the Company or any of its Subsidiaries (including any disposition by means of a
merger, consolidation or similar transaction) other than (i) a disposition by a
Subsidiary to the Company or by the Company or a Subsidiary to a Wholly Owned
Subsidiary, (ii) a disposition of inventory in the ordinary course of business,
(iii) a disposition of obsolete or worn out equipment that is no longer useful
in the conduct of the business of the Company and its Subsidiaries and that is
disposed of in each case in the ordinary course of business, (iv) dispositions
of property for net proceeds less than $2.5 million in aggregate in any
calendar year and (v) transactions permitted under Section 5.1.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption multiplied by the amount of such payment by (ii) the sum of all such
payments.
<PAGE> 9
3
"Bank Indebtedness" means any and all amounts, whether
outstanding on the Issue Date or thereafter incurred, payable by the Company
under or in respect of the Credit Agreement and any related notes, collateral
documents, letters of credit and guarantees, including principal, premium (if
any), interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board
of Directors.
"Business Day" means each day which is not a Legal Holiday.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP, and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date such lease may be terminated without
penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of any of the
following events:
(i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company and its Subsidiaries to
any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a "Group") (whether or not otherwise in
compliance with the provisions of this Indenture), other than to
Permitted Holders; or
(ii) a majority of the Board of Directors of Holding or
the Company shall consist of Persons who are not Continuing Directors;
or
<PAGE> 10
4
(iii) the acquisition by any Person or Group (other than
the Permitted Holders) of the power, directly or indirectly, to vote
or direct the voting of securities having more than 50% of the
ordinary voting power for the election of directors of Holding or the
Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means International Wire Group, Inc., until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.
"Consolidated Cash Flow" for any period means the Consolidated
Net Income for such period, plus the following to the extent deducted in
calculating such Consolidated Net Income: (i) income tax expense, (ii)
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization
expense, (v) exchange or translation losses on foreign currencies, and (vi) all
other non-cash items reducing Consolidated Net Income (excluding any non-cash
item to the extent it represents an accrual of or reserve for cash
disbursements for any subsequent period prior to the Stated Maturity of the
Securities) and less, to the extent added in calculating Consolidated Net
Income, (x) exchange or translation gains on foreign currencies, and (y)
non-cash items (excluding such non-cash items to the extent they represent an
accrual for cash receipts reasonably expected to be received prior to the
Stated Maturity of the Securities), in each case for such period.
Notwithstanding the foregoing, the income tax expense, depreciation expense and
amortization expense of a Subsidiary of the Company shall be included in
Consolidated Cash Flow only to the extent (and in the same proportion) that the
net income of such Subsidiary was included in calculating Consolidated Net
Income.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of Consolidated Cash Flow for the
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination and as to which financial statements are available
to (ii) Consolidated Interest Expense for such four fiscal quarters; provided,
however, that (1) if the Company or any of its Subsidiaries has Incurred any
Indebtedness since the beginning of such period that remains outstanding or if
the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence of Indebtedness, or both, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to (A) such Indebtedness as if such Indebtedness
had been Incurred on the first day of such period (provided that if such
Indebtedness is Incurred under a revolving credit facility (or similar
arrangement or under any predecessor revolving credit or similar arrangement)
only that portion of such Indebtedness that
<PAGE> 11
5
constitutes the one year projected minimum balance of such Indebtedness (as
determined in good faith by senior management of the Company and assuming a
constant level of sales) shall be deemed outstanding for purposes of this
calculation) and (B) the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of such period,
(2) if since the beginning of such period any Indebtedness of the Company or
any of its Subsidiaries has been repaid, repurchased, defeased or otherwise
discharged (other than Indebtedness under a revolving credit or similar
arrangement unless such revolving credit Indebtedness has been permanently
repaid and has not been replaced), Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Indebtedness had been repaid, repurchased, defeased or otherwise discharged on
the first day of such period, (3) if since the beginning of such period the
Company or any of its Subsidiaries shall have made any Asset Disposition or if
the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Asset Disposition, Consolidated Cash Flow for such period shall be
reduced by an amount equal to the Consolidated Cash Flow (if positive)
attributable to the assets which are the subject of such Asset Disposition for
such period or increased by an amount equal to the Consolidated Cash Flow (if
negative) attributable thereto for such period, and Consolidated Interest
Expense for such period shall be (i) reduced by an amount equal to the
Consolidated Interest Expense attributable to any Indebtedness of the Company
or any of its Subsidiaries repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Subsidiaries in
connection with such Asset Disposition for such period (or, if the Capital
Stock of any Subsidiary of the Company is sold, the Consolidated Interest
Expense for such period directly attributable to the Indebtedness of such
Subsidiary to the extent the Company and its continuing Subsidiaries are no
longer liable for such Indebtedness after such sale) and (ii) increased by
interest income attributable to the assets which are the subject of such Asset
Disposition for such period, (4) if since the beginning of such period the
Company or any of its Subsidiaries (by merger or otherwise) shall have made an
Investment in any Subsidiary of the Company (or any Person which becomes a
Subsidiary of the Company) or an acquisition of assets, including any
Investment in a Subsidiary of the Company or any acquisition of assets
occurring in connection with a transaction causing a calculation to be made
hereunder, which constitutes all or substantially all of an operating unit of a
business, Consolidated Cash Flow and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including the
Incurrence of any Indebtedness) as if such Investment or acquisition occurred
on the first day of such period and (5) if since the beginning of such period
any Person (that subsequently became a Subsidiary of the Company or was merged
with or into the Company or any Subsidiary of the Company since the beginning
of such period) shall have made any Asset
<PAGE> 12
6
Disposition, Investment or acquisition of assets that would have required an
adjustment pursuant to clause (3) or (4) above if made by the Company or a
Subsidiary of the Company during such period, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition, Investment or
acquisition occurred on the first day of such period. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting Officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate Agreement applicable
to such Indebtedness if such Interest Rate Agreement has a remaining term in
excess of 12 months).
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its Subsidiaries, plus, to the extent
not included in such interest expense, (i) interest expense attributable to
capital leases, (ii) amortization of debt discount, (iii) capitalized interest,
(iv) non-cash interest expense, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) interest actually paid by the Company or any such Subsidiary
under any Guarantee of Indebtedness or other obligation of any other Person,
(vii) net payments (whether positive or negative) pursuant to Interest Rate
Agreements, and (viii) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust and less, (a) to
the extent included in such interest expense, the amortization of capitalized
debt issuance costs and (b) interest income. Notwithstanding the foregoing, the
Consolidated Interest Expense with respect to any Subsidiary of the Company
that was not a Wholly Owned Subsidiary, shall be included only to the extent
(and in the same proportion) that the net income of such Subsidiary was
included in calculating Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net
income (loss) of the Company and its consolidated Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net Income: (i)
any net income (loss) of any Person acquired by the Company or any of its
Subsidiaries in a pooling of interests transaction for any period prior to the
date of such acquisition; (ii) any net income of any Subsidiary of the Company
if such Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making
<PAGE> 13
7
of distributions by such Subsidiary, directly or indirectly, to the Company
(other than restrictions in effect on the Original 11 3/4% Notes Issue Date
with respect to a Subsidiary of the Company and other than restrictions that
are created or exist in compliance with Section 4.5); (iii) any gain or loss
realized upon the sale or other disposition of any assets of the Company or its
consolidated Subsidiaries (including pursuant to any Sale/Leaseback
Transaction) which are not sold or otherwise disposed of in the ordinary course
of business and any gain or loss realized upon the sale or other disposition of
any Capital Stock of any Person; (iv) any extraordinary gain or loss; (v) the
cumulative effect of a change in accounting principles; (vi) any expenses
(including taxes) or writeoffs attributable to, and effective as of the date
of, the Mergers (as described in the offering memorandum for the Original 11
3/4% Notes) in an amount not to exceed the amount thereof set forth in the pro
forma balance sheet of the Company and its subsidiaries contained in the
offering memorandum relating to the Original 11 3/4% Notes; and (vii) the net
income of any Person, other than a Subsidiary, except to the extent of the
lesser of (A) dividends or distributions paid to the Company or any of its
Subsidiaries by such Person and (B) the net income of such Person (but in no
event less than zero), and the net loss of such Person shall be included only
to the extent of the aggregate Investment of the Company or any of its
Subsidiaries in such Person.
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of
the most recent fiscal quarter of the Company ending prior to the taking of any
action for the purpose of which the determination is being made and for which
financial statements are available (but in no event ending more than 135 days
prior to the taking of such action), as (i) the par or stated value of all
outstanding Capital Stock of the Company plus (ii) paid-in capital or capital
surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"Continuing Director" means, as of the date of determination,
any person who (i) was a member of the Board of Directors of Holding or the
Company on the Original 11 3/4% Notes Issue Date, (ii) was nominated for
election or elected to the Board of Directors of Holding or the Company with
the affirmative vote of a majority of the Continuing Directors who were members
of such Board of Directors at the time of such nomination or election, or (iii)
is a representative of a Permitted Holder.
"Credit Agreement" means (i) the Amended and Restated Credit
Agreement, dated as of March 12, 1997, among Holding, the Company, The Chase
Manhattan Bank, as Administrative Agent, Bankers Trust Company, as
Documentation Agent, and the lenders party thereto from time to time, as the
same may be amended,
<PAGE> 14
8
supplemented or otherwise modified from time to time and (ii) any renewal,
extension, refunding, restructuring, replacement or refinancing thereof
(whether with the original Administrative Agent and lenders or another
administrative agent or agents or other lenders and whether provided under the
original Credit Agreement or any other credit or other agreement or indenture).
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees
and their respective successors.
"Designated Senior Indebtedness" means (i) the Bank
Indebtedness in the case of the Company, (ii) any Guarantee by a Subsidiary
Guarantor of the Bank Indebtedness in the case of such Subsidiary Guarantor and
(iii) any other Senior Indebtedness in the case of the Company or Guarantor
Senior Indebtedness of a Subsidiary Guarantor in the case of such Subsidiary
Guarantor which, at the date of determination, has an aggregate principal
amount outstanding of, or under which, at the date of determination, the
holders thereof are committed to lend up to, at least $20 million and is
specifically designated by the Company or such Subsidiary Guarantor in the
instrument evidencing or governing such Senior Indebtedness or Guarantor Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this
Indenture.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock of such Person which by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable) or upon
the happening of any event (i) matures or is mandatorily redeemable pursuant to
a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock (excluding capital stock which is
convertible or exchangeable solely at the option of the Company or a
Subsidiary) or (iii) is redeemable at the option of the holder thereof, in
whole or in part, in each case on or prior to the Stated Maturity of the
Securities, provided, that only the portion of Capital Stock which so matures
or is mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder thereof prior to such Stated Maturity
shall be deemed to be Disqualified Stock.
"ECM" means Electro Componentes de Mexico, S.A. de C.V., a
Mexican corporation and a Wholly-Owned Subsidiary.
<PAGE> 15
9
"Equity Offering" means an offering for cash by Holding or the
Company of its common stock, or options, warrants or rights with respect to its
common stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted principles in the United
States of America as in effect as of the Original 11 3/4% Notes Issue Date,
including those 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 entity as are approved by a significant segment
of the accounting profession. All ratios and computations based on GAAP
contained in this Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor Senior Indebtedness" means, with respect to a
Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter
issued, the Guarantee of the Bank Indebtedness by such Subsidiary Guarantor,
all other Guarantees by such Subsidiary Guarantor of Senior Indebtedness of the
Company and all Indebtedness of such Subsidiary Guarantor, including interest
and fees thereon, unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that the obligations
of such Subsidiary Guarantor in respect of such Indebtedness are not superior
in right of payment to the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee; provided, however, that Guarantor Senior Indebtedness
shall not include (1) any obligation of such Subsidiary Guarantor to the
Company or any other Subsidiary of the Company, (2) any liability for Federal,
state, local or other taxes owed or owing by such Subsidiary Guarantor, (3) any
accounts payable or other liability to trade creditors arising in the ordinary
course of business (including Guarantees thereof or instruments evidencing such
liabilities) or (4) any Indebtedness,
<PAGE> 16
10
Guarantee or obligation of such Subsidiary Guarantor that is expressly
subordinate or junior in right of payment to any other Indebtedness, Guarantee
or obligation of such Subsidiary Guarantor, including any Guarantor Senior
Subordinated Indebtedness and Guarantor Subordinated Obligations of such
Subsidiary Guarantor.
"Guarantor Senior Subordinated Indebtedness" means, with
respect to a Subsidiary Guarantor, the obligations of such Subsidiary Guarantor
under the Original 11 3/4% Notes Guarantee, the 14% Notes Guarantee, the
Subsidiary Guarantee and any other Indebtedness of such Subsidiary Guarantor
that specifically provides that such Indebtedness is to rank pari passu in
right of payment with the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee and is not subordinated by its terms in right of payment
to any Indebtedness or other obligation of such Subsidiary Guarantor which is
not Guarantor Senior Indebtedness of such Subsidiary Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee pursuant to a written agreement.
"Hicks Muse" means Hicks, Muse, Tate & Furst Incorporated.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holding" means International Wire Holding Company, a Delaware
corporation and the owner of all the outstanding Capital Stock of the Company
on the Issue Date.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be incurred
by such Subsidiary at the time it becomes a Subsidiary.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication), (i) the principal of and premium (if
any) in respect of indebtedness of such Person for borrowed money, (ii) the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto) (other
than obligations with respect to letters of credit securing obligations (other
than obligations described in clauses (i), (ii) and (v)) entered into in the
<PAGE> 17
11
ordinary course of business of such Person to the extent that such letters of
credit are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third business day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit), (iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except trade payables and accrued
expenses incurred in the ordinary course of business), which purchase price is
due more than six months after the date of placing such property in service or
taking delivery and title thereto or the completion of such services, (v) all
Capitalized Lease Obligations and all Attributable Indebtedness of such Person,
(vi) all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person, (vii) all
Indebtedness of other Persons to the extent Guaranteed by such Person and
(viii) to the extent not otherwise included in this definition, obligations
under Currency Agreements and Interest Rate Agreements. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts payable on the balance sheet of such
Person) or other extension of credit (including by way of Guarantee or similar
arrangement, but excluding any debt or extension of credit represented by a
bank deposit other than a time deposit) or capital contribution to (by means of
any transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such Person.
"Issue Date" means the date on which the Notes are originally
issued.
"Legal Holiday" has the meaning ascribed in Section 12.8.
<PAGE> 18
12
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"Mills & Partners" means Mills & Partners, Inc.
"Monitoring and Oversight Agreement" means the Monitoring and
Oversight Agreement, dated as of June 12, 1995 among the Company, Holding and
Hicks Muse & Co. Partners, L.P., as in effect on the Issue Date.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received
in the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to such properties or assets or received in any other
non-cash form) therefrom, in each case net of (i) all legal, title and
recording tax expenses, commissions and other fees and expenses incurred, and
all Federal, state, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (ii) all
payments made on any Indebtedness which is secured by any assets subject to
such Asset Disposition, in accordance with the terms of any Lien upon such
assets, or which must by its terms, or in order to obtain a necessary consent
to such Asset Disposition, or by applicable law, be repaid out of the proceeds
from such Asset Disposition, (iii) all distributions and other payments
required to be made to any Person owning a beneficial interest in assets
subject to sale or minority interest holders in Subsidiaries or joint ventures
as a result of such Asset Disposition, (iv) the deduction of appropriate
amounts to be provided by the seller as a reserve, in accordance with GAAP,
against any liabilities associated with the assets disposed of in such Asset
Disposition and retained by the Company or any Subsidiary of the Company after
such Asset Disposition and (v) any portion of the purchase price from an Asset
Disposition placed in escrow (whether as a reserve for adjustment of the
purchase price, for satisfaction of indemnities in respect of such Asset
Disposition or otherwise in connection with such Asset Disposition); provided,
however, that upon the termination of such escrow, Net Available Cash shall be
increased by any portion of funds therein released to the Company or any
Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result of such issuance or sale.
<PAGE> 19
13
"Offering Memorandum" means the Offering Memorandum dated June
11, 1997 relating to the Notes; provided that after the issuance of Exchange
Notes, all references herein to "Offering Memorandum" shall be deemed
references to the Prospectus relating to the Exchange Notes.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, the Secretary of the Company or the Assistant
Secretary of the Company, as applicable.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Original 11 3/4% Notes" means the 11 3/4% Senior Subordinated
Notes due 2005 issued pursuant to the Original 11 3/4% Notes Indenture.
"Original 11 3/4% Notes Guarantee" means the Guarantee of the
Subsidiary Guarantors (as defined in the Original 11 3/4% Notes Indenture) set
forth in Article XI of the Original 11 3/4% Notes Indenture.
"Original 11 3/4% Notes Indenture" means the Indenture, dated
June 12, 1995, among the Company, the Subsidiary Guarantors (as defined
therein) and IBJ Schroder Bank & Trust Company, as Trustee, as the same may be
amended, supplemented or otherwise modified from time to time.
"Original 11 3/4% Notes Issue Date" means June 12, 1995.
"Permitted Holders" means Hicks Muse, Mills & Partners or any
of their Affiliates, officers or directors.
"Permitted Indebtedness" means (i) Indebtedness of the Company
owing to and held by any Wholly Owned Subsidiary or Indebtedness of a
Subsidiary owing to and held by the Company or any Wholly Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any Capital
Stock or any other event which results in any such Wholly Owned Subsidiary
ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of any such
Indebtedness (except to the Company or a Wholly Owned Subsidiary) shall be
deemed, in each case, to constitute the Incurrence of such Indebtedness by the
issuer thereof; (ii) Indebtedness represented by (x) the Notes, the Original 11
3/4% Notes and the 14% Notes, (y) any Indebtedness (other than the Indebtedness
described in clauses (i), (ii) and (iv) of Section 4.3(b) and other than
Indebtedness incurred pursuant to clause (i) above or clauses (iv), (v) or (vi)
below) outstanding on the
<PAGE> 20
14
Original 11 3/4% Notes Issue Date and (z) any Refinancing Indebtedness Incurred
in respect of any Indebtedness described in this clause (ii) or Incurred
pursuant to Section 4.3(a); (iii) (A) Indebtedness of a Subsidiary Incurred and
outstanding on the date on which such Subsidiary was acquired by the Company
(other than Indebtedness incurred as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the transaction
or series of related transactions pursuant to which such Subsidiary became a
Subsidiary or was otherwise acquired by the Company); provided, however, that
at the time such Subsidiary is acquired by the Company, the Company would have
been able to Incur $1.00 of additional Indebtedness pursuant to Section 4.3(a)
after giving effect to the Incurrence of such Indebtedness pursuant to this
clause (iii) and (B) Refinancing Indebtedness Incurred by a Subsidiary in
respect of Indebtedness Incurred by such Subsidiary pursuant to this clause
(iii); (iv) Indebtedness (A) in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided by the Company or any of its
Subsidiaries to their customers in the ordinary course of their business, (B)
in respect of performance bonds or similar obligations of the Company or any of
its Subsidiaries for or in connection with pledges, deposits or payments made
or given in the ordinary course of business in connection with or to secure
statutory, regulatory or similar obligations, including obligations under
health, safety or environmental obligations, (C) arising from Guarantees to
suppliers, lessors, licensees, contractors, franchisees or customers of
obligations (other than Indebtedness) Incurred in the ordinary course of
business and (D) under Currency Agreements and Interest Rate Agreements;
provided, however, that in the case of Currency Agreements and Interest Rate
Agreements, such Currency Agreements and Interest Rate Agreements are entered
into for bona fide hedging purposes of the Company or its Subsidiaries (as
determined in good faith by the Board of Directors or senior management of the
Company) and correspond in terms of notional amount, duration, currencies and
interest rates, as applicable, to Indebtedness of the Company or its
Subsidiaries Incurred without violation of the Indenture or to business
transactions of the Company or its Subsidiaries on customary terms entered into
in the ordinary course of business; (v) Indebtedness arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from Guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any of its
Subsidiaries pursuant to such agreements, in any case incurred in connection
with the disposition of any business assets or Subsidiary of the Company (other
than Guarantees of Indebtedness or other obligations Incurred by any Person
acquiring all or any portion of such business assets or Subsidiary of the
Company for the purpose of financing such acquisition) in a principal amount
not to exceed the gross proceeds actually received by the Company or any of its
Subsidiaries in connection with such disposition; provided, however, that the
principal amount of any Indebtedness Incurred pursuant to this clause (v), when
taken together with all
<PAGE> 21
15
Indebtedness Incurred pursuant to this clause (v) and then outstanding, shall
not exceed $10.0 million; and (vi) Indebtedness consisting of (A) Guarantees by
the Company or a Subsidiary of Indebtedness Incurred by a Wholly Owned
Subsidiary without violation of this Indenture, (B) Guarantees by a Subsidiary
of Senior Indebtedness Incurred by the Company without violation of this
Indenture (so long as such Subsidiary could have Incurred such Indebtedness
directly without violation of this Indenture) and (C) Guarantees by the Company
or a Subsidiary of Guarantor Senior Indebtedness of a Subsidiary Guarantor (so
long as the Company or such Subsidiary could have Incurred such Indebtedness
directly without violation of this Indenture).
"Permitted Investment" means an Investment by the Company or
any of its Subsidiaries in (i) a Wholly Owned Subsidiary of the Company;
provided, however, that the primary business of such Subsidiary is a Related
Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Subsidiary of the Company;
provided, however, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
of its Subsidiaries, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; (v)
payroll, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business; (vi) loans or
advances to employees for purposes of purchasing the common stock of the
Company in an aggregate amount outstanding at any one time not to exceed $5.0
million and other loans and advances to employees made in the ordinary course
of business consistent with past practices of the Company or such Subsidiary;
(vii) stock, obligations or securities received in settlement of debts created
in the ordinary course of business and owing to the Company or any of its
Subsidiaries or in satisfaction of judgments or claims; (viii) a Person engaged
in a Related Business or a loan or advance to the Company the proceeds of which
are used solely to make an Investment in a Person engaged in a Related Business
or a Guarantee by the Company of Indebtedness of any Person in which such
Investment has been made; provided, however, that no Permitted Investments may
be made pursuant to this clause (viii) to the extent the amount thereof would,
when taken together with all other Permitted Investments made pursuant to this
clause (viii), exceed $20.0 million in the aggregate (plus, to the extent not
previously reinvested, any return of capital realized on Permitted Investments
made pursuant to this clause (viii), or any release or other cancellation of
any Guarantee constituting such Permitted Investment); (ix) Persons to the
extent such Investment is received by the Company or any Subsidiary as
consideration for asset dispositions effected in compliance with Section 4.6;
(x) prepayments and other credits to suppliers made in the ordinary course of
business consistent with the past
<PAGE> 22
16
practices of the Company and its Subsidiaries; and (xi) Investments in
connection with pledges, deposits, payments or performance bonds made or given
in the ordinary course of business in connection with or to secure statutory,
regulatory or similar obligations, including obligations under health, safety
or environmental obligations.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
A "Public Market" exists at any time with respect to the
common stock of Holding or the Company if (a) the common stock of Holding or
the Company, as applicable, is then registered with the SEC pursuant to Section
12(b) or 12(g) of the Exchange Act and traded either on a national securities
exchange or in the National Association of Securities Dealers Automated
Quotation System and (b) at least 15% of the total issued and outstanding
common stock of the Company or Holding, as applicable, has been distributed
prior to such time by means of an effective registration statement under the
Securities Act of 1933.
"QIB" means any "qualified institutional buyer" (as defined
under the Securities Act).
"Redemption Date" means the date specified by the Company in a
notice delivered pursuant to Section 3.3 as the date on which the Company has
elected to redeem all of the Securities pursuant to paragraph 5 of the
Securities after the occurrence of a Change of Control.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances, replaces, renews, repays or extends (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of the Indenture or Incurred in compliance with the Indenture (including
Indebtedness of the Company that refinances Indebtedness of any Subsidiary and
Indebtedness of any Subsidiary that refinances Indebtedness of another
Subsidiary) including Indebtedness that refinances Refinancing Indebtedness;
provided, however, that (i) the Refinancing Indebtedness has a Stated Maturity
no earlier than the Stated Maturity of the Indebtedness being refinanced, (ii)
the Refinancing Indebtedness has an Average Life at the time
<PAGE> 23
17
such Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being refinanced and (iii) such Refinancing
Indebtedness is Incurred in an aggregate principal amount (or if issued with
original issue discount, an aggregate issue price) that is equal to (or 101%
of, in the case of a refinancing of the Securities in connection with a Change
of Control) or less than the sum of the aggregate principal amount (or if
issued with original issue discount, the aggregate accreted value) then
outstanding of the Indebtedness being refinanced.
"Registered Exchange Offer" shall have the meaning set forth
in the Registration Rights Agreement.
"Registration Rights Agreement" means the Exchange and
Registration Rights Agreement, dated June 17, 1997, among the Company, the
Subsidiary Guarantors, Chase Securities Inc. and BT Securities Corporation.
"Related Business" means any business which is the same as or
related, ancillary or complementary to any of the businesses of the Company and
its Subsidiaries on the Issue Date, as reasonably determined by the Board of
Directors.
"Representative" means any trustee, agent or representative
(if any) of an issue of Senior Indebtedness or Guarantor Senior Indebtedness;
provided that, with respect to any Guarantor Senior Indebtedness consisting of
a Guarantee of Senior Indebtedness, the Representative of such Guarantor Senior
Indebtedness shall be deemed to be the Representative of such Senior
Indebtedness.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company
or any Subsidiary secured by a Lien.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depositary), or any successor Person
thereto and shall initially be the Trustee.
"Senior Indebtedness" means, whether outstanding on the Issue
Date or thereafter issued, the Bank Indebtedness and all
<PAGE> 24
18
Indebtedness of the Company, including interest and fees thereon, unless, in
the instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that the obligations in respect of such
Indebtedness are not superior in right of payment to the Securities; provided,
however, that Senior Indebtedness shall not include (1) any obligation of the
Company to any Subsidiary, (2) any liability for Federal, state, local or other
taxes owed or owing by the Company, (3) any accounts payable or other liability
to trade creditors arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities) or (4) any
Indebtedness, Guarantee or obligation of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness, Guarantee
or obligation of the Company, including any Senior Subordinated Indebtedness
and any Subordinated Obligations.
"Senior Subordinated Indebtedness" means the Original 11 3/4%
Notes, the 14% Notes, the Securities and any other Indebtedness of the Company
that specifically provides that such Indebtedness is to rank pari passu with
the Securities in right of payment and is not subordinated by its terms in
right of payment to any Indebtedness or other obligation of the Company which
is not Senior Indebtedness.
"Shelf Registration Statement" has the meaning ascribed
thereto in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the Commission.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision.
"Subordinated Obligation" means any Indebtedness of the
Company (whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Company.
<PAGE> 25
19
"Subsidiary Guarantee" means the Guarantee of the Securities
by the Subsidiary Guarantors set forth in Article XI.
"Subsidiary Guarantors" means each Subsidiary of the Company
in existence on the Issue Date (other than ECM and Wirekraft Industries de
Mexico, S.A. de C.V.) and each Subsidiary (other than foreign subsidiaries)
created or acquired by the Company after the Issue Date and which becomes a
party hereto pursuant to Section 11.7.
"Temporary Cash Investments" means any of the following: (i)
any Investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof, (ii) Investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital, surplus and
undivided profits aggregating in excess of $250.0 million (or the foreign
currency equivalent thereof) and whose long-term debt, or whose parent holding
company's long-term debt, is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act), (iii) repurchase obligations
with a term of not more than 30 days for underlying securities of the types
described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) Investments in commercial
paper, maturing not more than 180 days after the date of acquisition, issued by
a corporation (other than an Affiliate of the Company) organized and in
existence under the laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time as of
which any investment therein is made of "P-1" (or higher) according to Moody's
Investors Services, Inc. or "A-1" (or higher) according to Standard and Poor's
Ratings Group, (v) Investments in securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by Standard &
Poor's Ratings Group or "A" by Moody's Investors Service, Inc., and (vi)
Investments in mutual funds whose investment guidelines restrict such funds'
investments to those satisfying the provisions of clauses (i) through (v)
above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.6 hereof.
<PAGE> 26
20
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two business days prior
to the Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to June 1, 2000; provided, however, that if the
period from the Redemption Date to June 1, 2000 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of United States Treasury securities for which such yields are given,
except that if the period from the Redemption Date to June 1, 2000 is less than
one year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Subsidiary of the Company,
at least 99% of the Capital Stock of which (other than directors qualifying
shares) is owned by the Company or another Wholly Owned Subsidiary.
<PAGE> 27
21
SECTION 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . 4.7
"Agent Member" . . . . . . . . . . . . . . . . . 2.1
"Bankruptcy Law" . . . . . . . . . . . . . . . . 6.1
"Blockage Notice" . . . . . . . . . . . . . . . 10.3
"covenant defeasance option" . . . . . . . . . . 8.1(b)
"Custodian" . . . . . . . . . . . . . . . . . . 6.1
"Definitive Securities" . . . . . . . . . . . . 2.1
"Event of Default" . . . . . . . . . . . . . . . 6.1
"Global Security" . . . . . . . . . . . . . . . 2.1
"legal defeasance option" . . . . . . . . . . . 8.1(b)
"Non-Global Purchaser" . . . . . . . . . . . . . 2.1
"Offer" . . . . . . . . . . . . . . . . . . . . 4.6
"pay the Securities" . . . . . . . . . . . . . . 10.3
"Paying Agent" . . . . . . . . . . . . . . . . . 2.3
"Payment Blockage Period" . . . . . . . . . . . 10.3
"Registrar" . . . . . . . . . . . . . . . . . . 2.3
"Restricted Payment" . . . . . . . . . . . . . . 4.4
"Rule 144A" . . . . . . . . . . . . . . . . . . 2.1
"Successor Company" . . . . . . . . . . . . . . 5.1
</TABLE>
SECTION 1.3. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by the TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
<PAGE> 28
22
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in
the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or
other discount security at any date shall be the principal amount
thereof that would be shown on a balance sheet of the issuer dated
such date prepared in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be
(i) the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with
respect to such Preferred Stock, whichever is greater.
ARTICLE II
The Securities
SECTION 2.1. Form and Dating. (a) The Notes and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture.
The Exchange Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit B, which is hereby incorporated by
reference and expressly made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule or
usage, in addition to those set forth on Exhibits A and B. The Company and the
Trustee shall approve the forms of the Securities and any notation, endorsement
or legend on them. Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in Exhibit A and Exhibit B are part of
the terms of this Indenture and, to the extent applicable, the Company, the
Subsidiary Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to be bound by such terms.
(b) Global Securities. The Notes are being offered and
sold by the Company pursuant to a Purchase Agreement, dated June 11, 1997,
among the Company, the Subsidiary Guarantors, Chase Securities Inc. and BT
Securities Corporation (the "Purchase Agreement").
Notes offered and sold to a QIB in reliance on Rule 144A under
the Securities Act ("Rule 144A") as provided in the Purchase Agreement, shall
be issued initially in the form of one or more permanent global Securities in
definitive, fully
<PAGE> 29
23
registered form without interest coupons with the Global Securities Legend and
Restricted Securities Legend set forth in Exhibit A hereto (each, a "Global
Security"), which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its New York office, as custodian for
the Depositary, and registered in the name of the Depositary or a nominee of
the Depositary, duly executed by the Company and authenticated by the Trustee
as hereinafter provided. The aggregate principal amount of the Global
Securities may from time to time be increased or decreased by endorsements made
on such Global Securities by the Trustee and the Depositary or its nominee as
hereinafter provided.
(c) Book-Entry Provisions. This Section 2.1(c) shall
apply only to Global Securities deposited with the Trustee, as custodian for
the Depositary.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or by the Trustee as the
custodian of the Depositary or under such Global Security, and the Depositary
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of the Depositary governing the exercise of
the rights of a holder of a beneficial interest in any Global Security.
(d) Certificated Securities. Except as provided in
Section 2.6, owners of beneficial interests in Global Securities will not be
entitled to receive Definitive Securities (as hereinafter defined). Notes
offered and sold to Person who are not QIBs (referred to herein as the
"Non-Global Purchasers"), as provided in the Purchase Agreement, shall be
issued initially to such Person in the form of certificated Notes bearing the
Restricted Securities Legend set forth in Exhibit A hereto ("Definitive
Securities"); provided, however, that upon transfer of such Definitive
Securities to a QIB, such Definitive Securities will, unless the Global
Security has previously been exchanged, be exchanged for an interest in a
Global Security pursuant to the provisions of Section 2.6 hereof. Definitive
Securities will bear the Restricted Securities Legend set forth on Exhibit A
unless removed in accordance with Section 2.6(g) hereof.
SECTION 2.2. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed,
<PAGE> 30
24
affixed, imprinted or reproduced on the Securities and may be in facsimile
form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually authenticates the Security. The signature of the Trustee
on a Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture.
The Trustee shall authenticate and deliver: (1) Notes for
original issue in an aggregate principal amount of $150 million and (2)
Exchange Notes for issue only in a Registered Exchange Offer pursuant to the
Registration Rights Agreement, and only in exchange for Notes of an equal
principal amount, in each case upon a written order of the Company signed by
two Officers or by an Officer and either an Assistant Treasurer or an Assistant
Secretary of the Company. Such order shall specify the amount of the Securities
to be authenticated and the date on which the original issue of Securities is
to be authenticated and whether the Securities are to be Notes or Exchange
Notes. The aggregate principal amount of Securities outstanding at any time may
not exceed $150 million except as provided in Section 2.7.
The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Securities. Unless
limited by the terms of such appointment, any such 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.
SECTION 2.3. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of each such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to Section
7.7. The Company or
<PAGE> 31
25
any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent for the Securities.
SECTION 2.4. Paying Agent To Hold Money in Trust. By at least
12:00 noon (New York City time) on the date on which any principal of or
interest on any Security is due and payable, the Company shall deposit with the
Paying Agent a sum sufficient to pay such principal or interest when due. The
Company shall require each Paying Agent (other than the Trustee) to agree in
writing that such Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by such Paying Agent for the
payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate the money held
by it as Paying Agent and hold it as a separate trust fund. The Company at any
time may require a Paying Agent (other than the Trustee) to pay all money held
by it to the Trustee and to account for any funds disbursed by such Paying
Agent. Upon complying with this Section, the Paying Agent (if other than the
Company or a Subsidiary) shall have no further liability for the money
delivered to the Trustee. Upon any bankruptcy, reorganization or similar
proceeding with respect to the Company, the Trustee shall serve as Paying Agent
for the Securities.
SECTION 2.5. 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 Securityholders. If the Trustee
is not the Registrar, the Company shall furnish to the Trustee, in writing at
least seven Business Days before 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 may reasonably require of the names and addresses of
Securityholders.
SECTION 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented by a Holder to the Registrar or a
co-registrar with a request:
(x) to register the transfer of such Definitive
Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
<PAGE> 32
26
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:
(i) such Definitive Securities shall be duly endorsed or
accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar or co-registrar, duly
executed by such Holder or his attorney duly authorized in writing;
and
(ii) if such Definitive Securities are Transfer Restricted
Securities, such Definitive Securities shall also 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 the form set forth on the
reverse of the Security); or
(B) if such Transfer Restricted Securities are
being transferred (x) to the Company or to a QIB in accordance
with Rule 144A under the Securities Act or (y) pursuant to an
effective registration statement under the Securities Act, a
certification from such Holder to that effect (in the form set
forth on the reverse of the Security); or
(C) if such Transfer Restricted Securities are
being transferred (w) pursuant to an exemption from
registration in accordance with Rule 144 or Regulation S under
the Securities Act; or (x) 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 the Securities of $250,000 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 (y) in reliance on another exemption from
the registration requirements of the Securities Act: (i) a
certification to that effect from such Holder (in the form set
forth on the reverse of the Security), (ii) if the Company or
the Trustee so requests, an Opinion of Counsel reasonably
acceptable to the Company and to the Trustee to the effect
that such transfer is in compliance with the Securities Act
and (iii) in the case of clause (x), a signed letter from the
transferee substantially in the form of Exhibit C hereto.
<PAGE> 33
27
(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 Trustee
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse
of the Security, to the effect that such Definitive Security is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act; and
(ii) written instructions from the Holder thereof
directing the Trustee 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 Trustee 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 Depositary 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
Company shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officers' Certificate, a new Global Security in
the appropriate principal amount. The Trustee shall deliver copies of each
certification and instruction received by it pursuant to clauses (i) and (ii)
above to the Depositary and, upon receipt thereof, the Depositary shall make
appropriate adjustments to its books and records to reflect exchange of such
Definitive Security for an interest in the Global Security in accordance with
Section 2.6(c).
(c) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depositary, in accordance with this Indenture
(including applicable restrictions on transfer set forth herein, if any) and
the procedures of the Depositary therefor.
(ii) A Global Security deposited with the Depositary or
with the Trustee as custodian for the Depositary pursuant to Section 2.1 shall
be transferred to the beneficial owners thereof only if such transfer complies
with this Section 2.6 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or if at
any time such Depositary ceases to be a "clearing agency" registered under the
Exchange Act and a successor depositary is not appointed by the Company within
90 days of such notice, or (ii) an Event of Default has occurred and is
continuing.
<PAGE> 34
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(iii) Any Global Security that is transferable to the
beneficial owners thereof pursuant to this Section shall be surrendered by the
Depositary to the Trustee to be so transferred, in whole or from time to time
in part, without charge, and the Company shall sign and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Security, an equal aggregate principal amount of Definitive Securities of
authorized denominations. Each Definitive Security delivered in exchange for
any portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 and any
integral multiple thereof and shall be registered in such names as the
Depositary shall direct. Any Definitive Security delivered in exchange for an
interest in the Global Security shall, except as otherwise provided in Section
2.6(g), bear the Restricted Securities Legend set forth in Exhibit A hereto.
(iv) The registered Holder of a Global Security may grant
proxies and otherwise authorize any Person, including Agent Members and Persons
that may hold interests through Agent Members, to take any action which a
Holder is entitled to take under this Indenture or the Securities.
(v) In the event of the occurrence of either of the
events specified in Section 2.6(c)(ii), the Company will promptly make
available to the Trustee a reasonable supply of certificated Securities in
definitive, fully registered form without interest coupons.
(d) Restriction on 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 of the same aggregate principal amount; provided
that such request is accompanied by the information specified below.
Upon receipt by the Trustee of written instructions (or such other
form of instructions as is customary for the Depositary) from the
Depositary or its nominee on behalf of any Person having a beneficial
interest in a Global Security and, in the case of a Transfer
Restricted Security, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depositary as
being the owner of a beneficial interest in a Global Security,
a certification from such Person to that effect (in the form
set forth on the reverse of the Security); or
<PAGE> 35
29
(B) if such beneficial interest is being
transferred (x) to a QIB in accordance with Rule 144A under
the Securities Act or (y) pursuant to an effective
registration statement under the Securities Act, a
certification from such person to that effect (in the form set
forth on the reverse of the Security); or
(C) if such beneficial interest is being
transferred (w) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities
Act; or (x) 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 the Securities of $250,000 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
(y) in reliance on another exemption from the registration
requirements of the Securities Act: (i) a certification to
that effect from the transferee (in the form set forth on the
reverse of the Security), (ii) if the Company or the Trustee
so requests, an Opinion of Counsel reasonably acceptable to
the Company and to the Trustee to the effect that such
transfer is in compliance with the Securities Act, and (iii)
in the case of clause (x), a signed letter from the transferee
in the form of Exhibit C hereto;
then the Securities Custodian, at the direction of the Trustee, will
cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Securities Custodian, the
aggregate principal amount of the Global Security to be reduced
accordingly and, following such reduction, the Company will execute
and the Trustee will authenticate and deliver to the transferee one or
more Definitive Securities in accordance with clause (ii) below.
(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 Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the
Trustee in writing. The Trustee shall deliver such Definitive
Securities to the Persons in whose names such Securities are so
registered in accordance with the instructions of the Depositary.
(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)
<PAGE> 36
30
of this Section 2.6), a Global Security may not be transferred as a whole
except by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
(f) [Intentionally Omitted];
(g) Legend.
(i) Except as permitted by the following paragraph (ii)
each Security certificate evidencing Global Securities and Definitive
Securities (and all Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE
ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF 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 THE SECURITIES OF $250,000, 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 (F) PURSUANT TO
<PAGE> 37
31
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH CASE, ONLY IF A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE
OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR
TO THE ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act:
(A) in the case of any Transfer Restricted
Security that is a Definitive Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security for a Definitive Security that does not bear the
legend set forth in paragraph (i) above and rescind any
restriction on the transfer of such Security; and
(B) in the case of any such Transfer Restricted
Security represented by a Global Security, such Transfer
Restricted Security shall not be required to bear the legend
set forth in paragraph (i) above, although it shall continue
to be subject to the provisions of Section 2.6(c) hereof;
provided, however, that with respect to any request for an
exchange of a Transfer Restricted Security that is represented
by a Global Security for a Definitive Security that does not
bear the legend set forth in paragraph (i) above, which
request is made in reliance upon Rule 144, the Holder thereof
shall certify in writing to the Trustee that such request is
being made pursuant to Rule 144 (such certification to be in
the form set forth on the reverse of the Security).
(h) Cancellation 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 canceled, such
Global Security shall be returned to the Depositary for cancellation or
retained and canceled 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 canceled, the principal amount of
Securities represented by such Global Security shall be reduced and an
endorsement shall be made on
<PAGE> 38
32
such Global Security by the Securities Custodian to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges
of Securities.
(i) To permit registrations of transfers and exchanges,
the Company 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 to a Holder for any
registration of transfer or exchange, but the Company 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 or similar governmental charges payable
upon exchange or transfer pursuant to Sections 4.6, 4.8 or 9.5 or
pursuant to paragraph 5 of the Securities).
(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 (1) 15
Business Days before the mailing of a notice of an offer to repurchase
or redeem Securities and ending at the close of business on the day of
such mailing or (2) 15 Business Days before an interest payment date
and ending on such interest payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(j) No Obligation of the Trustee. (i) The Trustee shall
have no responsibility or obligation to any beneficial owner of a Global
Security, a member of, or a participant in the Depositary or other Person with
respect to the accuracy of the records of the Depositary or its nominee or of
any participant or
<PAGE> 39
33
member thereof, with respect to any ownership interest in the Securities or
with respect to the delivery to any participant, member, beneficial owner or
other Person (other than the Depositary) of any notice (including any notice of
redemption) or the payment of any amount or delivery of any Securities (or
other security or property) under or with respect to such Securities or for any
other matter relating to the actions or procedures of the Depositary. All
notices and communications to be given to the Holders and all payments to be
made to Holders in respect of the Securities shall be given or made only to or
upon the order of the registered Holders (which shall be the Depositary or its
nominee in the case of a Global Security). The rights of beneficial owners in
any Global Security shall be exercised only through the Depositary subject to
the applicable rules and procedures of the Depositary. The Trustee may rely and
shall be fully protected in relying upon information furnished by the
Depositary with respect to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers between
or among Depositary participants, members or beneficial owners in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and
when expressly required by, the terms of this Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.
SECTION 2.7. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements
of Section 8-405 of the Uniform Commercial Code are met and the Holder
satisfies any other reasonable requirements of the Trustee. If required by the
Trustee or the Company, such Holder shall furnish an indemnity bond sufficient
in the judgment of the Company and the Trustee to protect the Company, the
Trustee, the Paying Agent, the Registrar and any co-registrar from any loss
which any of them may suffer if a Security is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Security. Every
replacement Security is an additional obligation of the Company.
SECTION 2.8. Outstanding Securities. Securities outstanding at
any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
<PAGE> 40
34
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.9. Temporary Securities. Until definitive Securities
are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive
Securities. After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of
the temporary Securities at any office or agency maintained by the Company for
that purpose and such exchange shall be without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute, and the Trustee shall authenticate and deliver in exchange
therefor, one or more definitive Securities representing an equal principal
amount of Securities. Until so exchanged, the Holder of temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as
a holder of a definitive Securities.
SECTION 2.10. Cancellation. The Company 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 registration of transfer, exchange or payment. The Trustee and no one else
shall cancel and destroy (subject to the record retention requirements of the
Exchange Act) all Securities surrendered for registration of transfer,
exchange, payment or cancellation and deliver a certificate of such destruction
to the Company unless the Company directs the Trustee to deliver canceled
Securities to the Company. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
<PAGE> 41
35
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed (or upon the Company's failure to do so the Trustee shall
fix) any such special record date and payment date to the reasonable
satisfaction of the Trustee which specified record date shall not be less than
10 days prior to the payment date for such defaulted interest and shall
promptly mail or cause to be mailed to each Securityholder a notice that states
the special record date, the payment date and the amount of defaulted interest
to be paid. The Company shall notify the Trustee in writing of the amount of
defaulted interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such defaulted interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when so deposited to be held in trust for the benefit of the Person
entitled to such defaulted interest as provided in this Section.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders, provided, however, 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.
ARTICLE III
Redemption
SECTION 3.1. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify
the Trustee in writing of the redemption date and the principal amount of
Securities to be redeemed.
The Company shall give each notice to the Trustee provided for
in this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from the Company to the effect that such redemption will comply
with the conditions herein. If fewer than all the Securities are to be
redeemed, the record date relating to such redemption shall be selected by the
Company and set forth in the related notice given
<PAGE> 42
36
to the Trustee, which record date shall be not less than 15 days after the date
of such notice.
SECTION 3.2. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.3. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to
be redeemed, the identification and principal amounts of the
particular Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on
Securities (or portion thereof) called for redemption ceases to accrue
on and after the redemption date;
(7) the CUSIP number, if any, printed on the Securities
being redeemed; and
<PAGE> 43
37
(8) that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice or
printed on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.4. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to 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 shall be payable to
the Securityholder of the redeemed Securities registered on the relevant record
date. Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.
SECTION 3.5. Deposit of Redemption Price. By at least 12:00
noon (New York City time) on the date on which any principal of or intent on
any Security is due and payable, the Company shall deposit with the Paying
Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which are owned by the Company or
a Subsidiary and have been delivered by the Company or such Subsidiary to the
Trustee for cancellation.
If the Company complies with the preceding paragraph, then,
unless the Company defaults in the payment of such redemption price, interest
on the Securities to be redeemed will cease to accrue on and after the
applicable redemption date, whether or not such Securities are presented for
payment.
SECTION 3.6. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in a principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE IV
Covenants
SECTION 4.1. Payment of Securities. The Company shall promptly
pay the principal of and interest on the Securities on the dates and in the
manner provided in the Securities and in
<PAGE> 44
38
this Indenture. Principal and interest shall be considered paid on the date due
if on such date the Trustee or the Paying Agent holds in accordance with this
Indenture money sufficient to pay all principal and interest then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money to the Securityholders on that date pursuant to the terms of this
Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law,
deduct or withhold income or other similar taxes imposed by the United States
of America from principal or interest payments hereunder.
SECTION 4.2. SEC Reports. Notwithstanding that the Company may
not be required to be subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall file with the SEC and within 15
days after such reports are filed, provide the Trustee and the Holders (at
their addresses as set forth in the register of Securities) with the annual and
quarterly reports and the information, documents and other reports which are
otherwise required pursuant to Section 13 of the Exchange Act. Such
requirements may also be satisfied, prior to August 11, 1995, with the filing
with the SEC of a registration statement under the Securities Act that contains
the foregoing information (including financial statements) and by providing
copies thereof to the Trustee and the Holders. In addition, following the
registration of the common stock of the Company pursuant to Section 12(b) or
12(g) of the Exchange Act, the Company shall furnish to the Trustee and the
Holders, promptly upon their becoming available, copies of the Company's annual
report to shareholders and any other information provided by the Company to its
public shareholders generally. The Company shall also comply with the other
provisions of TIA Section 314(a).
SECTION 4.3. Limitation on Indebtedness. (a) The Company shall
not, and shall not permit any of its Subsidiaries to, Incur any Indebtedness;
provided, however, that the Company and any of its Subsidiaries may Incur
Indebtedness if on the date thereof the Consolidated Coverage Ratio would be
greater than 2.25:1.00.
(b) Notwithstanding Section 4.3(a), the Company and its
Subsidiaries may Incur the following Indebtedness: (i) Indebtedness Incurred
pursuant to (A) the Credit Agreement (including any renewal, extension,
refunding, restructuring, replacement or refinancing thereof referred to in
clause (ii) of the definition thereof) or (B) any other agreements or
indentures governing Senior Indebtedness or Guarantor Senior Indebtedness;
<PAGE> 45
39
provided that the aggregate principal amount of all Indebtedness Incurred
pursuant to this clause (i) does not exceed $240.0 million at any time
outstanding, less the aggregate principal amount thereof repaid with the net
proceeds of Asset Dispositions (to the extent, in the case of a repayment of
revolving credit Indebtedness, the commitment to advance the loans repaid has
been terminated), provided further, that the aggregate principal amount of
Indebtedness deemed to be Incurred pursuant to the Credit Agreement shall be
the same amount as is deemed to be Incurred pursuant to the Credit Agreement
under the Original 11 3/4% Indenture; (ii) Indebtedness represented by
Capitalized Lease Obligations, mortgage financings or purchase money
obligations, in each case Incurred for the purpose of financing all or any part
of the purchase price or cost of construction or improvement of property used
in a Related Business or Incurred to Refinance any such purchase price or cost
of construction or improvement, in each case Incurred no later than 365 days
after the date of such acquisition or the date of completion of such
construction or improvement; provided, however, that the principal amount of
any Indebtedness Incurred pursuant to this Section 4.3(b)(ii) shall not exceed
$10.0 million at any time outstanding; (iii) Permitted Indebtedness; and (iv)
Indebtedness (other than Indebtedness described in clauses (i)-(iii)) in a
principal amount which, when taken together with the principal amount of all
other Indebtedness Incurred pursuant to this Section 4.3(b)(iv) and then
outstanding, will not exceed $25.0 million.
(c) The Company shall not Incur any Indebtedness under
Section 4.3(b) if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Obligations unless such Indebtedness shall be
subordinated to the Securities to at least the same extent as such Subordinated
Obligations. No Subsidiary Guarantor shall Incur any Indebtedness under Section
4.3(b) if the proceeds thereof are used, directly or indirectly, to Refinance
any Guarantor Subordinated Obligation of such Subsidiary Guarantor unless such
Indebtedness shall be subordinated to the obligations of such Subsidiary
Guarantor under the Subsidiary Guarantee to at least the same extent as such
Guarantor Subordinated Obligation.
(d) The Company shall not Incur any Secured Indebtedness
which is not Senior Indebtedness unless contemporaneously therewith effective
provision is made to secure the Securities equally and ratably with such
Secured Indebtedness for so long as such Secured Indebtedness is secured by a
Lien. No Subsidiary Guarantor shall Incur any Secured Indebtedness which is not
Guarantor Senior Indebtedness of such Subsidiary Guarantor unless
contemporaneously therewith effective provision is made to secure the
obligations of such Subsidiary Guarantor under the Subsidiary Guarantee equally
and ratably with such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
<PAGE> 46
40
(e) The Company shall not Incur any Indebtedness if such
Indebtedness is subordinate or junior in ranking in any respect to any Senior
Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is
expressly subordinated in right of payment to Senior Subordinated Indebtedness.
No Subsidiary Guarantor shall Incur any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Guarantor Senior
Indebtedness of such Subsidiary Guarantor unless such Indebtedness is Guarantor
Senior Subordinated Indebtedness of such Subsidiary Guarantor or is expressly
subordinated in right of payment to Guarantor Senior Subordinated Indebtedness
of such Subsidiary Guarantor.
SECTION 4.4. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any of its Subsidiaries, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company or any of its Subsidiaries)
except (A) dividends or distributions payable in its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to purchase such
Capital Stock and (B) dividends or distributions payable to the Company or a
Subsidiary of the Company (and, if such Subsidiary is not a Wholly Owned
Subsidiary, to its other stockholders on a pro rata basis or on a basis no more
favorable to such other stockholders), (ii) purchase, redeem, retire or
otherwise acquire for value any Capital Stock of the Company held by Persons
other than a Subsidiary of the Company or any Capital Stock of a Subsidiary of
the Company held by any Affiliate of the Company, other than another Subsidiary
(in either case, other than in exchange for its Capital Stock (other than
Disqualified Stock)), (iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled repayment
or scheduled sinking fund payment, any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of acquisition)
or (iv) make any Investment (other than a Permitted Investment) in any Person
(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or Investment being herein referred to as a
"Restricted Payment"), if at the time the Company or such Subsidiary makes such
Restricted Payment: (1) a Default or Event of Default shall have occurred and
be continuing (or would result therefrom); or (2) the Company is not able to
incur an additional $1.00 of Indebtedness pursuant to Section 4.3(a); or (3)
the aggregate amount of such Restricted Payment and all other Restricted
Payments declared or made subsequent to the Original 11 3/4% Notes Issue Date
would exceed the sum of: (A) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) from the Original 11 3/4% Notes
Issue Date to the end of the most recent fiscal quarter ending prior to the
<PAGE> 47
41
date of such Restricted Payment as to which financial results are available
(but in no event ending more than 135 days prior to the date of such Restricted
Payment) (or, in case such Consolidated Net Income shall be a deficit, minus
100% of such deficit); (B) the aggregate Net Cash Proceeds received by the
Company from the issue or sale of its Capital Stock (other than Disqualified
Stock) or other cash contributions to its capital subsequent to the Original 11
3/4% Notes Issue Date (other than an issuance or sale to a Subsidiary of the
Company or an employee stock ownership plan or similar trust); (C) the
aggregate Net Cash Proceeds received by the Company from the issue or sale of
its Capital Stock (other than Disqualified Stock) to an employee stock
ownership plan or similar trust subsequent to the Issue Date; provided,
however, that if such plan or trust Incurs any Indebtedness to or Guaranteed by
the Company or any of its Subsidiaries to finance the acquisition of such
Capital Stock, such aggregate amount shall be limited to such Net Cash Proceeds
less such Indebtedness Incurred or Guaranteed by the Company or any of its
Subsidiaries and any increase in the Consolidated Net Worth of the Company
resulting from principal repayments made by such plan or trust with respect to
Indebtedness Incurred by it to finance the purchase of such Capital Stock; (D)
the amount by which Indebtedness of the Company is reduced on the Company's
balance sheet upon the conversion or exchange (other than by a Subsidiary of
the Company) subsequent to the Original 11 3/4% Notes Issue Date of any
Indebtedness of the Company convertible or exchangeable for Capital Stock of
the Company (less the amount of any cash, or other property, distributed by the
Company upon such conversion or exchange); and (E) the amount equal to the net
reduction in Investments (other than Permitted Investments) made by the Company
or any of its Subsidiaries in any Person resulting from repurchases or
redemptions of such Investments by such Person, proceeds realized upon the sale
of such Investment to an unaffiliated purchaser, repayments of loans or
advances or other transfers of assets by such Person to the Company or any
Subsidiary of the Company; provided, however, that no amount shall be included
under this clause (E) of this Section 4.4(a) to the extent it is already
included in Consolidated Net Income.
(b) The provisions of Section 4.4(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock or Subordinated Obligations of
the Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary or an employee
stock ownership plan or similar trust); provided, however, that (A) such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale shall be
excluded from clause (3)(B) of Section 4.4(a); (ii) any purchase or redemption
of Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Obligations of
the Company; provided, however, that such purchase or redemption shall be
excluded in the calculation
<PAGE> 48
42
of the amount of Restricted Payments; (iii) any purchase or redemption of
Subordinated Obligations from Net Available Cash to the extent permitted under
Section 4.6; provided, however, that such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments; (iv)
dividends paid within 60 days after the date of declaration if at such date of
declaration such dividend would have complied with this provision; provided,
however, that such dividend shall be included in the calculation of the amount
of Restricted Payments; (v) [Intentionally Omitted]; (vi) payments by the
Company to fund (A) out of pocket expenses of Holding for administrative, legal
and accounting services provided by third parties, or to pay franchise fees and
similar costs; provided, however, any such administrative expenses shall not
exceed an aggregate amount of $1.0 million per annum, and (B) taxes of Holding;
(vii) payments by the Company to Holding pursuant to the Monitoring and
Oversight Agreement; (viii) payments of dividends on the Company's common stock
after an initial public offering of common stock of the Company or of Holding
in an annual amount not to exceed 6% of the gross proceeds (before deducting
underwriting discounts and commissions and other fees and expenses of the
offering) received by the Company (directly or as a common equity contribution
from Holding) from such initial public offering; (ix) payments by the Company
to repurchase, or to enable Holding to repurchase, Capital Stock or other
securities of Holding from members of management of Holding or the Company in
an aggregate amount not to exceed $7,500,000; (x) payments to enable Holding to
redeem or repurchase stock purchase or similar rights granted by Holding with
respect to its Capital Stock in an aggregate amount not to exceed $500,000;
(xi) payments, not to exceed $100,000 in the aggregate, to enable Holding to
make cash payments to holders of its Capital Stock in lieu of the issuance of
fractional shares of its Capital Stock; and (xii) payments made pursuant to any
merger, consolidation or sale of assets effected in accordance with Section
5.1; provided, however, that no such payment may be made pursuant to this
clause (xii) unless, after giving effect to such transaction, the Consolidated
Coverage Ratio of the Company would be greater than 3.5:1.0; provided, further,
that in the case of clauses (vii), (viii), (ix), (x), (xi) and (xii) no Default
or Event of Default (in the case of clause (vii) such Default or Event of
Default shall be limited to items (1) and (2) under Section 6.1) shall have
occurred or be continuing at the time of such payment or as a result thereof.
SECTION 4.5. Limitation on Restrictions on Distributions from
Subsidiaries. The Company shall not, and shall not permit any of its
Subsidiaries to, create or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on its Capital Stock or pay any
Indebtedness or other obligation owed to the Company, (ii) make any loans or
advances to the Company or (iii) transfer any of its property or assets to the
Company; except: (a) any
<PAGE> 49
43
encumbrance or restriction pursuant to an agreement in effect at or entered
into on the Original 11 3/4% Notes Issue Date, including the Credit Agreement;
(b) any encumbrance or restriction with respect to such a Subsidiary pursuant
to an agreement relating to any Indebtedness issued by such Subsidiary on or
prior to the date on which such Subsidiary was acquired by the Company and
outstanding on such date (other than Indebtedness issued as consideration in,
or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Subsidiary became a Subsidiary of the Company or was acquired by the
Company); (c) any encumbrance or restriction with respect to such a Subsidiary
pursuant to an agreement evidencing Indebtedness Incurred without violation of
this Indenture or effecting a refinancing of Indebtedness issued pursuant to an
agreement referred to in clauses (a) or (b) or this clause (c) or contained in
any amendment to an agreement referred to in clauses (a) or (b) or this clause
(c); provided, however, that the encumbrances and restrictions with respect to
such Subsidiary contained in any of such agreement, refinancing agreement or
amendment, taken as a whole, are no less favorable to the Holders in any
material respect, as determined in good faith by the senior management of the
Company or the Board of Directors, than encumbrances and restrictions with
respect to such Subsidiary contained in agreements in effect at, or entered
into on, the Original 11 3/4% Notes Issue Date; (d) in the case of clause (iii)
of this Section 4.5, any encumbrance or restriction (A) that restricts in a
customary manner the subletting, assignment or transfer of any property or
asset that is a lease, license, conveyance or contract or similar property or
asset, (B) by virtue of any transfer of, agreement to transfer, option or right
with respect to, or Lien on, any property or assets of the Company or any
Subsidiary not otherwise prohibited by this Indenture, (C) that is included in
a licensing agreement to the extent such restrictions limit the transfer of the
property subject to such licensing agreement or (D) arising or agreed to in the
ordinary course of business and that does not, individually or in the
aggregate, detract from the value of property or assets of the Company or any
of its Subsidiaries in any manner material to the Company or any such
Subsidiary; (e) in the case of clause (iii) of this Section 4.5, restrictions
contained in security agreements, mortgages or similar documents securing
Indebtedness of a Subsidiary to the extent such restrictions restrict the
transfer of the property subject to such security agreements; (f) any
restriction with respect to such a Subsidiary imposed pursuant to an agreement
entered into for the sale or disposition of all or substantially all the
Capital Stock or assets of such Subsidiary pending the closing of such sale or
disposition and (g) encumbrances or restrictions arising or existing by reason
of applicable law.
SECTION 4.6. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company shall not, and shall not permit any of its Subsidiaries
to, make any Asset Disposition
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44
unless (i) the Company or such Subsidiary receives consideration at the time of
such Asset Disposition at least equal to the fair market value, as determined
in good faith by the Company's senior management or the Board of Directors
(including as to the value of all non-cash consideration), of the shares and
assets subject to such Asset Disposition; (ii) at least 75% of the
consideration thereof received by the Company or such Subsidiary is in the form
of cash or cash equivalents; and (iii) an amount equal to 100% of the Net
Available Cash from such Asset Disposition is applied by the Company (or such
Subsidiary, as the case may be) (A) first, to the extent the Company or any
Subsidiary elects (or is required by the terms of any Senior Indebtedness or
Guarantor Senior Indebtedness), to prepay, repay or purchase (x) Senior
Indebtedness or Guarantor Senior Indebtedness or (y) Indebtedness of a Wholly
Owned Subsidiary (in each case other than Indebtedness owed to the Company)
within 180 days from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; (B) second, within one year from the
receipt of such Net Available Cash, to the extent of the balance of such Net
Available Cash after application in accordance with clause (A), at the
Company's election either (x) to the investment in or acquisition of Additional
Assets or (y) to prepay, repay or purchase (1) Senior Indebtedness or Guarantor
Senior Indebtedness or (2) Indebtedness of a Wholly Owned Subsidiary (in each
case other than Indebtedness owed to the Company); (C) third, within 45 days
after the later of the application of Net Available Cash in accordance with
clauses (A) and (B) and the date that is one year from the receipt of such Net
Available Cash, to the extent of the balance of such Net Available Cash after
application and in accordance with clauses (A) and (B), to make an offer to
purchase the Original 11 3/4% Notes at par plus accrued and unpaid interest, if
any, thereon in accordance with the provisions of the Original 11 3/4% Notes
Indenture; and (D) fourth, within 45 days of the later of the application of
Net Available Cash in accordance with clauses (A), (B) and (C) and the date
that is one year from the receipt of such Net Available Cash, to the extent of
the balance of such Net Available Cash after application in accordance with
clauses (A), (B) and (C), to make an offer to purchase the 14% Notes at par
plus accrued and unpaid interest, if any, thereon in accordance with the
provisions of the 14% Notes Indenture; and (E)fifth, within 45 days of the
later of the application of Net Available Cash in accordance with clauses (A),
(B), (C) and (D) and the date that is one year from the receipt of such Net
Available Cash, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A), (B), (C) and (D), to make an offer
to purchase the Notes at par plus accrued and unpaid interest, if any, thereon;
and (F) sixth, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A), (B), (C), (D) and (E), to (w) the
investment in or acquisition of Additional Assets; (x) the making of Temporary
Cash Investments, (y) the prepayment, repayment or purchase of Indebtedness of
the Company or Indebtedness of any Subsidiary (other than Indebtedness owed to
the Company) or (z)
<PAGE> 51
45
any other purpose otherwise permitted under this Indenture, in each case within
the later of 45 days after the application of Net Available Cash in accordance
with clauses (A), (B), (C), (D) and (E) and the date that is one year from the
receipt of such Net Available Cash; provided, however, that, in connection with
any prepayment, repayment or purchase of Indebtedness pursuant to clauses (A),
(B), (C), (D), (E) or (F) above, the Company or such Subsidiary shall retire
such Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased. Notwithstanding the foregoing provisions, the Company and
its Subsidiaries shall not be required to apply any Net Available Cash in
accordance herewith except to the extent that the aggregate Net Available Cash
from all Asset Dispositions which are not applied in accordance with this
covenant at any time exceed $10.0 million. The Company shall not be required to
make an offer for Securities pursuant to this covenant if the Net Available
Cash available therefor (after application of the proceeds as provided in
clauses (A), (B), (C) and (D) is less than $10.0 million for any particular
Asset Disposition (which lesser amounts shall be carried forward for purposes
of determining whether an offer is required with respect to the Net Available
Cash from any subsequent Asset Disposition).
For the purposes of this covenant, the following will be
deemed to be cash: (x) the assumption by the transferee of Senior Indebtedness
of the Company or Indebtedness of any Subsidiary of the Company and the release
of the Company or such Subsidiary from all liability on such Senior
Indebtedness or Indebtedness in connection with such Asset Disposition (in
which case the Company shall, without further action, be deemed to have applied
cash to repay such assumed Indebtedness in accordance with clause (A) of the
preceding paragraph) and (y) securities received by the Company or any
Subsidiary from the transferee that are promptly converted by the Company or
such Subsidiary into cash.
(b) In the event of an Asset Disposition that requires
the purchase of Securities pursuant to Section 4.6(a)(iii)(E), the Company will
be required to purchase Securities tendered pursuant to an offer by the Company
for the Securities (the "Offer") at a purchase price of 100% of their principal
amount plus accrued and unpaid interest, if any, to the purchase date in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in Section 4.6(c). If the aggregate purchase price
of the Securities tendered pursuant to the Offer is less than the Net Available
Cash allotted to the purchase of the Securities, the Company will apply the
remaining Net Available Cash in accordance with Section 4.6(a)(iii)(F).
Promptly, and in any event within 10 days after the Company is required to make
an Offer, the Company shall deliver to the Trustee and send, by first-class
mail to each Holder, a written notice stating that the Holder may elect to have
his Securities
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46
purchased by the Company either in whole or in part (subject to prorating as
hereinafter described in the event the Offer is oversubscribed) in integral
multiples of $1,000 of principal amount, at the applicable purchase price. The
notice shall specify a purchase date not less than 30 days nor more than 60
days after the date of such notice (the "Purchase Date").
Not later than the date upon which such written notice of an Offer is delivered
to the Trustee and the Holders, the Company shall deliver to the Trustee an
Officers' Certificate setting forth (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions as a result of which such Offer is being made and (iii) the
compliance of such allocation with the provisions of Section 4.6(a). Upon the
expiration of the period (the "Offer Period") for which the Offer remains open,
the Company shall deliver to the Trustee for cancellation the Securities or
portions thereof which have been properly tendered to and are to be accepted by
the Company. The Trustee shall, on the Purchase Date, mail or deliver payment
to each tendering Holder in the amount of the purchase price of the Securities
tendered by such Holder to the extent such funds are available to the Trustee.
Holders electing to have a Security purchased will be required to surrender the
Security, with an appropriate form duly completed, to the Company at the
address specified in the notice prior to the expiration of the Offer Period.
Each Holder will be entitled to withdraw its election if the Trustee or the
Company receives, not later than one Business Day prior to the expiration of
the Offer Period, a telegram, telex, facsimile transmission or letter from such
Holder setting forth the name of such Holder, the principal amount of the
Security or Securities which were delivered for purchase by such Holder and a
statement that such Holder is withdrawing his election to have such Security or
Securities purchased. If at the expiration of the Offer Period the aggregate
principal amount of Securities surrendered by Holders exceeds the Offer Amount,
the Company shall select the Securities to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Company so that only
Securities in denominations of $1,000, or integral multiples thereof, shall be
purchased). Holders whose Securities are purchased only in part will be issued
new Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(c) The Company will comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of Securities
pursuant to this Section 4.6. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section 4.6,
the Company will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under this Indenture by
virtue thereof.
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SECTION 4.7. Limitation on Affiliate Transactions. (a) The
Company will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into or conduct any transaction (including the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Affiliate of the Company other than a Wholly Owned Subsidiary (an
"Affiliate Transaction") unless: (i) the terms of such Affiliate Transaction
are no less favorable to the Company or such Subsidiary, as the case may be,
than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate; (ii) in the
event such Affiliate Transaction involves an aggregate amount in excess of $2.5
million, the terms of such transaction have been approved by a majority of the
members of the Board of Directors and by a majority of the disinterested
members of such Board of Directors, if any (and such majority or majorities, as
the case may be, determine(s) that such Affiliate Transaction satisfies the
criteria in clause (i) above); and (iii) in the event such Affiliate
Transaction involves an aggregate amount in excess of $10.0 million, the
Company has received a written opinion from an independent investment banking
firm of nationally recognized standing that such Affiliate Transaction is fair
to the Company or such Subsidiary, as the case may be, from a financial point
of view.
(b) The provisions of Section 4.7(a) shall not prohibit
(i) any Restricted Payment permitted to be made pursuant to Section 4.4, (ii)
any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board of
Directors, (iii) loans or advances to employees in the ordinary course of
business of the Company or any of its Subsidiaries, (iv) any transaction
between Wholly Owned Subsidiaries, (v) the payment of fees and indemnities to
directors, officers and employees of the Company and its Subsidiaries in the
ordinary course of business, (vi) transactions pursuant to agreements as in
existence on the Original 11 3/4% Notes Issue Date, (vii) any employment
agreements entered into by the Company or any of its Subsidiaries in the
ordinary course of business, (viii) the issuance of Capital Stock of the
Company (other than Disqualified Stock) and (ix) any obligation of the Company
pursuant to the Monitoring and Oversight Agreement.
SECTION 4.8. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require that the Company
repurchase all or any part of such Holder's Securities at a purchase price in
cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest on the relevant interest
payment date), such repurchase to be made in accordance with Section 4.8(b).
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(b) Within 30 days following any Change of Control,
unless the Company has mailed a redemption notice with respect to all the
outstanding Securities in connection with such Change of Control, the Company
shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on a record
date to receive interest on the relevant interest payment date);
(2) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(3) the procedures determined by the Company, consistent with
this Section, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Each Holder will be entitled to withdraw its
election if the Company receives, not later than one Business Day prior to the
purchase date, a telegram, telex, facsimile transmission or letter from such
Holder setting forth the name of such Holder, the principal amount of the
Security or Securities which were delivered for purchase by such Holder and a
statement that such Holder is withdrawing his election to have such Security or
Securities purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered to the Trustee for cancellation,
and the Company shall pay the purchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of Securities
pursuant to this Section 4.8. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section 4.8,
the Company shall comply with the applicable securities laws and regulations
and shall not be deemed to have breached its obligations under this Indenture
by virtue thereof.
SECTION 4.9. Limitation on Preferred Stock of Subsidiaries.
The Company will not permit any of its Subsidiaries to issue any Preferred
Stock (other than to the
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49
Company or to a Wholly Owned Subsidiary of the Company) or permit any Person
(other than the Company or a Wholly Owned Subsidiary of the Company) to own any
such Preferred Stock (other than Acquired Preferred Stock); provided that at
the time the issuer of such Acquired Preferred Stock becomes a Subsidiary of
the Company or merges with the Company or any of its Subsidiaries, and after
giving effect to such transaction, the Company shall be able to incur an
additional $1.00 of Indebtedness pursuant to Section 4.3(a) (treating the
amount of all obligations of such Subsidiary with respect to the redemption,
repayment or other repurchase of such Acquired Preferred Stock (but excluding
any accrued dividends thereon) as Indebtedness solely for purpose of such
calculation, but only to the extent that such obligations arise on or prior to
the first anniversary of the Stated Maturity of the Securities).
SECTION 4.10. Limitation on Capital Stock of Subsidiaries. The
Company will not permit any of its Subsidiaries to issue any Capital Stock
(other than Preferred Stock) to any Person (other than to the Company or a
Wholly Owned Subsidiary) or permit any Person (other than the Company or a
Wholly-Owned Subsidiary) to own any Capital Stock (other than Preferred Stock)
of a Subsidiary of the Company, if in either case as a result thereof such
Subsidiary would no longer be a Subsidiary of the Company; provided, however,
that this Section 4.10 shall not prohibit the Company or any of its
Subsidiaries from selling, leasing or otherwise disposing of all of the Capital
Stock of any Subsidiary.
SECTION 4.11. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default or Event of Default and whether or not the
signers know of any Default or Event of Default that occurred during such
period. If they do, the certificate shall describe the Default or Event of
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA Section 314(a)(4).
SECTION 4.12. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE V
Successor Company
SECTION 5.1. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or
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into, or convey, transfer or lease all or substantially all its assets to, any
Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation organized and existing
under the laws of the United States of America, any State thereof or
the District of Columbia and the Successor Company (if not the
Company) shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Securities and
this Indenture;
(ii) immediately after giving effect to such transaction
(and treating any Indebtedness which becomes an obligation of the
Successor Company or any Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Subsidiary at
the time of such transaction), no Default or Event of Default shall
have occurred and be continuing;
(iii) immediately after giving effect to such transaction,
the Successor Company would be able to incur an additional $1.00 of
Indebtedness pursuant to Section 4.3(a); and
(iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, transfer or lease and such supplemental
indenture (if any) comply with this Indenture.
The Successor Company shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture, but the predecessor, the Company, in the case of a lease of all or
substantially all its assets shall not be released from the obligation to pay
the principal of and interest on the Securities.
Notwithstanding clauses (ii) and (iii) of the first sentence
of this Section 5.1: (1) any Subsidiary of the Company may consolidate with,
merge into or transfer all or part of its properties and assets to the Company;
(2) the Company may merge with an Affiliate incorporated solely for the purpose
of reincorporating the Company in another jurisdiction to realize tax or other
benefits and (3) the Company may merge with and into Omega Wire Corp. pursuant
to the Merger Agreement.
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ARTICLE VI
Defaults and Remedies
SECTION 6.1. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article X, and such default continues
for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise, whether or not such payment shall be
prohibited by Article X;
(3) the Company fails to comply with Section 5.1;
(4) the Company fails to comply with Section 4.2, 4.3, 4.4,
4.5, 4.6, 4.7, 4.8, 4.9 or 4.10 (in each case other than a failure to
repurchase Securities when required pursuant to Section 4.6 or 4.8
which failure shall constitute an Event of Default under Section
6.1(2)) and such failure continues for 30 days after the notice
specified below;
(5) the Company or any Subsidiary Guarantor fails to comply
with any of its agreements in the Securities or this Indenture (other
than those referred to in (1), (2), (3) or (4) above) and such failure
continues for 60 days after the notice specified below;
(6) Indebtedness of the Company or any Subsidiary is not paid
within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such unpaid or accelerated Indebtedness exceeds $10.0
million or its foreign currency equivalent at the time and such
default shall not have been cured or such acceleration rescinded
within a 10 day period;
(7) the Company or a Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against
it in an involuntary case;
(C) consents to the appointment of a Custodian of it or
for any substantial part of its property; or
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(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company
or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order,
decree or relief remains unstayed and in effect for 60 days; or
(9) any judgment or decree for the payment of money in excess
of $10.0 million or its foreign currency equivalent at the time (to
the extent not covered by insurance) is entered against the Company or
any Significant Subsidiary and such judgment or decree remains
undischarged or unstayed for a period of 60 days after such judgment
becomes final and non-appealable.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under clause (4) or
(5) of this Section 6.1 will not constitute an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the outstanding
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified in said clause (4) or (5) after receipt of
such notice. Such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
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The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clauses (4), (5), (6) or (9) of this Section 6.1.
SECTION 6.2. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.1(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in outstanding principal amount of the Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
and unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.1(7) or (8) with respect to the
Company occurs, the principal of and accrued and unpaid interest on all the
Securities shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Securityholders.
The Holders of a majority in principal amount of the Securities by notice to
the Trustee may rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing Events of
Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default or Event of Default and its consequences except (i) a
Default or Event of Default in the payment of the principal of or interest on a
Security or (ii) a Default or Event of Default in respect of a provision that
under Section 9.2 cannot be amended without the consent of each Securityholder
affected. When a Default or Event of Default is waived, it is deemed cured,
but no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any consequent right.
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SECTION 6.5. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture
or, subject to Section 7.1, that the Trustee determines is unduly prejudicial
to the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses
caused by taking or not taking such action.
SECTION 6.6. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in outstanding principal
amount of the Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of
Default specified in Section 6.1(1) or (2) occurs and is
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continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount then due and owing
(together with interest on any unpaid interest to the extent lawful) and the
amounts provided for in Section 7.7.
SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its Subsidiaries
or their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder
to make 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 its counsel, and any
other amounts due the Trustee under Section 7.7.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to holders of Senior Indebtedness and Guarantor Senior
Indebtedness to the extent required by Article X;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess
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reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit by
Holders of more than 10% in outstanding principal amount of the Securities.
ARTICLE VII
Trustee
SECTION 7.1. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise 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 such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) 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; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
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(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b) and (c) of this
Section.
(e) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company.
(f) Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(h) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
SECTION 7.2. Rights of Trustee. (a) The Trustee may 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.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through 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; provided, however, that the Trustee's conduct does
not constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
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SECTION 7.3. 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 Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.5. Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if a Trust Officer has actual knowledge
thereof, the Trustee shall mail to each Securityholder notice of the Default or
Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment of principal of or interest on any
Security (including payments pursuant to the optional redemption or required
repurchase provisions of such Security, if any), the Trustee may withhold the
notice if and so long as its board of directors, the Executive Committee of its
board of directors or a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Securityholders.
SECTION 7.6. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports required by
TIA Section 313(c).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.7. Compensation and Indemnity. The Company shall pay
to the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, costs of preparing and
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reviewing reports, certificates and other documents, costs of preparation and
mailing of notices to Securityholders and reasonable costs of counsel retained
by the Trustee in connection with the delivery of an Opinion of Counsel or
otherwise, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Company
shall indemnify the Trustee against any and all loss, liability or expense
(including reasonable attorneys' fees) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder,
including the costs and expenses of enforcing this Indenture (including this
Section 7.7) and of defending itself against any claims (whether asserted by
any Securityholder, the Company or otherwise). The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee may
have separate counsel and the Company shall pay the fees and expenses of such
counsel. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Section 7.7 shall not be
subordinate to any other liability or indebtedness of the Company.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.1(7) or (8) with
respect to the Company, the expenses are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign at
any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
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If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon 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. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the 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.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.7 shall continue for
the benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this
Indenture provided that the certificate of the Trustee shall have.
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SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of
TIA Section 310(a). The Trustee shall have a combined capital and surplus of at
least $150 million as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA Section 310(b); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities or certificates of
interest or participation in other securities of the Company are outstanding if
the requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities; Defeasance.
(a) When (i) the Company delivers to the Trustee all outstanding Securities
(other than Securities replaced pursuant to Section 2.7) for cancellation or
(ii) all outstanding Securities have become due and payable, whether at
maturity or as a result of the mailing of a notice of redemption pursuant to
Article III hereof and the Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity or upon redemption all outstanding Securities
(other than Securities replaced pursuant to Section 2.7), including interest
thereon to maturity or such redemption date, and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture
shall, subject to Section 8.1(c), cease to be of further effect. The Trustee
shall acknowledge satisfaction and discharge of this Indenture on demand of the
Company (accompanied by an Officers' Certificate and an Opinion of Counsel
stating that all conditions precedent specified herein relating to the
satisfaction and discharge of this Indenture have been complied with) and at
the cost and expense of the Company.
(b) Subject to Sections 8.1(c) and 8.2, the Company at
any time may terminate (i) all its obligations under the Securities and this
Indenture and all obligations of the Subsidiary Guarantors under the Subsidiary
Guarantee and this Indenture ("legal defeasance option") or (ii) its
obligations under Sections 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11,
5.1(iii) and 5.1(iv) and the operation of Sections 6.1(4), 6.1(5), 6.1(6),
6.1(7) (but only with respect to a Significant
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Subsidiary), 6.1(8) (but only with respect to a Significant Subsidiary) and
6.1(9) ("covenant defeasance option"). The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Sections 6.1(4),
6.1(5), 6.1(6), 6.1(7) (but only with respect to a Significant Subsidiary),
6.1(8) (but only with respect to a Significant Subsidiary) and 6.1(9) or
because of the failure of the Company to comply with Section 5.1(iii) and
Section 5.1(iv).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding the provisions of Sections 8.1(a) and
(b), the Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 7.7, 7.8,
8.4, 8.5 and 8.6 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.7, 8.4 and 8.5 shall
survive.
SECTION 8.2. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and
interest when due on all the Securities to maturity or redemption, as
the case may be;
(3) the Company shall have delivered to the Trustee an Opinion
of Counsel, subject to certain customary qualifications, to the effect
that (i) the funds so deposited will not be subject to any rights of
any other holders of Indebtedness of the Company, and (ii) the funds
so deposited will not be subject to avoidance under applicable
Bankruptcy Law;
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(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such legal defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Securityholders 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; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the Securities
and this Indenture as contemplated by this Article VIII have been
complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article III.
SECTION 8.3. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article VIII. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and in accordance with
this Indenture to the payment of principal of and interest on the Securities.
Money and securities so held in trust are not subject to Article X.
SECTION 8.4. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon
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request any excess money or securities held by them upon payment of all the
obligations under this Indenture.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal of or interest on the Securities that remains
unclaimed for two years, and, thereafter, Securityholders entitled to the money
must look to the Company for payment as general creditors.
SECTION 8.5. Indemnity for U.S. Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
this Article VIII by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company and the
Subsidiary Guarantors under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to this Article VIII
until such time as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article VIII;
provided, however, that, if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
to receive such payment from the money or U.S. Government Obligations held by
the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.1. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in
addition to or in place of certificated Securities; provided, however,
that the uncertificated Securities are issued in registered form for
purposes of Section 163(f) of the Code or in a manner such that the
uncertificated
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Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article X that would limit or
terminate the benefits available to any holder of Senior Indebtedness
or Guarantor Senior Indebtedness (or Representatives therefor) under
Article X;
(5) to add guarantees with respect to the Securities or to
secure the Securities;
(6) to add to the covenants of the Company for the
benefit of the Holders or to surrender any right or power herein
conferred upon the Company;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA;
(8) to make any change that does not adversely affect the
rights of any Securityholder; or
(9) to provide for the issuance of the Exchange Notes, which
will have terms substantially identical in all material respects to
the Notes (except that the transfer restrictions contained in the
Notes will be modified or eliminated, as appropriate), and which will
be treated, together with any outstanding Notes, as a single issue of
securities.
An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness or Guarantor Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness or Guarantor Senior Indebtedness (or any
group or representative thereof authorized to give a consent) consent to such
change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 9.2. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities. However, without the consent of
each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
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(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon the redemption or
repurchase of any Security or change the time at which any Security
may or shall be redeemed or repurchased in accordance with this
Indenture;
(5) make any Security payable in money other than that stated
in the Security;
(6) modify or affect in any manner adverse to the Holders the
terms and conditions of the obligation of the Company for the due and
punctual payment of the principal of or interest on Securities; or
(7) make any change in Section 6.4 or 6.7 or the second
sentence of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness or Guarantor Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness or Guarantor Senior Indebtedness (or any
group or representative thereof authorized to give a consent) consent to such
change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 9.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any
such Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment or waiver becomes effective. After
an amendment or waiver becomes effective, it shall bind every Securityholder.
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The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such
Persons continue to be Holders after such record date. No such consent shall
become valid or effective more than 120 days after such record date.
SECTION 9.5. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder
of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
SECTION 9.6. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article IX if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.1) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
ARTICLE X
Subordination
SECTION 10.1. Agreement To Subordinate. The Company and each
Subsidiary Guarantor agree, and each Securityholder by accepting a Security and
the related Subsidiary Guarantee agrees, that the Indebtedness evidenced by the
Securities and the related Subsidiary Guarantee is subordinated in right of
payment, to the extent and in the manner provided in this Article X, to the
prior payment of (i) all Senior Indebtedness in the case of the Securities and
(ii) all Guarantor Senior Indebtedness of such Subsidiary Guarantor in the case
of its obligations under the Subsidiary Guarantee and that the subordination is
for the benefit of and enforceable by the holders of Senior Indebtedness and
such Guarantor Senior Indebtedness. The Securities shall in all respects rank
pari passu with all other Senior Subordinated Indebtedness of the Company, the
related Subsidiary Guarantee of
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each Subsidiary Guarantor shall in all respects rank pari passu with all
Guarantor Senior Subordinated Indebtedness of such Subsidiary Guarantor and
only Indebtedness of the Company which is Senior Indebtedness will rank senior
to the Securities and only Indebtedness of such Subsidiary Guarantor which is
Guarantor Senior Indebtedness of such Subsidiary Guarantor shall rank senior to
the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee in
accordance with the provisions set forth herein. All provisions of this Article
X shall be subject to Section 10.12.
SECTION 10.2. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company or any Subsidiary
Guarantor to creditors upon a total or partial liquidation or a total or
partial dissolution of the Company or such Subsidiary Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or such Subsidiary Guarantor or their respective
properties:
(1) holders of Senior Indebtedness in the case of the Company
or holders of Guarantor Senior Indebtedness of such Subsidiary
Guarantor in the case of such Subsidiary Guarantor shall be entitled
to receive payment in full of all Senior Indebtedness in the case of
the Company or all such Guarantor Senior Indebtedness in the case of
such Subsidiary Guarantor before Securityholders shall be entitled to
receive any payment of principal of or interest on or other amounts
with respect to the Securities from the Company or such Subsidiary
Guarantor, whether directly by the Company or pursuant to the
Subsidiary Guarantee; and
(2) until the Senior Indebtedness in the case of the Company
or such Guarantor Senior Indebtedness in the case of such Subsidiary
Guarantor is paid in full, any payment or distribution to which
Securityholders would be entitled but for this Article X shall be made
to holders of Senior Indebtedness in the case of payments or
distributions made by the Company or the holders of such Guarantor
Senior Indebtedness in the case of payments or distributions made by
such Subsidiary Guarantor, in each case as their respective interests
may appear.
SECTION 10.3. Default on Senior Indebtedness or Guarantor
Senior Indebtedness. Neither the Company nor any Subsidiary Guarantor may pay
the principal of, premium (if any) or interest on or other amounts with respect
to the Securities or make any deposit pursuant to Section 8.1 or repurchase,
redeem or otherwise retire any Securities, whether directly by the Company or
by such Subsidiary Guarantor under the Subsidiary Guarantee (collectively, "pay
the Securities") if (i) any Senior Indebtedness in the case of the Company or
any Guarantor Senior Indebtedness of such Subsidiary Guarantor in the case of
such Subsidiary Guarantor is not paid when due or (ii) any other
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default on Senior Indebtedness in the case of the Company or such Guarantor
Senior Indebtedness in the case of such Subsidiary Guarantee occurs and the
maturity of such Senior Indebtedness in the case of the Company or such
Guarantor Senior Indebtedness in the case of such Subsidiary Guarantor is
accelerated in accordance with its terms unless, in either case, (x) the
default has been cured or waived and any such acceleration has been rescinded
or (y) such Senior Indebtedness in the case of the Company or such Guarantor
Senior Indebtedness in the case of such Subsidiary Guarantor has been paid in
full; provided, however, that the Company or such Subsidiary Guarantor may pay
the Securities, whether directly or pursuant to the Subsidiary Guarantee,
without regard to the foregoing if the Company or such Subsidiary Guarantor and
the Trustee receive written notice approving such payment from the
Representative of the Senior Indebtedness in the case of the Company or such
Guarantor Senior Indebtedness in the case of such Subsidiary Guarantor with
respect to which either of the events set forth in clause (i) or (ii) of the
immediately preceding sentence has occurred or is continuing. During the
continuance of any default (other than a default described in clause (i) or
(ii) of the preceding sentence) with respect to any Designated Senior
Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods,
neither the Company (in the case of Designated Senior Indebtedness of the
Company) nor any Subsidiary Guarantor (in the case of Designated Senior
Indebtedness of such Subsidiary Guarantor) may pay the Securities, either
directly or pursuant to the Subsidiary Guarantee, for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to
the Company or such Subsidiary Guarantor) of written notice (a "Blockage
Notice") of such default from the Representative of the holders of such
Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company or such Subsidiary Guarantor from the Person or Persons who gave such
Blockage Notice, (ii) by repayment in full of such Designated Senior
Indebtedness or (iii) because the default giving rise to such Blockage Notice
is no longer continuing). Notwithstanding the provisions of the immediately
preceding sentence, unless the holders of such Designated Senior Indebtedness
or the Representative of such holders shall have accelerated the maturity of
such Designated Senior Indebtedness, the Company or such Subsidiary Guarantor
may resume payments on the Securities, either directly or pursuant to the
Subsidiary Guarantee, after such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness during
such period.
SECTION 10.4. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event
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of Default, the Company, the Subsidiary Guarantors or the Trustee shall
promptly notify the holders of the Designated Senior Indebtedness (or their
Representatives) of the acceleration. If any Designated Senior Indebtedness is
outstanding, neither the Company (in the case of any Designated Senior
Indebtedness of the Company) nor any Subsidiary Guarantor (in the case of any
Designated Senior Indebtedness of such Subsidiary Guarantor) may pay the
Securities, either directly or pursuant to the Subsidiary Guarantee, until five
Business days after the Representative of such Designated Senior Indebtedness
receives notice of such acceleration and, thereafter, may pay the Securities,
either directly or pursuant to the Subsidiary Guarantee, only if this Article
10 otherwise permits payments at that time.
SECTION 10.5. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article X should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness and Guarantor Senior
Indebtedness and promptly pay it over to them as their respective interests may
appear.
SECTION 10.6. Subrogation. After all Senior Indebtedness and
Guarantor Senior Indebtedness is paid in full and until the Securities are paid
in full, Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness and Guarantor Senior Indebtedness to receive distributions
applicable to Senior Indebtedness and Guarantor Senior Indebtedness. A
distribution made under this Article X to holders of Senior Indebtedness or
Guarantor Senior Indebtedness which otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a payment
by the Company of Senior Indebtedness or, as between a Subsidiary Guarantor and
Securityholders, a payment by such Subsidiary Guarantor of Guarantor Senior
Indebtedness.
SECTION 10.7. Relative Rights. This Article X defines the
relative rights of Securityholders and holders of Senior Indebtedness and
Guarantor Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company or the Subsidiary
Guarantors, as the case may be, and Securityholders, the obligation of
the Company or the Subsidiary Guarantors, as the case may be, which is
absolute and unconditional, to pay principal of and interest on the
Securities in accordance with their terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default or Event of Default, subject to
the rights of holders of Senior Indebtedness and Guarantor Senior
Indebtedness to receive distributions otherwise payable to
Securityholders.
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SECTION 10.8. Subordination May Not Be Impaired by Company or
the Subsidiary Guarantors. No right of any holder of Senior Indebtedness or
Guarantor Senior Indebtedness to enforce the subordination of the Indebtedness
evidenced by the Securities or the related Subsidiary Guarantee shall be
impaired by any act or failure to act by the Company or any Subsidiary
Guarantor or by the failure of any of them to comply with this Indenture.
SECTION 10.9. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.3, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article X. The Company, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness or Guarantor
Senior Indebtedness may give the notice; provided, however, that, if an issue
of Senior Indebtedness or Guarantor Senior Indebtedness has a Representative,
only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness or Guarantor Senior Indebtedness with the same rights it
would have if it were not Trustee. The Registrar and co-registrar and the
Paying Agent may do the same with like rights. The Trustee shall be entitled to
all the rights set forth in this Article X with respect to any Senior
Indebtedness or Guarantor Senior Indebtedness which may at any time be held by
it, to the same extent as any other holder of Senior Indebtedness or Guarantor
Senior Indebtedness; and nothing in Article VII shall deprive the Trustee of
any of its rights as such holder. Nothing in this Article X shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 7.7.
SECTION 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness or Guarantor Senior Indebtedness, the distribution may be made and
the notice given to their Representative (if any).
SECTION 10.11. Article X Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment in respect of the
Securities, whether directly or pursuant to the Subsidiary Guarantee, by reason
of any provision in this Article X shall not be construed as preventing the
occurrence of a Default or Event of Default. Nothing in this Article X shall
have any effect on the right of the Securityholders or the Trustee to
accelerate the maturity of the Securities or to make a claim for payment under
the Subsidiary Guarantee.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary,
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payments from money or the proceeds of U.S. Government Obligations held in
trust under Article VIII by the Trustee for the payment of principal of and
interest on the Securities shall not be subordinated to the prior payment of
any Senior Indebtedness or Guarantor Senior Indebtedness or subject to the
restrictions set forth in this Article X, and none of the Securityholders shall
be obligated to pay over any such amount to the Company, any Subsidiary
Guarantor, any holder of Senior Indebtedness of the Company, any holder of
Guarantor Senior Indebtedness or any other creditor of the Company or any
Subsidiary Guarantor.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness or Guarantor Senior Indebtedness for the purpose of ascertaining
the Persons entitled to participate in such payment or distribution, the
holders of Senior Indebtedness, Guarantor Senior Indebtedness and other
Indebtedness of the Company or the Subsidiary Guarantors, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article X. In the event that the
Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness or Guarantor Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article X, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
or Guarantor Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article X, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.1 and 7.2 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article X.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Securityholders and the
holders of Senior Indebtedness and Guarantor Senior Indebtedness as provided in
this Article X and appoints the Trustee as attorney-in-fact for any and all
such purposes.
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SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness and Guarantor Senior Indebtedness. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of Senior Indebtedness or Guarantor
Senior Indebtedness and shall not be liable to any such holders if it shall
mistakenly pay over or distribute to Securityholders or the Company, the
Subsidiary Guarantors or any other Person, money or assets to which any holders
of Senior Indebtedness or Guarantor Senior Indebtedness shall be entitled by
virtue of this Article X or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness and
Guarantor Senior Indebtedness on Subordination Provisions. Each Securityholder
by accepting a Security acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each holder of any Senior Indebtedness or Guarantor Senior
Indebtedness, whether such Senior Indebtedness or Guarantor Senior Indebtedness
was created or acquired before or after the issuance of the Securities, to
acquire and continue to hold, or to continue to hold, such Senior Indebtedness
or Guarantor Senior Indebtedness and such holder of Senior Indebtedness or
Guarantor Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness or Guarantor Senior Indebtedness.
ARTICLE XI
Subsidiary Guarantee
SECTION 11.1. Subsidiary Guarantee. Subject to the
subordination provisions contained in Article X, the Subsidiary Guarantors
hereby, jointly and severally, fully, unconditionally and irrevocably,
Guarantee to each Holder and to the Trustee and its successors and assigns (a)
the full and punctual payment of principal of and interest on the Securities
when due, whether at maturity, by acceleration, by redemption or otherwise, and
all other monetary obligations of the Company under this Indenture (including
obligations to the Trustee) and the Securities and (b) the full and punctual
performance within applicable grace periods of all other obligations of the
Company under this Indenture and the Securities (all the foregoing being
hereinafter collectively called the "Obligations"). The Subsidiary Guarantors
further agree that the Obligations may be extended or renewed, in whole or in
part, without notice or further assent from the Subsidiary Guarantors, and that
the Subsidiary Guarantors will remain bound under this Article XI
notwithstanding any extension or renewal of any Obligation.
The Subsidiary Guarantors waive presentation to, demand of,
payment from and protest to the Company of any of the Obligations and also
waive notice of protest for nonpayment. The
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Subsidiary Guarantors waive notice of any default under the Securities or the
Obligations. The obligations of the Subsidiary Guarantors hereunder shall not
be affected by (a) the failure of any Holder or the Trustee to assert any claim
or demand or to enforce any right or remedy against the Company or any other
Person under this Indenture, the Securities or any other agreement or
otherwise; (b) any extension or renewal of any Obligation; (c) any rescission,
waiver, amendment, modification or supplement of any of the terms or provisions
of this Indenture (other than this Article XI), the Securities or any other
agreement; (d) the release of any security held by any Holder or the Trustee
for the Obligations or any of them; (e) the failure of any Holder or Trustee to
exercise any right or remedy against any other guarantor of the Obligations; or
(f) any change in the ownership of the Company.
The Subsidiary Guarantors further agree that their Guarantees
herein constitute a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waive any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Obligations.
The Guarantee of each Subsidiary Guarantor is, to the extent
and in the manner set forth in Article X, subordinated and subject in right of
payment to the prior payment in full of the principal of and premium, if any,
and interest on all Guarantor Senior Indebtedness of such Subsidiary Guarantor
and this Guarantee is made subject to such provisions of this Indenture.
The obligations of the Subsidiary Guarantors hereunder shall
not be subject to any reduction, limitation, impairment or termination for any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense, setoff, counterclaim,
recoupment or termination whatsoever or by reason of the invalidity, illegality
or unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Subsidiary Guarantors
herein shall not be discharged or impaired or otherwise affected by the failure
of any Holder or the Trustee to assert any claim or demand or to enforce any
remedy under this Indenture, the Securities or any other agreement, by any
waiver or modification of any thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Obligations, or by any other
act or thing or omission or delay to do any other act or thing which may or
might in any manner or to any extent vary the risk of the Subsidiary Guarantors
or would otherwise operate as a discharge of the Subsidiary Guarantors as a
matter of law or equity.
The Subsidiary Guarantors further agree that their Guarantees
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of any Obligation is rescinded or
must otherwise be
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restored by any Holder or the Trustee upon the bankruptcy or reorganization of
the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against the
Subsidiary Guarantors by virtue hereof, upon the failure of the Company to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, by redemption or otherwise, or to perform or comply with any
other Obligation, the Subsidiary Guarantors hereby promise to and will, upon
receipt of written demand by the Trustee, forthwith pay, or cause to be paid,
in cash, to the Holders or the Trustee an amount equal to the sum of (i) the
unpaid principal amount of such Obligations, (ii) accrued and unpaid interest
on such Obligations (but only to the extent not prohibited by law) and (iii)
all other monetary Obligations of the Company to the Holders and the Trustee.
The Subsidiary Guarantors agree that, as between the
Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article VI for the purposes of the Guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such Obligations as provided in
Article VI, such Obligations (whether or not due and payable) shall forthwith
become due and payable by the Subsidiary Guarantors for the purposes of this
Section.
The Subsidiary Guarantors also agree to pay any and all costs
and expenses (including reasonable attorneys' fees) incurred by the Trustee or
any Holder in enforcing any rights under this Section.
SECTION 11.2. Limitation on Liability. Any term or provision
of this Indenture to the contrary notwithstanding, the maximum, aggregate
liability of each Subsidiary Guarantor hereunder shall not exceed the maximum
amount that can be guaranteed by such Subsidiary Guarantor under applicable
federal and state laws relating to insolvency of debtors.
SECTION 11.3. Successors and Assigns. This Article XI shall be
binding upon the Subsidiary Guarantors and their successors and assigns and
shall enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
(b) Notwithstanding the foregoing, all obligations of a
Subsidiary Guarantor under this Article XI shall be
<PAGE> 82
76
automatically and unconditionally released and discharged upon any sale,
exchange or transfer to any Person which is not a Subsidiary of the Company, of
all or substantially all of the assets of such Subsidiary Guarantor or all of
the Capital Stock of such Subsidiary Guarantor owned by the Company or any
Subsidiary; provided that (i) such sale, exchange or transfer is not prohibited
by this Indenture and (ii) all obligations of such Subsidiary Guarantor in
respect of the Bank Indebtedness and under all of its Guarantees of, and in
respect of all liens on its assets securing, Indebtedness of the Company are
also released and discharged upon such sale, exchange or transfer.
SECTION 11.4. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article XI shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of
any right, power or privilege. The rights, remedies and benefits of the Trustee
and the Holders herein expressly specified are cumulative and not exclusive of
any other rights, remedies or benefits which either may have under this Article
XI at law, in equity, by statute or otherwise.
SECTION 11.5. Right of Contribution. Each Subsidiary Guarantor
hereby agrees that to the extent that a Subsidiary Guarantor shall have paid
more than its proportionate share of any payment made hereunder, such
Subsidiary Guarantor shall be entitled to seek and receive contribution from
and against any other Subsidiary Guarantor hereunder who has not paid its
proportionate share of such payment. Each Subsidiary Guarantor's right of
contribution shall be subject to the terms and conditions of Section 11.6. The
provisions of this Section shall in no respect limit the obligations and
liabilities of any Subsidiary Guarantor to the Trustee and the Securityholders
and each Subsidiary Guarantor shall remain liable to the Trustee and the
Securityholders for the full amount guaranteed by such Subsidiary Guarantor
hereunder.
SECTION 11.6. No Subrogation. Notwithstanding any payment or
payments made by any of the Subsidiary Guarantors hereunder, no Subsidiary
Guarantor shall be entitled to be subrogated to any of the rights of the
Trustee or any Securityholder against the Company or any other Subsidiary
Guarantor or any collateral security or guarantee or right of offset held by
the Trustee or any Securityholder for the payment of the Obligations, nor shall
any Subsidiary Guarantor seek or be entitled to seek any contribution or
reimbursement from the Company or any other Subsidiary Guarantor in respect of
payments made by such Subsidiary Guarantor hereunder, until all amounts owing
to the Trustee and the Securityholders by the Company on account of the
Obligations are paid in full. If any amount shall be paid to any Subsidiary
Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by such
<PAGE> 83
77
Subsidiary Guarantor in trust for the Trustee and the Securityholders,
segregated from other funds of such Subsidiary Guarantor, and shall, forthwith
upon receipt by such Subsidiary Guarantor, be turned over to the Trustee in the
exact form received by such Subsidiary Guarantor (duly indorsed by such
Subsidiary Guarantor to the Trustee, if required), to be applied against the
Obligations.
SECTION 11.7. Additional Subsidiary Guarantors. Concurrently
with the creation or acquisition by the Company of any Subsidiary (other than a
foreign subsidiary), the Company, such Subsidiary and the Trustee shall execute
and deliver a supplement to this Indenture providing that such Subsidiary will
be a Subsidiary Guarantor hereunder. Each such supplement shall be in a form
reasonably satisfactory to the Trustee.
SECTION 11.8. Modification. No modification, amendment or
waiver of any provision of this Article XI, nor the consent to any departure by
the Subsidiary Guarantors therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on the Subsidiary Guarantors in any
case shall entitle the Subsidiary Guarantors to any other or further notice or
demand in the same, similar or other circumstances.
ARTICLE XII
Miscellaneous
SECTION 12.1. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which
is required to be included in this Indenture by the TIA, the provision required
by the TIA shall control.
SECTION 12.2. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
International Wire Group, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention of David M. Sindelar
<PAGE> 84
78
if to the Subsidiary Guarantors:
International Wire Group, Inc.
c/o 101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention of David M. Sindelar
if to the Trustee:
IBJ Schroder Bank & Trust Company
1 State Street
New York, NY 10004
Attention of Corporate Trust and
Agency Administration
The Company, any of the Subsidiary Guarantors, or the Trustee
by notice to the other may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears
on the registration books of the Registrar and shall be sufficiently given if
so mailed within the time prescribed.
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. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 12.3. Communication by Holders with other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 12.4. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to
take or refrain from taking any action under this Indenture, the Company 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.
<PAGE> 85
79
SECTION 12.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(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 individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 12.6. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 12.8. Legal Holidays. A "Legal Holiday" is a Saturday,
a Sunday or a day on which banking institutions are not required to be open in
the State of New York. If a payment date is a Legal Holiday, payment shall be
made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 12.9. Governing Law. This Indenture and the Securities
shall be governed by, and construed in accordance with, the laws of the State
of New York but without giving effect to applicable principles of conflicts of
law to the extent that
<PAGE> 86
80
the application of the laws of another jurisdiction would be required thereby.
SECTION 12.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be
part of the consideration for the issue of the Securities.
SECTION 12.11. Successors. All agreements of the Company and
the Subsidiary Guarantors in this Indenture and the Securities shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 12.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 12.13. Variable Provisions. The Company initially
appoints the Trustee as Paying Agent and Registrar and custodian with respect
to any Global Securities.
SECTION 12.14. Qualification of Indenture. The Company shall
qualify this Indenture under the TIA in accordance with the terms and
conditions of the Registration Rights Agreement and shall pay all reasonable
costs and expenses (including attorneys' fees for the Company, the Trustee and
the Holders) incurred in connection therewith, including, but not limited to,
costs and expenses of qualification of the Indenture and the Securities and
printing this Indenture and the Securities. The Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel
or other documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 12.15. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
<PAGE> 87
81
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
INTERNATIONAL WIRE GROUP, INC.
By: /s/ ELLEN LIPSITZ
-----------------------------
Vice President and
Assistant Secretary
CAMDEN WIRE CO., INC.
By: /s/ ELLEN LIPSITZ
-----------------------------
Title: Vice President and
Assistant Secretary
ECM HOLDING COMPANY
By: /s/ ELLEN LIPSITZ
-----------------------------
Title: Vice President and
Assistant Secretary
OMEGA WIRE, INC.
By: /s/ ELLEN LIPSITZ
-----------------------------
Title: Vice President and
Assistant Secretary
OWI CORPORATION
By: /s/ ELLEN LIPSITZ
-----------------------------
Title: Vice President and
Assistant Secretary
WIRE HARNESS INDUSTRIES, INC.
By: /s/ ELLEN LIPSITZ
-----------------------------
Title: Vice President and
Assistant Secretary
WIREKRAFT EMPLOYMENT COMPANY
By: /s/ ELLEN LIPSITZ
-----------------------------
Title: Vice President and
Assistant Secretary
<PAGE> 88
WIREKRAFT INDUSTRIES, INC.
By: /s/ ELLEN LIPSITZ
-----------------------------
Title: Vice President and
Assistant Secretary
WIRE TECHNOLOGIES, INC.
By: /s/ ELLEN LIPSITZ
-----------------------------
Title: Vice President and
Assistant Secretary
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ BARBARA MCCLUSKEY
-----------------------------
Title: Vice President
<PAGE> 89
EXHIBIT A
[FORM OF FACE OF NOTE]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE
ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES THAT
<PAGE> 90
2
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR
WITHIN THE MEANING OF 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 THE SECURITIES OF $250,000, 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 (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) AND (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN EACH CASE, ONLY IF A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE ISSUER AND THE TRUSTEE. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
<PAGE> 91
No. [_____] Principal Amount [______________]
CUSIP NO. 460933AC8
11 3/4% Series B Senior Subordinated Note due 2005
International Wire Group, Inc., a Delaware corporation,
promises to pay to [___________], or registered assigns, the principal sum of
[_________________] on June 1, 2005.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
<PAGE> 92
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: June 17, 1997 INTERNATIONAL WIRE GROUP, INC.
by
-----------------------------
Vice President
-----------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
IBJ SCHRODER BANK & TRUST
COMPANY
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
-------------------------------
Authorized Signatory
<PAGE> 93
[FORM OF REVERSE SIDE OF NOTE]
11 3/4% Series B Senior Subordinated Note due 2005
1. Interest
International Wire Group, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on
the principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on June 1 and
December 1 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid on the Securities or, if no
interest has been paid, from June 17, 1997. The Company shall pay interest on
overdue principal or premium, if any, at the rate borne by the Securities to
the extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment
By at least 12:00 noon (New York City time) on the date on
which any principal of or interest on any Security is due and payable, the
Company shall irrevocably deposit with the Trustee or the Paying Agent money
sufficient to pay such principal, premium, if any, and/or interest. The Company
will pay interest (except defaulted interest) to the Persons who are registered
Holders of Securities at the close of business on the May 15 or November 15
next preceding the interest payment date even if Securities are cancelled,
repurchased or redeemed after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
Initially, IBJ Schroder Bank & Trust Company, a New York
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice to any Securityholder. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
<PAGE> 94
2
4. Indenture
The Company issued the Securities under an Indenture dated as
of June 17, 1997 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors named therein (the "Subsidiary Guarantors") and the
Trustee. 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 of
1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the
Indenture (the "Act"). Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject
to all such terms, and Securityholders are referred to the Indenture and the
Act for a statement of those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $150.0 million aggregate principal amount
(subject to Section 2.7 of the Indenture). This Security is one of the Notes
referred to in the Indenture. The Securities include the Notes and any Exchange
Notes issued in exchange for the Notes pursuant to the Indenture and the
Registration Rights Agreement. The Notes and the Exchange Notes are treated as
a single class of securities under the Indenture. The Indenture imposes certain
limitations on the Incurrence of Indebtedness by the Company and its
Subsidiaries, the payment of dividends and other distributions on the Capital
Stock of the Company and its Subsidiaries, the purchase or redemption of
Capital Stock of the Company and Capital Stock of such Subsidiaries, certain
purchases or redemptions of Subordinated Obligations, the sale or transfer of
assets and Capital Stock of Subsidiaries, the issuance or sale of Capital Stock
of Subsidiaries, the business activities and investments of the Company and its
Subsidiaries and transactions with Affiliates. In addition, the Indenture
limits the ability of the Company and its Subsidiaries to restrict
distributions and dividends from Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the
Company under the Indenture and the Securities when and as the same shall be
due and payable, whether at maturity, by acceleration or otherwise, according
to the terms of the Securities and the Indenture, the Subsidiary Guarantors
have unconditionally guaranteed such obligations on a senior subordinated basis
pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in this paragraph 5, the Securities will
not be redeemable at the option of the Company prior to June 1, 2000. On and
after such date, the Securities will be redeemable, at the Company's option, in
whole or in part, upon
<PAGE> 95
3
not less than 30 nor more than 60 days' prior notice mailed by first class mail
to each Holder's registered address, at the following redemption prices
(expressed as percentages of principal amount) plus accrued and unpaid interest
to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date):
If redeemed during the 12-month period commencing on June 1 of
the years set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . . . . 105.875%
2001 . . . . . . . . . . . . . . . . . . . . . 103.917%
2002 . . . . . . . . . . . . . . . . . . . . . 101.958%
2003 and thereafter . . . . . . . . . . . . . 100.000%
</TABLE>
Notwithstanding the foregoing, at any time or from time to
time prior to June 1, 1998, the Company may redeem in the aggregate up to $50.0
million principal amount of the Securities with the proceeds of one or more
Equity Offerings by the Company or Holding (to the extent, in the case of
Holding, the net cash proceeds thereof are contributed to the equity capital of
the Company) so long as there is a Public Market at the time of such
redemption, at a redemption price (expressed as a percentage of principal
amount) of 110% plus accrued and unpaid interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that after giving effect to such redemption, at least $75.0 million principal
amount of the Securities remain outstanding.
At any time on or prior to June 1, 2000, the Securities may
also be redeemed in whole, but not in part, at the option of the Company upon
the occurrence of a Change of Control, upon not less than 30 nor more than 60
days' prior notice (but in no event more than 90 days after the occurrence of
such Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of, and accrued but unpaid interest to, the date
of redemption (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date).
Nothwithstanding the above, the Company will not be permitted
to redeem the Original 11 3/4% Notes unless, substantially concurrently with
such redemption, the Company redeems an aggregate principal amount of the
Securities (rounded to the nearest integral multiple of $1,000) equal to the
product of: (1) a fraction, the numerator of which is the aggregate principal
amount of the Original 11 3/4% Notes to be so redeemed and the denominator of
which is the aggregate principal amount of
<PAGE> 96
4
Original 11 3/4% Notes outstanding immediately prior to such proposed
redemption, and (2) the aggregate principal amount of the Securities
outstanding immediately prior to such proposed redemption.
6. Notice of Redemption
Notice of redemption will be mailed 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. Securities in denominations of principal
amount larger than $1,000 may be redeemed in part but only in whole multiples
of $1,000. If money sufficient to pay the redemption price of and accrued and
unpaid interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount
thereof plus accrued interest to the date of repurchase as provided in, and
subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company
agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give them effect and appoints the Trustee as attorney-in-fact for such
purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or 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 (i) any Securities
<PAGE> 97
5
selected for redemption (except, in the case of a Security to be redeemed in
part, the portion of the Security not to be redeemed) for a period beginning 15
days before a selection of Securities to be redeemed and ending on the date of
such selection or (ii) any Securities for a period beginning 15 days before an
interest payment date and ending on such interest payment date.
10. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount of the outstanding Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to add guarantees with
respect to the Securities or to secure the Securities, or to add additional
covenants or surrender rights and powers conferred on the Company, or to comply
with any request of the SEC in connection with qualifying the Indenture under
the Act, or to make any change that does not adversely
<PAGE> 98
6
affect the rights of any Securityholder, or to provide for the issuance of
Exchange Notes.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph
5 of the Securities, upon required repurchase, upon declaration or otherwise;
(iii) failure by the Company to comply with other agreements in the Indenture
or the Securities, in certain cases subject to notice and lapse of time; (iv)
certain accelerations (including failure to pay within any grace period after
final maturity) of other indebtedness of the Company or its Subsidiaries if the
amount accelerated (or so unpaid) exceeds $10.0 million and such acceleration
or failure to pay is not rescinded or cured within a 10 day period; (v) certain
events of bankruptcy or insolvency with respect to the Company or any
Significant Subsidiary; and (vi) certain final, non-appealable judgments or
decrees for the payment of money in excess of $10.0 million. If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Securityholders notice of any
continuing Default or Event of Default (except a Default or Event of Default in
payment of principal or interest) if it determines that withholding notice is
in their interest.
15. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its affiliates and may
otherwise deal with the Company or its affiliates with the same rights it would
have if it were not Trustee.
16. No Recourse Against Others
<PAGE> 99
7
A director, officer, employee or stockholder, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company or any Subsidiary Guarantor under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the laws of another jurisdiction would be required thereby.
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture which
has in it the text of this Security in larger type. Requests may be made to:
International Wire Group, Inc., 101 South Hanley Road, Suite 400, St. Louis,
Missouri 63105
Attention of General Counsel
<PAGE> 100
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
------------------------ ---------------------------------
Signature Guarantee:
---------------------------------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is three years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1[ ] acquired for the undersigned's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or
Section 2.6(d)(i)(A) of the Indenture); or
2[ ] transferred to the Company; or
3[ ] transferred pursuant to and in compliance with Rule
144A under the Securities Act of 1933; or
4[ ] transferred pursuant to an effective registration
statement under the Securities Act; or
5[ ] transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933; or
6[ ] transferred to an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act of 1933), that has furnished to
the Trustee a signed letter
<PAGE> 101
2
containing certain representations and agreements
(the form of which letter appears as Exhibit C to the
Indenture); or
7[ ] transferred pursuant to another available exemption
from the registration requirements of the Securities
Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering
any such transfer of the Securities, in their sole discretion, such legal
opinions, certifications and other information as the Trustee or the Company
may reasonably request to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
-----------------------------------
Signature
Signature Guarantee:
- ------------------------------ -----------------------------------
Signature
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
<PAGE> 102
3
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global
Security have been made:
<TABLE>
<CAPTION>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Security authorized officer of
Date of Principal Amount of Principal Amount of following such Trustee or Securities
Exchange this Global Security this Global Security decrease or increase Custodian
-------- --------------------- --------------------- -------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 103
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state
the amount in principal amount (must be integral multiple of $1,000): $
Date: Your Signature
---------- --------------------------------------------
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee:
-------------------------------------------------------
(Signature must be guaranteed)
<PAGE> 104
EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
No. [____] Principal Amount $[__________]
CUSIP NO. [_________]
11 3/4% Series B Senior Subordinated Notes due 2005
International Wire Group, Inc., a Delaware corporation,
promises to pay to [______], or registered assigns, the principal sum of
[____________] on June 1, 2005.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set forth on the
other side of this Security.
Date: June 17, 1997 INTERNATIONAL WIRE GROUP, INC.
by
-----------------------------
Vice President
by
-----------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
IBJ SCHRODER BANK & TRUST
COMPANY
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
----------------------------
Authorized Signatory
<PAGE> 105
[FORM OF REVERSE SIDE OF EXCHANGE NOTE]
11 3/4% Series B Senior Subordinated Note due 2005
1. Interest
International Wire Group, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on
the principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on June 1 and
December 1 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid on the Securities or, if no
interest has been paid, from June 17, 1997. The Company shall pay interest on
overdue principal or premium, if any, at the rate borne by the Securities to
the extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment
By at least 12:00 noon (New York City time) on the date on
which any principal of or interest on any Security is due and payable, the
Company shall irrevocably deposit with the Trustee or the Paying Agent money
sufficient to pay such principal, premium, if any, and/or interest. The Company
will pay interest (except defaulted interest) to the Persons who are registered
Holders of the Securities at the close of business on the May 15 or November 15
next preceding the interest payment date even if Securities are cancelled,
repurchased or redeemed after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
Initially, IBJ Schroder Bank & Trust Company, a New York
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice to any Securityholder. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of June 17, 1997 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors named
<PAGE> 106
2
therein (the "Subsidiary Guarantors") and the Trustee. 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 of 1939 (15 U.S.C. Sections
77aaa-7bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized
terms used herein and not defined herein have the meanings ascribed thereto in
the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $150.0 million aggregate principal amount
(subject to Section 2.7 of the Indenture). This Security is one of the Exchange
Notes referred to in the Indenture. The Securities include the Notes and any
Exchange Notes issued in exchange for the Notes pursuant to the Indenture and
the Registration Rights Agreement. The Notes and the Exchange Notes are treated
as a single class of securities under the Indenture. The Indenture imposes
certain limitations on the Incurrence of Indebtedness by the Company and its
Subsidiaries, the payment of dividends and other distributions on the Capital
Stock of the Company and certain of its Subsidiaries, the purchase or
redemption of Capital Stock of the Company and Capital Stock of such
Subsidiaries, certain purchases or redemptions of Subordinated Obligations, the
sale or transfer of assets and Capital Stock of Subsidiaries, the issuance or
sale of Capital Stock of Subsidiaries, the business activities and investments
of the Company and its Subsidiaries and transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and its Subsidiaries
to restrict distributions and dividends from Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the
Company under the Indenture and the Securities when and as the same shall be
due and payable, whether at maturity, by acceleration or otherwise, according
to the terms of the Securities and such Indenture, the Subsidiary Guarantors
have unconditionally guaranteed the Obligations on a senior subordinated basis
pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in this paragraph 5, the Securities will
not be redeemable at the option of the Company prior to June 1, 2005. On and
after such date, the Securities will be redeemable, at the Company's option, in
whole or in part, upon not less than 30 nor more than 60 days' prior notice
mailed by first-class mail to each Holder's registered address, at the
following redemption prices (expressed as percentages of principal amount) plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
<PAGE> 107
3
If redeemed during the 12-month period commencing on June 1 of
the years set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . . . . 105.875%
2001 . . . . . . . . . . . . . . . . . . . . . 103.917%
2002 . . . . . . . . . . . . . . . . . . . . . 101.958%
2003 and thereafter . . . . . . . . . . . . . 100.000%
</TABLE>
Notwithstanding the foregoing, at any time or from time to
time prior to June 1, 1998, the Company may redeem in the aggregate up to $50.0
million principal amount of the Securities with the proceeds of one or more
Equity Offerings by the Company or Holding (to the extent, in the case of
Holding, the net cash proceeds thereof are contributed to the equity capital of
the Company) so long as there is a Public Market at the time of such
redemption, at a redemption price (expressed as a percentage of principal
amount) of 110% plus accrued and unpaid interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that after giving effect to such redemption, at least $75.0 million principal
amount of Securities remain outstanding.
At any time on or prior to June 1, 2000, the Securities may
also be redeemed in whole, but not in part, at the option of the Company upon
the occurrence of a Change of Control, upon not less than 30 nor more than 60
days' prior notice (but in no event more than 90 days after the occurrence of
such Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of and accrued but unpaid interest to, the date
of redemption (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date).
Nothwithstanding the above, the Company will not be permitted
to redeem the Original 11 3/4% Notes unless, substantially concurrently with
such redemption, the Company redeems an aggregate principal amount of the
Securities (rounded to the nearest integral multiple of $1,000) equal to the
product of: (1) a fraction, the numerator of which is the aggregate principal
amount of the Original 11 3/4% Notes to be so redeemed and the denominator of
which is the aggregate principal amount of Original 11 3/4% Notes outstanding
immediately prior to such proposed redemption, and (2) the aggregate principal
amount of the Securities outstanding immediately prior to such proposed
redemption.
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each
<PAGE> 108
4
Holder of Securities to be redeemed at his registered address. Securities in
denominations of principal amount larger than $1,000 may be redeemed in part
but only in whole multiples of $1,000. If money sufficient to pay the
redemption price of and accrued and unpaid interest on all Securities (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount
thereof plus accrued interest to the date of repurchase as provided in, and
subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company
agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give them effect and appoints the Trustee as attorney-in-fact for such
purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or 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 (i) any Securities selected for redemption (except, in the case
of a Security to be redeemed in part, the portion of the Security not to be
redeemed) or for a period beginning 15 days before a selection of Securities to
be redeemed and ending on the date of selection or (ii) any Securities for a
period beginning 15 days before an interest payment date and ending on such
interest payment date.
10. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
<PAGE> 109
5
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount of the outstanding Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to add guarantees with
respect to the Securities or to secure the Securities, or to add additional
covenants or surrender rights and powers conferred on the Company or
Communications or to comply with any request of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder, or to provide for the
issuance of Exchange Notes.
14. Defaults and Remedies
Under the Indenture, Events or Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon
required repurchase, upon redemption pursuant to paragraph 5 of the Securities,
upon required repurchase, upon declaration or otherwise; (iii) failure by the
Company to comply with other agreements in the Indenture or the Securities, in
certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of
other Indebtedness of the Company or its Subsidiaries if the amount accelerated
(or so unpaid) exceeds $10.0 million and such acceleration or failure to pay is
not rescinded or cured within a
<PAGE> 110
6
10 day period; (v) certain events of bankruptcy or insolvency with respect to
the Company or any Significant Subsidiary; and (vi) certain final,
non-appealable judgments or decrees for the payment of money in excess of $10.0
million. If an Event of Default occurs and is continuing, the Trustee or
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Securityholders notice of any
continuing Default or Event of Default (except a Default or Event of Default in
payment of principal or interest) if it determines that withholding notice is
in their interest.
15. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its affiliates and may
otherwise deal with the Company or its affiliates with the same rights it would
have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company or any Subsidiary Guarantor under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in
<PAGE> 111
7
common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with rights
of survivorship and not as tenants in common), CUST (=custodian) and U/G/M/A
(=Uniform Gift to Minors Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the laws of another jurisdiction would be required thereby.
The Company will furnish to any Securityholder upon request
and without charge to the Securityholder a copy of the Indenture which has in
it the text of this Security in larger type. Requests may be made to:
International Wire Group, Inc., 101 South Hanley Road, Suite 400, St. Louis,
Missouri 63105
Attention of General Counsel
- --------------------------------------------------------------------------------
<PAGE> 112
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature
------------------ ----------------------------------
Signature Guarantee:
-----------------------------------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
<PAGE> 113
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state
the amount in principal amount (must be integral multiple of $1,000): $
Date: Your Signature:
----------------- ----------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature
Guarantee:
---------------------------------------------
(Signature must be guaranteed)
<PAGE> 114
EXHIBIT C
Transferee Letter of Representation
International Wire Group, Inc.
c/o IBJ Schroder Bank & Trust Company
One State Street
New York, N.Y. 10004
Attention: Corporate Trust and Agency
Administration
Dear Sirs:
This certificate is delivered to request a transfer of $
principal amount of the 11 3/4% Series B Senior Subordinated Notes due 2005
(the "Notes") of International Wire Group, Inc. (the "Company").
Upon transfer, the Notes would be registered in the name of
the new beneficial owner as follows:
Name:
------------------------------------
Address:
---------------------------------
Taxpayer ID Number:
----------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933
(the "Securities Act")) purchasing for our own account or for the account of
such an institutional "accredited investor," at least $250,000 principal amount
of the Notes, and we are acquiring the Notes not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities
Act. We have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risk of our investment in the Notes
and invest in or purchase securities similar to the Notes in the normal course
of our business. We and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.
2. We understand that the Notes have not been registered
under the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf
of any investor account for which we are purchasing Notes to offer, sell or
otherwise transfer such Notes prior to the date which is three years after the
later of the date of original issue and the last date on
<PAGE> 115
2
which the Company or any affiliate of the Company was the owner of such Notes
(or any predecessor thereto) (the "Resale Restriction Termination Date") only
(a) to the Company, (b) pursuant to a registration statement which has been
declared effective under the Securities Act, (c) in a transaction complying
with the requirements of Rule 144A under the Securities Act, to a person we
reasonably believe is a qualified institutional buyer under Rule 144A (a "QIB")
that purchases for its own account or for the account of a QIB and to whom
notice is given that the transfer is being made in reliance on Rule 144A, (d)
pursuant to offers and sales that occur outside the United States within the
meaning of Regulation S under the Securities Act, (e) to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act that is purchasing for its own account or for the
account of such an institutional "accredited investor", in each case in a
minimum principal amount of Notes of $250,000 or (f) pursuant to any other
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or
accounts be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Notes is proposed to be made pursuant to clause (e) above
prior to the Resale Restriction Termination Date, the transferor shall deliver
a letter from the transferee substantially in the form of this letter to the
Company and the Trustee, which shall provide, among other things, that the
transferee is an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring
such Notes for investment purposes and not for distribution in violation of the
Securities Act. Each purchaser acknowledges that the Company and the Trustee
reserve the right prior to any offer, sale or other transfer prior to the
Resale Termination Date of the Notes pursuant to clauses (d), (e) or (f) above
to require the delivery of an opinion of counsel, certifications and/or other
information satisfactory to the Company and the Trustee.
TRANSFEREE:
---------------------------
BY
------------------------------------
<PAGE> 1
EXHIBIT 10.28
================================================================================
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
among
INTERNATIONAL WIRE GROUP, INC.,
as Borrower,
INTERNATIONAL WIRE HOLDING COMPANY,
as Guarantor,
CAMDEN WIRE CO., INC.,
The Several Lenders
from Time to Time Parties Hereto,
THE CHASE MANHATTAN BANK,
as Administrative Agent,
and
BANKERS TRUST COMPANY,
as Documentation Agent
_____________________________________
CHASE SECURITIES INC.
and
BT SECURITIES CORPORATION,
as Arrangers
_____________________________________
Dated as of June 17, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Amendments to Section 1.1 of the Credit Agreement . . . . . . . . . . . . . . . . 1
2. Amendment to Section 2 of the Credit Agreement. . . . . . . . . . . . . . . . . . 7
3. Amendment to Subsection 3.1 of the Credit Agreement . . . . . . . . . . . . . . . 7
4. Amendment to Subsection 5.24 of the Credit Agreement. . . . . . . . . . . . . . . 7
5. Amendment to Subsection 7.7 of the Credit Agreement . . . . . . . . . . . . . . . 7
6. Amendment to Subsection 8.2 of the Credit Agreement . . . . . . . . . . . . . . . 7
7. Amendment to Subsection 8.4 of the Credit Agreement . . . . . . . . . . . . . . . 8
8. Amendment to Subsection 8.7 of the Credit Agreement . . . . . . . . . . . . . . . 8
9. Amendment to Subsection 8.10 of the Credit Agreement. . . . . . . . . . . . . . . 8
10. Amendment to Subsection 12.1 of the Credit Agreement . . . . . . . . . . . . . . 9
11. Amendment to Schedule 1.1 to the Credit Agreement . . . . . . . . . . . . . . . . 9
12. Consent to Additional Senior Subordinated Notes . . . . . . . . . . . . . . . . . 9
13. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Corporate Power; Authorization; Enforceable Obligation . . . . . . . . . 9
(c) No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(d) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14. Conditions to Effectiveness of this Amendment . . . . . . . . . . . . . . . . . . 10
(a) Amendment; Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Receipt of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Corporate Proceedings of the Credit Parties . . . . . . . . . . . . . . 11
(d) Incumbency Certificates . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(f) Certificate Regarding Subordinated Notes . . . . . . . . . . . . . . . . 11
(g) Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(h) Consents, Licenses and Approvals . . . . . . . . . . . . . . . . . . . . 12
(i) Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(j) Borrowing Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 12
(k) Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(l) Borrowing Base Certificate . . . . . . . . . . . . . . . . . . . . . . . 12
(m) No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(n) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 12
15. Confirmation of Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
16. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(d) Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(e) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(f) Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . 14
(g) Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(h) Waivers of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
<PAGE> 3
TABLE OF ANNEXES, SCHEDULES AND EXHIBITS TO AMENDMENT
ANNEXES
A Amended Section 2 of Credit Agreement
EXHIBITS
A Form of Opinion of Counsel to the Credit Parties
SCHEDULES
1.1 Addresses for Notices; Commitments
5.4 Required Consents
<PAGE> 4
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
FIRST AMENDMENT, dated as of June 17, 1997, to the Amended and
Restated Credit Agreement, dated as of February 12, 1997 (as amended,
supplemented or otherwise modified prior to the date hereof, the "Credit
Agreement"), among INTERNATIONAL WIRE GROUP, INC., a Delaware corporation (the
"Borrower"), INTERNATIONAL WIRE HOLDING COMPANY, a Delaware corporation
("Holdings"), CAMDEN WIRE CO., INC., a New York corporation ("Camden"), the
several banks and other financial institutions from time to time parties
thereto (the "Lenders") and THE CHASE MANHATTAN BANK, a New York banking
corporation, as administrative agent for the Lenders thereunder (in such
capacity, the "Administrative Agent"), and BANKERS TRUST COMPANY, as
documentation agent for the Lenders thereunder (in such capacity, the
"Documentation Agent"). Unless otherwise defined herein, terms which are
defined in the Credit Agreement and used herein are so used as so defined.
W I T N E S S E T H:
WHEREAS, the Borrower, Holdings, the Lenders, the Administrative Agent
and the Documentation Agent are parties to the Credit Agreement; and
WHEREAS, the Borrower desires to issue the Additional Senior
Subordinated Notes (as defined below); and
WHEREAS, the Borrower has requested (i) that the Lenders consent to
the issuance of the Additional Senior Subordinated Notes (as hereinafter
defined), (ii) that the Tranche C Term Loan Lenders convert their outstanding
Tranche C Term Loans to Tranche B Term Loans on the Effective Date (as
hereinafter defined), (iii) that the proceeds of the issuance of the Additional
Subordinated Notes be allocated to the prepayment of the Loans as follows (the
"Agreed Allocation"): first, to the Tranche A Loans until the aggregate
principal amount outstanding thereunder is $25,000,000; second, to the Tranche
B Loans (which will be combined with the Tranche C Loans as provided herein,
collectively the "Combined Tranche B Loans"), until the aggregate principal
amount outstanding under the Combined Tranche B Loans is $160,500,000; and
third, to the extent of the remaining proceeds, to the Revolving Credit Loans,
(iv) permission to repurchase the Exchange Notes in an amount not to exceed
$5,700,000 including related accrued interest and premium, and (v) certain
related amendments to the Credit Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. Amendments to Section 1.1 of the Credit Agreement. (a) Section
1.1 of the Credit Agreement is hereby amended by inserting the following new
definitions in the proper alphabetical order:
""Additional Senior Subordinated Note Documents": the
collective reference to the Additional Senior Subordinated
<PAGE> 5
Notes, the Additional Senior Subordinated Note Indenture, the
Additional Senior Subordinated Note Purchase Agreement and all other
agreements or instruments executed in connection with the Additional
Senior Subordinated Notes, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with subsection
8.10; individually a "Additional Senior Subordinated Note Document."
"Additional Senior Subordinated Note Indenture": the Indenture
dated as of June 17, 1997 among the Borrower, the Subsidiary
Guarantors (as defined therein), and IBJ Schroder Bank & Trust Company
as trustee, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with subsection 8.10.
"Additional Senior Subordinated Note Purchase Agreement": the
reference to the Purchase Agreement dated June 11, 1997 among the
Borrower, the Subsidiary Guarantors (as defined therein), Chase
Securities Inc., BT Securities Corporation and certain other parties
thereto, pursuant to which the Borrower issues or sells Additional
Senior Subordinated Notes, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with subsection
8.10.
"Additional Senior Subordinated Notes": the $150,000,000
aggregate principal amount of 11-3/4% Series B Senior Subordinated
Notes due 2005 of the Borrower, as the same may be amended,
supplemented or otherwise modified from time to time in accordance
with subsection 8.10.
"Agreed Allocation": as set forth in the recitals hereto.
"Consolidated Senior Debt": at a particular date, with respect
to the Borrower, the aggregate Consolidated Total Debt less
Consolidated Subordinated Indebtedness.
"Consolidated Subordinated Indebtedness": at a particular
date, with respect to the Borrower, the aggregate principal amount of
Indebtedness outstanding under the Senior Subordinated Notes, the
Exchange Notes and the Additional Senior Subordinated Notes as such
Indebtedness may be amended, supplemented or otherwise modified in
accordance with subsection 8.10(b).
"ECF Percentage": 75%; provided that the percentage will be
reduced to zero if the ratio of Consolidated Total Debt of the
Borrower and its Subsidiaries to Consolidated EBITDA of the Borrower
and its Subsidiaries, for the most recently completed fiscal year
(determined in accordance with subsection 8.1(c)) is ( 3.75:1.0.
"Effective Date": the date on which all conditions set forth
in Section 16 are met.""
(b) Section 1.1 of the Credit Agreement is further
amended by deleting therefrom the definitions of Additional Term
Loans, Additional Tranche A Term Loan, Additional
<PAGE> 6
Tranche A Term Loan Commitment, Additional Tranche B Term Loan,
Additional Tranche B Term Loan Commitment, Applicable Margin,
Consolidated Total Debt, Excess Cash Flow, Interest Coverage Ratio,
Revolving Credit Commitment Termination Date, Second Additional Term
Loans, Term Loan Commitments, Term Loan Lender, Term Note and Term
Notes, Total Credit Percentage, Tranche A Term Loan Commitment,
Tranche B Term Loan Commitment and inserting in lieu thereof the
following corresponding new definitions:
""Additional Term Loans": the collective reference to the
Additional Tranche A Term Loans.
"Additional Tranche A Term Loan": any term loan made by a
Tranche A Term Loan Lender on the Second Amendment Closing Date.
"Additional Tranche A Term Loan Commitment": as to any Tranche
A Term Loan Lender, its obligation to make an Additional Tranche A
Term Loan to the Borrower on the Second Amendment Closing Date.
"Additional Tranche B Term Loan": any term loan made by a
Tranche B Term Loan Lender on the Second Amendment Closing Date.
"Additional Tranche B Term Loan Commitment": as to any Tranche
B Term Loan Lender, its obligation to make an Additional Tranche B
Term Loan to the Borrower on the Second Amendment Closing Date.
"Applicable Margin": for each Type of Loan, the rate per annum
set forth under the relevant column heading below:
<TABLE>
<CAPTION>
Alternate Base Rate Loans
Type Applicable Margin
- ------------------------- -----------------
<S> <C>
Tranche A Term Loans 1/2%
Tranche B Term Loans 1%
Revolving Credit Loans 1/2%
(including Swing Line Loans)
</TABLE>
<TABLE>
<CAPTION>
Eurodollar Rate Loans
Type Applicable Margin
- --------------------- -----------------
<S> <C>
Tranche A Term Loans 1-1/2%
Tranche B Term Loans 2%
Revolving Credit Loans 1-1/2%
</TABLE>
; provided that in the event that the ratio of Consolidated Senior
Debt of the Borrower as of the most recent fiscal quarter to
Consolidated EBITDA (calculated in accordance with subsection 8.1(c))
of the Borrower, is as set forth in the relevant column heading below
for any quarterly period, any such Applicable Margin with respect to
Tranche A Term Loans and Revolving Credit Loans (including in the case
of Alternate Base Rate Loans, Swing Line Loans) shall be as provided
in the relevant column heading below, but in no event shall any such
reductions be effective prior to the first anniversary of the
Effective Date:
<PAGE> 7
<TABLE>
<CAPTION>
Relevant Ratio of Applicable
Consolidated Senior Margin For Applicable Margin
Debt to Consolidated Eurodollar for Alternate Base
EBITDA Loans Rate Loans
- -------------------- ---------- ------------------
<S> <C> <C>
1.75x and above 1-1/2% 1/2%
1.50x to but excluding 1.75x 1-1/4% 1/4%
Below 1.50x 1% 0%
</TABLE>
if the financial statements required to be delivered pursuant to
subsection 7.1(a) or 7.1(b), as applicable, and the related compliance
certificate required to be delivered pursuant to subsection 7.2(b),
are delivered on or prior to the date when due (or, in the case of the
fourth quarterly period of each fiscal year of the Borrower, if
financial statements which satisfy the requirements of, and are
delivered within the time period specified in, subsection 7.l(b) and a
related compliance certificate which satisfies the requirements of,
and is delivered within the time period specified in, subsection
7.2(b), with respect to any such quarterly period are so delivered
within such time periods), then the Applicable Margin in respect of
the Revolving Credit Loans and the Tranche A Term Loans from the date
upon which such financial statements were delivered shall be the
Applicable Margin as set forth in the relevant column heading above;
provided, however, that in the event that the financial statements
delivered pursuant to subsection 7.1(a) or 7.1(b), as applicable, and
the related compliance certificate required to be delivered pursuant
to subsection 7.2(b), are not delivered when due, then:
(a) if such financial statements and certificate are
delivered after the date such financial statements and
certificate were required to be delivered (without giving
effect to any applicable cure period) and the Applicable
Margin increases from that previously in effect as a result of
the delivery of such financial statements and certificate,
then the Applicable Margin in respect of Revolving Credit
Loans (including in the case of Alternate Base Rate Loans,
Swing Line Loans) and Tranche A Term Loans during the period
from the date upon which such financial statements and
certificate were required to be delivered (without giving
effect to any applicable cure period) until the date upon
which they actually are delivered shall, except as otherwise
provided in clause (c) below, be the Applicable Margin as so
increased;
(b) if such financial statements and certificate are
delivered after the date such financial statements and
certificate were required to be delivered (without giving
effect to any applicable cure period) and the Applicable
Margin decreases from that previously in effect as a result of
the delivery of such financial statements and certificate,
then such decrease in the Applicable Margin shall not become
applicable until the date upon which such financial statements
and certificate actually are delivered; and
<PAGE> 8
(c) if such financial statements and certificate are
not delivered prior to the expiration of the applicable cure
period, then, effective upon such expiration, for the period
from the date upon which such financial statements and
certificate were required to be delivered (after the
expiration of the applicable cure period) until two Business
Days following the date upon which they actually are
delivered, the Applicable Margin in respect of Revolving
Credit Loans (including in the case of Alternate Base Rate
Loans, Swing Line Loans) and Tranche A Term Loans shall be
1-1/2%, in the case of Eurodollar Loans, and 1/2%, in the case
of Alternate Base Rate Loans (it being understood that the
foregoing shall not limit the rights of the Administrative
Agent and the Lenders set forth in Section 9).
"Consolidated Total Debt": at a particular date, with respect
to the Borrower, the aggregate principal amount of Indebtedness
outstanding under this Agreement, the Senior Subordinated Notes, the
Additional Senior Subordinated Notes, the Exchange Notes, Financing
Leases, purchase money Indebtedness and any other Indebtedness for
borrowed money of the Borrower and its Subsidiaries at such date.
"Excess Cash Flow": for any fiscal year of the Borrower, the
excess of (a) the sum, without duplication, of (i) Consolidated EBITDA
for such fiscal year (calculated for purposes of this definition
without giving effect to clause (vii) of the definition of
Consolidated EBITDA), (ii) the amount of returned surplus assets of
any Plan during such fiscal year to the extent not included in
Consolidated Net Income to determine Consolidated EBITDA for such
fiscal year, (iii) decreases in Consolidated Working Capital of the
Borrower and its Subsidiaries for such fiscal year, (iv) the amount of
any refund received by the Borrower and its Subsidiaries on taxes paid
by the Borrower and its Subsidiaries (other than the Sellers Tax
Escrow Amount), (v) cash dividends, cash interest and other similar
cash payments received by the Borrower in respect of investments to
the extent not included in Consolidated Net Income to determine
Consolidated EBITDA for such fiscal year and (vi) extraordinary cash
gains to the extent subtracted or otherwise not included in
Consolidated Net Income to determine Consolidated EBITDA for such
fiscal year over (b) the sum, without duplication, of (i) the
aggregate amount of cash Capital Expenditures made by the Borrower and
its Subsidiaries during such fiscal year and permitted hereunder
(other than Capital Expenditures permitted under subsection 8.8(b)),
(ii) the aggregate amount of all reductions of the Revolving Credit
Commitments (to the extent such reductions are accompanied by
prepayment of Revolving Credit Loans, Swing Line Loans and/or L/C
Obligations) or payments or prepayments of the Term Loans during such
fiscal year other than pursuant to subsection 2.12(a), (b) or (c),
(iii) the aggregate amount of payments of principal in respect of any
Indebtedness (other than revolving credit Indebtedness to
<PAGE> 9
the extent the related commitment is not permanently reduced)
permitted hereunder during such fiscal year (other than under this
Agreement), (iv) increases in Consolidated Working Capital of the
Borrower and its Subsidiaries for such fiscal year, (v) cash interest
expense of the Borrower and its Subsidiaries for such fiscal year,
(vi) taxes actually paid in such fiscal year or to be paid in the
subsequent fiscal year on account of such fiscal year to the extent
added to Consolidated Net Income to determine Consolidated EBITDA for
such fiscal year, (vii) extraordinary cash losses to the extent added
to Consolidated Net Income to determine Consolidated EBITDA for such
fiscal year, (viii) the amount of all Investments made in such fiscal
year as permitted by clauses (d), (h) and (j) of subsection 8.9 and
(ix) dividends or other direct payments paid by the Borrower to or for
the benefit of Holdings to the extent permitted by subsection 8.7(a)
to the extent not subtracted in the determination of Consolidated Net
Income of the Borrower for such fiscal year. For purposes of
determining changes in Consolidated Working Capital, the working
capital acquired in connection with the Acquisition and the Camden
Acquisition will be excluded. For the purposes of calculating Excess
Cash Flow, the proceeds, the application thereof and any fees in
connection with the issuance of the Additional Senior Subordinated
Notes will be excluded.
"Interest Coverage Ratio": for any period, with respect to the
Borrower and its Subsidiaries, the ratio of (a) Consolidated EBITDA to
(b) consolidated cash interest expense (including any such cash
interest expense in respect of Indebtedness under Financing Leases and
purchase money Indebtedness permitted under subsection 8.2(e)) of the
Borrower and its Subsidiaries net of cash interest income (such
consolidated cash interest expense to include fees payable on account
of letters of credit and amortization of debt premium, but to exclude
amortization of debt discount (including discount of liabilities and
reserves established under Accounting Principles Board Opinion No. 16
as in effect on the date hereof) and costs of debt issuance) of the
Borrower and its Subsidiaries.
"Revolving Credit Commitment Termination Date": the earliest
of (a) September 30, 2002 or, if such date is not a Business Day, the
Business Day next preceding such date, (b) the date upon which the
Term Loans shall be paid in full and (c) the date upon which the
Revolving Credit Commitments shall be terminated pursuant hereto.
"Second Additional Term Loans": the collective reference to
the Additional Tranche B Term Loans.
"Term Loan Commitments": the collective reference to the
Tranche A Term Loan Commitments and the Tranche B Term Loan
Commitments; collectively, as to all the Term Loan Lenders, the "Term
Commitments."
"Term Loan Lender": the collective reference to the Tranche A
Term Loan Lenders and the Tranche B Term Loan Lenders.
<PAGE> 10
"Term Note" and "Term Notes": as defined in subsection 2.8(a).
"Total Credit Percentage": as to any Lender at any time, the
percentage of the aggregate Revolving Credit Commitments, outstanding
Tranche A Term Loans and outstanding Tranche B Term Loans then
constituted by its Revolving Credit Commitment, outstanding Tranche A
Term Loans and outstanding Tranche B Term Loans (or, if the Revolving
Credit Commitments have terminated or expired, the percentage of the
aggregate outstanding Revolving Credit Loans, outstanding Tranche A
Term Loans and outstanding Tranche B Term Loans and risk interests in
the Letter of Credit Outstandings and Swing Line Loans then
constituted by its outstanding Revolving Credit Loans, outstanding
Tranche A Term Loans and outstanding Tranche B Term Loans and risk
interest in Letter of Credit Outstandings and Swing Line Loans).
"Tranche A Term Loan Commitment": as to any Tranche A Term
Loan Lender, its prior obligation to have made a Tranche A Term Loan
to the Borrower as previously provided in the Credit Agreement.
"Tranche B Term Loan Commitment": as to any Tranche B Term
Loan Lender, its prior obligation to have made a Tranche B Term Loan
to the Borrower as previously provided in the Credit Agreement.
(c) Section 1.1 of the Credit Agreement is further amended by
deleting therefrom the definitions of Additional Tranche C Term Loan,
Additional Tranche C Term Loan Commitment, Original Tranche A Term Loan,
Original Tranche B Term Loan, Original Tranche C Term Loan, Tranche C Term Loan
Commitment, Tranche C Term Loan Commitment Percentage, Tranche C Term Loan
Lender, Tranche C Term Loans and Tranche C Term Note.
2. Amendment to Section 2 of the Credit Agreement. Section 2 of the
Credit Agreement is hereby amended by deleting such Section in its entirety and
inserting in lieu thereof Annex A hereto.
3. Amendment to Subsection 3.1 of the Credit Agreement. Subsection
3.1(a) of the Credit Agreement is hereby amended by deleting the words "360
day" wherever they appear in the paragraph and inserting in lieu thereof the
words "one year".
4. Amendment to Subsection 5.15 of the Credit Agreement. Subsection
5.15 of the Credit Agreement is hereby amended by deleting the words in the
second sentence thereof immediately following the word "therewith" and
inserting in lieu thereof the following phrase:
", to refinance the credit facilities under the Omega Credit Agreement
and to repurchase the Exchange Notes in accordance with subsection
8.10(a), as well as for general corporate purposes of the Borrower and
the Subsidiaries."
5. Amendment to Subsection 5.24 of the Credit Agreement. Subsection
5.24 of the Credit Agreement is hereby amended by
<PAGE> 11
deleting the phrase "of the Senior Subordinated Notes" and inserting in lieu
thereof: ", of the Senior Subordinated Notes and the Additional Senior
Subordinated Notes".
6. Amendment to Subsection 7.7 of the Credit Agreement. Subsection
7.7(b)(ii) of the Credit Agreement is hereby amended by inserting at the end of
the clause but before the semi-colon the phrase: "or the Additional Senior
Subordinated Notes".
7. Amendment to Subsection 8.2 of the Credit Agreement. (a) Subsection
8.2(n) of the Credit Agreement is hereby amended by deleting the word "and" at
the end of the proviso.
(b) Subsection 8.2(o) of the Credit Agreement is hereby amended by
deleting the period at the end of the second proviso and inserting in lieu
thereof a semi-colon followed by the word "and".
(c) Subsection 8.2 of the Credit Agreement is hereby amended by adding
the following paragraph in the proper alphabetical order:
"(p) Indebtedness under the Additional Senior Subordinated Notes not
to exceed $150,000,000 in aggregate principal amount at any one time;
provided that such Indebtedness shall not be extended, renewed,
replaced, refinanced or otherwise amended except for amendments
otherwise permitted by subsection 8.10(b)."
8. Amendment to Subsection 8.4 of the Credit Agreement. (a) Subsection
8.4(h) of the Credit Agreement is hereby amended by deleting the word "and" at
the end of the clause.
(b) Subsection 8.4(i) of the Credit Agreement is hereby amended by
deleting the period at the end of the clause and inserting in lieu thereof a
semi-colon followed by the word "and".
(c) Subsection 8.4 of the Credit Agreement is hereby amended by adding
the following paragraph in the proper alphabetical order:
"(j) the guarantees of the Domestic Subsidiaries of the Borrower set
forth in the Additional Senior Subordinated Notes and the Additional
Senior Subordinated Note Documents."
9. Amendment to Subsection 8.7 of the Credit Agreement. (a) Subsection
8.7(a)(i) of the Credit Agreement is hereby amended by deleting such subsection
in its entirety and inserting in lieu thereof the following:
"(i) the proceeds of which shall be applied by Holdings
directly to pay out of pocket expenses for administrative,
legal and accounting services provided by third parties which
are reasonable and customary and incurred in the ordinary
course of business, to pay franchise fees and similar costs or
to pay filing fees in connection with the registration under
the Securities Act of 1933, as amended of securities issued
<PAGE> 12
in exchange for (A) the Senior Subordinated Notes or (B) the
Additional Senior Subordinated Notes; provided, howeverthat any
such administrative expenses shall not exceed an aggregate amount
of $1,000,000 in fiscal year 1997 and $750,000 in each fiscal year
thereafter;
10. Amendment to Subsection 8.10 of the Credit Agreement. (a)
Subsection 8.10(a) of the Credit Agreement is hereby amended by deleting the
words "and the Exchange Notes" where they appear in the parenthetical and
inserting in lieu thereof the phrase ", the Additional Senior Subordinated
Notes and the Exchange Notes, provided that, notwithstanding anything to the
contrary herein, the Borrower may apply the proceeds of the Revolving Credit
Loans to the repurchase of the Exchange Notes in an amount not to exceed
$5,700,000 (including related accrued interest and premium) promptly, but in no
event later than ten days following the Effective Date of the First Amendment".
(b) Subsection 8.10(b) of the Credit Agreement is hereby amended by
deleting the words "and the Exchange Notes" where they appear in the
parenthetical occurring in the first clause and inserting in lieu thereof the
phrase ", the Exchange Notes and the Additional Senior Subordinated Notes".
(c) Subsection 8.10(b)(iv) of the Credit Agreement is hereby amended
by inserting at the end of the parenthetical the phrase "and the Additional
Senior Subordinated Notes".
11. Amendment to Subsection 8.11 of the Credit Agreement. Subsection
8.11(b)(ii) of the Credit Agreement is hereby amended by deleting the word
"and" at the end of the clause.
(b) Subsection 8.11(b)(iii) of the Credit Agreement is hereby amended
by deleting the period at the end of the clause and inserting in lieu thereof a
semi-colon followed by the word "and".
(c) Subsection 8.11(b) of the Credit Agreement is hereby amended by
adding the following paragraph in the proper numerical order:
"(iv) the repurchase of the Exchange Notes is accordance with the
provisions of subsection 8.10(a)."
12. Amendment to Subsection 12.1 of the Credit Agreement. Subsection
12.1 of the Credit Agreement is hereby amended by deleting paragraph (b)
thereof in its entirety.
13. Amendment to Schedule 1.1 to the Credit Agreement. Schedule 1.1 to
the Credit Agreement is hereby amended by deleting such Schedule in its
entirety and inserting in lieu thereof the new Schedule 1.1 attached hereto.
14. Consent to Additional Senior Subordinated Notes. Each Lender party
to this Amendment hereby consents to the issuance of the Additional Senior
Subordinated Notes.
15. Representations and Warranties. To induce the Administrative Agent
and the Lenders to enter into this
<PAGE> 13
Amendment, to make the Loans and to issue and participate in Letters of Credit
and to consent to the issuance of the Additional Senior Subordinated Notes, the
Credit Parties hereby represent and warrant to the Administrative Agent and
each Lender that:
(a) Financial Condition. (i) The pro forma balance sheet of the
Borrower and its Subsidiaries as of March 31, 1997 and after giving effect to
the issuance of the Additional Senior Subordinated Notes and the refinancings
contemplated hereby, which has heretofore been furnished to each Lender which
shall be in form and substance satisfactory to the Lenders, and (ii) the
unaudited balance sheet of the Borrower for the fiscal quarter ended March 31,
1997, and the related statements of income, cash flows and changes in
shareholders equity for such periods, copies of which have heretofore been
furnished to each Lender, to the best knowledge of the Borrower, present fairly
in all material respects the financial position of the Borrower as at such
date, and the consolidated results of the Borrower's operations and the
Borrower's cash flows for the fiscal period then ended. All such financial
statements have been prepared, to the best knowledge of the Borrower, in
accordance with GAAP applied consistently throughout the period involved
(except as approved by such accountants and as disclosed therein and subject to
normal recurring adjustments as necessary for the fair presentation thereof).
Neither the Borrower nor any of its Subsidiaries had, to the best knowledge of
the Borrower, as at the date of the balance sheet referred to above, any
material Guarantee Obligation, contingent liability or liability for taxes, or
any long-term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction, which is not reflected in the foregoing statements or in the notes
thereto and which, to the best knowledge of the Borrower, has any reasonable
likelihood of resulting in a material cost or loss. During the period from
March 31, 1997 to and including the date hereof there has been, to the best
knowledge of the Borrower, no sale, transfer or other disposition by the
Borrower or any of its Subsidiaries of any material part of its business, or
property and no purchase or other acquisition of any business or property
(including any capital stock of any other Person) material in relation to the
consolidated financial condition of the Borrower and its Subsidiaries at March
31, 1997.
(b) Corporate Power; Authorization; Enforceable Obligations. Each
Credit Party has the corporate power and authority, and the legal right, to
make, deliver and perform this Amendment, any of the Notes and the other Loan
Documents to which it is a party and, with respect to the Borrower, to borrow
under the Credit Agreement and has taken all necessary corporate action to
authorize the borrowings on the terms and conditions of, or the granting of any
security interests under, the Credit Agreement, this Amendment, any of the
Notes and the other Loan Documents and to authorize the execution, delivery and
performance of this Amendment, any of the Notes, the other Loan Documents to
which it is a party. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other Person
is required in connection with the borrowings under the Credit Agreement or
with the execution, delivery, performance, validity or enforceability
<PAGE> 14
of, or the granting of any security interests under, the Credit Agreement, this
Amendment and any of the Notes or the other Loan Documents to which any Credit
Party is a party, except for those set forth on Schedule 5.4 hereto, each of
which have been made or taken and are in full force and effect. This Amendment,
any Note and each of the other Loan Documents has been duly executed and
delivered on behalf of the Credit Party thereto. This Amendment, any Note and
each of the other Loan Documents constitutes a legal, valid and binding
obligation of the Credit Party thereto enforceable against such Credit Party in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
(c) No Legal Bar. The execution, delivery and performance of this
Amendment, any of the Notes and the other Loan Documents, the borrowings under
the Credit Agreement and the use of the proceeds thereof will not violate any
Requirement of Law or Contractual Obligation of any Credit Party or of any of
their Subsidiaries.
(d) Disclosure. No information, financial statement, report,
certificate or other document prepared or furnished by or on behalf of any
Credit Party to the Administrative Agent or any Lender in connection with this
Amendment, any other Loan Document (but excluding all projections and pro forma
financial statements which shall have been prepared in good faith and based
upon reasonable assumptions) contains any untrue statement of a material fact
or omits to state any material fact necessary to make the statements herein or
therein not misleading. As of the Effective Date, there is no fact known to any
Credit Party (other than general economic conditions, which conditions are
commonly known and affect businesses generally) which has, or which could
reasonably be expected to have, in the reasonable judgment of such Credit
Party, a Material Adverse Effect.
16. Conditions to Effectiveness of this Amendment. The agreement of
(i) the Tranche C Term Loan Lenders to convert the outstanding Tranche C Term
Loans to Tranche B Term Loans and (ii) each Lender party to this Amendment to
consent to the issuance of the Additional Senior Subordinated Notes and the
other amendments set forth herein, is subject to the satisfaction of the
following conditions precedent:
(a) Amendment; Notes. The Administrative Agent shall have received (a)
this Amendment, executed and delivered by a duly authorized officer of the
Borrower, Holdings and Camden with a counterpart for each Lender and (b) for
the account of each of the Lenders which has requested a Note pursuant to
subsections 2.8(a), if requested, a replacement Tranche B Term Note, conforming
to the requirements hereof and executed and delivered by a duly authorized
officer of the Borrower.
(b) Receipt of Proceeds. On or prior to the date hereof the Borrower
shall have received at least $150,000,000 of gross cash proceeds from the
issuance of the Additional Senior Subordinated Notes which proceeds shall, on
the Effective Date, be remitted to the Lenders on a pro rata basis in
accordance with
<PAGE> 15
the Agreed Allocation. The Lenders shall have received copies of the Additional
Senior Subordinated Notes Documents and the Administrative Agent shall be
satisfied with the terms and conditions thereof.
(c) Corporate Proceedings of the Credit Parties. The Administrative
Agent shall have received, with a copy for each Lender, a copy of the
resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the Board of Directors or duly authorized committee of
each of the Credit Parties authorizing (i) the execution, delivery and
performance of this Amendment and the other Loan Documents to which it is a
party and certified by the Secretary or an Assistant Secretary of each of the
Credit Parties as of the Effective Date, which certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded and shall be in form and substance reasonably satisfactory to the
Administrative Agent.
(d) Incumbency Certificates. The Administrative Agent shall have
received, with a copy for each Lender, a certificate of the Secretary or an
Assistant Secretary (or comparable officer) of each of the Credit Parties dated
the Effective Date, as to the incumbency and signature of the officers of such
Person executing each Loan Document to which it is a party and any certificate
or other document to be delivered by it pursuant hereto and thereto, together
with evidence of the incumbency of such Secretary or Assistant Secretary.
(e) Corporate Documents. The Administrative Agent shall have received,
with a counterpart for each Lender, true and complete copies of the certificate
of incorporation and by-laws of each of the Credit Parties certified as of the
Effective Date as complete and correct copies thereof by the Secretary or an
Assistant Secretary of each of the Credit Parties.
(f) Certificate Regarding Subordinated Notes. The Administrative Agent
shall have received, with a counterpart for each Lender a certificate from a
Responsible Officer of the Borrower, dated the Effective Date, that, after
giving effect to the transactions contemplated by this Amendment, the Borrower
will be in compliance with the debt incurrence covenants contained in the
Senior Subordinated Notes Indenture and the Additional Senior Subordinated
Notes Indenture, which certificate shall set forth the calculations used to
make such representation.
(g) Guarantees. Each of the Domestic Subsidiaries, Wire Technologies
and Camden shall have reaffirmed their obligations under the Domestic
Subsidiaries' Guarantee (and each other guarantee executed and delivered by a
Domestic Subsidiary pursuant to subsection 7.12 of the Credit Agreement, if
any), the Wire Technologies Guarantee and the Camden Guarantee, respectively,
each in form and substance reasonably satisfactory to the Administrative Agent.
(h) Consents, Licenses and Approvals. (a) All governmental and
material third party approvals (including material landlords' and other
consents) necessary or advisable in connection with the execution, delivery and
performance of the
<PAGE> 16
Loan Documents and the continuing operation of the Business shall have been
obtained and be in full force and effect, (b) all applicable waiting periods
shall have expired without any action being taken or threatened by any
competent Governmental Authority which would restrain, prevent or otherwise
impose adverse conditions on Holdings or any of its Subsidiaries and (c) the
Administrative Agent shall have received, with a counterpart for each Lender, a
certificate of a Responsible Officer of each of the Credit Parties (A)
attaching copies of all consents, authorizations and filings in connection with
this Amendment and (B) stating that such consents, licenses and filings are in
full force and effect, and each such consent, authorization and filing shall be
in form and substance satisfactory to the Administrative Agent.
(i) Fees. (i) the Administrative Agent shall have received for the
account of the Lenders parties hereto, an amendment fee equal to 10 basis
points of the sum of (x) the aggregate Revolving Credit Commitments of such
Lenders and (y) the aggregate outstanding Term Loans after giving effect to the
changes in the outstanding amounts of the Term Loans contemplated hereby of
such Lenders, as of the Effective Date and (ii) Chase shall have received the
amounts set forth in the Fee Letter dated June 17, 1997 among the Borrower,
Chase and CSI.
(j) Borrowing Certificate. The Administrative Agent shall have
received, with a copy for each Lender, the most recent borrowing certificate
required pursuant to the Credit Agreement, executed by a Responsible Officer of
the Borrower.
(k) Legal Opinions. The Administrative Agent shall have received, with
a counterpart for each Lender, the executed legal opinion of Weil, Gotshal &
Manges LLP, counsel to the Credit Parties, substantially in the form of Exhibit
A hereto, dated the Effective Date and covering such other matters incident to
the transactions contemplated by this Agreement as the Administrative Agent may
require.
(l) Borrowing Base Certificate. The Administrative Agent shall have
received, with a copy for each Lender, a certificate of a Responsible Officer
of the Borrower setting forth information concerning the Borrowing Base as of a
recent date approved by the Administrative Agent.
(m) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the issuance of the
Additional Senior Subordinated Notes and the transactions contemplated herein.
(n) Representations and Warranties. Each of the representations and
warranties made by the Credit Parties and their Subsidiaries in or pursuant to
the Loan Documents shall be true and correct in all material respects on and as
of the date hereof as if made on and as of the date hereof, except for any
representation and warranty which is expressly made as of an earlier date,
which representation and warranty shall have been true and correct in all
material respects as of such earlier date.
<PAGE> 17
17. Confirmation of Guarantees. (a) Holdings hereby acknowledges and
confirms its obligations under Section 11 of the Credit Agreement, and agrees
that its guarantee shall continue at all times to support the Borrower's
obligations under all of the Loan Documents, including, without limitation, as
such documents have been heretofore amended or modified, and, to the extent
permitted by applicable law, as may be further amended or modified from time to
time.
(b) The Borrower hereby acknowledges and confirms its obligations
under the Borrower Guarantee and agrees that its guarantee shall continue at
all times to support Camden's obligations and liabilities under any Letters of
Credit issued for the account of Camden, substantially in the form of Exhibit
B-23 to the Credit Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
(c) Camden hereby acknowledges and confirms its obligations under the
Camden Guarantee, and agrees that its guarantee shall continue at all times to
support the Borrower's obligations under all of the Loan Documents, including,
without limitation, as such documents have been heretofore amended or modified,
and, to the extent permitted by applicable law, as may be further amended or
modified from time to time.
18. Assignment and Assumption. (a) The following Lenders: Aeries
Finance Ltd.; Amara - 2 Finance Ltd.; Captiva II Finance Ltd.; Ceres Finance
Ltd.; The First National Bank of Chicago; National City Bank; Restructured
Obligations Backed by Senior Assets B.V.; Strata Funding Ltd.; Integon Life
Insurance Corporation; Lehman Commercial Paper Inc.; Occidental Life Insurance
Company of North Carolina; Pennsylvania Life Insurance Company; and United
Companies Life Insurance Company (the "Departing Lenders") hereby irrevocably
sell and assign to the Lenders parties hereto excluding the Departing Lenders
but including lenders parties hereto not previously parties to the Credit
Agreement (the "Continuing Lenders") and the Continuing Lenders hereby
irrevocably purchase and assume from the Assigning Lenders without recourse to
the Assigning Lenders, as of the Effective Date, all of the Assigning Lenders
rights and obligations under the Credit Agreement such that the Continuing
Lenders' Revolving Credit Commitments, Tranche A outstandings and Tranche B
outstandings will be as set forth under the relevant headings as on Schedule
1.1.
(b) From and after the Effective Date each of the Departing Lenders
shall relinquish its respective rights and be released from its respective
obligations under the Credit Agreement except as otherwise provided in the
Credit Agreement.
19. Miscellaneous.
(a) Effect. Except as expressly amended hereby, all of the
representations, warranties, terms, covenants and conditions of the Loan
Documents shall remain unamended and not waived and shall continue to be in
full force in effect.
(b) Counterparts. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts, and all of
said counterparts taken together shall
<PAGE> 18
be deemed to constitute one and the same instrument. A set of the copies of
this Amendment signed by all the parties shall be lodged with the Borrower and
the Administrative Agent.
(c) Severability. Any provision of this Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(d) Integration. This Amendment and the other Loan Documents represent
the agreement of the Credit Parties, the Administrative Agent and the Lenders
with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to the subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
(e) GOVERNING LAW. THIS AMENDMENT AND ANY NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT AND ANY NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
(f) Submission To Jurisdiction; Waivers. Each of Holdings, Camden and
the Borrower hereby irrevocably and unconditionally:
(1) submits for itself and its property in any legal action or
proceeding relating to this Amendment and the other Loan Documents to
which it is a party, or for recognition and enforcement of any
judgement in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(2) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;
(3) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Credit Parties at their respective addresses set forth
in subsection 12.2 of the Credit Agreement or at such other address of
which the Administrative Agent shall have been notified pursuant
thereto;
(4) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(5) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal
<PAGE> 19
action or proceeding referred to in this subsection any special,
exemplary, punitive or consequential damages.
(g) Acknowledgements. Each of Holdings, Camden and the Borrower hereby
acknowledges that:
(1) it has been advised by counsel in the negotiation,
execution and delivery of this Amendment and any Notes and the other
Loan Documents;
(2) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Credit Parties arising out
of or in connection with this Amendment or any of the other Loan
Documents, and the relationship between Administrative Agent and
Lenders, on one hand, and the Credit Parties, on the other hand, in
connection herewith or therewith is solely that of debtor and
creditor; and
(3) no joint venture exists among the Lenders or among the
Credit Parties and the Lenders.
(h) WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, CAMDEN, THE
ADMINISTRATIVE AGENT AND THE LENDERS PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AMENDMENT OR ANY NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
(i) Confidentiality. Each Lender party hereto agrees to keep
information obtained by it pursuant hereto and the other Loan Documents
identified as confidential in writing at the time of delivery confidential in
accordance with such Lender's customary practices and agrees that it will only
use such information in connection with the transactions contemplated by this
Amendment and not disclose any of such information other than (a) to such
Lender's employees, representatives, directors, attorneys, auditors, agents or
affiliates who are advised of the confidential nature of such information, (b)
to the extent such information presently is or hereafter becomes available to
such Lender on a non- confidential basis from any source or such information
that is in the public domain at the time of disclosure, (c) to the extent
disclosure is required by law (including applicable securities laws),
regulation, subpoena or judicial order or process (provided that notice of such
requirement or order shall be promptly furnished to the Borrower unless such
notice is legally prohibited) or requested or required by bank, securities or
investment company regulations or auditors or any administrative body or
commission to whose jurisdiction such Lender may be subject, (d) to Transferees
or prospective Transferees or direct or indirect contractual counterparties in
swap agreements, who agree to be bound by the provisions of subsection 12.15 of
the Credit Agreement, (e) to the extent required in connection with any
litigation between any Credit Party and any Lender with respect to the Loans or
this Amendment and the other Loan Documents or (f) with the Borrower's prior
written consent. The agreements in this subsection shall survive repayment of
the Loans and all other amounts payable hereunder.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
INTERNATIONAL WIRE GROUP, INC.,
as Borrower
By:
--------------------------------
Name:
Title:
INTERNATIONAL WIRE HOLDING COMPANY,
as Guarantor
By:
--------------------------------
Name:
Title:
CAMDEN WIRE CO., INC.
By:
--------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a
Lender,
as Swing Line Lender and as
Issuing Lender
By:
--------------------------------
Name:
Title:
BANKERS TRUST COMPANY
By:
--------------------------------
Name:
Title:
<PAGE> 21
AERIES FINANCE LTD.
By:
--------------------------------
Name:
Title:
AMARA - 2 FINANCE LTD.
By:
--------------------------------
Name:
Title: Director
THE BANK OF NEW YORK
By:
--------------------------------
Name:
Title:
BANK OF SCOTLAND
By:
--------------------------------
Name:
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
<PAGE> 22
BANQUE PARIBAS
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
CAISSE NATIONALE DE CREDIT AGRICOLE
By:
--------------------------------
Name:
Title:
CAPTIVA II FINANCE LTD.
By:
--------------------------------
Name:
Title:
CERES FINANCE LTD.
By:
--------------------------------
Name:
Title:
DEBT STRATEGIES FUND, INC.
By:
--------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Name:
Title:
<PAGE> 23
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
--------------------------------
Name:
Title:
HELLER FINANCIAL, INC.
By:
--------------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By:
--------------------------------
Name:
Title:
KZH HOLDING CORPORATION
By:
--------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By:
--------------------------------
Name:
Title:
<PAGE> 24
MEDICAL LIABILITY MUTUAL INSURANCE CO.
By: CHANCELLOR LGT SENIOR SECURED
MANAGEMENT, INC. as Investment
Manager
By:
--------------------------------
Name:
Title:
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By:
--------------------------------
Name:
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By:
--------------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By:
--------------------------------
Name:
Title:
NATIONAL CITY BANK
By:
--------------------------------
Name:
Title:
<PAGE> 25
THE NIPPON CREDIT BANK, LTD.
By:
--------------------------------
Name:
Title:
PRIME INCOME TRUST
By:
--------------------------------
Name:
Title:
ML CBO IV (CAYMAN) LTD.
By: PROTECTIVE ASSET MANAGEMENT,
L.L.C. as Collateral Manager
By:
--------------------------------
Name:
Title:
RESTRUCTURED OBLIGATION BACKED BY
SENIOR ASSETS B.V.
By: CHANCELLOR LGT SENIOR SECURED
MANAGEMENT, INC.
as Portfolio Advisor
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
<PAGE> 26
SENIOR DEBT PORTFOLIO
By: BOSTON MANAGEMENT &
RESEARCH, as Investment
Advisor
By:
--------------------------------
Name:
Title:
SENIOR HIGH INCOME PORTFOLIO, INC.
By:
--------------------------------
Name:
Title:
STRATA FUNDING LTD.
By:
--------------------------------
Name:
Title:
TCW ASSET MANAGEMENT COMPANY, as
Attorney-in-Fact for Integon Life
Insurance Corporation
By:
--------------------------------
Name:
Title:
TCW ASSET MANAGEMENT COMPANY, as
Attorney-in-Fact for Occidental
Life
Insurance Company of North
Carolina
By:
--------------------------------
Name:
Title:
<PAGE> 27
TCW ASSET MANAGEMENT COMPANY, as
Attorney-in-Fact for Pennsylvania
Life Insurance
Company
By:
--------------------------------
Name:
Title:
TCW ASSET MANAGEMENT COMPANY, as
Attorney-in-Fact for United
Companies Life Insurance Company
By:
--------------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By:
--------------------------------
Name:
Title:
DEEPROCK & COMPANY by:
Eaton Vance Management, as
Investment
Advisor
By:
--------------------------------
Name:
Title: Authorized signatory
CITY NATIONAL BANK
By:
--------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER INC.
By:
--------------------------------
Name:
Title:
<PAGE> 28
ANNEX A
SECTION 2 AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans (each, a "Revolving Credit Loan", collectively,
"Revolving Credit Loans") to the Borrower from time to time during the
Revolving Credit Commitment Period in an aggregate principal amount at any one
time outstanding, when added to such Revolving Credit Lender's Revolving Credit
Commitment Percentage of all Letter of Credit Outstandings and outstanding
Swing Line Loans, not to exceed the lesser of (i) the amount of such Revolving
Credit Lender's Revolving Credit Commitment less such Revolving Credit Lender's
Revolving Credit Commitment Percentage of any commitment in respect of any
working capital facility described in subsection 8.2(i)(iii) and (ii) such
Lender's Revolving Credit Commitment Percentage of the Borrowing Base then in
effect. During the Revolving Credit Commitment Period the Borrower may use the
Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans
in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof, as
determined by the Borrower and notified to the Administrative Agent in
accordance with subsections 2.3 and 2.13.
2.2 Revolving Credit Notes. The Borrower agrees that, upon the request
to the Administrative Agent by any Revolving Credit Lender, in order to
evidence such Lender's Revolving Credit Loans the Borrower will execute and
deliver to such Lender a promissory note substantially in the form of Exhibit
A-1, with appropriate insertions as to payee, date and principal amount (each,
as amended, supplemented, replaced or otherwise modified from time to time, a
"Revolving Credit Note"), payable to the order of such Revolving Credit Lender
and in a principal amount equal to the lesser of (a) the amount of the initial
Revolving Credit Commitment of such Revolving Credit Lender and (b) the
aggregate unpaid principal amount of all Revolving Credit Loans made by such
Revolving Credit Lender. Each Revolving Credit Lender is hereby authorized to
record the date, Type and amount of each Revolving Credit Loan made by such
Revolving Credit Lender, each continuation thereof, each conversion of all or a
portion thereof to another Type, the date and amount of each payment or
prepayment of principal thereof and, in the case of Eurodollar Loans, the
length of each Interest Period with respect thereto, on the schedules annexed
to and constituting a part of its Revolving Credit Note, and any such
recordation shall, in the absence of manifest error, constitute prima facie
evidence of the accuracy of the information so recorded, provided that the
failure by any Revolving Credit Lender to make any such recordation shall not
affect any of the obligations of the Borrower under such Revolving Credit Note
or this Agreement. Any Revolving Credit Note shall (x) be dated the Closing
Date, (y) be stated to mature on the Revolving Credit Commitment Termination
Date and (z) provide for the payment of interest in accordance with subsection
4.1.
<PAGE> 29
2
2.3 Procedure for Revolving Credit Borrowing. The Borrower may borrow
under the Revolving Credit Commitments during the Revolving Credit Commitment
Period on any Business Day, provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (a) three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Revolving Credit Loans are to be initially Eurodollar Loans, or (b)
one Business Day prior to the requested Borrowing Date, otherwise), specifying
(i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether
the borrowing is to be of Eurodollar Loans, Alternate Base Rate Loans or a
combination thereof and (iv) if the borrowing is to be entirely or partly of
Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Periods therefor. Each borrowing
under the Revolving Credit Commitments shall be in an amount equal to (A) in
the case of Alternate Base Rate Loans, $500,000 or a whole multiple of $100,000
in excess thereof (or, if the then Available Revolving Credit Commitments are
less than $500,000, such lesser amount) and (B) in the case of Eurodollar
Loans, $1,000,000 or a whole multiple of $250,000 in excess thereof. Upon
receipt of any such notice from the Borrower, the Administrative Agent shall
promptly notify each Revolving Credit Lender thereof. Each Revolving Credit
Lender will make the amount of its pro rata share of each borrowing available
to the Administrative Agent for the account of the Borrower at the office of
the Administrative Agent specified in subsection 12.2 prior to 11:00 A.M., New
York City time, on the Borrowing Date requested by the Borrower in funds
immediately available to the Administrative Agent. Such borrowing will then be
made available to the Borrower by the Administrative Agent crediting the
account of the Borrower on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Revolving Credit
Lenders and in like funds as received by the Administrative Agent.
2.4 Commitment Fee; Administrative Agent Fees. (a) The Borrower agrees
to pay to the Administrative Agent for the account of each Revolving Credit
Lender a commitment fee for the period from and including the first day of the
Revolving Credit Commitment Period to the Revolving Credit Commitment
Termination Date, computed at the rate of 1/2 of 1% per annum on the average
daily Available Revolving Credit Commitment of such Revolving Credit Lender
during the period for which payment is made, payable quarterly in arrears on
the last day of each March, June, September and December and on the Revolving
Credit Commitment Termination Date.
(b) The Borrower shall pay to Chase the amounts set forth in the Fee
Letter dated December 26, 1996 among Chase, CSI, Bankers Trust Company, BT
Securities Corporation and the Borrower in the amounts and on the dates set
forth therein.
2.5 Termination or Reduction of Revolving Credit Commitments. (a) The
Borrower shall have the right, upon not less than five Business Days' notice to
the Administrative Agent, to terminate the Revolving Credit Commitments or,
from time to time, reduce the unutilized portion of the amount of the Revolving
Credit Commitments, provided that (i) the Revolving
<PAGE> 30
3
Credit Commitments shall not be terminated if any Letters of Credit or Swing
Line Loans are outstanding and (ii) any such termination of the Revolving
Credit Commitments shall be accompanied by prepayment in full of the Revolving
Credit Loans, Swing Line Loans and L/C Obligations then outstanding, together
with accrued interest thereon to the date of such prepayment, cancellation of
all Letters of Credit (unless cash collateralized in accordance with the last
sentence of this paragraph) and the payment of any unpaid commitment fee then
accrued hereunder. Any such reduction shall be in an amount of $500,000, or a
whole multiple of $100,000 in excess thereof, and shall reduce permanently the
amount of the Revolving Credit Commitments then in effect and shall further
include any amounts due in respect thereof under subsection 4.9. Upon
termination of the Revolving Credit Commitments, any Letter of Credit then
outstanding which has been fully cash collateralized upon terms reasonably
satisfactory to the Administrative Agent and the Issuing Lender shall no longer
be considered a "Letter of Credit" as defined in subsection 1.1, and any L/C
Participating Interest heretofore granted by the Issuing Lender to the
Revolving Credit Lenders in such Letter of Credit shall be deemed terminated
but the letter of credit fees payable under subsection 3.3 shall continue to
accrue to the Issuing Lender with respect to such Letter of Credit until the
expiry thereof.
(b) In the case of any reduction of the Revolving Credit Commitments
hereunder, to the extent, if any, that the sum of the Revolving Credit Loans,
Swing Line Loans and the Letter of Credit Outstandings exceeds the Revolving
Credit Commitments as so reduced, the Borrower shall make a prepayment equal to
such excess amount, the proceeds of which shall be applied first, to payment of
the Swing Line Loans then outstanding, second, to payment of the Revolving
Credit Loans then outstanding, third, to payment of any L/C Obligations then
outstanding and last, to cash collateralize any outstanding Letter of Credit on
terms satisfactory to the Required Lenders.
(c) The Revolving Credit Commitments once terminated or reduced may
not be reinstated.
2.6 Term Loans. (a) Each Tranche A Term Loan Lender identified on
Schedule 1.1 hereto has made a term loan (a "Tranche A Term Loan") to the
Borrower the outstanding principal balance of which is set forth opposite such
Lender's name in Schedule 1.1 under the heading "Tranche A Term Loan"
(collectively, the "Tranche A Term Loans").
(b) Each Tranche B Term Loan Lender identified on Schedule 1.1 hereto
has made a Tranche B term loan (a "Tranche B Term Loan") to the Borrower the
outstanding principal balance of which is set forth opposite such Lender's name
in Schedule 1.1 under the heading "Tranche B Term Loan" (collectively, the
"Tranche B Term Loans").
(c) All outstanding Tranche C Term Loans are hereby converted to
Tranche B Term Loans for all purposes hereof on and as of the Effective Date.
<PAGE> 31
4
(d) The Term Loans may from time to time be (i) Eurodollar Loans, (ii)
Alternate Base Rate Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with subsection
2.10.
2.7 Tranche A Term Notes. (a) The Borrower agrees that, upon the
request to the Administrative Agent by any Tranche A Term Loan Lender, in order
to evidence such Lender's Tranche A Term Loan the Borrower will execute and
deliver to such Lender a promissory note substantially in the form of Exhibit
A-2 (each, as amended, supplemented, replaced or otherwise modified from time
to time, a "Tranche A Term Note"), with appropriate insertions therein as to
payee, date and principal amount, payable to the order of such Tranche A Term
Loan Lender and in a principal amount equal to the amount set forth opposite
such Tranche A Term Loan Lender's name on Schedule 1.1 under the heading
"Tranche A Term Loan Commitment". Each Tranche A Term Loan Lender is hereby
authorized to record the date, Type and amount of its Tranche A Term Loan, each
continuation thereof, each conversion of all or a portion thereof to another
Type, the date and amount of each payment or prepayment of principal of its
Tranche A Term Loan and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto, on the schedules annexed to and
constituting a part of its Tranche A Term Note, and any such recordation shall,
in the absence of manifest error, constitute prima facie evidence of the
accuracy of the information so recorded, provided that the failure by any
Tranche A Term Loan Lender to make any such recordation shall not affect any of
the obligations of the Borrower under such Tranche A Term Note or this
Agreement. Any Tranche A Term Note shall (i) be dated the Closing Date, (ii) be
payable as provided in subsection 2.7(b) and (iii) provide for the payment of
interest in accordance with subsection 4.1.
(b) The aggregate Tranche A Term Loans of all the Tranche A Term Loan
Lenders shall be payable in 21 consecutive quarterly installments on the dates
and in a principal amount equal to the amount set forth below (together with
all accrued interest thereon) opposite the applicable installment date (or, if
less, the aggregate amount of the Tranche A Term Loans then outstanding):
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
September 30, 1997 $625,000.00
December 31, 1997 $625,000.00
March 31, 1998 $625,000.00
June 30, 1998 $625,000.00
September 30, 1998 $625,000.00
December 31, 1998 $625,000.00
March 31, 1999 $937,500.00
June 30, 1999 $937,500.00
September 30, 1999 $937,500.00
December 31, 1999 $937,500.00
</TABLE>
<PAGE> 32
5
<TABLE>
<S> <C>
March 31, 2000 $1,250,000.00
June 30, 2000 $1,250,000.00
September 30, 2000 $1,250,000.00
December 31, 2000 $1,250,000.00
March 31, 2001 $1,562,500.00
June 30, 2001 $1,562,500.00
September 30, 2001 $1,562,500.00
December 31, 2001 $1,562,500.00
March 31, 2002 $2,000,000.00
June 30, 2002 $2,000,000.00
September 30, 2002 $2,250,000.00
</TABLE>
2.8 Tranche B Term Notes. (a) The Borrower agrees that, upon the
request to the Administrative Agent by any Tranche B Term Loan Lender, in order
to evidence such Lender's Tranche B Term Loan the Borrower will execute and
deliver to such Lender a promissory note substantially in the form of Exhibit
A-3 (each, as amended, supplemented, replaced or otherwise modified from time
to time, a "Tranche B Term Note"; Tranche A Term Notes, and Tranche B Term
Notes when hereinafter referred to collectively shall be referred to as "Term
Notes"), with appropriate insertions therein as to payee, date and principal
amount, payable to the order of such Tranche B Term Loan Lender and in a
principal amount equal to the amount set forth opposite such Tranche B Term
Loan Lender's name on Schedule 1.1 under the heading "Tranche B Term Loan
Commitment." Each Tranche B Term Loan Lender is hereby authorized to record the
date, Type and amount of its Tranche B Term Loan, each continuation thereof,
each conversion of all or a portion thereof to another Type, the date and
amount of each payment or prepayment of principal of its Tranche B Term Loan
and, in the case of Eurodollar Loans, the length of each Interest Period with
respect thereto, on the schedules annexed to and constituting a part of its
Tranche B Term Note, and any such recordation shall, in the absence of manifest
error, constitute prima facie evidence of the accuracy of the information so
recorded, provided that the failure by any Tranche B Term Loan Lender to make
any such recordation shall not affect any of the obligations of the Borrower
under such Tranche B Term Note or this Agreement. Any Tranche B Term Note shall
(i) be dated the Closing Date, (ii) be payable as provided in subsection 2.8(b)
and (iii) provide for the payment of interest in accordance with subsection
4.1.
(b) The aggregate Tranche B Term Loans of all the Tranche B Term Loan
Lenders shall be payable in 25 consecutive quarterly installments on the dates
and in a principal amount equal to the amount set forth below (together with
all accrued interest thereon) opposite the applicable installment date (or, if
less, the aggregate amount of the Tranche B Term Loans then outstanding):
<PAGE> 33
6
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
September 30, 1997 $250,000.00
December 31, 1997 $250,000.00
March 31, 1998 $250,000.00
June 30, 1998 $250,000.00
September 30, 1998 $250,000.00
December 31, 1998 $250,000.00
March 31, 1999 $250,000.00
June 30, 1999 $250,000.00
September 30, 1999 $250,000.00
December 31, 1999 $250,000.00
March 31, 2000 $250,000.00
June 30, 2000 $250,000.00
September 30, 2000 $250,000.00
December 31, 2000 $250,000.00
March 31, 2001 $250,000.00
June 30, 2001 $250,000.00
September 30, 2001 $250,000.00
December 31, 2001 $250,000.00
March 31, 2002 $500,000.00
June 30, 2002 $500,000.00
September 30, 2002 $500,000.00
December 31, 2002 $38,625,000.00
March 31, 2003 $38,625,000.00
June 30, 2003 $38,625,000.00
September 30, 2003 $38,625,000.00
</TABLE>
2.9 [Intentionally Omitted].
2.10 Repayment of Loans. (a) [Intentionally Omitted].
(b) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of: (i) each Revolving Credit Lender, the
then unpaid principal amount of each Revolving Credit Loan of such Lender, on
the Revolving Credit Commitment Termination Date (or such earlier date on which
the Revolving Credit Loans become due and payable pursuant to Section 9); (ii)
the Swing Line Lender, the then unpaid principal amount of the Swing Line
Loans, on the Revolving Credit Commitment Termination Date (or such earlier
date on which the Swing Line Loans become due and payable pursuant to Section
9); (iii) each Tranche A Term Loan Lender, such Tranche A Term Loan Lender's
Tranche A Term Loan Commitment Percentage of the amounts specified in
subsection 2.7(b) (or, if less, the aggregate amount of the Tranche A Term
Loans of such Tranche A Term Loan Lender then outstanding), on the dates
specified in subsection 2.7(b) (or such earlier date on which the Tranche A
Term Loans become due and payable pursuant to Section 9); and (iv) each Tranche
B Term Loan Lender, such Tranche B Term Loan Lender's Tranche B Term Loan
Commitment Percentage of the amounts specified in subsection 2.8(b) (or, if
less, the aggregate amount of the Tranche B Term Loans of such
<PAGE> 34
7
Tranche B Term Loan Lender then outstanding), on the dates specified in
subsection 2.8(b) (or such earlier date on which the Tranche B Term Loans
become due and payable pursuant to Section 9). The Borrower hereby further
agrees to pay interest on the unpaid principal amount of the Loans from time to
time outstanding from the date hereof until payment in full thereof at the
rates per annum, and on the dates, set forth in subsection 4.1.
(c) Each Lender (including the Swing Line Lender) shall maintain in
accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Lender resulting from each Loan of such
Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.
(d) The Administrative Agent shall maintain the Register pursuant to
subsection 12.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, the Type thereof and each
Interest Period, if any, applicable thereto, (ii) the amount of any principal
or interest due and payable or to become due and payable from the Borrower to
each Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(e) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 2.10(c) shall, in the absence of manifest
error and to the extent permitted by applicable law, be prima facie evidence of
the existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Administrative Agent
to maintain the Register or any such account, or any error therein, shall not
in any manner affect the obligation of the Borrower to repay (with applicable
interest) the Loans made to the Borrower by such Lender in accordance with the
terms of this Agreement.
2.11 Optional Prepayments. (a) The Borrower may, at any time and from
time to time, prepay the Loans, in whole or in part, without premium or
penalty, upon at least three Business Days' irrevocable notice to the
Administrative Agent, specifying the date and amount of prepayment and whether
the prepayment is of (i) Eurodollar Loans, Alternate Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each and (ii) Tranche A Term Loans, Tranche B Term Loans, Revolving Credit
Loans or a combination thereof, and if of a combination thereof, the amount
allocable to each. Upon receipt of any such notice the Administrative Agent
shall promptly notify each Term Loan Lender or Revolving Credit Lender, as the
case may be, thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with,
in the case of prepayments of the Term Loans only, accrued interest to such
date on the amount prepaid. Optional prepayments of the Term Loans shall be
applied, with respect to the first $10,000,000 of such prepayments, to
installments of the Term Loans as the Borrower may elect (other than scheduled
installments of the Tranche B
<PAGE> 35
8
Term Loans prior to December 31, 2002) and, with respect to any amount of such
prepayments in excess of $10,000,000, such prepayments shall be applied pro
rata to the Term Loans based upon the then outstanding principal amounts of the
Tranche A Term Loans and Tranche B Term Loans (with each Tranche A Term Loan
and Tranche B Term Loan to be allocated that percentage of the amount to be
applied as is equal to a fraction (expressed as a percentage), the numerator of
which is the then outstanding principal amount of such Tranche A Term Loan and
Tranche B Term Loan, as the case may be, and the denominator of which is equal
to the then outstanding principal amount of all Term Loans).
(b) With respect to optional prepayments of the Term Loans after
$10,000,000 of optional prepayments shall have been made, the amount of each
principal payment of Term Loans shall be applied to reduce the then remaining
installments of the Tranche A Term Loans and Tranche B Term Loans, pro rata
based upon the then remaining number of installments of such Tranche A Term
Loans or Tranche B Term Loans, as the case may be, after giving effect to all
prior reductions thereto (i.e., each then remaining installment of the Tranche
A Term Loans or Tranche B Term Loans, as the case may be, shall be reduced by
an amount equal to the aggregate amount to be applied to the Tranche A Term
Loans or Tranche B Term Loans, as the case may be, divided by the number of the
then remaining installments for such Tranche A Term Loans or Tranche B Term
Loans); provided, that if the amount to be applied to any installment as
required by this Agreement would exceed the then remaining amount of such
installment, then an amount equal to such excess shall be applied to the next
succeeding installment after giving effect to all prior reductions thereto
(including the amount of prepayments theretofore allocated pursuant to the
preceding portion of this sentence). Amounts prepaid on account of the Term
Loans may not be reborrowed. Partial prepayments shall be in an aggregate
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof
and shall include any amounts due in respect thereof under subsection 4.9.
2.12 Mandatory Prepayments and Revolving Credit Commitment Reductions.
(a) If, subsequent to the Second Amendment Closing Date, unless the Required
Lenders (and Tranche A Term Loan Lenders and Tranche B Term Loan Lenders having
in the aggregate at least a majority of the outstanding Term Loans) and the
Borrower shall otherwise agree, Holdings or any of its Subsidiaries shall issue
any class of Capital Stock other than a Permitted Issuance or incur any
Indebtedness other than any Indebtedness permitted pursuant to subsection 8.2
or 11.6(i), 100% of the Net Cash Proceeds thereof shall on the first Business
Day after receipt, be applied toward the prepayment of the Loans and reduction
of Commitments as set forth in paragraph (d) of this subsection 2.12.
(b) Unless the Required Lenders (and Tranche A Term Loan Lenders and
Tranche B Term Loan Lenders having in the aggregate at least a majority of the
outstanding Term Loans) and the Borrower shall otherwise agree, if the Borrower
or any of its Subsidiaries shall receive Net Cash Proceeds from any Asset Sale
(including the sale and leaseback of assets and any sale of
<PAGE> 36
9
accounts receivable in connection with a receivable financing transaction) such
Net Cash Proceeds shall, on the first Business Day after receipt, be applied
toward the prepayment of the Loans and reduction of Commitments as set forth in
paragraph (d) of this subsection 2.12.
(c) Unless the Required Lenders (and Tranche A Term Loan Lenders and
Tranche B Term Loan Lenders having in the aggregate at least a majority of the
outstanding Term Loans) and the Borrower shall otherwise agree, if for any
fiscal year, commencing with the fiscal year ending December 31, 1996 there
shall be Excess Cash Flow for such fiscal year, the ECF Percentage of such
Excess Cash Flow shall be applied toward prepayment of the Loans and reduction
of the Commitments as set forth in paragraph (d) of this subsection 2.12. Each
such prepayment shall be made on or before the date which is seven Business
Days after the earlier of (A) the date on which the financial statements
referred to in subsection 7.1(a) are required to be delivered to the Lenders
and (B) the date on which said financial statements are actually delivered.
(d) All mandatory prepayments shall be applied first to the Term Loans
and second to the permanent reduction of the Revolving Credit Commitments. The
application of prepayments referred to in the preceding sentence shall be made
first to Alternate Base Rate Loans and second to Eurodollar Loans. Each
mandatory prepayment of the Term Loans shall be applied pro rata to the Term
Loans based upon the then outstanding principal amounts of the Tranche A Term
Loans and Tranche B Term Loans (with each Tranche A Term Loan and Tranche B
Term Loan to be allocated that percentage of the amount to be applied as is
equal to a fraction (expressed as a percentage), the numerator of which is the
then outstanding principal amount of such Tranche A Term Loan or Tranche B Term
Loan, as the case may be, and the denominator of which is equal to the then
outstanding principal amount of all Term Loans).
The amount of each principal prepayment of Term Loans shall be applied
to reduce the then remaining installments of the Tranche A Term Loans and
Tranche B Term Loans, pro rata based upon the then remaining number of
installments of such Tranche A Term Loans or Tranche B Term Loans, as the case
may be, after giving effect to all prior reductions thereto (i.e., each then
remaining installment of the Tranche A Term Loans or Tranche B Term Loans, as
the case may be, shall be reduced by an amount equal to the aggregate amount to
be applied to the Tranche A Term Loans or Tranche B Term Loans, as the case may
be, divided by the number of the then remaining installments for such Tranche A
Term Loans or Tranche B Term Loans); provided, that if the amount to be applied
to any installment as required by this Agreement would exceed the then
remaining amount of such installment, then an amount equal to such excess shall
be applied to the next succeeding installment after giving effect to all prior
reductions thereto (including the amount of prepayments theretofore allocated
pursuant to the preceding portion of this sentence). Amounts prepaid on account
of the Term Loans may not be reborrowed.
<PAGE> 37
10
(e) If at any time the sum of the Revolving Credit Loans, Swing Line
Loans and the Letter of Credit Outstandings exceeds the lesser of (i) the
Borrowing Base as then in effect and (ii) the Revolving Credit Commitments less
the amount of any commitment in respect of any working capital facility
described in subsection 8.2(i)(iii) (including at any time after any reduction
of the Revolving Credit Commitments pursuant to subsection 2.5 or this
subsection 2.12), the Borrower shall make a payment in the amount of such
excess which payment shall be applied in the order set forth in subsection
2.5(b). To the extent that after giving effect to any prepayment of the Loans
required by the preceding sentence, the sum of the Revolving Credit Loans,
Swing Line Loans and Letter of Credit Outstandings exceed the lesser of clauses
(i) and (ii) above, the Borrower shall, without notice or demand, immediately
cash collateralize the then outstanding L/C Obligations in an amount equal to
such excess upon terms reasonably satisfactory to the Administrative Agent.
(f) If at any time the Borrower or any Subsidiary shall receive any
cash proceeds of any casualty or condemnation in excess of $2,000,000 permitted
by subsection 8.6(c), such proceeds shall be deposited with the Administrative
Agent who shall hold such proceeds in a cash collateral account satisfactory to
it. From time to time upon request, the Administrative Agent will release such
proceeds to the Borrower or such Subsidiary, as necessary, to pay for
replacement or rebuilding of the assets lost or condemned. If such assets are
not replaced or rebuilt within one year (subject to reasonable extension for
force majeure or weather delays) following the condemnation or casualty or if
the Borrower fails to notify the Administrative Agent in writing on or before
180 days after such casualty or condemnation that the Borrower shall commence
the replacement or rebuilding of such asset, then, in either case, the
Administrative Agent may apply any amounts in the cash collateral account to
the repayment of the Loans in accordance with subsection 2.12(d).
(g) If there shall be any reduction in the price under the Omega
Acquisition Agreement, the Omega Escrow Agreement (other than (i) any reduction
in the purchase price described in subsection 1.09(a)(ii) of the Omega
Acquisition Agreement to the extent, and only to the extent that any such
reduction does not exceed $500,000 in the aggregate and (ii) any reduction in
the purchase price which is due to a breach of any covenant, representation or
warranty in the Omega Acquisition Agreement by any party thereto other than the
Borrower which, due to such party's refusal or other failure to cure, is cured
with such reduction) pursuant to the terms thereof, then on the same Business
Day as the Borrower receives any payment in respect thereof, the Borrower
shall, unless the Required Lenders and the Borrower shall otherwise agree,
repay the Loans in the amount of such reduction to be applied first to the Term
Loans in accordance with subsection 2.12(d) and second to the permanent
reduction of the Revolving Credit Commitments. The application of prepayments
referred to in the preceding sentence shall be made first to Alternate Base
Rate Loans and second to Eurodollar Loans. Each mandatory prepayment of the
Term Loans pursuant to
<PAGE> 38
11
this subsection 2.12(g) shall be applied to the remaining installments thereof
in accordance with subsection 2.12(d). To the extent that after giving effect
to any prepayment of the Loans required by the preceding sentence, the sum of
the Revolving Credit Loans, Swing Line Loans and Letter of Credit Outstandings
exceed the lesser of (i) the Borrowing Base and (ii) the Revolving Credit
Commitments as then reduced, the Borrower shall, without notice or demand,
immediately cash collateralize the then outstanding L/C Obligations in an
amount equal to such excess upon terms reasonably satisfactory to the
Administrative Agent.
(h) If there shall be any reduction in the price under any of the
Acquisition Documents or the Camden Acquisition Documents (other than (i) an
adjustment due to working capital adjustments as contemplated by the
Acquisition Documents or the Camden Acquisition Documents, as the case may be,
or (ii) any reduction in the purchase price which is due to a breach of any
covenant, representation or warranty in any Acquisition Agreement or Camden
Acquisition Document, as the case may be, by any party thereto other than the
Borrower which, due to such party's refusal or other failure to cure, is cured
with such reduction) pursuant to the terms thereof, then on the same Business
Day as the Borrower receives any payment in respect thereof, the Borrower
shall, unless the Required Lenders and the Borrower shall otherwise agree,
repay the Loans in the amount of such reduction to be applied first to the Term
Loans in accordance with subsection 2.12(d) and second to the permanent
reduction of the Revolving Credit Commitments. The application of prepayments
referred to in the preceding sentence shall be made first to Alternate Base
Rate Loans and second to Eurodollar Loans. Each mandatory prepayment of the
Term Loans pursuant to this subsection 2.12(h) shall be applied to the
remaining installments thereof in accordance with subsection 2.12(d). To the
extent that after giving effect to any prepayment of the Loans required by the
preceding sentence, the sum of the Revolving Credit Loans, Swing Line Loans and
Letter of Credit Outstandings exceed the lesser of (i) the Borrowing Base and
(ii) the Revolving Credit Commitments as then reduced, the Borrower shall,
without notice or demand, immediately cash collateralize the then outstanding
L/C Obligations in an amount equal to such excess upon terms reasonably
satisfactory to the Administrative Agent.
(i) The provisions of this subsection 2.12 shall not be in derogation
of any other covenant or obligation of the Borrower and its Subsidiaries under
the Loan Documents and shall not be construed as a waiver of, or a consent to
departure from, any such covenant or obligation.
(j) Notwithstanding the foregoing provisions of this subsection 2.12,
if at any time the mandatory prepayment of the Term Loans pursuant to this
Agreement would result, after giving effect to the procedures set forth in this
Agreement, in the Borrower incurring breakage costs and other Eurodollar Loans
related costs under subsection 4.6, 4.7 or 4.8 as a result of Eurodollar Loans
being prepaid other than on the last day of an Interest Period applicable
thereto ("Affected Eurodollar Loans") which breakage costs are required to be
paid pursuant to
<PAGE> 39
12
subsection 4.9, then, the Borrower may so long as no Default or Event of
Default shall have occurred and be continuing, in its sole discretion,
initially deposit a portion (up to 100%) of the amounts that otherwise would
have been paid in respect to the Affected Eurodollar Loans with the
Administrative Agent (which deposit must be equal in amount to the amount of
Affected Eurodollar Loans not immediately prepaid) to be held as security for
the obligations of the Borrower to make such mandatory prepayment pursuant to a
cash collateral agreement to be entered into in form and substance reasonably
satisfactory to the Administrative Agent, with such cash collateral to be
directly applied upon the first occurrence (or occurrences) thereafter of the
last day of an Interest Period applicable to the relevant Term Loan that is a
Eurodollar Loan (or such earlier date or dates as shall be requested by the
Borrower), to repay an aggregate principal amount of such Term Loan equal to
the Affected Eurodollar Loans not initially repaid pursuant to this sentence.
2.13 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to Alternate Base Rate Loans, by
giving the Administrative Agent at least two Business Days' prior irrevocable
notice of such election, provided that, unless the Borrower elects to deposit
with the Administrative Agent the amount of any breakage costs and other
Eurodollar Loan related costs to be incurred by the Borrower under this
Agreement with respect to the prepayment or conversion of such Eurodollar Loan
prior to the end of an Interest Period, any such conversion of Eurodollar Loans
may only be made on the last day of an Interest Period with respect thereto.
The Borrower may elect from time to time to convert Alternate Base Rate Loans
to Eurodollar Loans by giving the Administrative Agent at least three Business
Days' prior irrevocable notice of such election. Any such notice of conversion
to Eurodollar Loans shall specify the length of the initial Interest Period or
Interest Periods therefor. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Term Loan Lender or Revolving Credit Lender,
as the case may be, thereof. All or any part of outstanding Eurodollar Loans
and Alternate Base Rate Loans may be converted as provided herein, provided
that (i) no Alternate Base Rate Loan may be converted into a Eurodollar Loan
when any Default or Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have determined that such a
conversion is not appropriate and (ii) any such conversion may only be made if,
after giving effect thereto, subsection 2.14 shall not have been contravened.
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
notice to the Administrative Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in subsection 1.1, of the
length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan may be continued as such (i) when any Event of Default
has occurred and is continuing and the Administrative Agent has or the Required
Lenders have determined that such a continuation is not appropriate or (ii) if,
after
<PAGE> 40
13
giving effect thereto, subsection 2.14 would be contravened and provided,
further, that if the Borrower shall fail to give any required notice as
described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso such Eurodollar Loans shall be automatically
converted to Alternate Base Rate Loans on the last day of such then expiring
Interest Period.
2.14 Minimum Amounts of Tranches. All borrowings, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of the Loans
comprising each Eurodollar Tranche shall be equal to $1,000,000 or a whole
multiple of $250,000 in excess thereof and so that there shall not be more than
15 Eurodollar Tranches at any one time outstanding.
2.15 Swing Line Commitment. (a) Subject to the terms and conditions
hereof, the Swing Line Lender agrees to make swing line loans (individually, a
"Swing Line Loan"; collectively, the "Swing Line Loans") to the Borrower from
time to time during the Revolving Credit Commitment Period in an aggregate
principal amount at any one time outstanding not to exceed $12,500,000,
provided that at no time may the sum of the Swing Line Loans, the Revolving
Credit Loans and Letter of Credit Outstandings exceed the lesser of (i) the
Revolving Credit Commitments less the amount of any commitment in respect of
any working capital facility described in subsection 8.2(i)(iii) and (ii) the
Borrowing Base then in effect. During the Revolving Credit Commitment Period,
the Borrower may use the Swing Line Commitment by borrowing, prepaying the
Swing Line Loans in whole or in part, and reborrowing, all in accordance with
the terms and conditions hereof. All Swing Line Loans shall be made as
Alternate Base Rate Loans and shall not be entitled to be converted into
Eurodollar Loans. The Borrower shall give the Swing Line Lender irrevocable
notice (which notice must be received by the Swing Line Lender prior to 12:00
Noon, New York City time) on the requested Borrowing Date specifying the amount
of the requested Swing Line Loan which shall be in an aggregate minimum amount
of $150,000 or a whole multiple of $25,000 in excess thereof. The proceeds of
the Swing Line Loan will be made available by the Swing Line Lender to the
Borrower at the office of the Swing Line Lender by 3:00 p.m. on the Borrowing
Date by crediting the account of the Borrower at such office with such
proceeds. The Borrower may at any time and from time to time, prepay the Swing
Line Loans, in whole or in part, without premium or penalty, by notifying the
Swing Line Lender prior to 12:00 Noon on any Business Day of the date and
amount of prepayment. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein. Partial
prepayments shall be in an aggregate principal amount of $150,000 or a whole
multiple of $25,000 in excess thereof.
(b) The Borrower agrees that, upon the request to the Administrative
Agent by the Swing Line Lender, in order to evidence the Swing Line Loans the
Borrower will execute and deliver to the Swing Line Lender a promissory note
substantially
<PAGE> 41
14
in the form of Exhibit A-5, with appropriate insertions (as the same may be
amended, supplemented, replaced or otherwise modified from time to time, the
"Swing Line Note"), payable to the order of the Swing Line Lender and
representing the obligation of the Borrower to pay the amount of the Swing Line
Commitment or, if less, the unpaid principal amount of the Swing Line Loans,
with interest thereon as prescribed in subsection 4.1. The Swing Line Lender is
hereby authorized to record the Borrowing Date, the amount of each Swing Line
Loan and the date and amount of each payment or prepayment of principal
thereof, on the schedule annexed to and constituting a part of the Swing Line
Note and any such recordation shall, in the absence of manifest error,
constitute prima facie evidence of the accuracy of the information so recorded,
provided that the failure by the Swing Line Lender to make any such recordation
shall not affect any of the obligations of the Borrower under such Swing Line
Note or this Agreement. Any Swing Line Note shall (a) be dated the Closing
Date, (b) be stated to mature on the Revolving Credit Commitment Termination
Date and (c) bear interest for the period from the date thereof until paid in
full on the unpaid principal amount thereof from time to time outstanding at
the applicable interest rate per annum determined as provided in, and payable
as specified in, subsection 4.1.
(c) The Swing Line Lender, at any time in its sole and absolute
discretion may, on behalf of the Borrower (which hereby irrevocably directs the
Swing Line Lender to act on its behalf) request each Revolving Credit Lender
including the Swing Line Lender, to make a Revolving Credit Loan in an amount
equal to such Lender's Revolving Credit Commitment Percentage of the amount of
the Swing Line Loans outstanding on the date such notice is given (the
"Refunded Swing Line Loans"). Unless any of the events described in paragraph
(f) of Section 9 shall have occurred with respect to the Borrower (in which
event the procedures of paragraph (e) of this subsection 2.15 shall apply) each
Revolving Credit Lender shall make the proceeds of its Revolving Credit Loan
available to the Administrative Agent for the account of the Swing Line Lender
at the office of the Administrative Agent specified in subsection 12.2 prior to
12:00 Noon (New York City time) in funds immediately available on the Business
Day next succeeding the date such notice is given. The proceeds of such
Revolving Credit Loans shall be immediately applied to repay the Refunded Swing
Line Loans. Effective on the day such Revolving Credit Loans are made, the
portion of the Swing Line Loans so paid shall no longer be outstanding as Swing
Line Loans, shall no longer be due under any Swing Line Note and shall be due
under the respective Revolving Credit Loans issued to the Revolving Credit
Lenders in accordance with their respective Revolving Credit Commitment
Percentages. The Borrower authorizes the Swing Line Lender to charge the
Borrower's accounts with the Administrative Agent (up to the amount available
in each such account) in order to immediately pay the amount of such Refunded
Swing Line Loans to the extent amounts received from the Revolving Credit
Lenders are not sufficient to repay in full such Refunded Swing Line Loans.
(d) Notwithstanding anything herein to the contrary, the Swing Line
Lender shall not be obligated to make any Swing Line Loans if the conditions
set forth in subsection 6.2 have not been satisfied.
<PAGE> 42
15
(e) If prior to the making of a Revolving Credit Loan pursuant to
paragraph (c) of subsection 2.15 one of the events described in paragraph (f)
of Section 9 shall have occurred and be continuing with respect to the
Borrower, each Revolving Credit Lender will, on the date such Revolving Credit
Loan was to have been made pursuant to the notice in subsection 2.15(c),
purchase an undivided participating interest in the Refunded Swing Line Loan in
an amount equal to (i) its Revolving Credit Commitment Percentage times (ii)
the Refunded Swing Line Loans. Each Revolving Credit Lender will immediately
transfer to the Swing Line Lender, in immediately available funds, the amount
of its participation, and upon receipt thereof the Swing Line Lender will
deliver to such Revolving Credit Lender a Swing Line Loan Participation
Certificate dated the date of receipt of such funds and in such amount.
(f) Whenever, at any time after any Revolving Credit Lender has
purchased a participating interest in a Swing Line Loan, the Swing Line Lender
receives any payment on account thereof, the Swing Line Lender will distribute
to such Revolving Credit Lender its participating interest in such amount
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Revolving Credit Lender's participating
interest was outstanding and funded); provided, however, that in the event that
such payment received by the Swing Line Lender is required to be returned, such
Revolving Credit Lender will return to the Swing Line Lender any portion
thereof previously distributed by the Swing Line Lender to it.
(g) Each Revolving Credit Lender's obligation to make the Loans
referred to in subsection 2.15(c) and to purchase participating interests
pursuant to subsection 2.15(e) shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right which such Revolving
Credit Lender or the Borrower may have against the Swing Line Lender, the
Borrower or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default or an Event of Default; (iii) any adverse change in
the condition (financial or otherwise) of the Borrower; (iv) any breach of this
Agreement or any other Loan Document by the Borrower, Holdings, any of their
Subsidiaries or any other Lender; or (v) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.
<PAGE> 43
1
SCHEDULE 1.1 TO
AMENDMENT
ADDRESSES FOR NOTICES; REVOLVING CREDIT COMMITMENTS; TERM LOANS OUTSTANDING
THE BANK OF NEW YORK
Address for Notice:
One Wall Street
New York, NY 10286
Attention: John Lambert
Telecopy: (212) 635-1208
Revolving Credit Commitment: $6,000,000.00
Tranche A Term Loan Outstanding: $2,000,000.00
Tranche B Term Loan Outstanding: 0.00
BANK OF SCOTLAND
Address for Notice:
565 Fifth Avenue
New York, NY 10017
Attention: Cynthia Hines
Telecopy: (212) 682-5720
Revolving Credit Commitment: $3,937,500.00
Tranche A Term Loan Outstanding: $1,312,500.00
Tranche B Term Loan Outstanding: 0.00
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
Address for Notice:
1251 Avenue of the Americas
New York, NY 10020
Attention: Dave McLaughlin
Telecopy: (212) 782-4981
Revolving Credit Commitment: $3,937,500.00
Tranche A Term Loan Outstanding: $1,312,500.00
Tranche B Term Loan Outstanding: 0.00
BANKERS TRUST COMPANY
Address for Notice:
130 Liberty Street
New York, NY 10006
Attention: Gina Thompson
Telecopy: (212) 250-7218
Revolving Credit Commitment: $6,000,000.00
Tranche A Term Loan Outstanding: $2,000,000.00
Tranche B Term Loan Outstanding: $3,000,000.00
<PAGE> 44
2
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
Address for Notice:
645 Fifth Avenue
New York, NY 10022
Attention: Frederick Kammler
Telecopy: (212) 872-5045
Revolving Credit Commitment: $4,500,000.00
Tranche A Term Loan Outstanding: $1,500,000.00
Original Tranche B Term Loan Outstanding: 0.00
BANQUE PARIBAS
Address for Notice:
2121 San Jacinto Street
Suite 930
Dallas, TX 75201
Attention: Deanna Walker
Telecopy: (214) 969-0260
Revolving Credit Commitment: $3,937,500.00
Tranche A Term Loan Outstanding: $1,312,500.00
Tranche B Term Loan Outstanding: 0.00
CAISSE NATIONALE DE CREDIT AGRICOLE
Address for Notice:
55 East Monroe Street
Suite 4700
Chicago, IL 60603-5702
Attention: Paul Dytrych
Telecopy: (312) 372-3724
Revolving Credit Commitment: $6,000,000.00
Tranche A Term Loan Outstanding: $2,000,000.00
Tranche B Term Loan Outstanding: 0.00
<PAGE> 45
3
THE CHASE MANHATTAN BANK
Address for Notice:
c/o Chase Securities Inc.
10 South LaSalle Street
23rd Floor
Chicago, Illinois 60603
Attention: Jonathan Twichell
Telecopy: (312) 346-9310
Revolving Credit Commitment: $11,812,500.00
Tranche A Term Loan Outstanding: $3,937,500.00
Tranche B Term Loan Outstanding: $55,500,000.00
CITY NATIONAL BANK
Address for Notice:
400 North Roxbury Dr., Third Floor
Beverly Hills, CA 90210
Attention: Kim Bingham
Telecopy: (310) 888-6152
Revolving Credit Commitment: $3,750,000.00
Tranche A Term Loan Outstanding: $1,250,000.00
Tranche B Term Loan Outstanding: $0.00
DEBT STRATEGIES FUND, INC.
Address for Notice:
800 Scudders Mill Road
Area 2C
Plainsboro, NJ 08536
Attention: Gilles Marchand
Telecopy: (609) 282-2550
Revolving Credit Commitment: 0.00
Tranche A Term Loan Outstanding: 0.00
Tranche B Term Loan Outstanding: $5,000,000.00
DEEPROCK & COMPANY
Address for Notice:
24 Federal Street, 6th floor
Boston, MA 02110
Attention: Eaton Vance Management
Telecopy: (617) 695-9594
Revolving Credit Commitment: 0.00
Tranche A Term Loan Outstanding: 0.00
Tranche B Term Loan Outstanding: $2,000,000.00
<PAGE> 46
GENERAL ELECTRIC CAPITAL CORPORATION
Address for Notice:
201 High Ridge Road
Stamford, CT 06927
Attention: Roger Burns
4
Telecopy: (203) 316-7978
Revolving Credit Commitment: $3,937,500.00
Tranche A Term Loan Outstanding: $1,312,500.00
Tranche B Term Loan Outstanding: 0.00
HELLER FINANCIAL, INC.
Address for Notice:
500 West Monroe Street
Chicago, IL 60661
Attention: Linda Wolf
Telecopy: (312) 441-7357
Revolving Credit Commitment: $6,000,000.00
Tranche A Term Loan Outstanding: $2,000,000.00
Tranche B Term Loan Outstanding: 0.00
THE INDUSTRIAL BANK OF JAPAN, LIMITED
Address for Notice:
1251 Avenue of the Americas
32nd Floor
New York, NY 10020-1104
Attention: Jennifer McNamara
Telecopy: (212) 282-4490
Revolving Credit Commitment: $3,937,500.00
Tranche A Term Loan Outstanding: $1,312,500.00
Tranche B Term Loan Outstanding: 0.00
KZH HOLDING CORPORATION
Address for Notice:
c/o The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Robert Goodwin
Telecopy: (212) 964-7776
Revolving Credit Commitment: 0.00
Tranche A Term Loan Outstanding: 0.00
Original Tranche B Term Loan Outstanding: $3,500,000.00
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH
Address for Notice:
165 Broadway
49th Floor
New York, NY 10006
Attention: Frank H. Madden, Jr.
Telecopy: (212) 608-2371
Revolving Credit Commitment: $6,750,000.00
Tranche A Term Loan Outstanding: $2,250,000.00
Tranche B Term Loan Outstanding: 0.00
<PAGE> 47
5
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
Address for Notice:
800 Scudders Mill Road
Area 2C
Plainsboro, NJ 08536
Attention: Gilles Marchand
Telecopy: (609) 282-2550
Revolving Credit Commitment: 0.00
Tranche A Term Loan Outstanding: 0.00
Tranche B Term Loan Outstanding: $20,000,000.00
THE MITSUBISHI TRUST AND BANKING CORPORATION
Address for Notice:
520 Madison Avenue
25th Floor
New York, NY 10022
Attention: Anthony James Rock
Telecopy: (212) 644-6825
Revolving Credit Commitment: $4,500,000.00
Tranche A Term Loan Outstanding: $1,500,000.00
Tranche B Term Loan Outstanding: 0.00
ML CBO IV (CAYMAN) LTD.
Address for Notice:
1150 Two Galleria Tower
13455 Noel Road-LB#45
Dallas, Texas 75240
Attention: Mark Okada
Telecopy: (972) 233-4343
Revolving Credit Commitment: 0.00
Tranche A Term Loan Outstanding: 0.00
Tranche B Term Loan Outstanding: $6,500,000.00
PRIME INCOME TRUST
Address for Notice:
Two World Trade Center, 72nd Floor
New York, NY 10048
Attention: Louis Pistecchia
Telecopy: (212) 392-5345
Revolving Credit Commitment: 0.00
Tranche A Term Loan Outstanding: 0.00
Tranche B Term Loan Outstanding: $13,000,000.00
<PAGE> 48
6
SENIOR DEBT PORTFOLIO
Address for Notice:
24 Federal Street, 6th floor
Boston, MA 02110
Attention: Gretchan Bergstresser
Telecopy: (617) 695-9594
Revolving Credit Commitment: 0.00
Tranche A Term Loan Outstanding: 0.00
Tranche B Term Loan Outstanding: $24,000,000.00
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
Address for Notice:
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: Jeffrey Maillet
Telecopy: (630) 684-6740
Revolving Credit Commitment: 0.00
Tranche A Term Loan Outstanding: 0.00
Tranche B Term Loan Outstanding: $28,000,000.00
<PAGE> 49
1
SCHEDULE 5.4 TO
AMENDMENT
REQUIRED CONSENTS
- NONE -
<PAGE> 1
EXHIBIT 23.2
[COOPERS & LYBRAND LETTERHEAD]
To the Board of Directors of
International Wire Group, Inc.:
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated February 28, 1997 on our audits of the consolidated financial
statements and financial statement schedules of International Wire Group, Inc.
We also consent to the reference to our Firm as experts under the caption
"Experts."
/s/ COOPERS & LYBRAND L.L.P
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
July 2, 1997
<PAGE> 1
EXHIBIT 23.3
To the Board of Directors of
each of the companies comprising
Dekko Wire Technologies:
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated January 30, 1996, except for Note 10, as to which the date is
January 30, 1996, except for Note 10, as to which the date is February 6, 1996,
on our audits of the consolidated financial statements of Dekko Wire
Technologies as of December 28, 1995, and the related combined statements of
income, shareholders' equity and cash flows for each of the years in the two
years ended December 28, 1995. We also consent to the reference to our Firm as
experts under the caption "Experts."
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
July 2, 1997
<PAGE> 1
EXHIBIT 23.4
To the Board of Directors of
Wirekraft Holdings Corp.:
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated January 27, 1996 on our audits of the consolidated statements of
operations, stockholders' equity and cash flows of Wirekraft Holdings Corp. and
Subsidiaries (formerly WB Holdings, Inc.) for the six months ended May 31, 1995
and the year ended November 30, 1994. We also consent to the reference to our
Firm as experts under the caption "Experts."
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
July 2, 1997
<PAGE> 1
EXHIBIT 23.5
To the Board of Directors of
Omega Wire Corp.:
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated January 27, 1996 on our audits of the consolidated statements of
operations, stockholders' equity and cash flows of Omega Wire Corp. for the two
months ended May 31, 1995. We also consent to the reference to our Firm as
experts under the caption "Experts."
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
July 2, 1997
<PAGE> 1
EXHIBIT 23.6
To the Stockholders of
Electro Componentes de Mexico S.A. de C.V.:
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated April 24, 1995 on our audit of the statement of direct revenues
and expenses of Electro Componentes de Mexico S.A. de C.V. for the eleven
months ended November 30, 1994. We also consent to the reference to our Firm
under the caption "Experts."
COOPERS & LYBRAND L.L.P.
El Paso, Texas
July 2, 1997
<PAGE> 1
EXHIBIT 23.8
To the Shareholders of
THL-Omega Holding Corporation:
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated January 27, 1996 on our audit of the financial statements of
operations and retained earnings and cash flows of THL-Omega Holding
Corporation for the three months ended March 31, 1995. We also consent to the
reference of our Firm as experts under the caption "Experts."
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
July 2, 1997
