<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 24, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BORG-WARNER AUTOMOTIVE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other-jurisdiction of
incorporation or organization)
13-3404508
(I.R.S. Employer
Identification Number)
------------------------
200 SOUTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60604
(312) 322-8500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
LAURENE H. HORISZNY, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
BORG-WARNER AUTOMOTIVE, INC.
200 SOUTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60604
(312) 322-8500
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
------------------------
Copies to:
<TABLE>
<S> <C>
DAVID A. KATZ, ESQ. ROHAN S. WEERASINGHE, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ SHEARMAN & STERLING
51 WEST 52ND STREET 599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10022
(212) 403-1000 (212) 848-4000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.
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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<TABLE>
<S> <C> <C> <C> <C>
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PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
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% Senior Notes due 2006.......... $150,000,000 100% $150,000,000 $45,455
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: one to be
used in connection with an offering of the registrant's % Senior Notes due
2006 (the "Prospectus") and one to be used in connection with certain
market-making activities which may, from time-to-time, be carried out by Merrill
Lynch & Co. (the "Market-Making Prospectus"). The two prospectuses are identical
except for the front outside and back cover pages and the Underwriting (or, in
the case of the Market-Making Prospectus, the Market-Making Activities of
MLPF&S) sections of each. The Prospectus is included herein and is followed by
the front outside and back cover pages and the Market-Making Activities of
MLPF&S section for the Market-Making Prospectus. Each of the alternate pages for
the Market-Making Prospectus included herein is labeled "Alternate Page for
Market-Making Prospectus."
In order to register under Rule 415 the Notes which will be offered and
sold in the market-making transactions, the appropriate box on the cover page of
the Registration Statement has been checked and the undertakings required by
Item 512(a) of Regulation S-K have been included in Item 17 of Part II of the
Registration Statement.
If required pursuant to Rule 424(b) of the General Rules and Regulations
under the Securities Act of 1933, as amended, copies of each of the prospectuses
in the forms in which they are used will be filed with the Securities and
Exchange Commission.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
PRELIMINARY PROSPECTUS DATED OCTOBER 24, 1996
PROSPECTUS
$150,000,000
[BORG-WARNER AUTOMOTIVE, INC. LOGO]
% SENIOR NOTES DUE 2006
------------------
Interest on the __% Senior Notes due ____________, 2006 (the "Notes") of
Borg-Warner Automotive, Inc. (the "Company") offered hereby is payable
semiannually on ________________ and ________________ of each year, beginning
____________, 1997. The Notes are unsecured, not redeemable prior to maturity
and not entitled to any sinking fund.
The Notes will be represented by one or more global securities (the "Global
Note") registered in the name of the nominee of The Depository Trust Company,
which will act as the Depositary ("DTC"). Interests in the Global Note will be
shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. Except as described herein, Notes in
definitive form will not be issued. Settlement for the Notes will be made in
immediately available funds. The Notes will trade in the DTC's Same-Day Funds
Settlement System until maturity, and secondary market trading activity for the
Notes will therefore settle in immediately available funds. All payments of
principal and interest will be made by the Company in immediately available
funds. See "Description of the Notes -- Global Note" and " -- Payments of
Principal and Interest."
Application has been made for listing the Notes on the New York Stock
Exchange, Inc. ("NYSE"), subject to official notice of issuance.
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" COMMENCING ON PAGE 8.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C>
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
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Per Note % % %
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Total $ $ $
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</TABLE>
(1) Plus accrued interest, if any, from ____________, 1996.
(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(3) Before deducting expenses payable by the Company estimated at $285,000.
------------------
The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of certain
legal matters by counsel for the Underwriters and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the Global
Note will be made through the facilities of DTC, on or about ____________, 1996,
against payment therefor in same-day funds.
------------------
MERRILL LYNCH & CO.
CHASE SECURITIES INC.
MORGAN STANLEY & CO.
INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
------------------
The date of this Prospectus is , 1996.
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549; and at the regional offices of the Commission at 7 World Trade Center
(13th Floor), New York, New York 10048; and Suite 1400, Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains an internet web site at http://www.sec.gov that contains reports,
proxy statements and other information. Additionally, reports, proxy statements
and other information concerning the Company filed pursuant to the Exchange Act
are available for inspection at the NYSE located at 20 Broad Street, New York,
New York 10005.
This Prospectus constitutes a part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus omits certain of the information
contained in the Registration Statement in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company and the Notes, reference is hereby made to the Registration Statement
and the exhibits thereto, which may be obtained from the Commission in the
manner set forth above. 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 or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Incorporated herein by reference are (i) the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 (including the portions of
the Company's annual report to stockholders incorporated by reference therein),
as amended by the Form 10-K/A (Amendment No. 1) filed on June 28, 1996, as
further amended by the Form 10-K/A (Amendment No. 2) filed on July 1, 1996; (ii)
the Company's proxy statement dated March 22, 1996 for its Annual Meeting of
Stockholders held on April 23, 1996 (other than the sections entitled
"Compensation Committee Report on Executive Compensation" and "Performance
Graph" which shall not be so incorporated); (iii) the Company's Form 10-Qs for
the quarters ended March 31, 1996 and June 30, 1996; and (iv) the Company's
Current Reports on Form 8-K dated January 19, 1996 and June 17, 1996.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Notes shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing such documents. Any statement contained herein or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein, or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will furnish, without charge, to each person to whom a
Prospectus is delivered, upon written or oral request, a copy of any or all of
the foregoing documents incorporated herein by reference other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
therein). Requests for such documents should be submitted in writing to
Borg-Warner Automotive, Inc., 200 South Michigan Avenue, Chicago, Illinois
60604, Attention: Leslie Cleveland Hague, Director of Communications/Investor
Relations, or by telephone at (312) 322-8607 or (312) 322-8547.
------------------------------------
CERTAIN STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS ARE "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 AND ARE THUS PROSPECTIVE. SUCH FORWARD
LOOKING STATEMENTS ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM FUTURE RESULTS EXPRESSED OR
IMPLIED BY SUCH FORWARD LOOKING STATEMENTS. THE MOST SIGNIFICANT OF SUCH RISKS,
UNCERTAINTIES AND OTHER FACTORS ARE DISCUSSED UNDER THE HEADING "RISK FACTORS,"
BEGINNING ON PAGE 8 OF THIS PROSPECTUS, AND PROSPECTIVE INVESTORS ARE URGED TO
CAREFULLY CONSIDER SUCH FACTORS.
------------------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NYSE OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 5
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere or incorporated by reference in this Prospectus. Unless the context
otherwise requires, references in this Prospectus to the "Company" refer to
Borg-Warner Automotive, Inc., a Delaware corporation and its subsidiaries, and
references to the "Notes" refer to the $150,000,000 principal amount of %
Senior Notes due 2006 of the Company offered hereby.
THE COMPANY
The Company is a leading, global Tier I supplier of highly engineered
systems and components, primarily for automotive powertrain applications. These
products are manufactured and sold worldwide, primarily to original equipment
manufacturers ("OEMs") of passenger cars, sport utility vehicles and light
trucks. The Company, which operates 36 manufacturing facilities in 12 countries
serving the North American, European and Asian automotive markets, is an
original equipment supplier to every major OEM in the world. The Company has
achieved its current leadership position and is well positioned to benefit from
emerging trends in the global automotive markets as a result of several key
competitive strengths, including: (i) the ability to supply its customers
globally; (ii) demonstrated technological expertise in developing highly
engineered systems and components; (iii) strong relationships with all major
OEMs; (iv) significant market shares in a number of its key products; and (v) a
strong presence in and focus on high-growth vehicle categories and platforms.
The Company's products fall into four operating groups: Powertrain Systems,
Automatic Transmission Systems, Morse TEC and Air/Fluid Systems (formerly known
as Control Systems). The Powertrain Systems group accounted for $544.8 million
(40%) of 1995 consolidated sales before inter-business eliminations. Its primary
products include four-wheel and all-wheel drive transfer cases and manual
transmissions. The Company supplies substantially all of the four-wheel drive
("4WD") transfer cases for Ford Motor Company ("Ford"), including those
installed on the Ford Explorer, the best selling sport utility vehicle in the
United States in 1995, and the Ford F-150 pickup truck. The Company has designed
and developed an exclusive 4WD Torque-On-Demand(TM) ("TOD(TM)") transfer case,
available on the Ford Explorer and on the new Ford Expedition, which allows
vehicles to automatically shift from two-wheel drive to 4WD when electronic
sensors indicate it is necessary.
The Automatic Transmission Systems group accounted for $454.4 million (33%)
of 1995 consolidated sales before inter-business eliminations. Its products
include friction plates, transmission bands, one-way clutches and torque
converters for automatic transmissions. The Company is a supplier to virtually
every major automatic transmission manufacturer in the world. The Company's
50%-owned joint venture in Japan, NSK-Warner Kabushiki Kaisha ("NSK-Warner"),
with 1995 sales of $337 million, is a leading producer of friction plates and
one-way clutches in Japan.
The Morse TEC group accounted for $257.6 million (19%) of 1995 consolidated
sales before inter-business eliminations. Morse TEC manufactures chain and chain
systems including HY-VO(R) front-wheel drive ("FWD") and 4WD chain, MORSE
GEMINI(TM) Transmission Chain Systems, timing chain and timing chain systems,
crankshaft and camshaft sprockets, chain tensioners and snubbers. The Company is
a supplier to every major manufacturer that uses chain for such applications.
The Air/Fluid Systems group accounted for $107.6 million (8%) of 1995
consolidated sales before inter-business eliminations. The Company's air and
fluid management products include mechanical, electromechanical and electronic
components and systems used for engine and emission control, fuel and vapor
management, electronically controlled automatic transmissions and steering and
suspension systems. The Air/Fluid Systems group is the Company's fastest growing
group and has grown from $52.1 million of consolidated sales in 1991 to $107.6
million in 1995 (a compound annual growth rate of 20%). On June 17, 1996, the
Company acquired the operations and substantially all of the operating assets of
the Holley Automotive, Coltec Automotive and Performance Friction Products
divisions (collectively, the "Coltec Divisions") of Coltec Industries Inc. for
$283 million in cash (the "Coltec Acquisition"). The Coltec Divisions have a
broad base of air and fluid management products, established OEM relationships,
and three
3
<PAGE> 6
technologically advanced manufacturing facilities. These operations produced
combined sales of $255 million in 1995. As a result of the Coltec Acquisition,
the Air/Fluid Systems group will comprise a significantly greater portion of the
Company's revenues. The Coltec Acquisition was financed with borrowings under
the Company's revolving credit facility.
The Company believes that it is a leading supplier to major OEMs worldwide
in each of its four product groups. For Powertrain Systems, the Company believes
that it is the world's leading independent manufacturer of 4WD transfer cases,
manufacturing approximately 847,000 transfer cases in 1995, principally for
Ford. The Company also believes that, including its NSK-Warner joint venture,
the Automatic Transmission Systems group is a leading manufacturer and supplier
of friction elements and one-way clutches in North America, Europe and Asia.
Similarly, the Morse TEC group manufactures transmission chains for FWD
transmissions and 4WD transfer cases for every major OEM who uses chain for such
applications. Finally, the Coltec Acquisition will position the Air/Fluid
Systems group to become a leading supplier of air and fluid management systems
with over 80% of its 1995 pro forma sales to the three largest North American
OEMs -- Ford, General Motors Corporation ("GM") and Chrysler Corporation
("Chrysler"). As a result of the Coltec Acquisition, the Air/Fluid Systems group
will almost double the Company's sales to Chrysler.
The Company's business objective is to maintain its position as one of the
leading independent suppliers of highly engineered systems and components for
automotive powertrain applications. The Company pursues this objective in
several ways. First, the Company seeks to maintain its position and reputation
as a technological leader in its product groups. Second, the Company seeks to
maintain its price competitiveness by continuing to improve the efficiency of
its operations, including its production processes. Third, the Company believes
that it is well positioned to take advantage of certain trends within the global
automotive market. The Company believes that these trends include (i) a growing
demand for automatic transmissions with a greater number of speeds (the
Company's component content in an automatic transmission rises as the number of
speeds increases), (ii) a growing demand for 4WD vehicles, (iii) an increasing
demand for overhead cam engines, (iv) a growing demand for automatic
transmissions and air and fluid management systems in Europe and in Asia, (v)
the increasing tendency of OEMs to purchase integrated systems rather than
individual components, and (vi) demand in markets outside the United States for
air and fluid management products, particularly emission controls. Fourth, the
Company continues to pursue strategic joint ventures and selected acquisitions
within its existing or related lines of business. The Company continues to
maintain its strong presence in Europe and Asia as a result of its recent
acquisitions and joint ventures. The Company believes its global presence will
enable it to better withstand the effect of cyclical downturns in the United
States automotive market, while serving its OEM customers as a global supplier.
Over the past several years, the Company has remained focused on and
committed to achieving its business objective. Sales have increased from $820
million in 1991 to $1.33 billion in 1995, reflecting a 12.8% compound annual
growth rate and outperforming the approximately 4% compound annual growth rate
of North American vehicle sales. The Company's sales outside the United States
are increasing and in 1995 represented 16% of consolidated sales. Including
unconsolidated joint ventures, 1995 sales outside the United States constituted
33% of total sales. The Company's sales have increased at a greater rate than
market growth as a result of higher content per vehicle and higher market share.
The Company's emphasis on providing systems and introduction of new technologies
has enabled it to substantially increase its content per vehicle. For example,
the timing system on the Ford modular engine consists of up to four chains as
well as sprockets, snubbers and tensioners as compared with a single timing
chain on the previous generation pushrod engine. The Company's market share
gains have been achieved during a period of OEM supplier consolidation which has
benefited the Company. Such growth in sales has been accompanied by growth in
profitability. Over the same period, earnings before interest and taxes ("EBIT")
increased from $22 million in 1991 to $125 million in 1995, with EBIT margins
rising from 2.6% in 1991 to 9.4% in 1995, and sales per employee rising from
$128,000 in 1991 to $163,000 in 1995.
The Company's executive offices are located at 200 South Michigan Avenue,
Chicago, Illinois 60604, telephone (312) 322-8500.
4
<PAGE> 7
RECENT DEVELOPMENTS
On October 21, 1996, the Company entered into an agreement to sell its
North American manual transmission manufacturing business located in Muncie,
Indiana, to Transmisiones Y Equipos Mecanicos S.A. De C.V. (Tremec). Under the
terms of the agreement, the Company will receive $20 million in cash at closing
for certain assets of its North American manual transmission business plus
approximately $20 million during the transition period (which is expected to
last 18 months) for the value of inventory and certain services to be provided.
Consummation of the transaction is subject to the expiration or termination of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, as well as satisfaction of certain other customary conditions.
As a result of the transaction, the Company currently expects to take a one-time
charge of $35 million, or $1.50 per share, in the fourth quarter of 1996. This
charge includes costs associated with the sale of the assets; costs necessary to
supply existing customers while the business is transferred to its new location;
and costs related to restructuring the Company's Muncie, Indiana operation. The
Company expects that a substantial portion of the proceeds from the sale will be
reinvested in the Muncie plant's remaining 4WD transfer case manufacturing
operation. See "Risk Factors -- Sale of Manual Transmission Business."
On October 23, 1996, the Company reported that its third quarter 1996 net
income was $18.8 million, or $0.80 per share, an increase of 42% compared with
$13.2 million, or $0.56 per share, reported in the third quarter of 1995. The
Company's sales for the third quarter of 1996 increased 30% to $387.7 million
compared with $298.5 million in the third quarter of 1995. The Company also
reported that net income for the first nine months of 1996 was $52.9 million, or
$2.25 per share, compared with net income of $51.8 million, or $2.20 per share
for the first nine months of 1995. The Company sales for the first nine months
of 1996 increased 14% to $1,118.4 million compared with sales of $982.3 million
in the first nine months of 1995. With respect to the Company's quarterly sales
increase, $55 million was contributed by the Coltec Divisions acquired in June
1996 and $3.7 million was contributed by France's Societe de l'Usine de la
Marque ("SUM") acquired in 1995. For the third quarter of 1996, the Company
announced that Air/Fluid Systems' sales increased 240% to $87.0 million (a rise
of 10% excluding the Coltec Acquisition and the SUM acquisition); Automatic
Transmission Systems' sales increased 10% to $116.9 million; Morse TEC's sales
increased 22% to $68.1 million; and Powertrain Systems' sales increased 5% to
$125.1 million (an increase of 14% without manual transmissions).
THE OFFERING
Notes...................... $150,000,000 principal amount of % Senior Notes
due 2006.
Maturity Date.............. , 2006.
Interest Payment Dates..... and beginning ,
1997.
Ranking.................... The Notes will be senior unsecured obligations of
the Company, ranking pari passu with all other
senior unsecured obligations of the Company.
Certain Covenants.......... The Indenture (as defined) will contain certain
covenants including, but not limited to, covenants
with respect to the following matters: (i)
limitation on liens; (ii) limitation on
sale/leaseback transactions; and (iii) restrictions
on consolidation, merger and sale of all or
substantially all of the assets of the Company to
another person.
Listing.................... The Notes have been approved for listing on the New
York Stock Exchange, Inc., subject to official
notice of issuance.
Use of Proceeds............ The Company will use the net proceeds from the
offering of the Notes to reduce amounts outstanding
under the Company's revolving credit facility.
Risk Factors............... For information concerning certain factors that
should be considered by prospective investors, see
"Risk Factors" beginning on page 8 of this
Prospectus.
For additional information with respect to the Notes, see "Description of
the Notes."
5
<PAGE> 8
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following summary historical consolidated financial information for the
Company for the five years ended December 31, 1995 and for the six-month periods
ended June 30, 1995 and 1996 has been derived from the consolidated financial
statements of the Company for such periods. The information for the years ended
December 31, 1991, 1992, 1993, 1994 and 1995 is derived from the audited
financial statements of the Company. The information for the six-month periods
ended June 30, 1995 and 1996 is not audited, but in the opinion of management is
a fair presentation of such information. This information is qualified by
reference to the historical consolidated financial statements of the Company
incorporated by reference herein. See "Incorporation of Certain Information by
Reference."
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------------------- -------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Net sales.............................. $ 820.3 $ 926.0 $ 985.4 $1,223.4 $1,329.1 $ 683.8 $ 730.7
Cost of sales.......................... 660.4 755.2(a) 769.3 948.4 1,044.9 530.0 575.0
Depreciation........................... 62.0(b) 64.3(a) 57.9 60.9 68.0 35.3 35.9
Selling, general and administrative
expenses............................. 77.7 69.6 83.5 92.1 97.8 52.7 60.0
Minority interest...................... (1.3) (1.3) 0.1 1.4 2.0 1.0 1.2
Goodwill amortization.................. 9.7 9.7 9.7 9.6 9.6 4.7 5.4
Equity in affiliate earnings and other
income............................... (9.9) (6.9) (10.6) (10.6) (18.6) (10.1) (6.9)
Interest expense and finance charges... 53.8(d) 44.8(d) 18.4 13.9 14.2 7.1 7.0
Provision for income taxes............. 3.7 2.7 24.3 43.3 37.0 24.5 19.0
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before cumulative
effect of accounting change.......... (35.8) (12.1) 32.8 64.4 74.2 38.6 34.1
Cumulative effect of change in
accounting(b)........................ 4.8 -- (130.8) -- --
-------- -------- -------- -------- -------- -------- --------
Net earnings (loss).................... $ (31.0) $ (12.1) $ (98.0) $ 64.4 $ 74.2 $ 38.6 $ 34.1
======== ======== ======== ======== ======== ======== ========
Earnings (loss) per share before
cumulative effect of accounting
change(b)............................ -- $ (0.53) $ 1.41 $ 2.75 $ 3.15 $ 1.65 $ 1.45
Net earnings (loss) per share(c)....... -- $ (0.53) $ (4.21) $ 2.75 $ 3.15 $ 1.65 $ 1.45
Average shares outstanding
(thousands)(c)....................... -- 23,005 23,284 23,424 23,562 23,461 23,519
Cash dividend declared per share....... -- -- $ 0.125 $ 0.45 $ 0.60 $ 0.30 $ 0.30
Ratio of earnings to fixed
charges(e)........................... (d) (d) 3.9 7.9 7.0 7.9 7.0
OTHER FINANCIAL DATA
Research and development............... $ 26.9 $ 26.8 $ 25.2 $ 33.8 $ 36.7 $ 18.7 $ 23.3
Capital expenditures................... 53.9 47.7 65.5 98.8 92.5 37.6 32.0
Number of full-time employees
(thousands).......................... 6.4 6.7 6.6 7.8 8.6 8.5 10.1(f)
Sales per full-time employee
(thousands).......................... $ 128.0 $ 139.0 $ 149.0 $ 158.0 $ 163.0 $ 170.0 $ 164.0(f)
BALANCE SHEET DATA (AT END OF PERIOD)
Net property, plant and equipment...... $ 463.5 $ 412.9 $ 418.3 $ 462.3 $ 523.0 $ 502.7 $ 539.3
Total assets........................... 1,080.0 1,074.2 1,159.4 1,240.3 1,335.2 1,337.1 1,649.9
Total debt............................. --(d) --(d) 159.6 107.3 134.7 168.7 358.4
BW-Security investment(g).............. 743.5 728.2 -- -- -- -- --
Stockholders' equity(g)................ -- -- 459.1 534.9 600.0 586.3 619.9
</TABLE>
- ---------------
(a) Cost of sales for 1992 included a $28.7 million charge for the write-off of
excess capacity and depreciation included $7.3 million related to such
capacity.
(b) Amounts reflect the adoption of Statement of Financial Accounting Standards
("SFAS") No. 109 in 1991 and SFAS No. 106 in 1993. In 1991, depreciation
increased by $11.2 million because of an adjustment to fixed assets related
to the adoption of SFAS No. 109.
(c) Earnings per share for 1992 and 1993 have been calculated assuming that the
initial public offering of the Company's Common Stock completed in August
1993 had been completed on January 1, 1992.
(d) Prior to the spin-off of the Company by BW-Security on January 27, 1993 (the
"Spin-Off"), interest was allocated to the Company on the basis of the
Company's relative operating investment compared to BW-Security's overall
capital investment (debt plus equity). Prior to the Spin-Off, all debt was
considered to be part of the BW-Security investment.
6
<PAGE> 9
(e) For purposes of computing the ratio of earnings to fixed charges, "earnings"
consist of earnings before income taxes, fixed charges and capitalized
interest amortization expense. "Fixed charges" consist of interest expense
excluding the benefit of capitalized interest and including one-third of
rental expense (approximate portion representing interest).
(f) For the six months ended June 30, 1996, number of full-time employees
includes employees from the Coltec Acquisition but sales per full-time
employee excludes such employees because the Coltec Acquisition was
completed near the end of the period.
(g) Prior to the Spin-Off, the Company was wholly owned by BW-Security and its
stockholders' equity is reported as BW-Security investment. After the
Spin-Off, the Company's equity is reported as stockholders' equity.
7
<PAGE> 10
RISK FACTORS
The following factors, as well as the information contained elsewhere or
incorporated by reference in this Prospectus, should be carefully considered by
prospective investors before any decision is made to invest in the Notes.
HOLDING COMPANY STRUCTURE
The operations of the Company are conducted through its subsidiaries and,
therefore, the Company is substantially dependent on the earnings and cash flow
of its subsidiaries to meet its debt obligations, including its obligations with
respect to the Notes. Because the assets of its subsidiaries constitute
effectively all of the assets of the Company, and because these subsidiaries do
not guarantee the payment of principal of and interest on the Notes, the claims
of the holders of the Notes effectively will be subordinated to the claims of
creditors of such companies. As of June 30, 1996, total liabilities (other than
intercompany liabilities) of the Company's subsidiaries were approximately
$684.9 million and debt of the Company's subsidiaries was approximately $59.5
million.
AUTOMOTIVE INDUSTRY CYCLICALITY AND CONDITIONS
The Company's principal operations are directly related to domestic and
foreign automotive production. Automotive sales and production are cyclical and
dependent upon general economic conditions and other factors. As compared to
1995, the Company expects automotive production in 1996 to be flat or to decline
slightly in North America and Europe, and to improve slightly in Asia. Any
significant reduction in automotive production would have an adverse effect on
the level of the Company's sales to OEMs and the Company's financial position
and operating results.
One of the Company's primary North American customers, GM, has major
contracts with the United Automobile, Aerospace and Agricultural Implement
Workers of America (the "UAW") which have expired and are subject to
renegotiation. Ford and Chrysler have recently entered into agreements with the
UAW. Because of the United States OEMs' dependence on a single union, labor
difficulties and work stoppages at OEMs' facilities have an impact on the
Company. For example, a 17-day March 1996 work stoppage in two Dayton, Ohio GM
plants resulted in the concomitant shutdown of the Company's production lines
dedicated to the manufacture of products for GM vehicles. Although the Company
took steps to minimize the consequences of the work stoppage, the Company lost
$8.5 million in revenue as a result of the 17-day strike.
Many of the Company's products are currently used exclusively in sport
utility vehicles and light trucks, the most rapidly growing segment in the
overall automotive market. Any significant reduction in production in this
market segment would have an adverse effect on the level of the Company's sales
to OEMs and the Company's financial position and operating results.
COMPETITION
The Company competes worldwide with a number of other manufacturers and
distributors which produce and sell similar products. Price, quality and
technological innovation are the primary elements of competition. The Company's
competitors include vertically integrated units of the Company's major OEM
customers, as well as a large number of independent domestic and international
suppliers. A number of these companies are larger and have greater resources
than the Company. There can be no assurance that the Company's business will not
be adversely affected by increased competition in the markets in which it
operates.
The competitive environment has also changed dramatically over the past few
years as the Company's traditional United States OEM customers, faced with
intense international competition, have expanded their worldwide sourcing of
components. As a result, the Company has experienced competition from suppliers
in other parts of the world which enjoy economic advantages such as lower labor
costs, lower health care costs, and, in some cases, export subsidies and/or raw
materials subsidies.
There is also substantial and continuing pressure from the OEMs to reduce
costs, including costs associated with outside suppliers such as the Company.
Although OEMs have indicated that they will continue to rely on outside
suppliers, a number of the Company's major OEM customers manufacture products
for their own use that compete with the Company's products and these OEMs could
elect to
8
<PAGE> 11
manufacture such products for their own use in place of the products now
supplied by the Company. The Company believes that its ability to develop
proprietary new products and to control its own costs will allow it to remain
competitive. However, there can be no assurance that the Company will be able to
improve or maintain its gross margins on product sales to OEMs or that the
recent trend by OEMs towards increased outsourcing will continue.
Annual price reductions to OEM customers appear to have become a permanent
feature of the Company's business environment. Price reductions net of economic
cost increase adjustments granted in 1995 totalled approximately $8 million. To
maintain its profit margins, the Company, among other things, seeks price
reductions from its own suppliers, adopts improved production processes to
increase manufacturing efficiency, updates product designs to reduce costs and
develops new products whose benefits support increased pricing. The Company's
ability to pass through increased raw material costs to its OEM customers is
also limited, with cost recovery less than 100% and often on a delayed basis.
There can be no assurance that the Company will be able to reduce costs in an
amount equal to the annual price reductions and the increase in raw material
costs.
RELIANCE ON MAJOR CUSTOMERS
The Company's worldwide sales in 1995 to Ford and GM constituted
approximately 41% and 25%, respectively, of its 1995 consolidated sales. The
corresponding percentages for 1994 were 39% and 27%. No other customer accounted
for more than 10% of the Company's consolidated sales in either 1995 or 1994.
After giving effect to the Coltec Acquisition, sales to Ford and GM would have
been approximately 40% and 26%, respectively, of 1995 consolidated sales. Sales
to Chrysler constituted approximately 9% of total consolidated sales in 1995,
and pro forma for the Coltec Acquisition, sales to Chrysler would have
constituted approximately 13% of 1995 consolidated sales. The Company's 1995
consolidated sales do not include the approximately $394 million of sales made
by the Company's unconsolidated joint ventures. If sales from unconsolidated
joint ventures were included in 1995 consolidated sales, worldwide sales to
Toyota Motor Corporation and its affiliates ("Toyota") would be approximately
10% of such sales.
Although the Company has had long-standing relationships with each of Ford,
GM, Chrysler and Toyota and sells a wide variety of products to various
divisions of each company globally, if the Company lost any significant portion
of its sales to any of these customers, it would have a material adverse effect
on the financial condition and results of operations of the Company.
LABOR RELATIONS
Approximately 50% of the Company's domestic hourly employees are unionized.
The Company's two most significant domestic collective bargaining agreements
expire in March 1998 for its Muncie, Indiana plant (transfer case and manual
transmissions businesses), and in October 1998 for its Ithaca, New York plant
(Morse TEC group). While the Company believes that its relations with its
employees are good, a prolonged dispute could have a material adverse effect on
the Company.
UNFUNDED PENSION OBLIGATIONS
The Company has a substantial unfunded pension obligation. On December 31,
1995, the present values of the Company's projected benefit obligations and
accumulated benefit obligations with respect to underfunded plans were $221.5
million and $217.7 million, respectively. The fair value of the Company's
pension plan assets with respect to such plans as of December 31, 1995 was
$135.7 million. The resulting unfunded portion of $85.8 million at December 31,
1995 compared with an unfunded portion of $77.5 million at December 31, 1994
(based on the Company's projected benefit obligations on the respective dates).
This increase was due in part to a change in the discount rate from 8.5% in 1994
to 7.25% in 1995. Had the discount rate remained 8.5%, the unfunded portion as
of December 31, 1995 would have been $20.8 million lower, or $65.0 million. Of
the 1995 unfunded portion, approximately $29.4 million relates to pension
obligations for the Company's German subsidiary, which does not require funding.
The Company's long-term objective is to fund its entire pension obligation with
funds that are generated from operations, although there can be no assurance
that this will occur.
9
<PAGE> 12
In connection with the Spin-Off, the Company and BW-Security entered into
an agreement with the Pension Benefit Guaranty Corporation (the "PBGC")
resolving certain issues with respect to the Company's pension obligations.
Pursuant to such agreement, the Company paid $17.5 million in 1993 to a
specified underfunded plan of the Company and agreed to pay to such plan, in
each year from 1993 through 2002, $1 million in excess of amounts that the
Company would otherwise be required to contribute under statutory or contractual
obligations. BW-Security also agreed to become the sponsor of two plans covering
certain employees of certain discontinued automotive operations, and the Company
will have no further liability for such plans. In addition, the Company agreed
to file certain reports and financial statements with the PBGC and to give the
PBGC advance notice of certain significant asset sales.
SALE OF MANUAL TRANSMISSION BUSINESS
The Company has entered into an agreement to sell its North American manual
transmission business, which is based in the Company's Muncie, Indiana plant.
See "Summary -- Recent Developments" and "Risk Factors -- Labor Relations."
Although profitable in 1994, this business lost money on an operating basis in
1995 and has continued to lose money during 1996 due to a decline in volume. The
business has a nominal investment of approximately $60 million, including $21
million in working capital. This amount does not reflect any retirement-related
liabilities. As a result of the transaction, the Company currently expects to
take a one-time charge of $35 million, or $1.50 per share, in the fourth quarter
of 1996. This charge includes costs associated with the sale of the assets;
costs necessary to supply existing customers while the business is transferred
to its new location; and costs related to restructuring the Company's Muncie,
Indiana operation. There can be no assurance that the transaction will be
consummated as currently contemplated or that the charge actually taken by the
Company with respect to this transaction will not be greater than the currently
contemplated charge.
ENVIRONMENTAL REGULATION AND PROCEEDINGS
The Company's operations are subject to federal, state, local and foreign
laws and regulations governing, among other things, emissions to air, discharge
to waters and the generation, handling, storage, transportation, treatment and
disposal of waste and other materials. The Company believes that its business,
operations and facilities have been and are being operated in compliance in all
material respects with applicable environmental and health and safety laws and
regulations, many of which provide for substantial fines and criminal sanctions
for violations. However, the operation of automotive parts manufacturing plants
entails risks in these areas, and there can be no assurance that the Company
will not incur material costs or liabilities. In addition, potentially
significant expenditures could be required in order to comply with evolving
environmental and health and safety laws, regulations or requirements that may
be adopted or imposed in the future.
The Company believes that the overall impact of compliance with regulations
and legislation protecting the environment will not have a material adverse
effect on its future financial position or results of operations, although no
assurance can be given. Capital expenditures and expenses in 1995 attributable
to compliance with such regulations and legislation were not material.
The Company and certain of its current and former direct and indirect
corporate predecessors, subsidiaries and divisions have been identified by the
United States Environmental Protection Agency and certain state environmental
agencies and private parties as potentially responsible parties ("PRPs") at 28
hazardous waste disposal sites under the Comprehensive Environmental Response,
Compensation and Liability Act ("Superfund") and equivalent state laws, and, as
such, may be liable for the cost of clean-up and other remedial activities at
these sites. Responsibility for clean-up and other remedial activities at a
Superfund site is typically shared among PRPs based on an allocation formula.
Based on information available to the Company which, in most cases,
includes an estimate of allocation of liability among PRPs; the probability that
other PRPs, many of whom are large, solvent public companies, will fully pay the
costs apportioned to them; currently available information from PRPs and/or
federal or state environmental agencies concerning the scope of contamination
and estimated remediation costs; estimated legal fees; and other factors, the
Company has established a reserve in its financial statements for indicated
environmental liabilities with a balance of approximately $11 million at June
30, 1996. The Company expects this amount to be expended over the next three to
five years.
10
<PAGE> 13
In connection with the Spin-Off, the Company and BW-Security entered into a
Distribution and Indemnity Agreement which provided for, among other matters,
certain cross-indemnities designed principally to place financial responsibility
for the liabilities of businesses conducted by BW-Security and its subsidiaries
with BW-Security and financial responsibility for liabilities of the Company or
related to its automotive businesses with the Company. The Company has been
advised that BW-Security believes that the Company is responsible for certain
liabilities relating to environmental matters retained by BW-Security at the
time of the Spin-Off. BW-Security has requested indemnification from the Company
for past costs of approximately $1.6 million and for future costs related to
these environmental matters. At the time of the Spin-Off, BW-Security maintained
a letter of credit for approximately $9 million with respect to the principal
portion of such environmental matters. Although there can be no assurance, based
upon information currently available to the Company, the Company does not
believe that it is required to indemnify BW-Security under the Distribution and
Indemnity Agreement with respect to such liabilities. In addition, the Company
does not currently have information sufficient to determine what its liability
would be if it is ultimately determined that it is required to indemnify
BW-Security with respect to such liabilities.
The Company believes that none of these matters, individually or in the
aggregate, will have a material adverse effect on its financial position or
future operating results, generally either because estimates of the maximum
potential liability at a site are not large or because liability will be shared
with other PRPs, although no assurance can be given with respect to the ultimate
outcome of any such matter.
PRINCIPAL STOCKHOLDER
Certain affiliates of Merrill Lynch Capital Partners, Inc. ("MLCP") control
approximately 22.6% of the voting power of the Company and the executive
officers and directors of the Company (without regard to shares held by
affiliates of MLCP) control in the aggregate approximately 1.08% of the voting
power of the Company. As a result of such stock ownership, if the MLCP
affiliates and the executive officers and directors of the Company were to vote
together, they may be able to influence significantly the election of the Board
of Directors of the Company and votes on all other matters submitted to the
Company's stockholders for approval. In addition, three of the members of the
Company's Board of Directors are associated with MLCP.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used to reduce amounts
outstanding under the Company's revolving credit facility, under which the
interest rate on September 30, 1996 was 6.1%. The Coltec Acquisition was
financed with borrowings under the Company's revolving credit facility. The
Company recently replaced and restated its existing revolving credit facility.
Major changes reflected in the new revolving credit facility include increasing
the amount of the facility from $300 to $350 million, extending the maturity of
the facility from 1999 to 2001, and releasing the subsidiaries' guaranties of
the credit facility.
11
<PAGE> 14
CAPITALIZATION
The following table sets forth the capitalization of the Company at June
30, 1996 and as adjusted to reflect the issuance of the Notes offered hereby.
This table should be read in conjunction with "Summary -- Recent Developments,"
- -- "Summary Historical Financial Data" and the historical Consolidated Financial
Statements of the Company appearing in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995 (the "Annual Report") and Form 10-Q for the
quarter ended June 30, 1996, which are incorporated by reference herein.
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------
HISTORICAL AS ADJUSTED
---------- -----------
<S> <C> <C>
Long-term debt:
% Senior Notes offered hereby................................... $ -- $ 150.0
Bank borrowings and other......................................... 244.7 94.7
Bank term loans................................................... 62.6 62.6
Capital lease liabilities......................................... 5.7 5.7
------ ------
Total long-term debt........................................... $313.0 $ 313.0
====== ======
Short-term debt:
Bank borrowings and other......................................... $ 25.3 $ 25.3
Bank term loans................................................... 20.0 20.0
Capital lease liabilities......................................... 0.1 0.1
------ ------
Total short-term debt.......................................... $ 45.4 $ 45.4
====== ======
Stockholders' equity:
Common stock...................................................... $ 0.2 $ 0.2
Other stockholders' equity........................................ 619.7 619.7
------ ------
Total stockholders' equity..................................... $619.9 $ 619.9
====== ======
</TABLE>
12
<PAGE> 15
DESCRIPTION OF THE NOTES
The Notes are to be issued under an Indenture dated as of ,
1996 (the "Indenture") to be entered into between the Company and The First
National Bank of Chicago, as trustee (the "Trustee"). The Indenture is subject
to and governed by the Trust Indenture Act of 1939, as amended (the "TIA"). The
following summary of certain provisions of the Notes and the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the provisions of the Notes and the Indenture, including the
definitions therein of certain terms. A copy of the Indenture has been filed as
an exhibit to the Registration Statement of which this Prospectus is a part.
Capitalized terms used herein have the meanings attributed to them in the Notes
or the Indenture (unless otherwise defined herein).
GENERAL
The Notes will be limited to $150,000,000 aggregate principal amount and
will mature on , 2006. The Notes will bear interest at the rate
of % from , 1996 payable semiannually on and
of each year, commencing , 1997 to the registered holders
at the close of business on the or preceding such
or , whether or not such day is a business day. Interest on the Notes
will be computed on the basis of a 360-day year of twelve 30-day months.
The certificates representing the Notes will be issued only in registered
form without coupons and in denominations of $1,000 and any integral multiple
thereof. No service charge will be made for any registration of transfer or
exchange of Notes, but the Company may require payment in certain circumstances
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
RANKING
The Notes will be senior unsecured obligations of the Company and will rank
pari passu in right of payment with all other senior unsecured indebtedness of
the Company. On a pro forma basis as of June 30, 1996, after giving effect to
the offering of the Notes and the application of the net proceeds therefrom, the
Company would have had $208.4 million of other senior indebtedness outstanding,
of which $5.8 million would have been secured indebtedness.
OPTIONAL REDEMPTION
The Notes will not be redeemable prior to maturity.
SINKING FUND
There will be no sinking fund payments for the Notes.
CERTAIN DEFINITIONS
"Attributable Indebtedness" means, with respect to any Sale/Leaseback
Transaction as of any particular time, the present value (discounted at the rate
of interest implicit in the terms of the lease) of the obligations of the lessee
under such lease for net rental payments during the remaining term of the lease
(including any period for which such lease has been extended). "Net rental
payments" under any lease for any period means the sum of the rental and other
payments required to be paid in such period by the lessee thereunder, not
including, however, any amounts required to be paid by such lessee (whether or
not designated as rental or additional rental) on account of maintenance and
repairs, insurance, taxes, assessments or similar charges.
"Consolidated Net Worth" means the amount of total stockholders' equity
shown in the most recent consolidated statement of financial position of the
Company.
"Current Assets" of any Person includes all assets of such Person that
would in accordance with generally accepted accounting principles be classified
as current assets.
"Current Liabilities" of any Person includes all liabilities of such Person
that would in accordance with generally accepted accounting principles be
classified as current liabilities.
"Non-Recourse Indebtedness" means indebtedness of the Company or any
Subsidiary of the Company in respect of which the recourse of the holder of such
indebtedness, whether direct or indirect and whether
13
<PAGE> 16
contingent or otherwise, is effectively limited to specified assets, and with
respect to which neither the Company nor any Subsidiary of the Company provides
any credit support.
"Sale/Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary, for a period of more
than three years, of any real or personal property, which property has been or
is to be sold or transferred by the Company or such Subsidiary to such Person in
contemplation of such leasing.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which is owned, directly
or indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, or (ii) any partnership or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned. For the purposes of this
definition, "securities having ordinary voting power" means securities or other
equity interests that ordinarily have voting power for the election of
directors, or persons having management power with respect to the Person,
whether at all times or only so long as no senior class of securities has such
voting power by reason of any contingency.
LIMITATION ON LIENS
The Indenture provides that the Company will not, and will not permit any
Subsidiary of the Company to, issue, assume or guarantee any indebtedness for
money borrowed ("Debt") if such Debt is secured by a mortgage, pledge, security
interest or lien (a "mortgage" or "mortgages") upon any real or personal
property of the Company or any Subsidiary of the Company or upon any shares of
stock or other stock or other equity interest or indebtedness of any Subsidiary
of the Company (whether such property, shares of stock or other equity interest
or indebtedness is now owned or hereafter acquired), without in any such case
effectively providing that the Notes shall be secured equally and ratably with
(or prior to) such Debt; provided, however, that the foregoing restrictions
shall not apply to: (a) mortgages existing on the date the Notes are originally
issued or mortgages provided for under the terms of agreements existing on such
date; (b) mortgages on Current Assets securing Current Liabilities; (c)
mortgages on any property acquired, constructed, altered or improved by the
Company or any Subsidiary of the Company after the date of the Indenture that
are created or assumed contemporaneously with or within one year after such
acquisition (or in the case of property constructed, altered or improved, after
the completion and commencement of commercial operation of such property,
whichever is later) to secure or provide for the payment of the purchase price
or cost thereof, provided that in the case of any such construction, alteration
or improvement the mortgages shall not apply to any property theretofore owned
by the Company or any Subsidiary of the Company other than (i) the property so
altered or improved and (ii) any theretofore unimproved real property on which
the property so constructed or altered, or the improvement, is located; (d)
existing mortgages on property acquired (including mortgages on any property
acquired from a Person that is consolidated with or merged with or into the
Company or a Subsidiary of the Company) or mortgages outstanding at the time any
Person becomes a Subsidiary of the Company that are not incurred in connection
with such entity becoming a Subsidiary of the Company; (e) mortgages in favor of
the Company or any Subsidiary of the Company; (f) mortgages on any property (i)
in favor of domestic or foreign governmental bodies to secure partial, progress,
advance or other payments pursuant to any contract or statute, (ii) securing
indebtedness incurred to finance all or any part of the purchase price or cost
of constructing, installing or improving the property subject to such mortgages
including mortgages to secure Debt of the pollution control or industrial
revenue bond type, or (iii) securing indebtedness issued or guaranteed by the
United States, any State, any foreign country or any department, agency,
instrumentality or political subdivision of any such jurisdiction; and (g) any
extension, renewal or replacement (or successive extensions, renewals or
replacements), in whole or in part, of any mortgage referred to in the foregoing
clause (a), (b), (c), (d), (e) or (f); provided, however, that the principal
amount of Debt secured thereby shall not exceed the principal amount of Debt so
secured at the time of such extension, renewal or replacement, together with the
reasonable costs related to such extension, renewal or replacement, and that
such extension, renewal or replacement shall be limited to all or a part of the
property that secured the mortgage so extended, renewed or replaced (plus
improvements on such property).
Notwithstanding the foregoing, the Company and any Subsidiary of the
Company may, without securing the Notes, issue, assume or guarantee secured Debt
(that would otherwise be subject to the foregoing restrictions) in an aggregate
amount that, together with all other such secured Debt and the aggregate amount
14
<PAGE> 17
of Attributable Indebtedness of the Company and its Subsidiaries deemed to be
outstanding in respect of all Sale/Leaseback Transactions entered into pursuant
to the provisions described below under "-- Limitation on Sale/Leaseback
Transactions" (excluding any such Sale/Leaseback Transactions the proceeds of
which have been applied in accordance with clauses (2) or (3) under the "--
Limitation on Sale/Leaseback Transactions" covenant described below), does not
exceed 10% of the Consolidated Net Worth, as shown on a consolidated balance
sheet as of a date not more than 90 days prior to the proposed transaction
prepared by the Company in accordance with generally accepted accounting
principles.
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, enter into any Sale/Leaseback Transaction with any
Person (other than the Company or a Subsidiary of the Company) unless:
(1) at the time of entering into such Sale/Leaseback Transaction, the
Company or such Subsidiary would be entitled to incur Debt, in a principal
amount equal to the Attributable Indebtedness with respect to such
Sale/Leaseback Transaction, secured by a mortgage on the property subject
to such Sale/Leaseback Transaction, pursuant to the provisions of the
covenant described under "-- Limitation on Liens" without equally and
ratably securing the Notes pursuant to such provisions;
(2) after the date on which Notes are first issued and within a period
commencing six months prior to the consummation of such Sale/Leaseback
Transaction and ending six months after the consummation thereof, the
Company or such Subsidiary shall have expended for property used or to be
used in the ordinary course of business of the Company or such Subsidiary
(including amounts expended for additions, expansions, alterations, repairs
and improvements thereto) an amount equal to all or a portion of the net
proceeds of such Sale/Leaseback Transaction, and the Company shall have
elected to designate such amount as a credit against such Sale/Leaseback
Transaction (with any such amount not being so designated to be applied as
set forth in clause (3) below); or
(3) during the 12-month period after the effective date of such
Sale/Leaseback Transaction, the Company shall have applied to the voluntary
defeasance or retirement of Notes or any pari passu indebtedness of the
Company an amount equal to the net proceeds of the sale or transfer of the
property leased in such Sale/Leaseback Transaction, which amount shall not
be less than the fair value of such property at the time of entering into
such Sale/Leaseback Transaction (adjusted to reflect any amount expended by
the Company as set forth in clause (2) above), less an amount equal to the
principal amount of such Notes and pari passu indebtedness voluntarily
defeased or retired by the Company within such 12-month period and not
designated as a credit against any other Sale/Leaseback Transaction entered
into by the Company or any Subsidiary of the Company during such period.
EVENTS OF DEFAULT
The Indenture provides that the following shall constitute Events of
Default:
(a) default in the payment of any interest on any Note when it becomes
due and payable, and continuance of such default for a period of 30 days;
(b) default in the payment of the principal of any Note at its
maturity;
(c) default in the performance, or breach, of any covenant or
agreement of the Company in the Indenture, continued for 90 days after
written notice to the Company;
(d) acceleration of or any failure to pay at final maturity any Debt
of the Company or any Subsidiary (other than the Notes or Non-Recourse
Indebtedness) in an aggregate amount in excess of $25 million if such
acceleration is not rescinded or annulled, or such indebtedness shall not
have been discharged, within 15 days after written notice thereof to the
Company; and
(e) certain events in bankruptcy, insolvency or reorganization of the
Company or any Subsidiary which constitutes a "significant subsidiary" as
defined in Rule 1-02 of Regulation S-X of the Securities Exchange Act of
1934, as amended (a "Significant Subsidiary").
15
<PAGE> 18
If an Event of Default, other than certain events with respect to
bankruptcy, insolvency and reorganization of the Company or any Significant
Subsidiary, shall occur and be continuing, then the Trustee or the holders of
not less than 25% in aggregate principal amount of the outstanding Notes may, by
a notice in writing to the Company (and to the Trustee if given by the Holders),
declare the principal of the Notes, and all accrued and unpaid interest thereon,
to be due and payable immediately. If an Event of Default with respect to
certain events of bankruptcy, insolvency or reorganization of the Company or any
Significant Subsidiary shall occur and be continuing, then the principal on the
Notes, and all accrued and unpaid interest thereon, shall be due and payable
immediately without any act on the part of the Trustee or any holder.
The holders of not less than a majority in principal amount of the
outstanding Notes may, on behalf of the holders of all of the Notes, waive any
past default under the Indenture and its consequences, except a default (i) in
respect of the payment of principal of or interest on the Notes or (ii) in
respect of a covenant or provision that cannot be modified or amended without
the consent of each holder.
The Company is required to file annually with the Trustee an officers'
certificate as to the Company's compliance with all conditions and covenants
under the Indenture. The Indenture will provide that the Trustee may withhold
notice to the holders of the Notes of any default (except payment defaults on
the Notes) if it considers it to be in the interest of such holders to do so.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, when an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request or direction of any of the holders, unless such holders shall
have offered to the Trustee reasonable security or indemnity. Subject to such
provisions concerning the rights of the Trustee, the holders of a majority in
aggregate principal amount of the outstanding Notes will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee under the Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that the Company may not consolidate with or merge
into any other corporation, or convey, transfer or lease, or permit one or more
of its Significant Subsidiaries to convey, transfer or lease, all or
substantially all of the property and assets of the Company, on a consolidated
basis, to any Person unless either the Company is the continuing corporation or
such corporation or Person assumes by supplemental indenture all of the
obligations of the Company under the Indenture and the Notes, immediately after
the transaction no Default or Event of Default shall exist, and the surviving
corporation or such Person is a corporation, partnership or trust organized and
validly existing under the laws of the United States of America, any state
thereof or the District of Columbia.
MODIFICATION OR WAIVER
Modification and amendment of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of not less than a majority in
principal amount of the outstanding Notes; provided that no such modification or
amendment may, without the consent of each holder, among other things: (i)
change the maturity of the principal of, or any installment of interest on, the
Notes; (ii) reduce the principal amount of or the rate of interest on the Notes;
(iii) change the place or currency of payment of principal of or interest on the
Notes; (iv) impair the right to institute suit for the enforcement of any such
payment on or after the maturity thereof; (v) reduce the percentage of holders
necessary to modify or amend the Indenture or to consent to any waiver
thereunder or reduce the requirements for voting or quorum described below; or
(vi) modify the foregoing requirements or reduce the percentage of outstanding
Notes necessary to waive any past default.
Modification and amendment of the Indenture may be made by the Company and
the Trustee without the consent of any holder for any of the following purposes:
(i) to evidence the succession of another Person to the Company and the
assumption by such Person of the covenants of the Company contained in the
Indenture and the Notes; (ii) to add covenants of the Company for the benefit of
the holders or to surrender any right or power conferred upon the Company; (iii)
to add Events of Default; (iv) to secure the Notes; (v) to evidence and provide
for the acceptance of appointment by a successor Trustee; (vi) to cure any
ambiguity, defect or inconsistency in the Indenture; provided such action does
not adversely affect the interests of the holders;
16
<PAGE> 19
(vii) to supplement any of the provisions of the Indenture to the extent
necessary to permit or facilitate defeasance and discharge of the Notes;
provided such action shall not adversely affect the interests of the holders; or
(viii) to conform with the requirements of the TIA.
DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, terminate the obligations
of the Company with respect to the outstanding Notes ("Defeasance"). Defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, except for (i) the rights of
the holders of outstanding Notes to receive payment in respect of the principal
of and interest on such Notes when such payments are due, (ii) the Company's
obligations to issue temporary Notes, register and transfer or exchange any
Notes, replace mutilated, destroyed, lost or stolen Notes, maintain an office or
agency for payments in respect of the Notes and segregate and hold money in
trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee,
and (iv) the Defeasance provisions of the Indenture. In addition, the Company
may, at its option and at any time, elect to terminate its obligations with
respect to the Notes (being primarily the restrictions described under
"-- Limitation on Liens" and "-- Limitation on Sale/Leaseback Transactions"),
and any omission to comply with such obligations shall not constitute a Default
or an Event of Default with respect to the Notes ("Covenant Defeasance").
In order to exercise either Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders, cash in United States dollars, U.S. Government Obligations, or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of and interest on the outstanding Notes to maturity; (ii) the Company
shall have delivered to the Trustee an opinion of counsel to the effect that the
holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Defeasance or 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 Defeasance
or Covenant Defeasance had not occurred (in the case of Defeasance, such opinion
must refer to and be based upon a ruling of the Internal Revenue Service or a
change in applicable federal income tax laws); (iii) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit or
insofar as clause (e) under the first paragraph under "-- Events of Default"
herein is concerned, at any time during the period ending the 91st day after the
date of deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period); (iv) such Defeasance or Covenant
Defeasance shall not cause the Trustee to have a conflicting interest (as
defined by the TIA) with respect to any securities of the Company; (v) such
Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under, the Indenture or any material agreement or
instrument to which the Company is a party or by which it is bound; and (vi) the
Company shall have delivered to the Trustee an officers' certificate and an
opinion of counsel, each stating that all conditions precedent under the
Indenture to either Defeasance or Covenant Defeasance, as the case may be, have
been complied with and that no violations under agreements governing any other
outstanding Debt would result.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
the Notes, as expressly provided for in the Indenture) as to all outstanding
Notes when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money or certain U.S. Government Obligations has
theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust) have
been delivered to the Trustee for cancellation or (b) all Notes not theretofore
delivered to the Trustee for cancellation have become due and payable or will
become due and payable at maturity within one year and the Company has
irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of and
interest on the Notes to the date of deposit together with irrevocable
instructions from the Company directing the Trustee to apply such funds to the
payment thereof at maturity; (ii) the Company has paid or has caused to be paid
all other sums payable under the Indenture by the Company; and (iii) the Company
has delivered
17
<PAGE> 20
to the Trustee an officers' certificate and an opinion of counsel stating that
all conditions precedent under the Indenture relating to the satisfaction and
discharge of the Indenture have been complied with.
GLOBAL NOTE
The Notes will initially be represented by a single Global Note in fully
registered form without interest coupons and will be deposited with the Trustee
as custodian for DTC, New York, New York and registered in the name of a nominee
of DTC. DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for persons who have accounts with DTC ("participants") and to
facilitate the clearance and settlement of securities transactions among its
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
Upon the issuance of the Global Note, DTC or its custodian will credit, on
its internal system, the respective principal amount of the individual
beneficial interests represented by such Global Note to the accounts of
participants. Ownership of beneficial interests in the Global Note will be
limited to participants or persons who hold interests through participants.
Ownership of beneficial interests in the Global Note will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of participants) and the records
of participants (with respect to interests of persons other than participants).
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. The laws of some states
require that certain persons take physical delivery of securities in definitive
form; consequently, the ability to transfer beneficial interests in the Global
Note to such persons may be limited. Because DTC can only act on behalf of
participants, who in turn act on behalf of indirect participants and certain
banks, the ability of a person having a beneficial interest in the Global Note
to pledge such interest to persons or entities that do not participate in the
DTC system, or otherwise take actions in respect of such interest, may be
affected by the lack of a physical certificate for such interest.
So long as DTC, or its nominee, is the registered holder of the Global
Note, DTC or such nominee, as the case may be, will be considered the sole owner
and holder of the Notes represented by such Global Note for all purposes under
the Indenture and the Notes. Unless (i) DTC notifies the Company that it is
unwilling or unable to continue as a depositary for the Global Note and a
successor depositary is not appointed by the Company within 90 days of such
notice, (ii) an Event of Default has occurred and is continuing with respect to
such Note and the registrar has received a request from DTC, or (iii) the
Company determines not to have the Notes represented by one or more Global
Notes, owners of beneficial interests in the Global Note will not be entitled to
have any portions of such Global Note registered in their names, will not
receive or be entitled to receive physical delivery of Certificated Notes and
will not be considered the owners or holders of such Global Note (or any Notes
represented thereby) under the Indenture or the Notes.
Payment of the principal of and interest on the Global Notes will be made
to DTC or its nominee as the registered owner thereof as described in
"-- Payments of Principal and Interest."
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, they are
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Company nor the Trustee
will have any responsibility for the performance by DTC or its participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
18
<PAGE> 21
CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as a depositary as
set forth under "-- Global Note," or if the Company determines not to have the
Notes represented by one or more Global Notes as provided therein, the Company
will issue Notes in certificate form ("Certificated Notes") in exchange for the
applicable Global Note. In all cases, Certificated Notes delivered in exchange
for any Global Note or beneficial interests therein will be registered in the
names, and issued in any approved denominations, requested by DTC.
Holders of Certificated Notes may transfer such Notes by surrendering such
Certificated Notes to (i) the office or agency maintained by the Company for
such purpose in The City of New York, which initially will be the principal
corporate trust office of the Trustee, or (ii) any other office or agency
designated by the Company.
Payment of the principal of and interest on the Certificated Notes will be
made to holders thereof as described in "-- Payments of Principal and Interest."
PAYMENTS OF PRINCIPAL AND INTEREST
Payments in respect of principal of and interest on Certificated Notes will
be payable at the office or agency of the Company to be maintained in The City
of New York, initially at the principal corporate trust office of the Trustee
maintained for such purpose at 14 Wall Street, 8th Floor, New York, New York
10005; provided, however, that at the option of the Company interest on
Certificated Notes may be paid by (i) check mailed to the addresses of the
persons entitled thereto at such addresses as shall appear in the register of
holders of Notes or (ii) transfer to an account located in the United States
maintained by the person entitled thereto. Any such payment of interest shall be
made to the person in whose name such Note is registered on the or
immediately preceding such interest payment date.
The total amount of payments in respect of principal of or interest on any
Global Note representing one or more Notes on any interest payment date or at
maturity will be made available to the Trustee on such date. As soon as possible
thereafter, the Trustee will make such payments to DTC or its nominee as the
registered owner of the Global Note. None of the Company, the Trustee or any
paying agent will have any responsibility or liability for the payment of such
amounts to beneficial owners of the Notes or for any aspect of the records
relating to, or payments made on account of, beneficial ownership interests in
the Global Notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Company believes that DTC or its nominee, upon receipt of any payment
of principal or interest in respect of a Global Note representing any Notes held
by it or its nominee, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Note as shown on the records of DTC or its
nominee. The Company also believes that payments by participants to owners of
beneficial interests in such Global Note held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in street name.
Such payments will be the responsibility of such participants.
THE TRUSTEE
The First National Bank of Chicago is the Trustee under the Indenture. The
Indenture and provisions of the TIA incorporated by reference therein contain
limitations on the rights of the Trustee thereunder, should the Trustee become a
creditor of the Company, to obtain payment of claims in certain cases or to
realize on certain property received by it in respect of any such claims, as
security or otherwise. The Company may from time to time maintain bank accounts
and have other customary banking relationships with and obtain credit facilities
and lines of credit from the Trustee in the ordinary course of business;
provided, however, that if the Trustee acquires any conflicting interest (as
defined in Section 310(b) of the TIA), it must eliminate such conflict or
resign.
The Company will appoint the Trustee at the offices specified in the
Indenture as registrar, principal paying agent and transfer agent for the Notes.
In such capacities, the Trustee will be responsible for, among other things, (i)
maintaining a record of the aggregate holdings of Notes represented by the
Global Note and
19
<PAGE> 22
accepting Notes for exchange and registration of transfer, (ii) ensuring that
payments of principal of and interest on the Global Note and other Notes
received by the Trustee from the Company are duly paid to DTC or its nominee or
the holders thereof, as the case may be, and (iii) transmitting to the Company
any notices from holders of Notes. The Company will cause the transfer agent to
act as a registrar. The Company may vary or terminate the appointment of the
transfer agent or appoint additional or other transfer agents or approve any
change in the office through which any transfer agent acts.
20
<PAGE> 23
UNDERWRITING
Subject to the terms and conditions set forth in the purchase agreement
(the "Purchase Agreement") among the Company and each of the underwriters named
below (the "Underwriters"), the Company has agreed to sell to each of the
Underwriters, and each of the Underwriters has severally agreed to purchase, the
principal amount of Notes set forth opposite its name below.
<TABLE>
<CAPTION>
UNDERWRITERS PRINCIPAL AMOUNT
----------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.....................................................
Chase Securities Inc.........................................................
Morgan Stanley & Co. Incorporated............................................
NationsBanc Capital Markets, Inc.............................................
------------
Total......................................................... $150,000,000
============
</TABLE>
In the Purchase Agreement, the several Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the Notes if any
of the Notes being sold pursuant to the Purchase Agreement are purchased. Under
certain circumstances, the commitments of non-defaulting Underwriters may be
increased.
The Underwriters propose initially to offer the Notes to the public at the
public offering price set forth on the cover page of this Prospectus and in part
to selected dealers (who may include Underwriters) at such price less a
concession not in excess of . % of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of . % of the principal amount of the Notes to certain other dealers. After
the initial public offering, the public offering price, concession and discount
may be changed.
The Notes have been approved for listing the NYSE under the symbol " ,"
subject to official notice of issuance. Prior to the offering of the Notes,
there has been no public market for the Notes. The Company has been advised by
the Underwriters that following the initial public offering of the Notes, they
presently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes and any such market-making activity may be discontinued at any time
without notice at the sole discretion of any of the Underwriters. There can be
no assurance as to the liquidity of the public market for the Notes or that an
active public market for the Notes will develop. If an active public market does
not develop, the market price and liquidity of the Notes may be adversely
affected.
Because the Company is an affiliate of Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("MLPF&S"), one of the Underwriters, the offering is being
conducted in accordance with the National Association of Securities Dealers,
Inc. (the "NASD") Conduct Rule 2720. In accordance with Conduct Rule 2720, no
NASD member participating in the distribution will be permitted to confirm sales
to accounts over which it exercises discretionary authority without the prior
specific written consent of the customer.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act.
Each of the Underwriters or their affiliates from time to time provide
commercial and investment banking and other financial services for the Company.
The Chase Manhattan Bank and NationsBank, affiliates of Chase Securities Inc.
and NationsBanc Capital Markets, Inc., respectively, are co-agents and lenders
under the Company's revolving credit facility and will receive their
proportional share of any repayment of amounts outstanding under the revolving
credit facility. See "Use of Proceeds." For information regarding the ownership
by MLCP and its affiliates of Common Stock and the representation of affiliates
of MLPF&S on the Board of Directors of the Company, see "Risk
Factors -- Principal Stockholder."
21
<PAGE> 24
LEGAL MATTERS
The validity of the Notes offered hereby and certain other legal matters
relating to the offering of the Notes will be passed upon for the Company by
Wachtell, Lipton, Rosen & Katz, New York, New York. Certain legal matters will
be passed upon for the Underwriters by Shearman & Sterling, New York, New York.
Wachtell, Lipton, Rosen & Katz and Shearman & Sterling occasionally act as
counsel to MLCP and other affiliates of MLPF&S.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
incorporated in this Prospectus by reference from the Company's Annual Report
for each of the three years in the period ended December 31, 1995 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
The financial statements of NSK-Warner as of March 31, 1996 and 1995, and
for each of the years in the three-year period ended March 31, 1996, have been
incorporated by reference herein in reliance upon the report of KPMG Peat
Marwick, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
The combined financial statements of the Coltec Automotive OEM Business
Group as of December 31, 1995 and 1994 and for each of the two years in the
period ended December 31, 1995, incorporated by reference in this Prospectus
from the Company's Form 8-K dated June 17, 1996, have been audited by Arthur
Andersen LLP, as indicated by their report, which is incorporated herein by
reference. The audited financial statements incorporated by reference have been
so incorporated in reliance upon the report of Arthur Andersen LLP given upon
the authority of said firm as experts in accounting and auditing.
22
<PAGE> 25
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, NOT CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFERING MADE HEREBY, AND INFORMATION OR REPRESENTATIONS NOT
HEREIN CONTAINED, IF GIVEN OR MADE, MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE NOTES OR AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, NOTES IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information................. 2
Incorporation of Certain Information
by Reference........................ 2
Summary............................... 3
Risk Factors.......................... 8
Use of Proceeds....................... 11
Capitalization........................ 12
Description of the Notes.............. 13
Underwriting.......................... 21
Legal Matters......................... 22
Experts............................... 22
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$150,000,000
[BORG-WARNER AUTOMOTIVE LOGO]
% SENIOR NOTES DUE 2006
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
CHASE SECURITIES INC.
MORGAN STANLEY & CO.
INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 26
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
PRELIMINARY PROSPECTUS DATED OCTOBER 24, 1996
PROSPECTUS
$150,000,000
[BORG-WARNER AUTOMOTIVE, INC. LOGO]
% SENIOR NOTES DUE 2006
------------------
Interest on the __% Senior Notes due ____________, 2006 (the "Notes") of
Borg-Warner Automotive, Inc. (the "Company") offered hereby is payable
semiannually on ________________ and ________________ of each year, beginning
____________, 1997. The Notes are unsecured, not redeemable prior to maturity
and not entitled to any sinking fund.
The Notes will be represented by one or more global securities (the "Global
Note") registered in the name of the nominee of The Depository Trust Company,
which will act as the Depositary ("DTC"). Interests in the Global Note will be
shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. Except as described herein, Notes in
definitive form will not be issued. Settlement for the Notes will be made in
immediately available funds. The Notes will trade in the DTC's Same-Day Funds
Settlement System until maturity, and secondary market trading activity for the
Notes will therefore settle in immediately available funds. All payments of
principal and interest will be made by the Company in immediately available
funds. See "Description of the Notes -- Global Note" and " -- Payments of
Principal and Interest."
The Notes are listed on the New York Stock Exchange, Inc. ("NYSE").
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" COMMENCING ON PAGE 8.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
This Prospectus is to be used by Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPF&S") in connection with offers and sales of the Notes related
to market-making transactions at negotiated prices related to prevailing market
prices at the time of sale. MLPF&S may act as principal or agent in such
transactions. If MLPF&S conducts any market-making activities, it may be
required to deliver a "market-making prospectus" when effecting offers and sales
in the Notes because of the equity ownership of affiliates of MLPF&S. Certain
affiliates of MLPF&S control, as of September 30, 1996, approximately 22.6% of
the voting power of the Company.
------------------
The date of this Prospectus is , 1996.
<PAGE> 27
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
MARKET-MAKING ACTIVITIES OF MLPF&S
This Prospectus is to be used by MLPF&S in connection with offers and sales
of the Notes in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. MLPF&S may act as principal or
agent in such transactions. There can be no assurance that MLPF&S will continue
to act in such capacities. MLPF&S has no obligation to make a market in the
Notes and may discontinue its market-making activities at any time without
notice, at its sole discretion.
MLPF&S is affiliated with entities that own capital stock representing
approximately 22.6% of the aggregate voting power of the capital stock of the
Company as of September 30, 1996.
MLPF&S acted as underwriter in connection with the initial offering of the
Notes and received underwriting fees and commissions aggregating approximately
$____ million.
The Company will receive no portion of the proceeds of the sales of the
Notes by MLPF&S and will bear the expenses incident to the registration thereof.
The Company has agreed to indemnify MLPF&S against certain liabilities under the
Securities Act or to contribute to payments that MLPF&S may be required to make
in respect of such liabilities.
<PAGE> 28
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, NOT CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFERING MADE HEREBY, AND INFORMATION OR REPRESENTATIONS NOT
HEREIN CONTAINED, IF GIVEN OR MADE, MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE NOTES OR AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, NOTES IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information................. 2
Incorporation of Certain Information
by Reference........................ 2
Summary............................... 5
Risk Factors.......................... 12
Use of Proceeds....................... 18
Capitalization........................ 19
Description of the Notes.............. 20
Market-Making Activities of MLPF&S.... 34
Legal Matters......................... 35
Experts............................... 35
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$150,000,000
[BORG-WARNER AUTOMOTIVE LOGO]
% SENIOR NOTES DUE 2006
---------------------------
PROSPECTUS
---------------------------
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 29
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses of the issuance and distribution
of the securities being registered, all of which will be paid by the Company.
<TABLE>
<S> <C>
Registration fee......................................................... $ 45,455
NASD and Blue Sky fees and expenses...................................... 28,000
Printing and engraving expenses.......................................... 75,000
Legal fees and expenses.................................................. 75,000
Trustee fees and expenses................................................ 3,000
Accounting fees and expenses............................................. 45,000
Miscellaneous............................................................ 13,545
-------
Total.................................................................... $285,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
("DGCL") provides that a corporation has the power to indemnify its officers and
directors against the expenses, including attorney's fees, judgments, fines or
settlement amounts actually and reasonably incurred by them in connection with
the defense of any action by reason of being or having been directors or
officers, if such person shall have acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation, except that if such action shall be in the right of the
corporation, no such indemnification shall be provided as to any claim, issue or
matter as to which such person shall have been judged to have been liable to the
corporation unless and to the extent that the Court of Chancery of the State of
Delaware, or another court in which the suit was brought, shall determine upon
application that, in view of all of the circumstances of the case, such person
is fairly and reasonably entitled to indemnity.
As permitted by Section 102 of the DGCL, the Certificate of Incorporation
of the Company provides that no director shall be liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director
other than (i) for breaches of the director's duty of loyalty to the Company and
its stockholders, (ii) for acts or omissions not in violation of law, (iii) for
the unlawful payment of dividends or unlawful stock purchases or redemptions
under Section 174 of the DGCL, and (iv) for any transaction from which the
director derived an improper personal benefit.
The Amended and Restated Certificate of Incorporation of the Company
provides for indemnification of its directors and officers to the fullest extent
permitted by the DGCL, and allows the Company to advance or reimburse litigation
expenses upon submission by the director, officer or employee of an undertaking
to repay such advances or reimbursements if it is ultimately determined that
indemnification is not available to such director or officer.
ITEM 16. EXHIBITS.
The following documents are filed as a part of this Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF DOCUMENT
- ------- ----------------------------------------------------------------
<C> <S>
1.1 Form of Purchase Agreement.
4.1 Form of Indenture for % Senior Notes due 2006.
5 Opinion of Wachtell, Lipton, Rosen & Katz.
</TABLE>
II-1
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF DOCUMENT
- ------- ----------------------------------------------------------------
<C> <S>
12 Statements re Computation of Ratios.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Wachtell, Lipton, Rosen & Katz (contained in Exhibit
5).
23.3 Consent of KPMG Peat Marwick.
23.4 Consent of Arthur Andersen LLP.
24 Powers of Attorney.
25 Statement of Eligibility of Trustee on Form T-1.
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(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;
(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 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended, that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c)-(g), (j) Not applicable.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise,
II-2
<PAGE> 31
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of a registration statement in reliance upon Rule 430A
and contained in the form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of registration statement as of the time
it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-3
<PAGE> 32
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Chicago, State of Illinois, on October 23, 1996.
BORG-WARNER AUTOMOTIVE, INC.
By: /s/ ROBIN J. ADAMS
------------------------------------
Robin J. Adams
Vice President and Treasurer
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 indicated on October 23, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------- ------------------------------------------------------
<C> <S>
* Chairman, Chief Executive Officer,
- ------------------------------------- and Director (Principal Executive Officer)
John F. Fiedler
/s/ ROBIN J. ADAMS Vice-President and Treasurer
- ------------------------------------- (Principal Financial Officer)
Robin J. Adams
* Vice-President and Controller
- ------------------------------------- (Principal Accounting Officer)
William C. Cline
* Director
- -------------------------------------
Donald C. Trauscht
* Director
- -------------------------------------
Alexis P. Michas
* Director
- -------------------------------------
Albert J. Fitzgibbon III
* Director
- -------------------------------------
Matthias B. Bowman
* Director
- -------------------------------------
Paul E. Glaske
* Director
- -------------------------------------
James J. Kerley
* Director
- -------------------------------------
Ivan W. Gorr
/s/ GASPARE G. RUGGIRELLO As attorney-in-fact for the
- ------------------------------------- officers and/or directors
Gaspare G. Ruggirello marked by an asterisk.
</TABLE>
II-4
<PAGE> 33
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF DOCUMENT
- ------- ------------------------------------------------------
<C> <S>
1.1 Form of Purchase Agreement
4.1 Form of Indenture for % Senior Notes due 2006
5 Opinion of Wachtell, Lipton, Rosen & Katz
12 Statements re Computation of Ratios
23.1 Consent of Deloitte & Touche LLP
23.3 Consent of KPMG Peat Marwick
23.4 Consent of Arthur Andersen LLP
24 Powers of Attorney
25 Statement of Eligibility of Trustee on Form T-1
</TABLE>
<PAGE> 1
EXHIBIT 1.1
-----------
FORM OF PURCHASE AGREEMENT
BORG-WARNER AUTOMOTIVE, INC.
(a Delaware corporation)
__% Senior Notes due 2006
PURCHASE AGREEMENT
Dated:_________________, 1996
<PAGE> 2
BORG-WARNER AUTOMOTIVE, INC.
(a Delaware corporation)
___% Senior Notes due __________, 2006
PURCHASE AGREEMENT
____________, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
As Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1201
Ladies and Gentlemen:
Borg-Warner Automotive, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the underwriters named in Schedule A
(the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), its ___% Senior Notes due 2006 (the "Securities"). The
Securities are to be sold to each Underwriter, acting severally and not jointly,
in the respective principal amounts as are set forth in Schedule A opposite the
name of such Underwriter. The Securities are to be issued pursuant to an
indenture to be dated as of , 1996 (the "Indenture") between
the Company and The First National
<PAGE> 3
2
Bank of Chicago, trustee (the "Trustee"). The Securities and the Indenture are
more fully described in the Prospectus referred to below.
You have advised us that you and the other Underwriters,
acting severally and not jointly, desire to purchase the Securities and that you
have been authorized by the other Underwriters to execute this Agreement and the
Price Determination Agreement referred to below on their behalf.
The principal amount and certain terms of the Securities, and
the purchase price of the Securities to be paid by the Underwriters, shall be
agreed upon by the Company and the Representatives, acting on behalf of the
several Underwriters, and such agreement shall be set forth in a separate
written instrument substantially in the form of Exhibit A hereto (the "Price
Determination Agreement"). The Price Determination Agreement may take the form
of an exchange of any standard form of written telecommunication between the
Company and the Representatives and shall specify such applicable information as
is indicated in Exhibit A hereto. The offering of the Securities will be
governed by this Agreement, as supplemented by the Price Determination
Agreement. From and after the date of the execution and delivery of the Price
Determination Agreement, this Agreement shall be deemed to incorporate, and all
references herein to "this Agreement" shall be deemed to include, the Price
Determination Agreement.
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(Registration No. 333- ______ ) covering the registration of the Securities
under the Securities Act of 1933, as amended (the "1933 Act"), including the
related preliminary prospectus, or prospectuses, and either (A) has prepared and
proposes to file, prior to the effective date of such registration statement, an
amendment to such registration statement, including a final prospectus or (B) if
the Company has elected to rely upon Rule 430A ("Rule 430A") of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations"),
will prepare and file a prospectus, in accordance with the provisions of Rule
430A and Rule 424(b) ("Rule 424(b)") of the 1933 Act Regulations, promptly after
execution and delivery of the Price Determination Agreement. Additionally, if
the Company has elected to rely upon Rule 434 ("Rule 434") of the 1933 Act
Regulations, the Company will prepare and file a term sheet (a "Term Sheet") in
accordance with the provisions of Rule 434 and Rule 424(b), promptly after
execution and delivery of the Price Determination Agreement. The information, if
any, included in such prospectus that was omitted from the prospectus included
in such registration statement at the time it becomes effective but that is
deemed, (i) pursuant to paragraph (b) of Rule 430A, to be part of such
registration statement at the time it becomes effective is referred to herein as
the "Rule 430A Information", and (ii) pursuant to paragraph (d) of Rule 434, to
be part of such registration statement at the time it becomes effective is
referred to herein as "Rule 434 Information". Each prospectus used before the
time such registration statement becomes effective, and any prospectus that
omits the Rule 430A
<PAGE> 4
3
Information or the Rule 434 Information, if applicable, that is used after such
effectiveness and prior to the execution and delivery of the Price Determination
Agreement, is herein called a "preliminary prospectus". Such registration
statement, including the exhibits thereto and the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act ("Item
12"), as amended, and Rule 412 of the 1933 Act Regulations ("Rule 412") at the
time it becomes effective and including, if applicable, the Rule 430A
Information or the Rule 434 Information, is herein called the "Original
Registration Statement". Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement", and the Original Registration Statement and any Rule
462(b) Registration Statement are herein referred to collectively as the
"Registration Statement". The prospectus, including the documents incorporated
by reference therein pursuant to Item 12 and Rule 412, included in the Original
Registration Statement at the time it becomes effective is herein called the
"Prospectus", except that, (i) if the final prospectus first furnished to the
Underwriters after the execution of the Price Determination Agreement for use in
connection with the offering of the Securities differs from the prospectus
included in the Original Registration Statement at the time it becomes effective
(whether or not such prospectus is required to be filed pursuant to Rule
424(b)), the term "Prospectus" shall refer to the final prospectus first
furnished to the Underwriters for such use, and (ii) if Rule 434 is relied upon,
the term "Prospectus" shall refer to the preliminary prospectus last furnished
to the Underwriters in connection with the offering of the Securities, in each
case together with the Term Sheet.
The Company understands that the Underwriters propose to make
a public offering of the Securities as soon as you deem advisable after the
Registration Statement becomes effective, the Price Determination Agreement has
been executed and delivered and the Indenture has been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act").
Section 1. Representations and Warranties. (a) The Company
represents and warrants to and agrees with each of the Underwriters that:
(i) The Company meets the requirements for use of Form S-3
under the 1933 Act and when the Registration Statement or any
post-effective amendment thereto shall become effective and at all
times subsequent thereto up to the Closing Time referred to below, (A)
the Registration Statement and the Prospectus, including any amendments
and supplements thereto, will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and the
requirements of the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations"); (B) neither
the Registration Statement nor any amendment or supplement thereto will
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
<PAGE> 5
4
statements therein not misleading; (C) neither the Prospectus nor any
amendment or supplement thereto will include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; and (D) if Rule 434 is relied
upon, the Prospectus shall not be "materially different", as such term
is used in Rule 434, from the prospectus included in the Registration
Statement at the time it becomes effective; except that this
representation and warranty does not apply to statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through you
expressly for use in the Registration Statement or the Prospectus or
any amendment or supplement thereof.
(ii) The documents incorporated by reference in the
Prospectus pursuant to Item 12 of Form S-3 under the 1933 Act, at the
time they were filed with the Commission, complied in all material
respects with the requirements of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together and with the other information in the Prospectus, at the time
the Registration Statement becomes effective and at all times
subsequent thereto up to the Closing Time, will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein not misleading.
(iii) (A) Deloitte & Touche LLP, who have certified the
financial statements of the Company and the schedules included or
incorporated by reference in the Registration Statement and Prospectus,
(B) KPMG Peat Marwick, who have certified the financial statements of
NSK-Warner K.K. ("NSK-Warner") included or incorporated by reference in
the Registration Statement and the Prospectus and (C) Arthur Andersen
LLP, who have certified the financial statements of Holley Automotive
Inc, Holley Automotive Group, Ltd., Holley Automotive Systems GmbH,
Coltec Automotive Inc, and Performance Friction Products, a division of
Stemco Inc, an indirect, wholly-owned subsidiary of Coltec Industries
Inc. (collectively, the "Coltec Subsidiaries"), included or
incorporated by reference in the Registration Statement and the
Prospectus, are independent public accountants as required by the 1933
Act and the 1933 Act Regulations.
(iv) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement; and this Agreement has been duly authorized, executed and
delivered by the Company.
(v) The consolidated financial statements and the related
notes of the Company, its Subsidiaries (as defined below) and the
Coltec Subsidiaries included or
<PAGE> 6
5
incorporated by reference in the Registration Statement present fairly
the consolidated financial position of the Company, its Subsidiaries
and the Coltec Subsidiaries as of the dates indicated and the
consolidated results of operations and cash flows of the Company, its
Subsidiaries and the Coltec Subsidiaries for the periods specified.
Such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as set forth in the notes
thereto) and subject, in the case of any interim statements, to normal
year-end audit adjustments. The financial statement schedules, if any,
included in the Registration Statement present fairly the information
required to be stated therein. The selected financial data included or
incorporated by reference in the Prospectus present fairly the
information shown therein and have been compiled on a basis consistent
with that of the audited consolidated financial statements included or
incorporated by reference in the Registration Statement. The pro forma
financial information included or incorporated by reference in the
Prospectus present fairly the information shown therein, has been
prepared in accordance with the applicable requirements of Rule 11-02
of Regulation S-X, has been properly compiled on the pro forma bases
described therein, and, in the opinion of the Company, the assumptions
used in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(vi) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
with corporate power and authority under such laws to own, lease and
operate its properties and conduct its business as described in the
Prospectus. The Company is duly qualified to transact business as a
foreign corporation and is in good standing in each other jurisdiction
in which it owns or leases property of a nature, or transacts business
of a type, that would make such qualification necessary, except to the
extent that the failure to so qualify or be in good standing would not
have a material adverse effect on the Company and the Subsidiaries,
considered as one enterprise.
(vii) The Company's only subsidiaries are set forth in Exhibit
B hereto (each such corporation is referred to herein as a "Subsidiary"
and, collectively, the "Subsidiaries"). Each Subsidiary is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation with corporate power
and authority under such laws to own, lease and operate its properties
and conduct its business; and each Subsidiary is duly qualified to
transact business as a foreign corporation and is in good standing in
each other jurisdiction in which it owns or leases property of a
nature, or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure to so
qualify or be in good standing would not have a material adverse effect
on the Company and the Subsidiaries, considered as one enterprise. All
of the outstanding shares of capital
<PAGE> 7
6
stock of each Subsidiary have been duly authorized and validly issued
and are fully paid and non-assessable and are owned by the Company,
directly or through one or more of the Subsidiaries, in the percentages
set forth in Exhibit B hereto, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind.
(viii) The Company had at the date indicated a duly authorized
and outstanding capitalization as set forth in the Prospectus under the
caption "Capitalization".
(ix) The Indenture has been duly authorized by the Company,
will be substantially in the form heretofore delivered to you and, when
duly executed and delivered by the Company and the Trustee, will
constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law); and the Indenture conforms to the
description thereof in the Prospectus.
(x) The Securities have been duly authorized by the
Company. When executed, authenticated, issued and delivered in the
manner provided for in the Indenture and sold and paid for as provided
in this Agreement, the Securities will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture
and enforceable against the Company in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law);
and the Securities conform to the description thereof in the
Prospectus.
(xi) All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable; no holder thereof is or will be subject to personal
liability by reason of being such a holder; and none of the outstanding
shares of capital stock of the Company was issued in violation of the
preemptive rights of any stockholder of the Company.
(xii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
described in the Registration Statement or any amendment or supplement
thereto, there has not been (A) any
<PAGE> 8
7
material adverse change in the condition (financial or otherwise),
results of operations, business affairs or business prospects of the
Company and the Subsidiaries, considered as one enterprise, whether or
not arising in the ordinary course of business, (B) any transaction
entered into by the Company or any Subsidiary, other than in the
ordinary course of business, that is material to the Company and the
Subsidiaries, considered as one enterprise, or (C) any dividend or
distribution of any kind declared, paid or made by the Company on its
capital stock, other than regular quarterly cash dividends declared or
paid on its Common Stock.
(xiii) Neither the Company nor any of its Subsidiaries is in
violation of its certificate of incorporation or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which it is a party or by
which it may be bound or to which any of its properties may be subject,
except for such defaults that would not have a material adverse effect
on the condition (financial or otherwise), results of operations,
business affairs or business prospects of the Company and the
Subsidiaries, considered as one enterprise. The execution and delivery
of this Agreement and the Indenture by the Company, the issuance and
delivery of the Securities, the consummation by the Company of the
transactions contemplated in this Agreement and in the Registration
Statement and compliance by the Company with the terms of this
Agreement and the Indenture, have been duly authorized by all necessary
corporate action on the part of the Company and do not violate and will
not result in any violation of the certificate of incorporation or
by-laws of the Company or any Subsidiary, and do not and will not
conflict with, or result in a breach of any of the terms or provisions
of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any Subsidiary under (A) any indenture,
mortgage, loan agreement, note, lease or other agreement or instrument
to which the Company or any Subsidiary is a party or by which any of
them may be bound or to which any of their properties may be subject,
except for such conflicts, breaches or defaults or liens, charges or
encumbrances that in the aggregate would not have a material adverse
effect on the condition (financial or otherwise), results of
operations, business affairs or business prospects of the Company and
the Subsidiaries, considered as one enterprise or (B) any existing
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any Subsidiary or any of their
respective properties, except for such conflicts, breaches or defaults
or liens, charges or encumbrances that in the aggregate would not have
a material adverse effect on the condition (financial or otherwise),
results of operations, business affairs or business prospects of the
Company and the Subsidiaries, considered as one enterprise.
<PAGE> 9
8
(xiv) No authorization, approval, consent or license of, or
any material filing with, any government, governmental instrumentality
or court, domestic or foreign (other than under the 1933, the 1933 Act
Regulations, the 1939 Act and the securities or Blue Sky laws of the
various states), is legally required for the valid authorization,
issuance, sale and delivery of the Securities or for the execution,
delivery or performance of the Indenture by the Company.
(xv) Except as disclosed in the Prospectus, there is no
action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending or, to the
knowledge of the Company, threatened against the Company or any
Subsidiary that is required to be disclosed in the Prospectus or that
could result in any material adverse change in the condition (financial
or otherwise), results of operations, business affairs or business
prospects of the Company and its Subsidiaries, considered as one
enterprise, or that could reasonably be expected to adversely affect
the consummation of the transactions contemplated by this Agreement.
(xvi) There are no contracts or documents of a character
required pursuant to the 1933 Act to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described and filed as required.
(xvii) The Company and the Subsidiaries each has good and
marketable title to all properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as (A) are described in the
Prospectus or (B) are neither material in amount nor materially
significant in relation to the business of the Company and the
Subsidiaries, considered as one enterprise; all of the leases and
subleases material to the business of the Company and the Subsidiaries,
considered as one enterprise, and under which the Company or any
Subsidiary holds properties described in the Prospectus, are in full
force and effect, and neither the Company nor any Subsidiary has any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any Subsidiary under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of such corporation to the continued possession of the
leased or subleased premises under any such lease or sublease.
(xviii) The Company and the Subsidiaries each owns, possesses
or has obtained all material governmental licenses, permits,
certificates, consents, orders, approvals and other authorizations, and
has made all filings with all governmental authorities, necessary to
own or lease, as the case may be, and to operate its properties and to
carry on its business as presently conducted, and neither the Company
nor any Subsidiary has received any notice of proceedings relating to
<PAGE> 10
9
revocation or modification of any such licenses, permits, certificates,
consents, orders, approvals or authorizations, which, singly or in the
aggregate, if not so owned, possessed or obtained or the subject of an
unfavorable ruling, decision or finding, could materially adversely
affect the condition (financial or otherwise), results of operations,
business affairs or business prospects of the Company and the
Subsidiaries, considered as one enterprise.
(xix) The Company and the Subsidiaries each owns or
possesses, or can acquire on reasonable terms, adequate patents, patent
licenses, trademarks, service marks and trade names necessary to carry
on its business as presently conducted, and neither the Company nor any
Subsidiary has received any notice of infringement of or conflict with
asserted rights of others with respect to any patents, patent licenses,
trademarks, service marks or trade names that in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could reasonably
be expected to materially adversely affect the condition (financial or
otherwise), results of operations, business affairs or business
prospects of the Company and the Subsidiaries, considered as one
enterprise.
(xx) Except as disclosed in the Prospectus, to the best
knowledge of the Company, no labor problem exists with its employees or
with employees of the Subsidiaries or is imminent that could reasonably
be expected to materially adversely affect the Company and the
Subsidiaries, considered as one enterprise and, to the knowledge of the
Company, except as disclosed in the Prospectus, the Company is not
aware of any material existing or imminent labor dispute by the
employees of any of its or the Subsidiaries' principal customers that
could be expected to materially adversely affect the Company and the
Subsidiaries, considered as one enterprise.
(xxi) The Company has not taken and will not take, directly
or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the
price of the Securities.
(xxii) Except as disclosed in the Registration Statement and
except as would not individually or in the aggregate have a material
adverse effect on the condition (financial or otherwise), results of
operations, business affairs or business prospects of the Company and
the Subsidiaries, considered as one enterprise, (A) the Company and the
Subsidiaries are each in compliance with all applicable Environmental
Laws, (B) the Company and the Subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or threatened Environmental Claims against the
Company or any Subsidiary, and (D) there are no circumstances with
respect to any property or operations of the Company or the
Subsidiaries that could
<PAGE> 11
10
reasonably be anticipated to form the basis of an Environmental Claim
against the Company or the Subsidiaries.
For purposes of this Agreement, the following terms shall have
the following meanings: "Environmental Law" means any United States (or
other applicable jurisdiction's) federal, state, local or municipal
statute, law, rule, regulation, ordinance, code, policy or rule of
common law and any judicial or administrative interpretation thereof
including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety or any chemical,
material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority. "Environmental Claims" means
any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigations or proceedings relating in any way to any
Environmental Law.
(xxiii) All United States federal income tax returns of the
Company (and any of the Subsidiaries, if not included in the Company's
U.S. consolidated federal income tax return) required by law to be
filed have been properly prepared and filed, and all taxes shown on
such returns or otherwise assessed which are due and payable have been
paid. All of the Company's United States federal tax returns (and any
of the Subsidiaries' tax returns, if applicable) for taxable periods
through and including the 1992 federal taxable year have been audited
by the Internal Revenue Service or the statute of limitations for such
taxable years has run and thus, all taxes for such periods have been
finally determined (excluding the effect of any net operating loss or
credit carryovers to such periods). All other tax returns of the
Company and the Subsidiaries required to be filed pursuant to
applicable foreign, state, local or other law have been filed, except
insofar as the failure to file such returns would not have a material
adverse effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and the
Subsidiaries, considered as one enterprise. The Company and the
Subsidiaries have paid (or there has been paid on their behalf) all
taxes which are due and for which no tax return is required. There are
no liens on any of the Company's or the Subsidiaries' assets for taxes,
other than for taxes which have accrued but which are not yet due and
payable. Neither the Company nor any Subsidiary is liable for any taxes
that are imposed on any other person or corporation (other than for
taxes imposed on the Company or the Subsidiaries), except as set forth
in Treasury Regulation 1.1502-6 with respect to prior consolidated
groups of which the Company or its subsidiaries were members.
(xxiv) With respect to each employee benefit plan, program
and arrangement (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) maintained or contributed
to by the Company or any Subsidiary, or with respect to
<PAGE> 12
11
which the Company or any Subsidiary could incur any liability under
ERISA (collectively, the "Benefit Plans"), no event has occurred and,
to the best knowledge of the Company, there exists no condition or set
of circumstances, in connection with which the Company or any
Subsidiary could be subject to any liability under the terms of such
Benefit Plans, applicable law (including, without limitation, ERISA and
the Internal Revenue Code of 1986, as amended (the "Code")) or any
applicable agreement (including, without limitation, the agreement
dated as of January 14, 1993 (the "PBGC Agreement"), among the Pension
Benefit Guaranty Corporation (the "PBGC"), the Company and Borg-Warner
Security Corporation ("BWSC")), that could materially adversely affect
the condition (financial or otherwise), results of operations, business
affairs or business prospects of the Company and the Subsidiaries,
considered as one enterprise. The Company is in compliance in all
respects with its obligations under the PBGC Agreement.
(xxv) The Securities have been approved for listing on the New
York Stock Exchange, Inc.
(b) Any certificate signed by any officer of the Company or
any Subsidiary and delivered to you or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
Section 2. Sale and Delivery to the Underwriters; Closing. (a)
On the basis of the representations and warranties herein contained, and subject
to the terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company, at the purchase price to be agreed upon by the Representatives
and the Company in accordance with Section 2(b) or 2(c), and set forth in the
Price Determination Agreement, the principal amount of Securities set forth
opposite the name of such Underwriter in Schedule A. If the Company elects to
rely on Rule 430A, Schedule A may be attached to the Price Determination
Agreement.
(b) If the Company has elected not to rely upon Rule 430A,
the initial public offering price of the Securities, the purchase price of the
Securities to be paid by the several Underwriters and certain other principal
terms of the Securities shall be agreed upon and set forth in the Price
Determination Agreement, dated the date hereof, and an amendment to the Original
Registration Statement containing such information will be filed before the
Original Registration Statement becomes effective.
(c) If the Company has elected to rely upon Rule 430A, the
initial public offering price of the Securities, the purchase price of the
Securities to be paid by the several Underwriters and certain other principal
terms of the Securities shall be agreed upon and set
<PAGE> 13
12
forth in the Price Determination Agreement. In the event that the Price
Determination Agreement has not been executed by the close of business on the
fourteenth business day following the later of the date on which the Original
Registration Statement and any Rule 462(b) Registration Statement becomes
effective, this Agreement shall terminate forthwith, without liability of any
party to any other party except that Sections 6, 7 and 8 shall remain in effect.
(d) Payment of the purchase price for, and delivery of, the
Securities shall be made at the offices of Shearman & Sterling, 599 Lexington
Avenue or 153 East 53rd Street, New York, New York 10022, or at such other place
as shall be agreed upon by the Company and you, at 10:00 A.M. either (i) on the
third full business day after the later of the effective date of the Original
Registration Statement and any Rule 462(b) Registration Statement (or, if
pricing of the Securities occurs after 4:30 P.M. Eastern time, on the fourth
full business day thereafter), or (ii) if the Company has elected to rely upon
Rule 430A, on the third full business day after execution of the Price
Determination Agreement (or, if pricing of the Securities occurs after 4:30 P.M.
Eastern time, on the fourth full business day thereafter)(unless, in either
case, postponed pursuant to Section 10), or at such other time not more than ten
full business days thereafter as you and the Company shall determine (such date
and time of payment and delivery being herein called the "Closing Time").
Payment shall be made to the Company by wire transfer in immediately available
funds against delivery of the Securities to you for the respective accounts of
the several Underwriters.
(e) The Securities shall be in such denominations ($1,000 or
an integral multiple thereof) and registered in such names as you may request in
writing at least two full business days before the Closing Time. The Securities,
which may be in temporary form, will be made available in New York City for
examination and packaging by you not later than 10:00 A.M. on the business day
prior to the Closing Time.
(f) It is understood that each Underwriter has authorized
you, for its account, to accept delivery of, receipt for, and make payment of
the purchase price for, the Securities that it has agreed to purchase. You,
individually and not as Representatives, may (but shall not be obligated to)
make payment of the purchase price for the Securities to be purchased by any
Underwriter whose check or checks shall not have been received by the Closing
Time.
Section 3. Certain Covenants of the Company. The Company
covenants with each Underwriter as follows:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective and, if the Company elects
to rely upon Rule 430A and subject to Section 3(b) hereof, will comply
with the requirements of Rule 430A and
<PAGE> 14
13
will notify you immediately, (i) when the Registration Statement, or
any post-effective amendment to the Registration Statement, shall have
become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission to amend
the Registration Statement or amend or supplement the Prospectus or for
additional information and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for any of such purposes.
The Company will use every reasonable effort to prevent the issuance of
any such stop order or of any order preventing or suspending such use
and, if any such order is issued, to obtain the lifting thereof at the
earliest possible moment.
(b) The Company will not at any time file or make any
amendment to the Registration Statement, (including any filing under
Rule 462(b)), file a Term Sheet or file or make any amendment or
supplement (i) if the Company has not elected to rely upon Rule 430A,
to the Prospectus (including amendments of the documents incorporated
by reference into the Prospectus) or (ii) if the Company has elected to
rely upon Rule 430A, to either the prospectus included in the Original
Registration Statement at the time it becomes effective or to the
Prospectus (including amendments of the documents incorporated by
reference into the prospectus or to the Prospectus pursuant to Item 12
and Rule 412), of which you shall not have previously been advised and
furnished a copy, or to which you or counsel for the Underwriters shall
reasonably object in writing.
(c) The Company has furnished or will furnish to you and
counsel for the Underwriters, without charge, as many copies (including
at least 1 signed copy) of the Registration Statement (as originally
filed) and of all amendments thereto, whether filed before or after the
Registration Statement becomes effective, copies of all exhibits and
documents filed therewith (including documents incorporated by
reference into the Prospectus pursuant to Item 12 and Rule 412) and
signed copies of all consents and certificates of experts, as you may
reasonably request and has furnished or will furnish to you, for each
other Underwriter, one conformed copy of the Registration Statement as
originally filed and of each amendment thereto (including documents
incorporated by reference into the Prospectus but without exhibits).
(d) The Company will deliver to each Underwriter, without
charge, from time to time until the later of the effective date of the
Original Registration Statement and any Rule 462(b) Registration
Statement (or, if the Company has elected to rely upon Rule 430A, until
the time the Price Determination Agreement is executed and
<PAGE> 15
14
delivered), as many copies of each preliminary prospectus as such
Underwriter may reasonably request, and the Company hereby consents to
the use of such copies for purposes permitted by the 1933 Act. The
Company will deliver to each Underwriter, without charge, as soon as
the Registration Statement shall have become effective (or, if the
Company has elected to rely upon Rule 430A, as soon as practicable on
or after the Price Determination Agreement has been executed and
delivered) and thereafter from time to time as requested during the
period when the Prospectus is required to be delivered under the 1933
Act, such number of copies of the Prospectus (as supplemented or
amended) as such Underwriter may reasonably request.
(e) The Company will comply in all material respects with the
1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations so as to
permit the completion of the distribution of the Securities as
contemplated in this Agreement and in the Prospectus. If at any time
when a prospectus is required by the 1933 Act or the 1933 Act
Regulations to be delivered in connection with sales of the Securities
any event shall occur or condition exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters or counsel
for the Company, to amend the Registration Statement or amend or
supplement the Prospectus in order that the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of either such
counsel, at any such time to amend the Registration Statement or amend
or supplement the Prospectus in order to comply with the requirements
of the 1933 Act or the 1933 Act Regulations, the Company will promptly
upon becoming aware of such event or condition prepare and file with
the Commission, subject to Section 3(b) hereof, such amendment or
supplement as may be necessary to correct such untrue statement or
omission or to make the Registration Statement or the Prospectus comply
with such requirements.
(f) The Company will use its best efforts in cooperation with
the Underwriters to qualify the Securities for offering and sale under
the applicable securities laws of such states and other jurisdictions
as you may designate and to maintain such qualifications in effect for
a period of not less than one year from the later of the effective date
of the Original Registration Statement and any Rule 462(b) Registration
Statement; provided, however, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not
otherwise so subject. The Company will file such statements and reports
as may be required by the laws of each jurisdiction in which the
Securities have been qualified as above provided. The Company will also
supply you with such information as is
<PAGE> 16
15
necessary for the determination of the legality of the Securities for
investment under the laws of such jurisdictions as you may request.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the
close of the period covered thereby, an earnings statement of the
Company (in form complying with the provisions of Rule 158 of the 1933
Act Regulations), covering a period of 12 months beginning after the
later of the effective date of the Original Registration Statement and
any Rule 462(b) Registration Statement and covering a period of 12
months beginning after the effective date of any post-effective
amendment to the Registration Statement but not later than the first
day of the Company's fiscal quarter next following such respective
effective dates.
(h) The Company will use the net proceeds received by it from
the sale of the Securities in the manner specified in the Prospectus
under the caption "Use of Proceeds".
(i) The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act, will file promptly all
documents required to be filed with the Commission pursuant to Section
13 or 14 of the 1934 Act subsequent to the time the Registration
Statement becomes effective.
(j) For a period of two years after the Closing Time, the
Company will furnish to you and, upon request, to each Underwriter,
copies of all annual reports, quarterly reports and current reports
filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other
similar forms as may be designated by the Commission, and such other
documents, reports and information as shall be furnished by the Company
to its stockholders or security holders generally.
(k) Between the date hereof and the Closing Time, the Company
will not, without your prior consent, offer or sell, or enter into any
agreement to sell, any debt securities issued or guaranteed by the
Company with a maturity of more than one year in any public offering
(other than the Securities). This limitation is not applicable to the
public offering of tax exempt securities guaranteed by the Company.
(l) If the Company has elected to rely upon Rule 430A, it will
take such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was
not, it will promptly file such prospectus.
(m) If the Company has elected to rely on Rule 434, it will
comply with the requirements of Rule 434, and the Prospectus will not
be "materially different," as
<PAGE> 17
16
such term is used in Rule 434, from the prospectus included in the
Registration Statement at the time it becomes effective.
(n) If the Company elects to rely upon Rule 462(b), the
Company shall both file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) and pay the applicable fees
in accordance with Rule 111 of the 1933 Act Regulations by the earlier
of (i) 10:00 P.M. Eastern time on the date of the Price Determination
Agreement and (ii) the time confirmations are sent or given, as
specified by Rule 462(b).
(o) If applicable, the Company will comply with all the
provisions of Florida H.B. 1771, codified as Section 517.075 of the
Florida statutes, and all regulations promulgated thereunder relating
to issuers doing business in Cuba.
(p) The Company will use its best efforts to effect the
listing of the Securities on the New York Stock Exchange on the date of
the Price Determination Agreement.
(q) The Company agrees that, at its expense, (i) as soon as
practicable after the Closing Time and the effectiveness of a
registration statement with respect to the Securities, it will promptly
prepare a registration statement under the Securities Act in connection
with the market-making activities of Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("MLPF&S") with respect to the Securities issued in
accordance with this agreement containing such disclosures as may be
required by the Securities Act and other applicable laws and such other
disclosures as are customary and appropriate for such a document and
file such registration statement and use its best efforts to cause such
registration statement to become effective under the Securities Act as
soon as practicable thereafter or (ii) in lieu of the registration
statement in clause (i) hereof, the Company will cause the Registration
Statement to contain alternative pages in connection with the
market-making activities of MLPF&S with respect to the Securities, and
that, in the case of either clause (i) or (ii) hereof, it will keep
such registration statement in effect as long as is required by the
Securities Act in the reasonable judgment of MLPF&S to engage in
market-making activities. The Company agrees to obtain from its
independent accountants, at its expense, on each effective date of such
registration statement, a letter addressed to MLPF&S dated such date
covering matters described in Section 5(g-j), modified as appropriate
to reflect the registered nature of the Securities, in each case in
form and substance satisfactory to MLPF&S. The Company agrees to
furnish to MLPF&S as many copies of the Prospectus and of each report
of the Company filed with the Commission pursuant to Section 13 or 15
of the Exchange Act as MLPF&S shall reasonably request in connection
with its market-making activities. If a "qualified independent
underwriter" is required by the National Association of Securities
<PAGE> 18
17
Dealers, Inc. ("NASD") in connection with such market-making
activities, the Company shall pay such underwriter's fee (in a
customary amount for transactions of this type and amount) and expenses
and to indemnify such underwriter on customary terms. Such qualified
independent underwriter shall be a firm selected by MLPF&S and
reasonably agreed upon by the Company.
Section 4. Payment of Expenses. The Company will pay and bear
all costs and expenses incident to the performance of its obligations under this
Agreement, including (a) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits), as
originally filed and as amended, the preliminary prospectuses and the Prospectus
and any amendments or supplements thereto, and the cost of furnishing copies
thereof to the Underwriters, (b) the preparation, printing and distribution of
this Agreement (except for the Price Determination Agreement), the Indenture,
the Securities, the Blue Sky Survey (which shall not be typeset) and the Legal
Investment Survey, if any, (c) the delivery of the Securities to the
Underwriters, (d) the fees and disbursements of the Company's counsel and
accountants, (e) the qualification of the Securities under the applicable
securities laws in accordance with Section 3(f) and any filing for review of the
offering with the National Association of Securities Dealers, Inc., including
filing fees and reasonable fees and disbursements of Shearman & Sterling as
counsel for the Underwriters solely in connection therewith, and in connection
with the Blue Sky Survey, (f) the listing fees and expenses incurred in
connection with listing the Securities on the New York Stock Exchange (g) the
Legal Investment Survey, if any, (h) any fees charged by rating agencies for
rating the Securities and (i) the fees and expenses of the Trustee, including
the fees and disbursements of counsel for the Trustee, in connection with the
Indenture and the Securities.
If this Agreement is terminated by you in accordance with the
provisions of Section 5 or 9(a)(i), the Company shall reimburse the Underwriters
for all their out-of-pocket expenses, including the reasonable fees and
disbursements of Shearman & Sterling as counsel for the Underwriters.
Section 5. Conditions of Underwriters' Obligations. In
addition to the execution and delivery of the Price Determination Agreement, the
obligations of the several Underwriters to purchase and pay for the Securities
that they have respectively agreed to purchase hereunder are subject to the
accuracy of the representations and warranties of the Company contained herein
(including those contained in the Price Determination Agreement) or in
certificates of any officer of the Company or any Subsidiary delivered pursuant
to the provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following further conditions:
<PAGE> 19
18
(a) The Original Registration Statement shall have become
effective not later than 5:30 P.M. on the date of this Agreement or,
with your consent, at a later time and date not later, however, than
5:30 P.M. on the first business day following the date hereof and if
the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective not later than the
earlier of (i) 9:00 A.M. Eastern time on the day following the date of
the Price Determination Agreement, and (ii) the time confirmations are
sent or given, as specified by Rule 462(b), or, with respect to the
Original Registration Statement, at such later time or on such later
date as you may agree to in writing with the approval of a majority in
interest of the several Underwriters; and at the Closing Time no stop
order suspending the effectiveness of the Registration Statement shall
have been issued under the 1933 Act and no proceedings for that purpose
shall have been instituted or shall be pending or, to your knowledge or
the knowledge of the Company, shall be contemplated by the Commission,
and any request made to the Company on the part of the Commission for
additional information with respect to the Registration Statement shall
have been complied with to the satisfaction of Shearman & Sterling as
counsel for the Underwriters. If the Company has elected to rely upon
Rule 430A, a prospectus containing the Rule 430A Information shall have
been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment providing such information shall have been
filed and declared effective in accordance with the requirements of
Rule 430A).
If the Company has elected to rely upon Rule 434, a Term
Sheet, which together with the preliminary prospectus last furnished to
the Underwriters in connection with the offering of the Securities
shall not be "materially different," as such term is used in Rule 434,
from the prospectus included in the Original Registration Statement at
the time it becomes effective, shall have been filed with the
Commission in accordance with Rule 424(b).
(b) At the Closing Time, you shall have received a signed
opinion of Wachtell, Lipton, Rosen & Katz, special counsel for the
Company, dated as of the Closing Time, together with signed or
reproduced copies of such opinion for each of the other Underwriters,
in form and substance reasonably satisfactory to counsel for the
Underwriters, in the form set forth in Exhibit C hereto.
(c) At the Closing Time, you shall have received a signed
opinion of Laurene H. Horiszny, Esq., Vice President, Secretary and
General Counsel for the Company, dated as of the Closing Time, together
with signed or reproduced copies of such opinion for each of the other
Underwriters, in form and substance reasonably satisfactory to counsel
for the Underwriters, in the form set forth in Exhibit D hereto.
<PAGE> 20
19
(d) At the Closing Time, you shall have received a signed
opinion of NSK-Warner's Japanese counsel, dated as of the Closing Time,
together with signed or reproduced copies of such opinion for each of
the other Underwriters, in form and substance reasonably satisfactory
to counsel for the Underwriters, in the form set forth in Exhibit E
hereto.
(e) At the Closing Time, you shall have received the favorable
opinion of Shearman & Sterling, counsel for the Underwriters, dated as
of the Closing Time, together with signed or reproduced copies of such
opinion for each of the other Underwriters, to the effect that the
opinions delivered pursuant to Sections 5(b), 5(c) and 5(d) hereof
appear on their face to be appropriately responsive to the requirements
of this Agreement except, specifying the same, to the extent waived by
you, and with respect to the incorporation and legal existence of the
Company, this Agreement, the Indenture, the Registration Statement, the
Prospectus and such other related matters as you may require. In giving
such opinion such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of New York, the
federal law of the United States and the General Corporation Law of the
State of Delaware, upon the opinions of counsel satisfactory to you.
Such counsel may also state that, insofar as such opinion involves
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and the Subsidiaries and
certificates of public officials.
(f) At the Closing Time, (i) the Registration Statement and
the Prospectus, as they may then be amended or supplemented, shall
comply in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations and the 1939 Act and the 1939 Act
Regulations, the Company shall have complied in all material respects
with Rule 430A (if it shall have elected to rely thereon) and Rule 434
(if it shall have elected to rely thereon) and neither the Registration
Statement nor the Prospectus, as they may then be amended or
supplemented, shall contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) there
shall not have been, since the respective dates as of which information
is given in the Registration Statement, any material adverse change in
the condition (financial or otherwise), results of operations, business
affairs or business prospects of the Company and the Subsidiaries,
considered as one enterprise, whether or not arising in the ordinary
course of business, (iii) no action, suit or proceeding at law or in
equity shall be pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary that would be required to be set
forth in the Prospectus other than as set forth therein and no
proceedings shall be pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary before or by any
federal, state or other commission, board or administrative agency
wherein an unfavorable decision, ruling or finding could materially
adversely affect the
<PAGE> 21
20
condition (financial or otherwise), results of operations, business
affairs or business prospects of the Company and the Subsidiaries,
considered as one enterprise, other than as set forth in the
Prospectus, (iv) the Company shall have complied with all agreements
and satisfied all conditions set forth in this Agreement on its part to
be performed or satisfied at or prior to the Closing Time and (v) the
other representations and warranties of the Company set forth in
Section 1(a) shall be accurate as though expressly made at and as of
the Closing Time. At the Closing Time, you shall have received a
certificate of the President or a Vice President, and the Treasurer or
an Assistant Treasurer, of the Company, dated as of the Closing Time,
to such effect.
(g) At the time that this Agreement is executed by the
Company, you shall have received from Deloitte & Touche LLP a letter,
dated such date, in form and substance satisfactory to you, together
with signed or reproduced copies of such letter for each of the other
Underwriters, confirming that they are independent public accountants
with respect to the Company within the meaning of the 1933 Act and the
applicable published 1933 Act Regulations, and stating in effect that:
(i) in their opinion, the audited financial statements
and the related financial statement schedules included or
incorporated by reference in the Registration Statement and
the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the
1933 Act Regulations;
(ii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards)
consisting of a reading of the unaudited interim consolidated
financial statements of the Company included or incorporated
by reference in the Registration Statement and the Prospectus
(collectively, the "10-Q Financials"), a reading of the latest
available unaudited interim consolidated financial statements
of the Company, a reading of the minutes of all meetings of
the stockholders and directors of the Company and the
Subsidiaries and each Committee of the Company's Board of
Directors and of each Committee of the Board of Directors of
any Subsidiary since January 1, 1996, inquiries of certain
officials of the Company and the Subsidiaries responsible for
financial and accounting matters, and such other inquiries and
procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) the 10-Q Financials incorporated by reference in
the Registration Statement and the Prospectus do not
comply as to form in all material respects with the
accounting requirements of the 1934 Act and the 1934 Act
Regulations applicable to unaudited financial
<PAGE> 22
21
statements included in Form 10-Q or any material
modifications should be made to the 10-Q Financials
included or incorporated by reference in the Registration
Statement and the Prospectus for them to be in conformity
with generally accepted accounting principles;
(B) at [September 30], 1996 and at a specified date
not more than five days prior to the date of this
Agreement, there was any change in the capital stock of
the Company and the Subsidiaries or any decrease in the
consolidated net current assets or stockholders' equity of
the Company and the Subsidiaries or any increase in
long-term debt of the Company and the Subsidiaries, in
each case as compared with amounts shown in the latest
consolidated balance sheet included or incorporated by
reference in the Registration Statement, except in each
case for changes, decreases or increases that the
Registration Statement discloses have occurred or may
occur; or
(C) for the period from [October 1], 1996 to a
specified date not more than five days prior to the date
of this Agreement, there was any decrease in net sales,
equity in affiliate earnings and other income, earnings
before interest and finance charges and income taxes or
net earnings, in each case as compared with the comparable
period in the preceding year;
(iii) based upon the procedures set forth in clause
(ii) above and a reading of the Selected Historical Financial
Data included in the Registration Statement and a reading of
the financial statements from which certain of such data were
derived, nothing has come to their attention that gives them
reason to believe that the Selected Historical Financial Data
included in the Registration Statement do not comply as to
form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations,
that the information set forth therein is not fairly stated in
relation to the financial statements from which it was derived
or that the financial statements not included in the
Registration Statement from which certain of such data were
derived are not in conformity with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited financial statements
included in the Registration Statement; and
(iv) they are unable to and do not express any
opinion on the Pro Forma Financial Data (the "Pro Forma
Statement") included or incorporated by reference in the
Registration Statement or on the pro forma adjustments applied
to the historical amounts included in the Pro Forma Statement;
however, for purposes of such letter they have:
<PAGE> 23
22
(A) read the Pro Forma Statement;
(B) made inquiries of certain officials of the
Company and of the Coltec Subsidiaries who have
responsibility for financial and accounting matters about
the basis for their determination of the pro forma
adjustments and whether the Pro Forma Statement complies
as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X;
and
(C) proved the arithmetic accuracy of the application
of the pro forma adjustments to the historical amounts in
the Pro Forma Statement; and
on the basis of such procedures, and such other inquiries and
procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that the Pro Forma
Statement included or incorporated by reference in the
Registration Statement does not comply as to form in all
material respects with the applicable requirements of Rule
11-02 of Regulation S-X or that the pro forma adjustments have
not been properly applied to the historical amounts in the
compilation of those statements;
(v) in addition to the procedures referred to in
clause (ii) above, they have performed other specified
procedures, not constituting an audit, with respect to certain
amounts, percentages, numerical data and financial information
appearing in the Registration Statement, which have previously
been specified by you and which shall be specified in such
letter, and have compared certain of such items with, and have
found such items to be in agreement with, the accounting and
financial records of the Company.
(h) At the time that this Agreement is executed by the
Company, you shall have received from KPMG Peat Marwick a letter, dated
such date, in form and substance satisfactory to you, together with
signed or reproduced copies of such letter for each of the other
Underwriters, confirming that they are independent public accountants
with respect to the NSK-Warner within the meaning of the 1933 Act and
applicable published 1933 Act Regulations, and stating in effect that:
(i) in their opinion, the audited financial
statements and the related financial statement schedules for
NSK-Warner included or incorporated by reference in the
Registration Statement and the Prospectus comply as to form in
all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations;
<PAGE> 24
23
(ii) they have read the latest available unaudited
interim consolidated financial statements of NSK-Warner, the
minutes of all meetings of the stockholders and directors of
NSK-Warner and each Committee of the Board of Directors since
April 1, 1996, inquired of certain officials of NSK-Warner
responsible for financial and accounting matters, and made
such other inquiries and performed such other procedures as
may be specified in such letter, and officials of NSK-Warner
stated that:
(A) at [September 30], 1996 and at a specified date
not more than five days prior to the date of this
Agreement, there was no change in the common stock of
NSK-Warner or decrease in the net current assets or
stockholders' equity of NSK-Warner or increase in the
notes payable or long-term debt of NSK-Warner, in each
case as compared with amounts shown in the latest balance
sheet included or incorporated by reference in the
Registration Statement; or
(B) for the period from [October 1], 1996 to a
specified date not more than five days prior to the date
of this Agreement, there was no decrease in sales,
earnings before income taxes or net earnings, in each case
as compared with the corresponding period in the preceding
year.
(i) At the time that this Agreement is executed, you shall
have received from Arthur Andersen LLP a letter, dated such date, in
form and substance satisfactory to you, together with signed or
reproduced copies of such letter for each of the other Underwriters,
confirming that they are independent public accountants with respect to
the Coltec Subsidiaries and the Company within the meaning of the 1933
Act and applicable published 1933 Act Regulations, and stating in
effect that:
(i) in their opinion, the audited financial statements
and the related financial statement schedules for the Coltec
Subsidiaries included or incorporated by reference in the
Registration Statement and the Prospectus comply as to form in
all material respects with the applicable accounting
requirements of the 1933 Act, the 1934 Act, the 1933 Act
Regulations and the 1934 Act Regulations;
(ii) they have read the latest available unaudited interim
consolidated financial statements of the Coltec Subsidiaries,
the minutes of all meetings of the stockholders and directors
of the Coltec Subsidiaries and each Committee of the Boards of
Directors since January 1, 1996, inquired of certain officials
of the Coltec Subsidiaries responsible for financial and
accounting matters, and
<PAGE> 25
24
made such other inquiries and performed such other procedures
as may be specified in such letter, and officials of the
Coltec Subsidiaries stated that:
(A) at June 17, 1996, there was no change in
the capital stock of the Coltec Subsidiaries or any
decrease in the consolidated net current assets or
stockholders' equity of the Coltec Subsidiaries or
any increase in long-term debt of the Coltec
Subsidiaries, in each case as compared with amounts
shown in the latest consolidated balance sheet
included or incorporated by reference in the
Registration Statement, except in each case for
changes, decreases or increases that the Registration
Statement discloses have occurred or may occur; or
(B) for the period from April 1, 1996 to May
31, 1996, there was no decrease in net sales,
earnings before income taxes or net earnings, in each
case as compared with the comparable period in the
preceding year, except in each case for any decreases
that the Registration Statement discloses have
occurred or may occur; and
(iii) based upon the procedures set forth in clause
(ii) above, nothing has come to their attention that gives
them reason to believe that the information set forth in the
latest available unaudited interim consolidated financial
statements of the Coltec Subsidiaries is not fairly stated in
relation to the financial statements from which it was derived
or that the financial statements not included in the
Registration Statement from which certain of such data were
derived are not in conformity with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited financial statements
included in the Registration Statement.
(j) At the Closing Time, you shall have received from each of
Deloitte & Touche LLP, KPMG Peat Marwick and Arthur Andersen LLP a
letter, in form and substance satisfactory to you and dated as of the
Closing Time, to the effect that they reaffirm the statements made in
the letters furnished pursuant to Sections 5(g), 5(h) and 5(i),
respectively, except that the specified date referred to shall be a
date not more than five days prior to the Closing Time.
(k) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Time, there shall not have been any
downgrading, nor any notice given of any intended or potential
downgrading or of a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities, including the Securities, by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the 1933 Act.
<PAGE> 26
25
(l) At the Closing Time, counsel for the Underwriters shall
have been furnished with all such documents, certificates and opinions
as they may reasonably request for the purpose of enabling them to pass
upon the sale of the Securities as contemplated in this Agreement and
the matters referred to in Section 5(e) and in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements of the Company, the performance of any of the covenants of
the Company, or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Company at or prior to the
Closing Time in connection with the sale of the Securities as
contemplated in this Agreement shall be reasonably satisfactory in form
and substance to you and to counsel for the Underwriters.
(m) The Securities shall have been duly authorized for listing
by the New York Stock Exchange on the date of the Price Determination
Agreement, subject only to official notice of issuance thereof and
notice of a satisfactory distribution of the Securities.
If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement, this Agreement may
be terminated by you on notice to the Company at any time at or prior to the
Closing Time, and such termination shall be without liability of any party to
any other party, except as provided in Section 4 hereof. Notwithstanding any
such termination, the provisions of Sections 6, 7 and 8 shall remain in effect.
Section 6. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, and all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of an untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if Rule 434 is used, if the Prospectus is
"materially different", as such term is used in Rule 434, from the
prospectus included in the Original Registration Statement at the time
it becomes effective;
<PAGE> 27
26
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 7(c) hereof, fees and disbursements of
counsel chosen by you), reasonably incurred in investigating, preparing
or defending against any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through you expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto).
Insofar as this indemnity agreement may permit indemnification
for liabilities under the 1933 Act of any person who is a partner of an
Underwriter or who controls an Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act and who, at the date of this
Agreement, is a director, officer or controlling person of the Company, such
indemnity agreement is subject to the undertaking of the Company in the
Registration Statement under Item 17 thereof.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 6(a), as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by Merrill Lynch through you expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
<PAGE> 28
27
the Rule 434 Information, if applicable, or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 6(a) above, counsel to the indemnified
parties shall be selected by Merrill Lynch, and, in the case of parties
indemnified pursuant to Section 6(b) above, counsel to the indemnified parties
shall be selected by the Company. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying party or parties be liable for the fees and expenses of more than
one counsel (in addition to any local counsel) separate from their own counsel
for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.
No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for
in Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then
<PAGE> 29
28
each indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and of the Underwriters on the other hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative benefits received the Company on the one hand and
the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus, or, if Rule 434 is used,
the corresponding location on the Term Sheet, bear to the aggregate initial
public offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact related to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public
<PAGE> 30
29
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the principal amount of Securities set forth
opposite their respective names in Schedule A hereto and not joint.
Section 8. Representations, Warranties and Agreements to
Survive Delivery. The representations, warranties, indemnities, agreements and
other statements of the Company or its officers set forth in or made pursuant to
this Agreement will remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Company, any Underwriter or any
person who controls the Company or any Underwriter within the meaning of Section
15 of the 1933 Act and will survive delivery of and payment for the Securities.
Section 9. Termination of Agreement. (a) You may terminate
this Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company and
the Subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States, or any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in your judgment, impracticable to market the Securities or
enforce contracts for the sale of the Securities or (iii) if trading in any
securities of the Company has been suspended by the Commission or the New York
Stock Exchange, or if trading generally on the American Stock Exchange or the
New York Stock Exchange or in the Nasdaq National Market has been suspended or
materially limited, or minimum or
<PAGE> 31
30
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or by such system or by order of
the Commission, the National Association of Securities Dealers, Inc. or any
other governmental authority or (iv) if a banking moratorium has been declared
by either federal, New York or Illinois authorities.
(b) If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party,
except to the extent provided in Section 4. Notwithstanding any such
termination, the provisions of Sections 1, 6, 7 and 8 shall remain in effect.
(c) This Agreement may also terminate pursuant to the
provisions of Section 2(c), with the effect stated in such Section.
Section 10. Default by One or More of the Underwriters. If one
or more of the Underwriters shall fail at the Closing Time to purchase the
Securities that it or they are obligated to purchase pursuant to this Agreement
(the "Defaulted Securities"), you shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other Underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms set forth in this Agreement; if, however, you have not completed such
arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Securities
does not exceed 10% of the aggregate principal amount of the Securities
to be purchased pursuant to this Agreement, the non-defaulting
Underwriters shall be obligated to purchase the full amount thereof in
the proportions that the principal amounts of Securities set forth
opposite the names of such non-defaulting Underwriters in Schedule A
bear to the total aggregate principal amount of Securities set forth
opposite the names of such non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Securities
exceeds 10% of the aggregate principal amount of the Securities to be
purchased pursuant to this Agreement, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default that does not result in a
termination of this Agreement, either you or the Company shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration
<PAGE> 32
31
Statement or Prospectus or in any other documents or arrangements. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
Section 11. Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered, mailed or transmitted by any standard form of
telecommunication. Notices to you shall be directed to you, c/o Merrill Lynch,
Pierce, Fenner & Smith Incorporated, at Merrill Lynch World Headquarters, North
Tower, World Financial Center, New York, New York 10281, Attention: Samuel R.
Chapin; and notices to the Company shall be directed to it at 200 South Michigan
Avenue, Chicago, Illinois 60604, Attention: General Counsel.
Section 12. Parties. This Agreement is made solely for the
benefit of the several Underwriters, the Company and, to the extent expressed,
any person controlling the Company or any of the Underwriters, and the directors
of the Company, its officers who have signed the Registration Statement, and
their respective executors, administrators, successors and assigns and, subject
to the provisions of Section 10, no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include any purchaser, as such purchaser, from any of the several
Underwriters of the Securities. All of the obligations of the Underwriters
hereunder are several and not joint.
Section 13. Representation of Underwriters. You will act for
the several Underwriters in connection with this financing, and any action under
or in respect of this Agreement taken by you as Representatives will be binding
upon all Underwriters.
Section 14. Governing Law and Time. This Agreement shall be
governed by the laws of the State of New York. Specified times of the day refer
to New York City time.
Section 15. Counterparts. This Agreement may be executed in
one or more counterparts, and when a counterpart has been executed by each
party, all such counterparts taken together shall constitute one and the same
agreement.
-------------------------
<PAGE> 33
32
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
BORG-WARNER AUTOMOTIVE, INC.
By: ________________________
Name:
Title:
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
By: Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By________________________
Name:
Title:
Investment Banking Group
For themselves and as Representatives of the
other Underwriters named in Schedule A.
<PAGE> 34
SCHEDULE A
<TABLE>
<CAPTION>
Principal Amount
of Securities
Underwriter to Be Purchased
----------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... $
Chase Securities Inc. .....................................
Morgan Stanley & Co. Incorporated...........................
NationsBanc Capital Markets, Inc. .........................
Total.......................................................
---------------
$
===============
</TABLE>
<PAGE> 35
Exhibit A
BORG-WARNER AUTOMOTIVE, INC.
(a Delaware corporation)
__% Senior Notes due ________, 2006
PRICE DETERMINATION AGREEMENT
___________, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
As Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1201
Ladies and Gentlemen:
Reference is made to the Purchase Agreement dated ___________,
1996 (the "Purchase Agreement") between Borg-Warner Automotive, Inc. (the
"Company") and the several Underwriters named in Schedule A thereto or hereto
(the "Underwriters"), for whom Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Chase Securities Inc., Morgan Stanley & Co.
Incorporated and NationsBanc Capital Markets, Inc. are acting as representatives
(the "Representatives"). The Purchase Agreement provides for the purchase by the
Underwriters from the Company, subject to the terms and conditions set forth
therein, of the Company's __% Senior Notes due ___________, 2006 (the
<PAGE> 36
A-2
"Securities"). This Agreement is the Price Determination Agreement referred to
in the Purchase Agreement. Terms not defined herein are used herein as defined
in the Purchase Agreement.
Pursuant to Section 2 of the Purchase Agreement, the Company
agrees with the Representatives as follows:
1. The initial public offering price of the Securities shall
be _____% of the principal amount thereof, plus accrued interest[, if
any,] from _______, 1996.
2. The purchase price of the Securities to be paid by the
several Underwriters shall be _____% of the principal amount thereof,
plus accrued interest[, if any,] from __________, 1996 to the Closing
Time.
3. The interest rate to be borne by the Securities shall be
_____% per annum.
4. The Securities will mature on _________, 2006.
The Company represents and warrants to each of the
Underwriters that the representations and warranties of the Company set forth in
Section 1(a) of the Purchase Agreement are accurate as though expressly made at
and as of the date hereof.
Additionally, if the Company elects to rely on Rule 462(b),
the Company covenants to each of the Underwriters that:
(a) the Company will file a Rule 462(b) Registration Statement in
compliance with, and that is effective upon filing pursuant
to, Rule 462(b) prior to the time confirmations are sent or
given, as specified in Rule 462(b) of the 1933 Act; and
(b) the Company will give irrevocable instructions for
transmission of the applicable filing fee in connection with
the filing of the Rule 462(b) Registration Statement, in
compliance with Rule 111 of the 1933 Act Regulations or the
Commission will have received payment of such filing fee upon
filing of the Rule 462(b) Registration Statement.
As contemplated by Section 2 of the Purchase Agreement,
attached as Schedule A is a completed list of the several Underwriters, which
shall be a part of this Agreement and the Purchase Agreement.
This Agreement shall be governed by the laws of the State of
New York.
--------------------
<PAGE> 37
A-3
If the foregoing is in accordance with the understanding of
the Representatives of the agreement between the Underwriters and the Company,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts and together with the Purchase
Agreement, shall be a binding agreement between the Underwriters and the Company
in accordance with its terms and the terms of the Purchase Agreement.
Very truly yours,
BORG-WARNER AUTOMOTIVE, INC.
By: ________________________________
Name:
Title:
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
By: Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By________________________
Name:
Title:
Investment Banking Group
For themselves and as Representatives of the
other Underwriters named in Schedule A.
<PAGE> 38
Exhibit B
SUBSIDIARIES
<TABLE>
<CAPTION>
Percent of
Capital Stock
Beneficially Owned by
Borg-Warner Automotive,
Name of Subsidiary Inc. or the Subsidiaries
- ------------------ ------------------------
<S> <C>
Borg-Warner Automotive Powertrain Systems Corporation 100
Borg-Warner Automotive South Asia Corporation 100
Divgi-Warner Pvt., Ltd. 60
Huazhong Warner Transmission Company 60
Borg-Warner Automotive Powertrain
Service Center Corporation 100
Borg-Warner Automotive Powdered Metals Corporation 100
Borg-Warner Automotive Diversified Transmission
Products Corporation 100
Borg-Warner Automotive Air/Fluid Systems Corporation 100
Borg-Warner Automotive Air/Fluid Systems
Corporation of Michigan 100
Borg-Warner Automotive Control Systems Holding Corporation 100
Borg-Warner Automotive Control Systems Europe S.A.S. 90
Societe de l'Usine de la Marque 100
Borg-Warner Automotive Morse TEC Corporation 100
Borg-Warner Automotive (Canada) Ltd. 100
Borg-Warner Automotive Japan Corporation 100
Borg-Warner Automotive K.K. 100
Borg-Warner Automotive Taiwan Co., Ltd. 100
B.W. Componentes Mexicanos de Transmissiones S.A. de C.V. 86
Morse TEC Europe, Sp.A 100
Borg-Warner Automotive Foreign Sales Corporation 100
</TABLE>
<PAGE> 39
B-2
<TABLE>
<CAPTION>
<S> <C>
Borg-Warner Automotive Automatic Transmission Systems Corporation 100
Borg-Warner Automotive Europe Corporation 100
Borg-Warner Automotive GmbH 100
Borg & Beck Torque Systems, Inc. 100
Borg-Warner Automotive-NW Corporation 100
Borg-Warner Automotive Korea, Inc. 60
Creon Insurance Agency, Ltd. 100
Creon Trustees, Ltd. 100
Coltec Automotive Inc. 100
Coltec Industries Inc. 100
Stemco Inc. 100
Performance Friction Products 100
Holley Automotive Inc. 100
Holley Automotive Group, Ltd. 100
Holley Automotive Systems GmbH 100
</TABLE>
<PAGE> 1
EXHIBIT 4.1
-----------
FORM OF INDENTURE
BORG-WARNER AUTOMOTIVE, INC.
TO
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
-------------------------
INDENTURE
Dated as of ___________, 1996
-------------------------
$150,000,000
__% Senior Notes due 2006
<PAGE> 2
BORG-WARNER AUTOMOTIVE, INC.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT
OF 1939 AND INDENTURE, DATED AS OF ___________, 1996
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
Section 310(a)(1) ..................................... 607
(a)(2) ..................................... 607
(b) ..................................... 608
Section 312(c) ..................................... 701
Section 314(a)(4) ..................................... 1004
(c)(1) ..................................... 102
(c)(2) ..................................... 102
(e) ..................................... 102
Section 315(b) ..................................... 601
Section 316(a)(last
sentence) ..................................... 101 ("Outstanding")
(a)(1)(A) ..................................... 502, 512
(a)(1)(B) ..................................... 513
(b) ..................................... 508
(c) ..................................... 104(d)
Section 317(a)(1) ..................................... 503
(a)(2) ..................................... 504
(b) ..................................... 1003
Section 318(a) ..................................... 111
- --------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PARTIES....................................................................... 1
RECITALS OF THE COMPANY....................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions..................................................... 1
Act...................................................................... 2
Affiliate................................................................ 2
Attributable Indebtedness................................................ 2
Board of Directors....................................................... 3
Board Resolution......................................................... 3
Business Day............................................................. 3
Commission............................................................... 3
Company.................................................................. 3
Company Request; Company Order........................................... 3
Consolidated Net Worth................................................... 3
Corporate Trust Office................................................... 3
corporation.............................................................. 3
Current Assets........................................................... 3
Current Liabilities...................................................... 4
Debt..................................................................... 4
Default.................................................................. 4
Defaulted Interest....................................................... 4
Event of Default......................................................... 4
Exchange Act............................................................. 4
Federal Bankruptcy Code.................................................. 4
Holder................................................................... 4
Indenture................................................................ 4
Industrial Development Bonds............................................. 4
Interest Payment Date.................................................... 4
Lien..................................................................... 4
Maturity................................................................. 4
Officers' Certificate.................................................... 5
Opinion of Counsel....................................................... 5
</TABLE>
- --------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE> 4
ii
<TABLE>
<CAPTION>
Page
----
<S> <C>
Outstanding.............................................................. 5
Paying Agent............................................................. 6
Person................................................................... 6
Predecessor Security..................................................... 6
Principal Property....................................................... 6
Regular Record Date...................................................... 7
Responsible Officer...................................................... 7
Sale/Leaseback Transaction............................................... 7
Securities............................................................... 7
Securities Act........................................................... 7
Security Register; Security Registrar.................................... 7
Significant Subsidiary................................................... 7
Special Record Date...................................................... 7
Stated Maturity.......................................................... 7
Subsidiary............................................................... 8
Trust Indenture Act; TIA................................................. 8
Trustee.................................................................. 8
Vice President........................................................... 8
SECTION 102. Compliance Certificates and Opinions............................ 8
SECTION 103. Form of Documents Delivered to Trustee.......................... 9
SECTION 104. Acts of Holders................................................. 10
SECTION 105. Notices, etc., to Trustee and Company........................... 11
SECTION 106. Notice to Holders; Waiver....................................... 11
SECTION 107. Effect of Headings and Table of Contents........................ 12
SECTION 108. Successors and Assigns.......................................... 12
SECTION 109. Separability Clause............................................. 12
SECTION 110. Benefits of Indenture........................................... 12
SECTION 111. Governing Law................................................... 12
SECTION 112. Legal Holidays.................................................. 13
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally................................................. 13
SECTION 202. Form of Face of Security........................................ 13
SECTION 203. Form of Reverse of Security..................................... 15
SECTION 204. Form of Trustee's Certificate of Authentication................. 17
SECTION 205. Securities Issuable in Global Form.............................. 17
</TABLE>
<PAGE> 5
iii
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms................................................. 18
SECTION 302. Denominations................................................... 19
SECTION 303. Execution, Authentication, Delivery and Dating.................. 19
SECTION 304. Temporary Securities............................................ 20
SECTION 305. Registration, Registration of Transfer and Exchange............. 20
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities................ 21
SECTION 307. Payment of Interest; Interest Rights Preserved.................. 22
SECTION 308. Persons Deemed Owners........................................... 23
SECTION 309. Cancellation.................................................... 23
SECTION 310. Computation of Interest......................................... 24
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture......................... 24
SECTION 402. Application of Trust Money...................................... 25
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default............................................... 26
SECTION 502. Acceleration of Maturity; Rescission and Annulment.............. 27
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. 28
SECTION 504. Trustee May File Proofs of Claim................................ 29
SECTION 505. Trustee May Enforce Claims Without Possession of Securities..... 30
SECTION 506. Application of Money Collected.................................. 30
SECTION 507. Limitation on Suits............................................. 31
SECTION 508. Unconditional Right of Holders to Receive Principal and Interest 32
SECTION 509. Restoration of Rights and Remedies.............................. 32
SECTION 510. Rights and Remedies Cumulative.................................. 32
SECTION 511. Delay or Omission Not Waiver.................................... 32
SECTION 512. Control by Holders.............................................. 33
SECTION 513. Waiver of Past Defaults......................................... 33
SECTION 514. Waiver of Stay or Extension Laws................................ 33
</TABLE>
<PAGE> 6
iv
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults.............................................. 34
SECTION 602. Certain Rights of Trustee....................................... 34
SECTION 603. Trustee Not Responsible for Recitals or Issuance of Securities.. 35
SECTION 604. May Hold Securities............................................. 36
SECTION 605. Money Held in Trust............................................. 36
SECTION 606. Compensation and Reimbursement.................................. 36
SECTION 607. Corporate Trustee Required; Eligibility......................... 37
SECTION 608. Resignation and Removal; Appointment of Successor............... 37
SECTION 609. Acceptance of Appointment by Successor.......................... 39
SECTION 610. Merger, Conversion, Consolidation or Succession to Business..... 39
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders.................... 40
SECTION 702. Reports by Trustee.............................................. 40
SECTION 703. Reports by Company.............................................. 40
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain Terms............ 41
SECTION 802. Successor Person Substituted.................................... 42
SECTION 803. Securities to Be Secured in Certain Events...................... 42
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.............. 43
SECTION 902. Supplemental Indentures with Consent of Holders................. 44
SECTION 903. Authorization and Execution of Supplemental Indentures.......... 44
SECTION 904. Effect of Supplemental Indentures............................... 45
SECTION 905. Conformity with Trust Indenture Act............................. 45
</TABLE>
<PAGE> 7
v
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 906. Reference in Securities to Supplemental Indentures.............. 45
SECTION 907. Notice of Supplemental Indentures............................... 45
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal and Interest.............................. 45
SECTION 1002. Maintenance of Office or Agency................................ 46
SECTION 1003. Money for Security Payments to Be Held in Trust................ 46
SECTION 1004. Statement as to Compliance..................................... 47
SECTION 1005. Payment of Taxes and Other Claims.............................. 48
SECTION 1006. Maintenance of Principal Properties............................ 48
SECTION 1007. Corporate Existence............................................ 48
SECTION 1008. Limitation on Liens............................................ 48
SECTION 1009. Limitation on Sale/Leaseback Transactions...................... 50
SECTION 1010. Waiver of Certain Covenants.................................... 51
ARTICLE ELEVEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1101. Company's Option to Effect Defeasance or Covenant Defeasance... 51
SECTION 1102. Defeasance and Discharge....................................... 51
SECTION 1103. Covenant Defeasance............................................ 52
SECTION 1104. Conditions to Defeasance or Covenant Defeasance................ 52
SECTION 1105. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.......................... 54
SECTION 1106. Reinstatement.................................................. 55
TESTIMONIUM................................................................... 61
SIGNATURES AND SEALS.......................................................... 61
</TABLE>
EXHIBIT A Form of Securities; Trustee's Certificate of Authentication
<PAGE> 8
INDENTURE, dated as of _______________, 1996, between BORG-WARNER
AUTOMOTIVE, INC., a corporation duly organized and existing under the laws of
the State of Delaware (herein called the "Company"), having its principal office
at 200 South Michigan Avenue, Chicago, Illinois 60604, and THE FIRST NATIONAL
BANK OF CHICAGO, a national banking association duly organized and existing
under the laws of the United States of America, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of __%
Senior Notes due 2006 (herein called the "Securities"), of substantially the
tenor and amount hereinafter set forth, and to provide therefor the Company has
duly authorized the execution and delivery of this Indenture.
This Indenture is subject to the provisions of the Trust Indenture
Act of 1939, as amended, that are required to be part of this Indenture and
shall, to the extent applicable, be governed by such provisions.
All things necessary have been done to make the Securities, when
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company and to make this
Indenture a valid agreement of the Company, in accordance with their and its
terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
<PAGE> 9
2
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein, and the terms "cash transaction" and
"self-liquidating paper", as used in TIA Section 311, shall have the
meanings assigned to them in the rules of the Commission adopted under the
Trust Indenture Act;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Articles Two and Eleven, are
defined in those Articles.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"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 specified 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.
"Attributable Indebtedness" means, with respect to any
Sale/Leaseback Transaction as of any particular time, the present value
(discounted at the rate of interest implicit in the terms of the lease) of the
obligations of the lessee under such lease for net rental payments during the
remaining term of the lease (including any period for which such lease has been
extended). "Net rental payments" under any lease for any period means the sum of
the rental and other payments required to be paid in such period by the lessee
thereunder, not including, however, any amounts required to be paid by such
lessee (whether or not designated as rental or additional rental) on account of
maintenance and repairs, insurance, taxes, assessments or similar charges.
<PAGE> 10
3
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture, until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request; Company Order" means a written request or order
signed in the name of the Company by its Chairman, its President, any Vice
President, its Treasurer or an Assistant Treasurer, and delivered to the
Trustee.
"Consolidated Net Worth" means the amount of total stockholders'
equity shown in the most recent consolidated statement of financial position of
the Company.
"Corporate Trust Office" means the principal corporate trust office
of the Trustee, at which at any particular time its corporate trust business
shall be administered, which office at the date of execution of this Indenture
is located at One First National Plaza, Suite 0126, Chicago, Illinois
60670-0126, Attention: Corporate Trust Services Division, except that, for
purposes of Section 1002, such term shall mean the office or agency of the
Trustee located in the Borough of Manhattan, The City of New York, which office
at the date hereof is located at 14 Wall Street, Eighth Floor, New York, New
York 10005.
"corporation" includes corporations, associations, companies and
business trusts.
"Current Assets" of any Person includes all assets of such Person
that would in accordance with generally accepted accounting principles be
classified as current assets.
<PAGE> 11
4
"Current Liabilities" of any Person includes all liabilities of such
Person that would in accordance with generally accepted accounting principles be
classified as current liabilities.
"Debt" means notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations thereunder.
"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of
the United States Code, as amended from time to time.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed and as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Industrial Development Bonds" means obligations issued by a state,
a commonwealth, a territory or a possession of the United States of America, or
any political subdivision of any of the foregoing, or the District of Columbia,
the interest on which is excludable from gross income of the holders thereof
pursuant to the provisions of Section 103(a) of the Internal Revenue Code of
1986, as amended (or any similar provision of such Code), as in effect at the
time of the issuance of such obligations.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Securities.
"Lien" means any pledge, mortgage, lien, charge, encumbrance or
security interest.
"Maturity", when used with respect to any Security, means the date
on which the principal of such Security or an installment of principal becomes
due and payable as
<PAGE> 12
5
therein or herein provided, whether at the Stated Maturity or by declaration of
acceleration or otherwise.
"Non-Recourse Indebtedness" means indebtedness of the Company or
any Subsidiary of the Company in respect of which the recourse of the holder
of such indebtedness, whether direct or indirect and whether contingent or
otherwise, is effectively limited to specified assets, and with respect to
which neither the Company nor any Subsidiary of the Company provides any credit
support.
"Officers' Certificate" means a certificate signed by the Chairman,
the President or a Vice President, and by the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, including an employee of the Company, and who shall be
acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities;
(iii) Securities, except to the extent provided in Sections 1102 and
1103, with respect to which the Company has effected defeasance and/or
covenant defeasance as provided in Article Eleven; and
(iv) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands the Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction,
<PAGE> 13
6
notice, consent or waiver, only Securities which the Trustee knows to be so
owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
reasonable satisfaction of the Trustee the pledgee's right so to act with
respect to such Securities and that the pledgee is not the Company or any other
obligor upon the Securities or any Affiliate of the Company or such other
obligor.
"Paying Agent" means any Person (including the Company acting as
Paying Agent) authorized by the Company to pay the principal of or interest on
the Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for a
mutilated security or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Security.
"Principal Property" means any manufacturing plant or warehouse,
together with the land upon which it is erected and fixtures comprising a part
thereof, owned by the Company or any Significant Subsidiary and located in the
United States, the gross book value (without deduction of any reserve for
depreciation) of which on the date as of which the determination is being made
is an amount which exceeds 1% of Consolidated Net Tangible Assets, other than
any such manufacturing plant or warehouse or any portion thereof (together with
the land upon which it is erected and fixtures comprising a part thereof) (i)
which is financed by Industrial Development Bonds or (ii) which, in the opinion
of the Board of Directors, is not of material importance to the total business
conducted by the Company and its Subsidiaries, taken as a whole.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the [date] or [date] (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust
<PAGE> 14
7
officer, the controller or any assistant controller or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above-designated officers, and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Sale/Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary, for a period of more
than three years, of any real or personal property, which property has been or
is to be sold or transferred by the Company or such Subsidiary to such Person in
contemplation of such leasing.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations thereunder.
"Security Register; Security Registrar" have the respective meanings
specified in Section 305.
"Significant Subsidiary" means any subsidiary of the Company which
constitutes a "Significant Subsidiary" as defined in Rule 1-02 of Regulation S-X
under the Exchange Act.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" of a Person means (i) any corporation more that 50% of
the outstanding securities having ordinary voting power of which is owned,
directly or indirectly, by such Person or by one or more of its Subsidiaries, or
by such Person and one or more of its Subsidiaries, or (ii) any partnership or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned. For the purposes
of this definition, "securities having ordinary voting power" means securities
or other equity interests that ordinarily have voting power for the election of
directors, or persons having management power with respect to the Person,
whether at all
<PAGE> 15
8
times or only so long as no senior class of securities has such voting power by
reason of any contingency.
"Trust Indenture Act; TIA" means the Trust Indenture Act of 1939 as
in force at the date as of which this Indenture was executed, except as provided
in Section 905.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee an Officers' Certificate stating that all conditions precedent,
if any, provided for in this Indenture (including any covenant compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than pursuant to
Section 1004) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
<PAGE> 16
9
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
<PAGE> 17
10
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner that the Trustee deems sufficient.
(c) The principal amount and serial numbers of Securities held by
any Person, and the date of holding the same, shall be proved by the Security
Register.
(d) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. Notwithstanding TIA Section 316(c),
such record date shall be the record date specified in or pursuant to such Board
Resolution, which shall be a date not earlier than the date 30 days prior to the
first solicitation of Holders generally in connection therewith and not later
than the date such solicitation is completed. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or other
Act may be given before or after such record date, but only the Holders of
record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be computed as of
such record date; provided that no such authorization, agreement or consent by
the Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than eleven
months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
SECTION 105. Notices, etc., to Trustee and Company.
<PAGE> 18
11
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention:
[Corporate Trust Administration Division], or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this Indenture, or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to Holders by
the Company or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. Where
notice to Holders is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Any notice mailed to a
Holder in the manner herein prescribed shall be conclusively deemed to have been
received by such Holder, whether or not such Holder actually receives such
notice. Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
SECTION 107. Effect of Headings and Table of Contents.
The Article and Section headings herein, the Cross-Reference Table
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
<PAGE> 19
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SECTION 108. Successors and Assigns.
All covenants and agreements in this Indenture by the Company or the
Trustee shall bind its respective successors and assigns, whether so expressed
or not.
SECTION 109. Separability Clause.
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 110. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto, any Paying Agent, any
Securities Registrar and their successors hereunder and the Holders, any benefit
or any legal or equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the law of the State of New York. This Indenture is subject
to the provisions of the Trust Indenture Act that are required to be part of
this Indenture and shall, to the extent applicable, be governed by such
provisions.
SECTION 112. Legal Holidays.
In any case where any Interest Payment Date or Stated Maturity or
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of principal or
interest need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, or at the Stated Maturity or Maturity; provided that no interest shall
accrue for the period from and after such Interest Payment Date or Stated
Maturity or Maturity, as the case may be.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
<PAGE> 20
13
The Securities and the Trustee's certificate of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. Any portion of the text of
any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security.
The definitive Securities may be printed, lithographed or engraved
on steel-engraved borders or produced in any other manner, all as determined by
the officers of the Company executing such Securities, as evidenced by their
execution of such Securities.
SECTION 202. Form of Face of Security.
BORG-WARNER AUTOMOTIVE, INC.
___% Senior Notes due 2006
No. __________ $_______________
Borg-Warner Automotive, Inc., a Delaware corporation (herein called
the "Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_______________ or registered assigns, the principal sum of
_______________Dollars on __________, 2006, at the office or agency of the
Company referred to below, and to pay interest thereon on __________, 1997 and
semi-annually thereafter, on [date] and [date] in each year, from __________,
1997, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, at the rate of ___% per annum, until the principal
hereof is paid or duly provided for, and (to the extent lawful) to pay on demand
interest on any overdue interest at the rate borne by the Securities from the
date on which such overdue interest becomes payable to the date payment of such
interest has been made or duly provided for. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the [date] or
[date] (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for shall forthwith cease to be payable to the Holder on such Regular Record
Date, and such defaulted interest, and (to the extent lawful) interest on such
defaulted interest at the rate borne by the Securities, may be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record
<PAGE> 21
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Date for the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to Holders of Securities not less than 10 days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture. Payment of the
principal of and interest on this Security will be made at the office or agency
of the Company maintained for that purpose in The City of New York, or at such
other office or agency of the Company as may be maintained for such purpose, in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided, however, that
payment of interest may be made at the option of the Company (i) by check mailed
to the address of the Person entitled thereto as such address shall appear on
the Security Register or (ii) by transfer to an account maintained by the payee
located in the United States.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture, or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated: __________ BORG-WARNER AUTOMOTIVE, INC.
By: ___________________________
Attest:
___________________________
Authorized Signature
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company designated as its ___% Senior Notes due 2006 (herein called the
"Securities"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $150,000,000, which may be issued
under an indenture (herein called the
<PAGE> 22
15
"Indenture") dated as of ____________, 1996 between the Company and The First
National Bank of Chicago, trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Trustee and the Holders of the Securities, and of
the terms upon which the Securities are, and are to be, authenticated and
delivered.
If an Event of Default shall occur and be continuing, the principal
of all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of the Company on this Security and (b) certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by or on behalf of the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof whether or not notation of such consent or waiver is made upon
this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registerable on the Security
Register of the Company, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
<PAGE> 23
16
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to the time of due presentment of this Security for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security be overdue, and
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
SECTION 204. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in
substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
Dated: ____________________
This is one of the Securities referred to in the within-mentioned
Indenture.
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By__________________________
Authorized Officer
SECTION 205. Securities Issuable in Global Form.
<PAGE> 24
17
(a) If so specified in the Company Order referred to in Section 303,
the Securities may be issued in the form of one or more permanent global
Securities, registered in the name of a securities depository (the "Depository")
or its nominee, representing all the Outstanding Securities. Such global
Securities shall be substantially in the form set forth in Section 201 with such
modifications as may be necessary or desirable to reflect the issuance thereof
in global form.
(b) Subject to the provisions of Section 303 and, if applicable,
Section 304, the Trustee shall deliver and redeliver any Security in permanent
global form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 303 or Section 304 has been, or simultaneously is,
delivered, any instructions by the Company with respect to endorsement or
delivery or redelivery of a Security in global form shall be in writing but need
not comply with Section 102 and need not be accompanied by an Opinion of
Counsel.
(c) Notwithstanding the provisions of Section 307, payment of
principal of and interest on any Security in permanent global form shall be made
to the Person or Persons specified therein. Notwithstanding the provisions of
Section 309 and except as provided in the preceding sentence, the Company, the
Trustee and any agent of the Company and the Trustee shall treat the Holder of
any permanent global Security as the owner of such Security for the purpose of
receiving payment of principal of and (subject to Sections 305 and 307) interest
on such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and none of the Company, the Trustee or any agent of the
Company or the Trustee shall be affected by notice to the contrary.
(d) If at any time, (i) the Depository notifies the Company that it is
unwilling or unable to continue as Depository or if at any time the Depository
shall no longer be registered or in good standing under the Exchange Act, or
other applicable statute or regulation and a successor Depository is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, as the case may be, or (ii) the Company
determines that the Securities shall no longer be represented by a global
Security or Securities and that the provisions of this Section 205 shall no
longer apply to the Securities, then in such event this Section 205 shall no
longer be applicable to the Securities and the Company will execute and the
Trustee, upon Company Request, will authenticate and deliver Securities in
definitive registered form, in authorized denominations, and in an aggregate
principal amount equal to the principal amount of the global Security or
Securities in exchange for such global Security whereupon the global Security or
Securities shall be cancelled by the Trustee. Such Securities in definitive
registered form issued in exchange for the global Security or Securities
pursuant to this Section 205(d) shall be registered in such names and issued in
such authorized denominations as the Depository, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct the Trustee.
<PAGE> 25
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The Trustee shall deliver such Securities to the Persons in whose names such
Securities are so registered.
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $150,000,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section 205,
304, 305, 306 or 906.
The Securities shall not be redeemable prior to Maturity and shall
be known and designated as the "___% Senior Notes due 2006" of the Company.
Their Stated Maturity shall be __________, 2006, and they shall bear interest at
the rate of ___% per annum from __________, 1997, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
payable on __________, 1997 and semi-annually thereafter on [date] and [date] in
each year and at said Stated Maturity, until the principal thereof is paid or
duly provided for.
The principal of and interest on the Securities shall be payable at
the office or agency of the Company maintained for such purpose in The City of
New York, or at such other office or agency of the Company as may be maintained
for such purpose; provided, however, that, at the option of the Company,
interest may be paid by check mailed to addresses of the Persons entitled
thereto as such addresses shall appear on the Security Register.
SECTION 302. Denominations.
The Securities shall be issuable only in fully registered form
without interest coupons and only in denominations of $1,000 and any integral
multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman, its President or a Vice President, under its corporate seal reproduced
thereon and attested by its Secretary or an Assistant Secretary. The signature
of any of these officers on the Securities may be manual or facsimile signatures
of the present or any future such authorized officer and may be imprinted or
otherwise reproduced on the Securities. The seal of the
<PAGE> 26
19
Company may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for in Exhibit
A, duly executed by the Trustee by manual signature of an authorized officer,
and such certificate upon any Security shall be conclusive evidence, and the
only evidence, that such Security has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as conclusively evidenced
by their execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 1002, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Securities of authorized denominations. Until so
exchanged, the temporary
<PAGE> 27
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Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Securities and of transfers of Securities. The Security Register shall be in
written form or any other form capable of being converted into written form
within a reasonable time. At all reasonable times, the Security Register shall
be open to inspection by the Trustee. The Trustee is hereby initially appointed
as security registrar (the "Security Registrar") for the purpose of registering
Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated pursuant to Section 1002, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee, one or more new Securities of any authorized
denomination or denominations of a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Security Registrar)
be duly endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of
<PAGE> 28
21
transfer or exchange of Securities, other than exchanges pursuant to Section 304
or 906 not involving any transfer.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If (i) any mutilated Security is surrendered to the Trustee, or (ii)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them to
hold each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute and upon Company Order the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name such Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest at the
office or agency of the Company maintained for such purpose pursuant to Section
1002; provided, however, that each installment of interest may at the Company's
option be paid by (i) mailing a check for such interest, payable to or
<PAGE> 29
22
upon the written order of the Person entitled thereto pursuant to Section 308,
to the address of such Person as it appears in the Security Register or (ii)
transfer to an account located in the United States maintained by the payee.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date shall forthwith cease to
be payable to the Holder on the Regular Record Date by virtue of having been
such Holder, and such defaulted interest and (to the extent lawful) interest on
such defaulted interest at the rate borne by the Securities (such defaulted
interest and interest thereon herein collectively called "Defaulted Interest")
may be paid by the Company, at its election in each case, as provided in clause
(1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to
the date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date, and in the
name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to
be given in the manner provided for in Section 106, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
given, such Defaulted Interest shall be paid to the Persons in whose names
the Securities (or their respective Predecessor Securities) are registered
at the close of business on such Special Record Date and shall no longer
be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed
<PAGE> 30
23
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to the due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and (subject
to Sections 305 and 307) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and none of the Company,
the Trustee or any agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, registration of transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation of any Securities previously
authenticated hereunder which the Company has not issued and sold, and all
Securities so delivered shall be promptly cancelled by the Trustee. If the
Company shall so acquire any of the Securities, however, such acquisition shall
not operate as a redemption or satisfaction of the indebtedness represented by
such Securities unless and until the same are surrendered to the Trustee for
cancellation. No Securities shall be authenticated in lieu of or in exchange for
any Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities held by the Trustee shall
be disposed of by the Trustee in accordance with its customary procedures and
certification of their disposal shall be delivered to the Company unless by
Company Order the Company shall direct that cancelled Securities be returned to
it.
SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
<PAGE> 31
24
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
the Securities expressly provided for herein or pursuant hereto) and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for which payment has theretofore been deposited in
trust with the Trustee or any Paying Agent or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year
and the Company, in the case of (i) or (ii) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust funds
in trust for such purpose an amount sufficient to pay and discharge
the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal of and interest on
the Securities to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity, together with irrevocable instructions from the Company
directing the Trustee to apply such funds to the payment thereof at
Maturity.
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
<PAGE> 32
25
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 606 and, if money
shall have been deposited with the Trustee pursuant to subclause (B) of clause
(1) of this Section , the obligations of the Trustee under Section 402 and the
last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee; but such money
need not be segregated from other funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of any interest on any Security when it
becomes due and payable, and continuance of such default for a period of
30 days;
(2) default in the payment of the principal of any Security at its
Maturity;
(3) default in the performance, or breach, of any covenant or
agreement of the Company in this Indenture, and continuance of such
default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal amount
of the Outstanding Securities, a written notice specifying such
<PAGE> 33
26
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder;
(4) (A) there shall have occurred one or more defaults by the
Company or any Subsidiary in the payment of the principal of Debt (other
than the Securities or Non-Recourse Indebtedness) in an aggregate amount
in excess of $25 million, when the same becomes due and payable at the
stated maturity thereof, and such default or defaults shall have
continued after any applicable grace period and shall not have been
cured or waived or (B) Debt (other than the Securities or Non-Recourse
Indebtedness) of the Company or any Subsidiary aggregating in an
aggregate amount in excess of $25 million shall have been accelerated or
otherwise declared due and payable, or required to be prepaid or
repurchased (other than by regularly scheduled required prepayment),
prior to the stated maturity thereof and such acceleration shall not
have been rescinded or annulled, or such indebtedness shall not have been
discharged, within 15 days after written notice to the Company by the
Trustee or to the Company and the Trustee by the Holders of not less than
25% in aggregate principal amount of the Outstanding Securities;
(5) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company or any Significant Subsidiary a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Company or any Significant Subsidiary under the Federal Bankruptcy
Code or any other applicable federal or state law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or any Significant Subsidiary or of any
substantial part of any of their property, or ordering the winding up or
liquidation of any of their respective affairs, and the continuance of any
such decree or order unstayed and in effect for a period of 90 consecutive
days; or
(6) the institution by the Company or any Significant Subsidiary of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by
the Company or any Significant Subsidiary to the institution of bankruptcy
or insolvency proceedings against any of them, or the filing by any of
them of a petition or answer or consent seeking reorganization or relief
under the Federal Bankruptcy Code or any other applicable federal or state
law, or the consent by the Company or any Significant Subsidiary to the
filing of any such petition or to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the Company or any Significant Subsidiary or of any substantial part of
any of their respective properties, or the making by the Company or any
Significant Subsidiary of an assignment for the benefit of creditors, or
the admission by any of them in writing of its respective inability to pay
their debts generally as they become due.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
<PAGE> 34
27
If an Event of Default (other than an Event of Default specified in
Section 501(5) or 501(6)) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities may declare the principal amount of all the
Securities, and all accrued and unpaid interest thereon, to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount, and all
accrued and unpaid interest thereon, shall become immediately due and payable.
If an Event of Default specified in Section 501(5) or 501(6) occurs and is
continuing, then the principal amount, and all accrued and unpaid interest
thereon, of 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 Holder.
At any time after a declaration of acceleration has been made with
respect to the Securities and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter provided in this
Article, the Holders of a majority in principal amount of the Outstanding
Securities, by written notice to the Company and the Trustee, may on behalf of
the Holders of all of the Securities rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay,
(A) all overdue interest on all Outstanding Securities,
(B) all unpaid principal of any Outstanding Securities which
has become due otherwise than by such declaration of acceleration,
and interest on such unpaid principal at the rate borne by the
Securities,
(C) to the extent that payment of such interest is lawful,
interest on overdue interest at the rate borne by the Securities,
and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default, other than the non-payment of amounts of
principal of or interest on Securities which have become due solely by
such declaration of acceleration, have been cured or waived as provided in
Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
<PAGE> 35
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Notwithstanding the preceding paragraph, in the event of a
declaration of acceleration in respect of the Securities because of an Event of
Default specified in Section 501(4) shall have occurred and be continuing, such
declaration of acceleration shall be automatically annulled if the Debt that is
the subject of such Event of Default has been discharged or the holders thereof
have rescinded their declaration of acceleration in respect of such Debt, and
written notice of such discharge or rescission, as the case may be, shall have
been given to the Trustee by the Company and countersigned by the holders of
such Debt or a trustee, fiduciary or agent for such holders, within 30 days
after such declaration of acceleration in respect of the Securities, and no
other Event of Default has occurred during such 30-day period which has not been
cured or waived during such period.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(a) default is made in the payment of any installment of interest on
any Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of any Security
at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee for the benefit
of the Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest, and interest on any overdue principal
and, to the extent that payment of such interest shall be legally enforceable,
upon any overdue installment of interest, at the rate borne by the Securities,
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and
<PAGE> 36
29
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities.
<PAGE> 37
30
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name and as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or interest,
upon presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
606;
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Securities for principal and interest, respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto, including the Company.
SECTION 507. Limitation on Suits.
No Holder of Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
<PAGE> 38
31
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority or more in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and proportionate benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment, as provided herein (including, if applicable, Article Eleven)
and in such Security, of the principal of and (subject to Section 307) interest
on, such Security on the Stated Maturity expressed therein and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to
<PAGE> 39
32
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. Control by Holders.
The Holders of not less than a majority in principal amount of the
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders not
consenting.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default
(1) in respect of the payment of principal of or interest on any
Security, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
<PAGE> 40
33
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 514. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults.
Within 90 days after the occurrence of any Default hereunder, the
Trustee shall transmit, in the manner and to the extent provided in TIA Section
313(c), notice of such Default hereunder known to the Trustee, unless such
Default shall have been cured or waived; provided, however, that, except in the
case of a Default in the payment of the principal of or interest on any
Security, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders; and
provided further that, in the case of any Default of the character specified in
Section 501(3), no such notice to Holders shall be given until at least 60 days
after the occurrence thereof.
SECTION 602. Certain Rights of Trustee.
Subject to the provisions of TIA Sections 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of
<PAGE> 41
34
indebtedness or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(8) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
<PAGE> 42
35
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 603. Trustee Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities, except that the Trustee represents that it is
duly authorized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder and that the statements made by
it in a Statement of Eligibility on Form T-1 supplied to the Company are true
and accurate, subject to the qualifications set forth therein. The Trustee shall
not be accountable for the use or application by the Company of Securities or
the proceeds thereof.
SECTION 604. May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company or of the Trustee, in its individual or any other capacity,
may become the owner or pledgee of Securities and, subject to TIA Sections
310(b) and 311, may otherwise deal with the Company with the same rights it
would have if it were not Trustee, Paying Agent, Security Registrar or such
other agent.
SECTION 605. Money Held in Trust.
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
law. The Trustee shall be under no liability for interest on any money received
by it hereunder except as otherwise agreed with the Company.
SECTION 606. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
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(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such obligations
of the Company, the Trustee shall have a claim prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of or interest on particular Securities.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(5) or (6), the expenses
(including the reasonable charges and expenses of its counsel) of and the
compensation for such services are intended to constitute expenses of
administration under any applicable Federal or State bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 607. Corporate Trustee Required; Eligibility.
There shall be at all times a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and shall have a combined
capital and surplus of at least $50,000,000. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of Federal, State, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section , the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section , it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 608. Resignation and Removal; Appointment of Successor.
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(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 609 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
not less than a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
(2) the Trustee shall cease to be eligible under Section 607 and
shall fail to resign after written request therefor by the Company or by
any Holder who has been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
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appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to the
Holders of Securities in the manner provided for in Section 106. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
SECTION 609. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 610. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such
<PAGE> 46
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authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities. In case any of the Securities shall not have been
authenticated by such predecessor Trustee, any successor Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor Trustee. In all such cases such certificates shall
have the full force and effect that this Indenture provides for the certificate
of authentication of the Trustee; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders.
Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that none of the Company or the Trustee
or any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with TIA Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under TIA Section
312(b).
SECTION 702. Reports by Trustee.
Within 60 days after [May 15] of each year commencing with the
first [May 15] after the first issuance of Securities, the Trustee shall
transmit to the Holders, in the manner and to the extent provided in TIA Section
313(c), a brief report dated as of such [May 15] if required by TIA Section
313(a).
SECTION 703. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Company may be required
to file with the Commission pursuant
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to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is
not required to file information, documents or reports pursuant to either
of said Sections , then it shall file with the Trustee and the Commission,
in accordance with rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules
and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance
by the Company with the conditions and covenants of this Indenture as may
be required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders, in the manner and to the extent
provided in TIA Section 313(c), within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed from
time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease, or permit any one or more of its
Significant Subsidiaries to convey, transfer or lease, all or substantially all
of the properties and assets of the Company, on a consolidated basis, to any
Person, unless:
(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company substantially as
an entirety (A) shall be a corporation, partnership or trust organized and
validly existing under the laws of the United States of America, any state
thereof or the District of Columbia and (B) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the Company's obligation for the due and
punctual payment of the principal of and
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interest on all the Securities and the performance and observance of every
covenant of this Indenture on the part of the Company to be performed or
observed;
(2) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; and
(3) the Company or such Person shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and such supplemental
indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
This Section shall only apply to a merger or consolidation in which
the Company is not the surviving corporation and to conveyances, leases and
transfers by the Company as transferor or lessor.
SECTION 802. Successor Person Substituted.
Upon any consolidation by the Company with or merger by the Company
into any other corporation or any conveyance, transfer or lease of all or
substantially all of the properties and assets of the Company, on a consolidated
basis, to any Person in accordance with Section 801, the successor Person formed
by such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor Person had been named as the Company
herein, and in the event of any such conveyance or transfer, the Company (which
term shall for this purpose mean the Person named as the "Company" in the first
paragraph of this Indenture or any successor Person which shall theretofore
become such in the manner described in Section 801), except in the case of a
lease, shall be discharged of all obligations and covenants under this Indenture
and the Securities and may be dissolved and liquidated.
SECTION 803. Securities to Be Secured in Certain Events.
If, upon any such consolidation of the Company with or merger of the
Company into any other corporation, or upon any conveyance, lease or transfer of
all or substantially all of the properties or assets of the Company, on a
consolidated basis, to any other Person, or any Principal Property of the
Company or of any Significant Subsidiary, would thereupon become subject to any
Lien, then unless such Lien could be created pursuant to Section 1008 without
equally and ratably securing the Securities, the Company or any Significant
Subsidiary, prior to or simultaneously with such consolidation, merger,
conveyance, lease or transfer, will, as to such Principal Property, secure the
Outstanding Securities hereunder (together with, if the Company shall so
determine, any other Debt of the
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Company now existing or hereafter created which is not subordinate to the
Securities) equally and ratably with (or prior to) the Debt which upon such
consolidation, merger, conveyance, lease or transfer is to become secured as to
such Principal Property by such Lien, or will cause such Securities to be so
secured.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
contained herein and in the Securities;
(2) to add covenants of the Company for the benefit of the Holders
or to surrender any right or power herein conferred upon the Company;
(3) to add Events of Default;
(4) to secure the Securities pursuant to the requirements of Section
803 or 1008 or otherwise;
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee pursuant to the requirements of Section
609;
(6) to cure any ambiguity or defect or to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture; provided that such action shall
not adversely affect the interests of the Holders; or
(7) to supplement any of the provisions hereof to the extent
necessary to permit or facilitate defeasance and discharge of the Notes in
accordance with Article XI hereof; provided that such action shall not
adversely affect the interests of the Holders; or
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(8) to conform with the requirements of Section 803 or 1008 or
otherwise the Trust Indenture Act.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders; provided, however, that no
such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of or any
installment of interest on any Security, or reduce the principal amount
thereof or the rate of interest thereon, or change the place or coin or
currency of payment of the principal of or interest payable on any
Security, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof, or
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture, or
(3) modify any of the provisions of this Section or Sections 508 and
513, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Security affected thereby.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Authorization and Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee shall execute all such supplemental
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indentures, except that it shall not be obligated to enter into any such
supplemental indenture which adversely affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice thereof to the Holder of each Outstanding Security affected,
in the manner provided for in Section 106, setting forth in general terms the
substance of such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal and Interest.
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The Company covenants and agrees for the benefit of the Holders that
it will duly and punctually pay the principal of and interest on the Securities
in accordance with the terms of the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in The City of New York, an office or
agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Corporate Trust Office of the Trustee shall be such
office or agency of the Company, unless the Company shall designate and maintain
some other office or agency for one or more of such purposes. The Company will
give prompt written notice to the Trustee of any change in the location of any
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Securities
may be presented or surrendered for any or all such purposes and may from time
to time rescind any such designation; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in The City of New York for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and any change in the location of any such other
office or agency.
SECTION 1003. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of or interest on the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal of or interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for the
Securities, it will, on or before each due date of the principal of, or interest
on, any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal or interest so becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such principal or interest, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of
such action or any failure so to act.
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The Company will cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of or
interest on Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal of or interest on the Securities; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or interest on
any Security and remaining unclaimed for two years after such principal or
interest has become due and payable shall be repaid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The City of
New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
SECTION 1004. Statement as to Compliance.
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The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year, a brief certificate from the principal executive
officer, principal financial officer or principal accounting officer as to his
or her knowledge of the Company's compliance with all conditions and covenants
under this Indenture. For purposes of this Section 1004, such compliance shall
be determined without regard to any period of grace or requirement of notice
under this Indenture.
SECTION 1005. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Significant
Subsidiary or upon the income, profits or property of the Company or any
Significant Subsidiary and (2) all material lawful claims for labor, materials
and supplies which, if unpaid, might by law become a Lien upon any Principal
Property of the Company or any Significant Subsidiary; provided, however, that
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.
SECTION 1006. Maintenance of Principal Properties.
The Company will cause all Principal Properties to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent or restrict the sale,
abandonment or other disposition of any of such Principal Properties if such
action is, in the judgment of the Company, desirable in the conduct of the
business of the Company and its Subsidiaries as a whole and not disadvantageous
in any material respect to the Holders.
SECTION 1007. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and the rights (charter and statutory) and franchises of the Company
and any Significant Subsidiary; provided, however, that the Company shall not be
required to preserve any such right or franchise if the Company shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries as a whole.
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SECTION 1008. Limitation on Liens.
The Company will not, and will not permit any Subsidiary of the
Company to, issue, assume or guarantee any Debt if such Debt is secured by a
mortgage, pledge, security interest or lien (a "mortgage" or "mortgages") upon
any real or personal property of the Company or any Subsidiary of the Company or
upon any shares of stock or other stock or other equity interest or indebtedness
of any Subsidiary of the Company (whether such property, shares of stock or
other equity interest or indebtedness is now owned or hereafter acquired),
without in any such case effectively providing that the Securities shall be
secured equally and ratably with (or prior to) such Debt; provided, however,
that the foregoing restrictions shall not apply to:
(a) Mortgages existing on the date the Securities are originally
issued or mortgages provided for under the terms of agreements existing on
such date;
(b) Mortgages on Current Assets securing Current Liabilities;
(c) Mortgages on any property acquired, constructed, altered or
improved by the Company or any Subsidiary of the Company after the date of
the Indenture that are created or assumed contemporaneously with or within
one year after such acquisition (or in the case of property constructed,
altered or improved, after the completion and commencement of commercial
operation of such property, whichever is later) to secure or provide for
the payment of the purchase price or cost thereof, provided that in the
case of any such construction, alteration or improvement the mortgages
shall not apply to any property theretofore owned by the Company or any
Subsidiary of the Company other than (i) the property so altered or
improved and (ii) any theretofore unimproved real property on which the
property so constructed or altered, or the improvement, is located;
(d) Existing mortgages on property acquired (including mortgages on
any property acquired from a Person that is consolidated with or merged
with or into the Company or a Subsidiary of the Company) or mortgages
outstanding at the time any Person becomes a Subsidiary of the Company
that are not incurred in connection with such entity becoming a Subsidiary
of the Company;
(e) mortgages in favor of the Company or any Subsidiary of the
Company;
(f) mortgages on any property (i) in favor of domestic or foreign
governmental bodies to secure partial, progress, advance or other payments
pursuant to any contract or statute, (ii) securing indebtedness incurred
to finance all or any part of the purchase price or cost of constructing,
installing or improving the property subject to such mortgages including
mortgages to secure Debt of the pollution control
<PAGE> 56
49
or industrial revenue bond type, or (iii) securing indebtedness issued or
guaranteed by the United States, any State, any foreign country or any
department, agency, instrumentality or political subdivision of any such
jurisdiction; and
(g) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any mortgage referred
to in the foregoing clause (a), (b), (c), (d), (e) or (f); provided,
however, that the principal amount of Debt secured thereby shall not
exceed the principal amount of Debt so secured at the time of such
extension, renewal or replacement, together with the reasonable costs
related to such extension, renewal or replacement, and that such
extension, renewal or replacement shall be limited to all or a part of the
property that secured the mortgage so extended, renewed or replaced (plus
improvements on such property).
Notwithstanding the foregoing, the Company and any Subsidiary of the
Company may, without securing the Securities, issue, assume or guarantee secured
Debt (that would otherwise be subject to the foregoing restrictions) in an
aggregate amount that, together with all other such secured Debt and the
aggregate amount of Attributable Indebtedness of the Company and its
Subsidiaries deemed to be outstanding in respect of all Sale/Leaseback
Transactions entered into pursuant to Section 1009 (excluding any such
Sale/Leaseback Transactions the proceeds of which have been applied in
accordance with clauses (2) or (3) of Section 1009), does not exceed 10% of the
Consolidated Net Worth, as shown on a consolidated balance sheet as of a date
not more than 90 days prior to the proposed transaction prepared by the Company
in accordance with generally accepted accounting principles.
SECTION 1009. Limitation on Sale/Leaseback Transactions.
The Company will not, and will not permit any of its Subsidiaries
to, enter into any Sale/Leaseback Transaction with any Person (other than the
Company or a Subsidiary of the Company) unless:
(1) At the time of entering into such Sale/Leaseback Transaction,
the Company or such Subsidiary would be entitled to incur Debt, in a
principal amount equal to the Attributable Indebtedness with respect to
such Sale/Leaseback Transaction, secured by a mortgage on the property
subject to such Sale/Leaseback Transaction, pursuant to Section 1008
without equally and ratably securing the Securities pursuant to such
provisions;
(2) After the date on which Securities are first issued and within a
period commencing six months prior to the consummation of such
Sale/Leaseback Transaction and ending six months after the consummation
thereof, the Company or
<PAGE> 57
50
such Subsidiary shall have expended for property used or to be used in the
ordinary course of business of the Company or such Subsidiary (including
amounts expended for additions, expansions, alterations, repairs and
improvements thereto) an amount equal to all or a portion of the net
proceeds of such Sale/Leaseback Transaction, and the Company shall have
elected to designate such amount as a credit against such Sale/Leaseback
Transaction (with any such amount not being so designated to be applied as
set forth in clause (3) below); or
(3) During the 12-month period after the effective date of such
Sale/Leaseback Transaction, the Company shall have applied to the
voluntary defeasance or retirement of Securities or any pari passu
indebtedness of the Company an amount equal to the net proceeds of the
sale or transfer of the property leased in such Sale/Leaseback
Transaction, which amount shall not be less than the fair value of such
property at the time of entering into such Sale/Leaseback Transaction
(adjusted to reflect any amount expended by the Company as set forth in
clause (2) above), less an amount equal to the principal amount of such
Securities and pari passu indebtedness voluntarily defeased or retired by
the Company within such 12-month period and not designated as a credit
against any other Sale/Leaseback Transaction entered into by the Company
or any Subsidiary of the Company during such period.
SECTION 1010. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Section 803 or Sections 1005 to 1009,
inclusive, if before the time for such compliance the Holders of not less than a
majority in principal amount of the Outstanding Securities, by Act of such
Holders, waive such compliance in such instance with such term, provision or
condition, but no such waiver shall extend to or affect such term, provision or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such term, provision or condition shall remain in full force
and effect.
ARTICLE ELEVEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1101. Company's Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at any time with
respect to the Securities, elect to have either Section 1102 or Section 1103 be
applied to all
<PAGE> 58
51
Outstanding Securities upon compliance with the conditions set forth below in
this Article Eleven.
SECTION 1102. Defeasance and Discharge.
Upon the Company's exercise under Section 1101 of the option
applicable to this Section 1102, the Company shall be deemed to have paid and
discharged its obligations with respect to all Outstanding Securities on the
date the conditions set forth in Section 1104 are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
Outstanding Securities, which shall thereafter be deemed to be "Outstanding"
only for the purposes of Section 1105 and the other Sections of this Indenture
referred to in (A) and (B) below, and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Securities to receive, solely from the trust fund
described in Section 1104 and as more fully set forth in such Section, payments
in respect of the principal of and interest on such Securities when such
payments are due, (B) the Company's obligations with respect to such Securities
under Sections 304, 305, 306, 1002 and 1003, (C) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (D) this Article Eleven.
Subject to compliance with this Article Eleven, the Company may exercise its
option under this Section 1102 notwithstanding the prior exercise of its option
under Section 1103 with respect to the Securities.
SECTION 1103. Covenant Defeasance.
Upon the Company's exercise under Section 1101 of the option
applicable to this Section 1103, the Company shall be released from its
obligations under Section 803 and Sections 1005 through 1007 with respect to the
Outstanding Securities on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance"), and the Securities shall
thereafter be deemed to be not "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to the Outstanding Securities, the Company
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 501(3), but, except as specified above, the
remainder of this Indenture and such Securities shall be unaffected thereby.
<PAGE> 59
52
SECTION 1104. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 1102 or Section 1103 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 607 who shall agree to comply with the provisions of this
Article Eleven applicable to it) as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of such Securities,
(A) cash in United States dollars in an amount, or (B) U.S. Government
Obligations (as defined below) which, through the scheduled payment of
principal and interest in respect thereof in accordance with their terms,
will provide, not later than one day before the due date of any payment,
money in an amount, or (C) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, the principal of and interest on
the Outstanding Securities on the Stated Maturity of such principal or
installment of interest applicable to the Outstanding Securities on the
day on which such payments are due and payable in accordance with the
terms of this Indenture and of such Securities; provided that the Trustee
shall have been irrevocably instructed to apply such money or the proceeds
of such U.S. Government Obligations to said payments with respect to the
Securities. For this purpose, "U.S. Government Obligations" means
securities that are (x) direct obligations of the United States of America
for the timely payment of which its full faith and credit is pledged or
(y) obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the timely
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on
any such U.S. Government Obligation held by such custodian for the account
of the holder of such depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
(2) In the case of an election under Section 1102, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (x) the
Company has
<PAGE> 60
53
received from, or there has been published by, the Internal Revenue
Service a ruling or (y) since ___________, 1996, there has been a change
in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the Holders of
the Outstanding Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance had not
occurred.
(3) In the case of an election under Section 1103, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that (i)
the Holders of the Outstanding Securities will not recognize income, gain
or loss for federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred and (ii) the defeasance trust
will be exempt from registration under the Investment Company Act of 1940.
(4) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit or,
insofar as paragraphs (5) and (6) of Section 501 hereof are concerned, at
any time during the period ending on the 91st day after the date of such
deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period).
(5) Such defeasance under Section 1102 or covenant defeasance under
Section 1103 shall not cause the Trustee to have a conflicting interest as
defined by the TIA with respect to any securities of the Company.
(6) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company is a party
or by which it is bound.
(7) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section
1102 or the covenant defeasance under Section 1103 (as the case may be)
have been complied with and that no violations under the agreements
governing any other outstanding Debt would result.
SECTION 1105. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including any proceeds therefrom)
deposited with the Trustee
<PAGE> 61
54
(or other qualifying trustee, collectively for purposes of this Section 1105,
the "Trustee") pursuant to Section 1104 in respect of the Outstanding Securities
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Holders of such Securities of
all sums due and to become due thereon in respect of principal and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1104 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities.
Anything in this Article Eleven to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations (including any proceeds
therefrom) held by it as provided in Section 1104 which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect an
equivalent defeasance or covenant defeasance, as applicable, in accordance with
this Article.
SECTION 1106. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 1105 by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1102 or 1103, as the case may be, until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 1105; provided, however, that if the Company makes any
payment of principal of or interest on any Security following 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 held by the Trustee or
Paying Agent.
<PAGE> 62
55
-------------------------
This Indenture may be signed in any number of counterparts each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
BORG-WARNER AUTOMOTIVE, INC.
[SEAL] By__________________________________________
Title:
Attest:_______________________
Title:
THE FIRST NATIONAL BANK OF CHICAGO
[SEAL] By__________________________________________
Title:
Attest:_______________________
Title:
<PAGE> 63
EXHIBIT A
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY
(AS DEFINED BELOW) 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.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE REGISTERED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER
NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY.
BORG-WARNER AUTOMOTIVE INC.
___% Senior Notes due 2006
No. __________ $_______________
Borg-Warner Automotive, Inc., a Delaware corporation (herein called
the "Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_______________ or registered assigns, the principal sum of
_______________Dollars on __________, 2006, at the office or agency of the
Company referred to below, and to pay interest thereon on __________, 1997 and
semi-annually thereafter, on [date] and [date] in each year, from __________,
1997, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, at the rate of ___% per annum, until the principal
hereof is paid or duly provided for, and (to the extent lawful) to pay on demand
interest on any overdue interest at the rate borne by the Securities from the
date on which such overdue interest becomes payable to the date payment of such
interest has been made or duly provided for. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the [date] or
[date] (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for shall forthwith cease to be payable to the Holder on such Regular Record
Date, and such defaulted interest, and (to the extent lawful) interest on such
defaulted interest at the rate borne by the Securities, may be paid to the
Person in whose name this Security (or one
<PAGE> 64
A-2
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture. Payment
of the principal of and interest on this Security will be made at the office or
agency of the Company maintained for that purpose in The City of New York, or at
such other office or agency of the Company as may be maintained for such
purpose, in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of the Company (i)
by check mailed to the address of the Person entitled thereto as such address
shall appear on the Security Register or (ii) by transfer to an account
maintained by the payee located in the United States.
This Security is one of a duly authorized issue of securities of the
Company designated as its ___% Senior Notes due 2006 (herein called the
"Securities"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $150,000,000, which may be issued
under an indenture (herein called the "Indenture") dated as of ___________, 1996
between the Company and The First National Bank of Chicago, trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties, obligations and immunities thereunder of the Company, the Trustee and
the Holders of the Securities, and of the terms upon which the Securities are,
and are to be, authenticated and delivered.
If an Event of Default shall occur and be continuing, the principal
of all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of the Company on this Security and (b) certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf
<PAGE> 65
A-3
of the Holders of all the Securities, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by or on behalf of
the Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registerable on the Security
Register of the Company, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to the time of due presentment of this Security for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security be overdue, and
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.
If at any time, (i) the Depository notifies the Company that it is
unwilling or unable to continue as Depository or if at any time the Depository
shall no longer be registered or in good standing under the Securities Exchange
Act of 1934, as amended, or other applicable statute or regulation and a
successor Depository is not appointed by the
<PAGE> 66
A-4
Company within 90 days after the Company receives such notice or becomes aware
of such condition, as the case may be, or (ii) the Company determines that the
Securities shall no longer be represented by a global Security or Securities,
then in such event the Company will execute and the Trustee will authenticate
and deliver Securities in definitive registered form, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of this Security in exchange for this Security. Such Securities in
definitive registered form shall be registered in such names and issued in such
authorized denominations as the Depository, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. The
Trustee shall deliver such Securities to the Persons in whose names such
Securities are so registered.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture, or be
valid or obligatory for any purpose.
<PAGE> 67
A-5
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated: __________ BORG-WARNER AUTOMOTIVE, INC.
By: ___________________________
Attest:
___________________________
Authorized Signature
<PAGE> 68
A-6
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
Dated: ____________________
This is one of the Securities referred to in the within-mentioned
Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By__________________________
Authorized Officer
<PAGE> 1
EXHIBIT 5
---------
[Letterhead of Wachtell, Lipton, Rosen & Katz]
October 23, 1996
Borg-Warner Automotive, Inc.
200 South Michigan Avenue
Chicago, Illinois 60604
Ladies and Gentlemen:
We have acted as special counsel for Borg-Warner Automotive,
Inc., a Delaware corporation (the "Company"), in connection with the
preparation and filing by the Company with the Securities and Exchange
Commission of a Registration Statement on Form S-3, as it may be
amended (the "Registration Statement"), under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the
registration under the Securities Act by the Company of $150 million of
___% Senior Notes due 2006 (the "Notes"). The Notes are to be issued
pursuant to the terms of an indenture (the "Indenture") between the
Company and The First National Bank of Chicago, as trustee (the
"Trustee"). The form of Indenture, which includes the form of Note as
an exhibit, is filed as an exhibit to the Registration Statement.
In this connection, we have reviewed: (i) the Restated
Certificate of Incorporation and By-Laws of the Company; (ii) the
Registration Statement and the Indenture; (iii) certain resolutions
adopted by the Board of Directors of the Company; and (iv) such other
documents, records and papers as we have deemed necessary or
appropriate in order to give the opinions set forth herein. We are
familiar with the proceedings heretofore taken by the Company in
connection with the authorization, registration, issuance and sale of
the Notes. We have, with your consent, relied as to factual matters on
certificates or other documents furnished by the Company or its
officers and by governmental authorities and upon such other
documents and data that we have deemed appropriate or necessary as a
basis for the opinions hereinafter expressed. In such review, we
have assumed the genuineness of all signatures, the authenticity of
all documents, certificates and instruments submitted to us as
originals, the conformity with the originals of all documents
submitted to us as copies, and the authenticity of the originals of
such latter documents.
<PAGE> 2
Borg-Warner Automotive, Inc.
October 23, 1996
Page Two
Based upon the foregoing and having regard for such legal
considerations as we deem relevant, we are of the opinion that, as of
the date hereof:
1. When duly authorized officers of the Company have taken
all necessary action to approve the form of the Indenture, including
the form of Notes, the Notes and the Indenture will be duly authorized
by the Company.
2. When (a) the Indenture has been qualified under the Trust
Indenture Act of 1939, as amended and has been duly executed and
delivered by the parties thereto, (b) the Notes have been duly executed
and issued in accordance with the provisions of the Indenture, (c) the
Notes have been authenticated by the Trustee under the Indenture, and
(d) the Notes have been issued and sold by the Company pursuant to the
Purchase Agreement (a form of which has been filed as an exhibit to the
Registration Statement), and duly paid for by the purchasers thereof,
the Notes will have been validly issued and will constitute the valid
and binding obligations of the Company enforceable against the Company
in accordance with their terms, subject in each case to (i) the effect
of bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent transfer and other similar laws relating to or affecting the
rights of creditors and (ii) general principles of equity (including,
without limitation, concepts of materiality, reasonableness, good
performance, injunctive relief and other equitable remedies),
regardless of whether considered in a proceeding at law or in equity.
We express no opinion as to the validity of Section 514 of the
Indenture or as to the effect of any laws not in effect on the date
hereof. We have assumed that the interest rate to be selected for the
Notes will be within the legal limits imposed on the Notes under
applicable law.
We are not members of the Bar of any jurisdiction other than
the State of New York and, with your consent, we express no opinion as
to the law of any jurisdiction other than the laws of the State of
New York and the General Corporation Law of the State of Delaware.
We consent to the use of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm under
the caption "Legal Matters" in the prospectus that is a part of
the Registration Statement. In giving such consent, we do not
hereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act or the General Rules
and Regulations promulgated thereunder.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
<PAGE> 1
EXHIBIT 12
BORG WARNER AUTOMOTIVE, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
($ IN MILLIONS)
<TABLE>
<CAPTION>
FIXED CHARGES
EARNINGS (INTEREST EXPENSE
(EARNINGS BEFORE EXCLUDING THE
CUMULATIVE EFFECT OF BENEFIT OF
ACCOUNTING CHANGE CAPITALIZED INTEREST
INCREASED BY FIXED CHARGES, AND INCLUDING ONE-THIRD
CAPITALIZED INTEREST OF RENTAL EXPENSE --
AMORTIZATION EXPENSE APPROXIMATE PORTION RATIO OF EARNINGS
AND INCOME TAXES) REPRESENTING INTEREST) TO FIXED CHARGES
--------------------------- ----------------------- -----------------
<S> <C> <C> <C>
1993.......................... $ 77.7 $19.9 3.9
1994.......................... $ 124.0 $15.6 7.9
1995.......................... $ 130.8 $18.6 7.0
Six Months:
1995.......................... $ 72.8 $ 9.2 7.9
1996.......................... $ 62.7 $ 9.0 7.0
</TABLE>
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Borg-Warner Automotive, Inc. on Form S-3 of our report dated January 31, 1996
incorporated by reference in the Annual Report on Form 10-K of Borg-Warner
Automotive, Inc. for the year ended December 31, 1995 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of such
Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Chicago, Illinois
October 23, 1996
<PAGE> 1
EXHIBIT 23.3
[LETTERHEAD OF KPMG PEAT MARWICK]
INDEPENDENT AUDITOR'S CONSENT
Dear Sirs:
We consent to incorporation by reference in this Registration Statement on Form
S-3 of Borg-Warner Automotive, Inc. of our report dated April 26, 1996 relating
to the balance sheets of NSK-Warner Kabushiki Kaisha as of March 31, 1996 and
1995, and the related statements of earnings, stockholders' equity, and cash
flows for each of the years in the three-year period ended March 31, 1996
incorporated by reference in the Annual Report on Form 10-K for the year ended
December 31, 1995, and to the reference to us under the heading "Experts" in the
Prospectus, which is part of such Registration Statement.
/s/ KPMG PEAT MARWICK
Tokyo, Japan
October 21, 1996
<PAGE> 1
EXHIBIT 23.4
[LETTERHEAD OF ARTHUR ANDERSEN]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of Borg-Warner Automotive, Inc. on Form
S-3 of our report dated June 14, 1996 on the combined financial statements of
the Coltec Automotive OEM Business Group as of December 31, 1995 and 1994 and
for the two years in the period ended December 31, 1995 included in Borg-Warner
Automotive, Inc.'s current report on Form 8-K dated June 17, 1996 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Arthur Andersen LLP
Detroit, Michigan
October 18, 1996
<PAGE> 1
EXHIBIT 24
----------
POWER OF ATTORNEY
The undersigned directors of Borg-Warner Automotive, Inc. (the
"Corporation"), hereby appoint John F. Fiedler, Laurene H. Horiszny and Gaspare
G. Ruggirello as their true and lawful attorneys-in-fact, with full power for
and on their behalf to execute, in their names and capacities as directors of
the Corporation, and to file with the Securities and Exchange Commission on
behalf of the Corporation under the Securities Act of 1933, as amended, any and
all Registration Statements (including any and all amendments or post-effective
amendments thereto) relating to the senior note offering by the Corporation.
This Power of Attorney automatically ends upon the termination of
Mr. Fiedler's, Ms. Horiszny's and Mr. Ruggirello's service with
the Corporation.
In witness whereof, the undersigned have executed this Power of Attorney on this
23rd day of October, 1996.
/s/ John F. Fiedler /s/ Donald C. Trauscht
- --------------------------- ---------------------------
John F. Fiedler Donald C. Trauscht
/s/ Alexis P. Michas /s/ Albert J. Fitzgibbons, III
- --------------------------- ---------------------------
Alexis P. Michas Albert J. Fitzgibbons, III
/s/ Matthias B. Bowman /s/ Paul E. Glaske
- --------------------------- ---------------------------
Matthias B. Bowman Paul E. Glaske
/s/ Ivan W. Gorr /s/ James J. Kerley
- --------------------------- ---------------------------
Ivan W. Gorr James J. Kerley
<PAGE> 2
POWER OF ATTORNEY
The undersigned officer of Borg-Warner Automotive, Inc. (the
"Corporation"), hereby appoints John F. Fiedler, Laurene H. Horiszny and Gaspare
G. Ruggirello as his true and lawful attorneys-in-fact, with full power for and
on his behalf to execute, in his name and capacity as an officer of the
Corporation, and to file with the Securities and Exchange Commission on behalf
of the Corporation under the Securities Act of 1933, as amended, any and all
Registration Statements (including any and all amendments or post-effective
amendments thereto) relating to the senior note offering by the Corporation.
This Power of Attorney automatically ends upon the termination of
Mr. Fiedler's, Ms. Horiszny's and Mr. Ruggirello's service with
the Corporation.
In witness whereof, the undersigned has executed this Power of Attorney on this
23rd day of October, 1996.
/s/ Robin J. Adams
- ----------------------------
Robin J. Adams
Vice President and Treasurer
<PAGE> 3
POWER OF ATTORNEY
The undersigned officer of Borg-Warner Automotive, Inc. (the
"Corporation"), hereby appoints John F. Fiedler, Laurene H. Horiszny and Gaspare
G. Ruggirello as his true and lawful attorneys-in-fact, with full power for and
on his behalf to execute, in his name and capacity as an officer of the
Corporation, and to file with the Securities and Exchange Commission on behalf
of the Corporation under the Securities Act of 1933, as amended, any and all
Registration Statements (including any and all amendments or post-effective
amendments thereto) relating to the senior note offering by the Corporation.
This Power of Attorney automatically ends upon the termination of
Mr. Fiedler's, Ms. Horiszny's and Mr. Ruggirello's service with
the Corporation.
In witness whereof, the undersigned has executed this Power of Attorney on this
23rd day of October, 1996.
/s/ William C. Cline
- ----------------------------------
William C. Cline
Vice President and Controller
<PAGE> 1
EXHIBIT 25
----------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
---
--------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
--------------------
BORG-WARNER AUTOMOTIVE, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3404508
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
200 SOUTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60604
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
DEBT SECURITIES
(TITLE OF INDENTURE SECURITIES)
<PAGE> 2
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
--------------------
INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of Currency, Washington, D.C., Federal
Deposit Insurance Corporation, Washington, D.C., The
Board of Governors of the Federal Reserve System,
Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST
POWERS.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR
-----------------------------
IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A
-----------------
PART OF THIS STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the trustee
now in effect.*
2. A copy of the certificates of authority of the
trustee to commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section
321(b) of the Act.
2
<PAGE> 3
7. A copy of the latest report of condition of the
trustee published pursuant to law or the requirements
of its supervising or examining
authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, The First National Bank of Chicago, a
national banking association organized and existing under the laws
of the United States of America, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 18th day of October, 1996.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY STEVEN M. WAGNER
------------------
STEVEN M. WAGNER
VICE PRESIDENT
* EXHIBIT 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 12 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
ITT CORPORATION, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER
15, 1996 (REGISTRATION NO. 333-07221).
3
<PAGE> 4
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
October 18, 1996
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Borg-Warner
Automotive, Inc. and The First National Bank of Chicago, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ STEVEN M. WAGNER
-------------------------------------------
STEVEN M. WAGNER
VICE PRESIDENT
4
<PAGE> 5
EXHIBIT 7
<TABLE>
<S> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1996
All schedules are to be reported in thousands of dollars. Unless
otherwise indicated, report the amount outstanding of the last business day of
the quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400
DOLLAR AMOUNT IN ---------
<- THOUSANDS RCFD BIL MIL THOU
- ------ ---------------- --- --------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A):
a. Noninterest-bearing balances and currency and coin(1) ............. 0081 3,572,641 1.a.
b. Interest-bearing balances(2)....................................... 0071 6,958,367 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A).......... 1754 0
2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)....... 1773 1,448,974 2.b.
3. Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and its Edge and Agreement
subsidiaries, and in IBFs:
a. Federal Funds sold................................................. 0276 5,020,878 3.a.
b. Securities purchased under agreements to resell.................... 0277 918,688 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C).................................................................. RCFD 2122 19,125,160 4.a.
b. LESS: Allowance for loan and lease losses........................... RCFD 3123 379,232 4.b.
c. LESS: Allocated transfer risk reserve.............................. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c) .................................. 2125 18,745,928 4.d.
5. Assets held in trading accounts........................................ 3545 9,599,172 5.
6. Premises and fixed assets (including capitalized leases)............... 2145 623,289 6.
7. Other real estate owned (from Schedule RC-M)........................... 2150 8,927 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)......................................... 2130 57,280 8.
9. Customers' liability to this bank on acceptances outstanding........... 2155 632,259 9.
10. Intangible assets (from Schedule RC-M)................................. 2143 156,715 10.
11. Other assets (from Schedule RC-F)...................................... 2160 1,592,088 11.
12. Total assets (sum of items 1 through 11) .............................. 2170 49,335,206 12.
</TABLE>
- -----------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE> 6
<TABLE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
SCHEDULE RC-CONTINUED DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
---------------- --------------
<S> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)............................ RCON 2200 16,878,870 13.a.
(1) Noninterest-bearing(1)............................. RCON 6631 7,855,880
13.a.(1)
(2) Interest-bearing ..................................... RCON 6636 9,022,990 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II) ........................ RCFN 2200 12,677,057 13.b.
(1) Noninterest bearing ................................... RCFN 6631 766,936 13.b.(1)
(2) Interest-bearing ...................................... RCFN 6636 11,910,121 13.b.(2)
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of
its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased ................................. RCFD 0278 1,318,968 14.a.
b. Securities sold under agreements to repurchase .......... RCFD 0279 1,197,589 14.b.
15. a. Demand notes issued to the U.S. Treasury ................ RCON 2840 104,546 15.a.
b. Trading Liabilities...................................... RCFD 3548 6,431,784 15.b.
16. Other borrowed money:
a. With original maturity of one year or less............... RCFD 2332 4,437,636 16.a.
b. With original maturity of more than one year............ RCFD 2333 75,308 16.b.
17. Mortgage indebtedness and obligations under capitalized
leases ..................................................... RCFD 2910 283,041 17.
18. Bank's liability on acceptance executed and outstanding .... RCFD 2920 632,259 18.
19. Subordinated notes and debentures........................... RCFD 3200 1,275,000 19.
20. Other liabilities (from Schedule RC-G)...................... RCFD 2930 892,947 20.
21. Total liabilities (sum of items 13 through 20).............. RCFD 2948 46,205,005 21.
22. Limited-Life preferred stock and related surplus ........... RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus .............. RCFD 3838 0 23.
24. Common stock................................................ RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock) .. RCFD 3839 2,349,164 25.
26. a. Undivided profits and capital reserves.................. RCFD 3632 584,878
26. a. b. Net unrealized holding gains (losses) on available-for-sale
securities .............................................. RCFD 8434 (3,951) 26.b.
27. Cumulative foreign currency translation adjustments ........ RCFD 3284 (748) 27.
28. Total equity capital (sum of items 23 through 27) .......... RCFD 3210 3,130,201 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28) ..................... RCFD 3300 49,335,206 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the most
comprehensive level of auditing work performed for the bank by independent external
Number
-------------
auditors as of any date during 1995 . . . . . . . . . . . . .. . . ....RCFD 6724 . ....N/A
M.1. --------------
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation
3 = Directors' examination of the bank conducted in work)
accordance with generally accepted auditing standards 8 = No external audit work
by a certified public accounting firm (may be required by
state chartering authority)
- ------------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
</TABLE>
6
