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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 20, 1997 (September 30, 1997)
Allied Holdings, Inc.
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(Exact name of registrant as specified in its charter)
Georgia 0-22276 58-0360550
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
160 Clairemont Avenue, Suite 510, Decatur, Georgia 30030
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(Address of principal executive offices) (Zip Code)
404/370-1100
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(Registrant's telephone number, including area code)
Not applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On September 30, 1997 Allied Holdings, Inc. ("Registrant")
issued $150.0 million of it's 8 5/8% Senior Notes due 2007 ("Notes").
Concurrently with the issuance of the Notes, the Registrant entered
into a revolving credit facility ("Revolving Credit Facility") which
provides for $230.0 million of total availability. The Registrant
also has outstanding $40.0 million of its 12% Senior Subordinated
Notes due February 1, 2003, which were issued in February, 1996 (the
"Senior Subordinated Notes"). A description of the Notes, the
Revolving Credit Facility, and the Senior Subordinated Notes is set
forth below:
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DESCRIPTION OF NOTES
GENERAL
The Notes have been issued pursuant to the Indenture among the Company, the
Guarantors and The First National Bank of Chicago, as trustee (the "Trustee").
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (the
"Trust Indenture Act"). The Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and the Trust Indenture Act for a statement
thereof. The following summary of the material provisions of the Indenture does
not purport to be complete and is qualified in its entirety by reference to the
Indenture, including the definitions therein of certain terms used below.
Copies of the form of Indenture and Registration Rights Agreement have been
filed with the Commission. The definitions of certain terms used in the
following summary are set forth below under "Certain Definitions." For
purposes of this "Description of Notes," the term "Company" refers only to
Allied Holdings, Inc. and not to any of its Subsidiaries.
The Notes are general unsecured obligations of the Company, ranking
pari passu in right of payment with all present and future senior indebtedness
of the Company, and senior in right of payment to all present and future
subordinated indebtedness of the Company. However, the Notes are effectively
junior to all present and future secured indebtedness of the Company to the
extent of the assets securing such indebtedness. As of June 30, 1997, after
giving pro forma effect to the Offering and the Acquisition, the Notes would
have been effectively junior to $41.8 million of secured indebtedness, including
borrowings under the New Credit Facility. In addition, the Company would have
had $126.3 million of additional secured borrowings available under the New
Credit Facility. The Indenture will permit the Company to incur additional
indebtedness in the future, subject to certain restrictions. See "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock."
As of the Closing Date, all of the Company's Subsidiaries will be
Restricted Subsidiaries, other than Haul Insurance Limited, which will be an
Unrestricted Subsidiary. Under certain circumstances, the Company will be able
to designate other current or future Subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants set forth in the Indenture. The Company's payment obligations under
the Notes will be guaranteed by all of the Company's present and future Domestic
Restricted Subsidiaries and existing Canadian Subsidiaries (other than AH
Industries, Inc.). See "Subsidiary Guarantees."
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $150.0 million
and mature on October 1, 2007. Interest on the Notes accrue at the rate of 8
5/8% per annum and are payable semi-annually in arrears on April 1 and October
1 of each year, commencing on April 1, 1998, to Holders of record on the
immediately preceding March 15 and September 15. Interest on the Notes accrues
from the most recent date to which interest has been paid or, if no interest
has been paid, from the date of original issuance. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months. Principal of and
premium, interest and Liquidated Damages, if any, on the Notes will be payable
at the office or agency of the Company maintained for such purpose or, at the
option of the Company, payment of interest and Liquidated Damages may be made
by check mailed to the Holders of the Notes at their respective addresses set
forth in the register of Holders of Notes; provided that all payments of
principal, premium, interest and Liquidated Damages with respect to Notes the
Holders of which have given wire transfer instructions to the Company will be
required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. Until otherwise designated by the
Company, the Company's office or agency will be the office of the Trustee
maintained for such purpose. The Notes will be issued in denominations of
$1,000 and integral multiples thereof.
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SUBSIDIARY GUARANTEES
The Company's payment obligations under the Notes are guaranteed by all
of the Company's Domestic Restricted Subsidiaries and Canadian Subsidiaries
(other than AH Industries, Inc.) existing on the Closing Date. Certain of such
Canadian Subsidiaries will indirectly guarantee the Company's payment
obligations under the Notes by guaranteeing their parent companies' obligations
under direct Guarantees. The Indenture will provide that (i) if the Company or
any of its Restricted Subsidiaries shall acquire or create another Domestic
Restricted Subsidiary after the Closing Date, or any Unrestricted Subsidiary
shall cease to be an Unrestricted Subsidiary and shall become a Domestic
Restricted Subsidiary, then such Subsidiary shall execute a Guarantee of the
notes and deliver an opinion of counsel, in accordance with the terms of the
Indenture and (ii) in the event of a sale or other disposition of all of the
assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all of the capital stock of any Guarantor, or in the
case the Company designates a Guarantor to be an Unrestricted Subsidiary in
accordance with the Indenture, then such Guarantor will be released and relieved
of any obligations under its Guarantee; provided that the Net Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions of the Indenture. See "-- Redemption or Repurchase at Option of
Holders -- Asset Sales."
OPTIONAL REDEMPTION
Prior to October 1, 2002, the Notes will be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the Make-Whole Price, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date. On and after October 1, 2002, the Notes will be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on October 1 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2002........................................................ 104.3125%
2003........................................................ 102.8750
2004........................................................ 101.4375
2005 and thereafter......................................... 100.0000%
</TABLE>
Notwithstanding the foregoing, at any time on or prior to October 1, 2000,
the Company may redeem up to 35% of the Notes at a redemption price equal to
108.625% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date, with the net
proceeds of one or more sales of Equity Interests (other than Disqualified
Stock) of the Company, provided that (i) at least $97.5 million of Notes remain
outstanding immediately following each such redemption and (ii) such redemption
shall occur within 90 days of the date of the consummation of such sale.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note. Notes called
for redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on Notes or portions of them called
for redemption.
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MANDATORY REDEMPTION
Except as set forth below under "-- Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, the Company will be obligated
to make an offer (a "Change of Control Offer") to each Holder of Notes to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Notes at an offer price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of purchase (the "Change of Control Payment"). Within 30
days following a Change of Control, the Company will mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"), pursuant to
the procedures required by the Indenture and described in such notice. The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the Notes as
a result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Notes to require that the Company
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction. The Company will not be required to make a Change of
Control Offer following a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in the Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
The occurrence of a Change of Control could constitute a default under the
New Credit Facility or under future agreements governing indebtedness of the
Company, which could permit the lenders under the New Credit Facility or the
holders of such indebtedness, as the case may be, to declare all such
indebtedness to be due and payable. There can be no assurance that, upon a
Change of Control, the Company would have sufficient resources to repurchase all
Notes tendered in a Change of Control Offer and to repay all indebtedness that
may be declared due and payable. The Company's failure to purchase tendered
Notes following a Change of Control would constitute an Event of Default under
the Indenture which could, in turn, constitute as default under the New Credit
Facility or under future agreements governing indebtedness of the Company.
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Asset Sales
The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash or Cash Equivalents; provided that the amount of (a) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet) of the Company or such Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any Guarantee thereof) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the Company
or such Restricted Subsidiary from further liability and (b) any securities,
notes or other obligations received by the Company or such Restricted Subsidiary
from such transferee that are immediately converted by the Company or such
Restricted Subsidiary into cash (to the extent of the cash received) shall be
deemed to be cash for purposes of this provision.
Within 365 days of the receipt of any Net Proceeds from an Asset Sale, the
Company, at its option, may apply such Net Proceeds to the acquisition of a
controlling interest in another business, the making of a capital expenditure or
the acquisition of other assets (other than assets that would be classified as
current assets in accordance with GAAP), in each case, in the same or a similar
line of business as the Company and its Restricted Subsidiaries, or in any
business reasonably complementary, related or incidental thereto, as determined
in good faith by the Board of Directors. Pending the final application of any
such Net Proceeds, the Company may temporarily reduce borrowings under the New
Credit Facility or otherwise invest such Net Proceeds in any manner that is not
prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company will be required to make an offer to
all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of purchase, in accordance with the procedures set forth in the Indenture. To
the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of an Asset Sale Offer, the amount of Excess Proceeds shall be reset
at zero.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that neither the Company nor any of its
Restricted Subsidiaries will, directly or indirectly, (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company) or to any direct or indirect
holders of the Company's Equity Interests in their capacity as such (other than
dividends or distributions (a) payable in Equity Interests (other than
Disqualified Stock) of the Company or (b) to the Company or any Guarantor); (ii)
purchase, redeem or otherwise acquire or retire for value (including without
limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of the Company or any direct or indirect parent of
the Company (other than any such Equity Interests owned by the Company or any
Guarantor); (iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness of the Company
or any Guarantor that is subordinated to the Notes or any Guarantee thereof,
except a payment of interest or principal at Stated Maturity; or (iv) make any
Restricted Investment (all such
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payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Consolidated Interest Coverage Ratio test set forth in the first
paragraph of the covenant described below under caption "Incurrence of
Indebtedness and Issuance of Preferred Stock;" and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Closing Date (excluding Restricted Payments
permitted by clause (ii) through (vii) of the next succeeding paragraph),
is less than the sum of (1) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) from October 1,
1997 to the end of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit), plus (2) 100% of the aggregate net
proceeds received by the Company from the issue or sale since the Closing
Date of Equity Interests of the Company (other than Disqualified Stock),
plus (3) the amount by which Indebtedness of the Company and its Restricted
Subsidiaries is reduced on the balance sheet of the Company upon the
conversion or exchange (other than by a Restricted Subsidiary of the
Company) subsequent to the Closing Date of any such Indebtedness for Equity
Interests (other than Disqualified Stock) of the Company, plus (4) to the
extent that any Restricted Investment that was made after the Closing Date
is sold for cash or otherwise liquidated or repaid for cash, the lesser of
(A) the cash return of capital with respect to such Restricted Investment
(less the cost of disposition, if any) and (B) the initial amount of such
Restricted Investment, plus (5) in the event that any Unrestricted
Subsidiary is redesignated as a Restricted Subsidiary, the lesser of (A) an
amount equal to the fair value (as determined by the Board of Directors) of
the Company's Investments in such Restricted Subsidiary and (B) the amount
of Restricted Investments previously made by the Company and its Restricted
Subsidiaries in such Unrestricted Subsidiary.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at the date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
or any Restricted Subsidiary in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Subsidiary of the Company)
of, other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c)(2) of the preceding paragraph; (iii) the defeasance,
redemption, repurchase or other acquisition of subordinated Indebtedness with
the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;
(iv) the repurchase, redemption or other acquisition or retirement for value of
any Equity Interests of the Company or any Restricted Subsidiary of the Company
held by any member of the Company's (or any of its Restricted Subsidiaries')
management or board of directors pursuant to any management equity subscription
agreement, stock option agreement or other similar agreement; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $500,000 in any twelve-month period and no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction; (v) the repurchase or other acquisition of subordinated
Indebtedness in anticipation of satisfying a sinking fund or principal payment
obligation, in each case due within one year of the date of repurchase or other
acquisition, provided that the date such sinking fund or principal payment
obligation becomes due is prior to the final maturity date of the Notes; (vi)
repurchases of Equity Interests that may be deemed to occur upon the exercise of
options, warrants or other rights to acquire Capital Stock of the Company to the
extent that such Equity Interests represent a portion of the exercise price
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of such options, warrants or other rights; and (vii) additional Restricted
Payments in an amount not to exceed $5.0 million.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined in good
faith by the Board of Directors whose resolution with respect thereto shall be
delivered to the Trustee. Not later than 30 days following the end of any fiscal
quarter in which any Restricted Payments were made, the Company shall deliver to
the Trustee an Officers' Certificate stating that such Restricted Payments were
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greatest of (i) the net book value of such Investments at the time of such
designation, (ii) the fair market value of such Investments at the time of such
designation and (iii) the original fair market value of such Investments at the
time they were made. Such designation will only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
Any such designation by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions. If, at any time, any
Unrestricted Subsidiary would fail to meet the definition of an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date under
the covenant described under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock," the Company shall be in default of such covenant).
The Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
the covenant described under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company's Restricted Subsidiaries will not issue
any shares of preferred stock (other than to the Company or a Wholly Owned
Restricted Subsidiary of the Company); provided, however, that the Company and
the Guarantors may incur Indebtedness (including Acquired Debt) if the
Consolidated Interest Coverage Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred would have been at least 2.0 to 1, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred at the beginning of such four-quarter
period.
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The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following (collectively, "Permitted Debt"):
(i) the incurrence by the Company and the Guarantors of Indebtedness
under (a) the New Credit Facility and (b) Capital Lease Obligations and
purchase money financing in respect of property, plant and equipment,
provided that the aggregate amount of Indebtedness incurred pursuant to
this clause (i) shall not exceed at any time outstanding the greater of (1)
$230.0 million and (2) the sum of (A) 80% of the consolidated accounts
receivable of the Company as shown on the Company's most recent balance
sheet, plus (B) 60% of the consolidated inventory of the Company as shown
on the Company's most recent balance sheet, plus (C) 50% of the
consolidated property, plant and equipment, net of depreciation, of the
Company as shown on the Company's most recent balance sheet;
(ii) the incurrence by the Company and the Guarantors of Indebtedness
represented by the Notes, the Guarantees thereof and the Indenture;
(iii) the incurrence by the Company and its Restricted Subsidiaries of
the Existing Indebtedness;
(iv) the incurrence by the Company and the Guarantors of additional
Indebtedness in an aggregate amount not to exceed $10.0 million at any time
outstanding;
(v) the incurrence by the Company and the Guarantors of Indebtedness
in connection with the acquisition of assets or a new Restricted
Subsidiary; provided that such Indebtedness was incurred by the prior owner
of such assets or such Restricted Subsidiary prior to such acquisition by
the Company and the Guarantors and was not incurred in connection with, or
in contemplation of, such acquisition by the Company and the Guarantors;
and provided further that the aggregate amount of Indebtedness incurred
pursuant to this clause (vi) does not exceed $5.0 million; at any time
outstanding;
(vi) the incurrence by the Company and its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness that was
permitted to be incurred by the first paragraph, or by clauses (ii) through
(ix) of the second paragraph of the covenant;
(vii) the incurrence of Indebtedness between or among the Company and
its Restricted Subsidiaries; provided, however, that any subsequent
issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Restricted
Subsidiary, and any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Restricted Subsidiary, shall be
deemed, in each case, to constitute an incurrence of such Indebtedness by
the Company or such Restricted Subsidiary, as the case may be;
(viii) the incurrence by the Company and its Restricted Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or
hedging (a) interest rate risk with respect to any Indebtedness that is
permitted by the terms of this Indenture to be outstanding or (b) foreign
currency risk;
(ix) the incurrence of Indebtedness by a Restricted Subsidiary of the
Company that is not a Guarantor in an aggregate amount not to exceed the
sum of (a) 80% of the accounts receivable of such Subsidiary as shown on
such Subsidiary's most recent balance sheet, plus (b) 60% of the inventory
of such Subsidiary as shown on such Subsidiary's most recent balance sheet,
plus (c) 50% of the property, plant and equipment, net of depreciation, of
such Subsidiary as shown on such Subsidiary's most recent balance sheet;
(x) the guarantee by the Company or any Guarantor of Indebtedness that
was permitted to be incurred by another provision of this covenant; and
(xi) Indebtedness of a Receivables Subsidiary that is not recourse to
the Company or any of its Restricted Subsidiaries (other than Standard
Securitization Undertakings) incurred in connection with a Qualified
Receivables Transaction.
For purposes of determining the amount of any Indebtedness of any Person
under this covenant, (a) there shall be no double counting of direct
obligations, Guarantees and reimbursement obligations for
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letter of credit; (b) the principal amount of any Indebtedness of such
Person arising by reason of such Person having granted or assumed a Lien on its
property to secure Indebtedness of another Person shall be the lower of the fair
market value of such property and the principal amount of such Indebtedness
outstanding (or committed to be advanced) at the time of determination; (c) the
amount of any Indebtedness of such Person arising by reason of such Person
having Guaranteed Indebtedness of another Person where the amount of such
Guarantee is limited to an amount less than the principal amount of the
Indebtedness so Guaranteed shall be such amount as so limited; (d) Indebtedness
shall not include a non-recourse pledge by the Company or any of its Restricted
Subsidiaries of Investments in any Person that is not a Restricted Subsidiary of
the Company to secure the Indebtedness of such Person; and (e) Indebtedness of
the Company and its Restricted Subsidiaries shall not include Indebtedness of a
Restricted Subsidiary whose assets consist solely of partnership or similar
interests in another person that is not a Restricted Subsidiary of the Company,
where the obligations with respect to such Indebtedness arise as a matter of law
from the obligations of such other Person.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (x) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant and such item of Indebtedness will be
treated as having been incurred pursuant to only one of such clauses or pursuant
to the first paragraph hereof. Accrual of interest, the accretion of accredit
value and the payment of interest in the form of additional Indebtedness will
not be deemed to be an incurrence of Indebtedness for purposes of this covenant.
Liens
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned
or hereafter acquired, or any income or profits therefrom or assign or convey
any right to receive income therefrom, except Permitted Liens, unless the Notes
are equally and ratably secured with the obligations so secured until such time
as such obligations are no longer secured by a Lien.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that neither the Company nor any of its
Restricted Subsidiaries will, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Company or any
of its Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on the Closing Date, (b) the New Credit Facility as in
effect as of the Closing Date, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the New Credit Facility as in effect on the Closing Date, (c)
the Notes, any Guarantee thereof and the Indenture, (d) applicable law, (e) any
instrument governing Indebtedness or Equity Interests of a Person acquired by
the Company or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the Equity Interests, properties
or assets of any Person, other than the Person, or the Equity Interests,
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture to
be incurred, (f) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
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practices, (g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (h) customary restrictions in asset or
stock sale agreements limiting transfer of such assets or stock pending the
closing of such sale, (i) customary non-assignment provisions in contracts
entered into in the ordinary course of business, (j) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive than
those contained in the agreements governing the Indebtedness being refinanced,
or (k) any Purchase Money Note, or other Indebtedness or contractual
requirements incurred with respect to a Qualified Receivables Transaction
relating to a Receivables Subsidiary.
Merger, Consolidation, or Sale of Assets
The Indenture provides that neither the Company nor any Guarantor will
consolidate or merge with or into (whether or not the Company or such Guarantor,
as the case may be, is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another Person unless (i) the
Company or such Guarantor, as the case may be, is the surviving corporation or
the Person formed by or surviving any such consolidation or merger (if other
than the Company or such Guarantor) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state thereof or
the District of Columbia; (ii) the Person formed by or surviving any such
consolidation or merger (if other than the Company or a Guarantor) or the Person
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company or such
Guarantor, as the case may be, under the Notes or such Guarantor's Guarantee
thereof and the Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; (iii) immediately after such transaction
no Default or Event of Default exists; and (iv) except in the case of a merger
of the Company or such Guarantor with or into another Guarantor or a Wholly
Owned Restricted Subsidiary of the Company, or a merger of a Guarantor with or
into another Person in connection with a Permitted Investment in such Person,
the Company or the Person formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (A) will have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction and (B) will, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio
test set forth in the first paragraph of the covenant described above under the
caption "Incurrence of Indebtedness and Issuance of Preferred Stock."
Transactions with Affiliates
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or such Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Restricted Subsidiary with
an unrelated Person and (ii) the Company delivers to the Trustee (a) with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $3.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) except in the case of
the provision of services in the ordinary course of business to, or the receipt
of services in the ordinary course of business from, any Person who is an
Affiliate of the Company solely by reason of an Investment in such Person by the
Company or its Subsidiaries, with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$5.0
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million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The foregoing provisions will not prohibit (i) any employment agreement or
other compensation plan or arrangement in the ordinary course of business and
either consistent with past practice or approved by a majority of the
disinterested members of the Board of Directors; (ii) transactions between or
among the Company and/or its Restricted Subsidiaries; (iii) any Permitted
Investment or any Restricted Payment that is permitted by the provisions of the
Indenture described above under the caption "Restricted Payments;" (iv) sales of
Equity Interests (other than Disqualified Stock) to Affiliates of the Company;
(v) transactions with Haul Insurance Limited, provided that no less than once
each calendar year, the Company delivers to the Trustee a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
transactions are in the ordinary course of business and consistent with past
practices and prudent insurance underwriting standards; (vi) transactions in
existence on the Closing Date, and any modifications thereof or extensions
thereto the terms of which are not materially more adverse to the Company than
those in existence on the Closing Date, including, in each case, all future
payments pursuant thereto; and (vii) sales of accounts receivable and other
related assets customarily transferred in an asset securitization transaction
involving accounts receivable to a Receivables Subsidiary in a Qualified
Receivables Transaction.
Payments for Consent
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Indenture or the Notes unless such consideration
is offered to be paid or is paid to all Holders of the Notes that consent,
waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
will furnish to the Holders of Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and results of
operations of the Company and its consolidated Subsidiaries (showing in
reasonable detail, either on the face of the financial statements or in the
footnotes thereto and in Management's Discussion and Analysis of Financial
Condition and Results of Operations, the financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial information and results of operations of the Unrestricted Subsidiaries
of the Company) and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants and (ii) all current
reports that would be required to be filed with the Commission on Form 8-K if
the Company were required to file such reports. In addition, whether or not
required by the rules and regulations of the Commission, the Company will file a
copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, the Company and its Restricted Subsidiaries will agree
that, for so long as any Notes remain outstanding, they will furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event
of Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes; (ii) default in payment
when due of the principal of or premium, if any, on the Notes; (iii) failure by
the Company or any of its Restricted Subsidiaries to comply with the provisions
described under the caption "Change of Control;" (iv) failure by the Company or
any of its Restricted Subsidiaries to comply with the
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provisions described under the captions "Asset Sales," "Restricted Payments,"
"Incurrence of Indebtedness and Issuance of Preferred Stock" or "Merger,
Consolidation or Sale of Assets," which default continues for 60 days; (v)
failure by the Company or any of its Restricted Subsidiaries for 60 days after
written notice by the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Notes to comply with any of its other agreements in the
Indenture or the Notes; (vi) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now exists or
is created after the Closing Date, which default (a) is caused by a failure to
pay principal of or premium, if any, or interest on such Indebtedness prior to
the expiration of the grace period provided in such Indebtedness on the date of
such default (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5.0 million or more; (vii) failure
by the Company or any of its Restricted Subsidiaries to pay final judgments
aggregating in excess of $5.0 million and either (a) any creditor commences
enforcement proceedings upon any such judgment or (b) such judgments are not
paid, discharged or stayed for a period of 60 days; (viii) except as permitted
by the Indenture, any Guarantee of the Notes shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect, or any Guarantor, or any Person acting on behalf of any
Guarantor, shall deny or disaffirm its obligations under its Guarantee of the
Notes; and (ix) certain events of bankruptcy or insolvency with respect to the
Company or any of its Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATORS AND
STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or such Guarantor under the Notes, any Guarantee thereof, the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes. Such waiver may not be effective to waive
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liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of and premium, interest and
Liquidated Damages, if any, on the Notes when such payments are due from the
trust referred to below, (ii) the Company's obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights, powers,
trusts, duties and immunities of the Trustee, and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, 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 premium, interest and Liquidated Damages, if any, on
the outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, and the Company must specify whether the Notes are
being defeased to maturity or to a particular redemption date; (ii) in the case
of Legal Defeasance, the Company shall have delivered to the Trustee an opinion
of counsel in the United States reasonably acceptable to the Trustee confirming
that (a) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (b) since the Closing Date, there has been
a change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of counsel shall confirm that, the Holders
of the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred; (iii) in
the case of Covenant Defeasance, the Company shall have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the 91st day after the date
of deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under any material agreement
or instrument (other than the Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and (viii) 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 the Legal Defeasance or the
Covenant Defeasance have been complied with.
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TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture,
the Notes and the Guarantees thereof may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Notes), and any
existing default or compliance with any provision of the Indenture, the Notes or
the Guarantees thereof may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver; (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
"Repurchase at the Option of Holders"); (iii) reduce the rate of or change the
time for payment of interest on any Note; (iv) waive a Default or Event of
Default in the payment of principal of or premium, interest or Liquidated
Damages, if any, on the Notes (except a rescission of acceleration of the Notes
by the Holders of at least a majority in aggregate principal amount of the Notes
and a waiver of the payment default that resulted from such acceleration); (v)
make any Note payable in money other than that stated in the Notes; (vi) make
any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of
or premium, interest or Liquidated Damages, if any, on the Notes; (vii) waive a
redemption payment with respect to any Note (other than a payment required by
one of the covenants described above under the caption "Repurchase at the Option
of Holders"); (ix) release any Guarantor from its Guarantee of the Notes; or
(ix) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture, the Notes or
any Guarantee thereof to cure any ambiguity, defect or inconsistency, to provide
for uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's or any Guarantor's obligations to
Holders of Notes in the case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of Notes or
that does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee,
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subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any Holder of Notes, unless such Holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this Offering Memorandum may obtain a copy of the
Indenture and Registration Rights Agreement without charge by writing to Allied
Holdings, Inc., 160 Clairemont Ave., Decatur, Georgia 30030, attention Daniel H.
Popky.
BOOK-ENTRY, DELIVERY AND FORM
The Notes were offered and sold (a) to "qualified institutional buyers"
(as defined in Rule 144A under the Securities Act) in reliance on the exemption
from the registration requirements of the Securities Act provided by Rule 144A
and (b) outside the United States in reliance on Regulation S under the
Securities Act will, in each case, be represented by a separate note in
registered, global form without interest coupons (respectively, the "Rule 144A
Global Note" and the "Regulation S Global Note"). Following the Closing Date,
Notes re-sold to institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) will be represented by a
separate note in registered, global form without interest coupons (the "IAI
Global Note and, collectively with the Rule 144A Global Note and the Regulation
S Global Note, the "Global Notes"). On the Closing Date, the Global Notes will
be deposited with, or on behalf of, the Depositary and will be registered in the
name of Cede & Co., as nominee of the Depositary (such nominee being referred to
herein as the "Global Note Holder"), in each case for credit to an account of a
direct or indirect participant as described below.
Notes that are issued as described below under "Certificated Securities"
will be issued in the form of registered definitive certificates (the
"Certificated Securities"). Such Certificated Securities may, unless the Global
Notes have previously been exchanged for Certificated Securities, be exchanged
for an interest in a Global Note representing the principal amount of Notes
being transferred.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the Initial
Purchaser), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depositary's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only through the Depositary's
Participants or the Depositary's Indirect Participants.
The Company expects that, pursuant to procedures established by the
Depositary, (i) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants designated by the Initial Purchaser with portions of
the principal amount of the Global Notes and (ii) ownership of the Notes
evidenced by the Global Notes will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by the Depositary
(with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants.
Prospective purchasers are advised that the laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer Notes evidenced by the Global
Notes will be limited to such extent. For certain other restrictions on the
transferability of the Notes, see "Notice to Investors."
The Regulation S Global Note initially will be deposited with or on behalf
of the Depositary and will be registered in the name of the Global Note Holder
for credit to subscribers accounts at Euroclear and Cedel
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Bank. Euroclear and Cedel Bank are each Participants in the Depositary's system.
Beneficial interests in the Regulation S Global Note may be held only through
Euroclear and Cedel until the earlier to occur of (i) the expiration of a 40-day
restricted period, as defined under Regulation S (the "Restricted Period"), and
(ii) the exchange of a beneficial interest in the Regulation S Global Note for a
beneficial interest in a global note representing Exchange Notes upon
consummation of the Exchange Offer. After the occurrence of one of the
conditions in the preceding sentence, investors may hold beneficial interests in
the Regulation S Global Note through organizations other than Euroclear and
Cedel Bank that are Participants in the Depositary's system. Euroclear and Cedel
Bank will hold interests in the Regulation S Global Note on behalf of their
Participants through customers' securities accounts in their respective names on
the books of their respective depositaries, which are Morgan Guaranty Trust
Company of New York, Brussels office, as operator of Euroclear, and Citibank,
N.A., as operator of Cedel Bank. In turn, each of Euroclear and Cedel Bank will
hold such interests in the Regulation S Global Note in customers' securities
accounts in its name on the books of the Depositary.
Prior to the Exchange Offer, the Global Notes (and any Notes issued in
exchange therefor) will bear the legend regarding such restrictions set forth
under "Notice to Investors" and will be subject to certain restrictions on
transfer set forth therein.
Beneficial interests in the one Global Note may be transferred to a person
who takes delivery in the form of a beneficial interest in another Global Note
only upon receipt by the Trustee of a written certification (in the form
provided in the Indenture) to the effect that such transfer is being made in
accordance with the Indenture and with the Securities Act and any applicable
securities laws of any state of the United States or any other jurisdiction. Any
beneficial interest in one of the Global Notes that is transferred to a person
who takes delivery in the form of a beneficial interest in another Global Note
will, upon transfer, cease to be a beneficial interest in such Global Note and
become a beneficial interest in the other Global Note and accordingly, will
thereafter be subject to all transfer restrictions, if any, and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such a beneficial interest.
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of any
Notes evidenced by the Global Notes. Beneficial owners of Notes evidenced by the
Global Notes will not be considered the owners or Holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. Neither the
Company nor the Trustee will have any responsibility or liability for any aspect
of the records of the Depositary or for maintaining, supervising or reviewing
any records of the Depositary relating to the Notes.
Payments in respect of the principal of and premium, interest and
Liquidated Damages, if any, on any Notes registered in the name of the Global
Note Holder on the applicable record date will be payable by the Trustee to or
at the direction of the Global Note Holder in its capacity as the registered
Holder under the Indenture. Under the terms of the Indenture, the Company and
the Trustee may treat the persons in whose names Notes, including the Global
Notes, are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of Notes. The Company believes, however, that it is currently the policy of the
Depositary to immediately credit the accounts of the relevant Participants with
such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of the
Depositary. Payments by the Depositary's Participants and the Depositary's
Indirect Participants to the beneficial owners of Notes will be governed by
standing instructions and customary practice and will be the responsibility of
the Depositary's Participants or the Depositary's Indirect Participants.
Additional Information Concerning Euroclear and Cedel Bank
Euroclear and Cedel Bank hold securities for participating organizations
and facilitate the clearance and settlement of securities transactions between
their respective participants through electronic book-entry changes in accounts
of such participants. Euroclear and Cedel Bank provide to their participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities
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and securities lending and borrowing. Euroclear and Cedel Bank interface with
domestic securities markets. Euroclear and Cedel Bank participants are financial
institutions such as underwriters, securities brokers and dealers, banks, trust
companies and certain other organizations. Indirect access to Euroclear and
Cedel Bank is also available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodian relationship with a
Euroclear or Cedel Bank participant, either directly or indirectly.
When beneficial interests are to be transferred from the account of a
Participant (other than Morgan Guaranty Trust Company of New York and Citibank,
N.A., as depositaries for Euroclear and Cedel Bank, respectively) to the account
of a Euroclear participant or a Cedel Bank participant, the purchaser must send
instructions to Euroclear or Cedel Bank through a participant at least one
business day prior to settlement. Euroclear or Cedel Bank, as the case may be,
will instruct Morgan Guaranty Trust Company of New York or Citibank, N.A. to
receive the beneficial interests against payment. Payment will include interest
attributable to the beneficial interest from and including the last payment date
to and excluding the settlement date, on the basis of a calendar year consisting
of twelve 30-day calendar months. For transactions settling on the 31st day of
the month, payment will include interest accrued to and excluding the first day
of the following month. Payment will then be made by Morgan Guaranty Trust
Company of New York or Citibank, N.A., as the case may be, to the Participant's
account against delivery of the beneficial interests. After settlement has been
completed, the beneficial interests will be credited to the respective clearing
systems and by the clearing system, in accordance with its usual procedures, to
the Euroclear participants' or Cedel Bank participants' account. Credit for the
beneficial interests will appear on the next business day (European time) and
the cash debit will be back-valued to, and interest attributable to the
beneficial interests will accrue from, the value date (which would be the
preceding business day when settlement occurs in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Euroclear or
Cedel Bank cash debit will instead be valued as of the actual settlement date.
Euroclear participants and Cedel Bank participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Euroclear or Cedel Bank. Under
this approach, they may take on credit exposure to Euroclear or Cedel Bank until
the beneficial interests are credited to their accounts one day later. Finally,
day traders that use Euroclear or Cedel Bank and that purchase beneficial
interests from Participants for credit to Euroclear participants or Cedel Bank
participants should note that these trades would automatically fall on the sale
side unless affirmative action were taken to avoid these potential problems.
Due to time zone differences in their favor, Euroclear participants and
Cedel Bank participants may employ their customary procedures for transactions
in which beneficial interests are to be transferred by the respective clearing
system, through Morgan Guaranty Trust Company of New York or Citibank, N.A., to
another Participant. The seller must send instructions to Euroclear or Cedel
Bank through a participant at least one business day prior to settlement. In
these cases, Euroclear or Cedel Bank will instruct Morgan Guaranty Trust Company
of New York or Citibank, N.A., as the case may be, to credit the beneficial
interests to the Participant's account against payment. Payment will include
interest attributable to the beneficial interest from and including the last
payment date to and excluding the settlement date on the basis of a calendar
year consisting of twelve 30-day calendar months. For transactions settling on
the 31st day of the month, payment will include interest accrued to and
excluding the first day of the following month. The payment will then be
reflected in the account of the Euroclear participant or Cedel Bank participant
the following business day, and receipt of the cash proceeds in the Euroclear or
Cedel Bank participant's account will be back-valued to the value date (which
would be the preceding business day, when settlement occurs in New York). If the
Euroclear participant or Cedel Bank participant has a line of credit with its
representative clearing system and elects to draw on such line of credit in
anticipation of receipt of the sale proceeds in its account, the back-valuation
may substantially reduce or offset any overdraft charges incurred over that one-
day period. If settlement is not completed on the intended value date (i.e., if
trade fails), receipt of the cash proceeds in the Euroclear or Cedel Bank
participant's account would instead be valued as of the actual settlement date.
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Certificated Securities
Subject to certain conditions, any person having a beneficial interest in a
Global Note may, upon request to the Trustee, exchange such beneficial interest
for Notes in the form of Certificated Securities. Upon any such issuance, the
Trustee is required to register such Certificated Securities in the name of, and
cause the same to be delivered to, such person or persons (or the nominee of any
thereof). All such certificated Notes would be subject to the legend
requirements described herein under "Notice to Investors." In addition, if (i)
the Company notifies the Trustee in writing that the Depositary is no longer
willing or able to act as a depositary and the Company is unable to locate a
qualified successor within 90 days or (ii) the Company, at its option, notifies
the Trustee in writing that it elects to cause the issuance of Notes in the form
of Certificated Securities under the Indenture, then, upon surrender by the
Global Note Holder of the Global Notes, Notes in such form will be issued to
each person that the Global Note Holder and the Depositary identify as being the
beneficial owner of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
Same-Day Settlement and Payment
The Indenture will require that payments in respect of the Notes
represented by the Global Notes (including principal, premium, interest and
Liquidated Damages, if any) be made by wire transfer of immediately available
funds to the accounts specified by the Global Note Holder. With respect to
Certificated Securities, the Company will make all payments of principal,
premium, interest and Liquidated Damages, if any, by wire transfer of
immediately available funds to the accounts specified by the Holders thereof or,
if no such account is specified, by mailing a check to each such Holder's
registered address.
The Notes represented by the Global Notes are expected to be eligible to
trade in the PORTAL market and to trade in the Depositary's Same-Day Funds
Settlement System, and any permitted secondary market trading activity in such
Notes will, therefore, be required by the Depositary to be settled in
immediately available funds. The Company expects that secondary trading in the
Certificated Securities will also be settled in immediately available funds.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company, the Guarantors and the Initial Purchaser entered into the
Registration Rights Agreement on the Closing Date. Pursuant to the Registration
Rights Agreement, the Company and the Guarantors agreed to file with the
Commission the Exchange Offer Registration Statement on the appropriate form
under the Securities Act with respect to the Exchange Notes. The Exchange Offer
Registraton Statement was filed on October 3, 1997 and Amended on October 15
and declared effective on October 17, 1997. The Exchange Offer commenced on
October 17, 1997. The Company has offered to the Holders of Transfer
Restricted Securities pursuant to the Exchange Offer who are able to make
certain representations the opportunity to exchange their Transfer Restricted
Securities for Exchange Notes. If (i) the Company is not required to file the
Exchange Offer Registration Statement or permitted to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
Commission policy or (ii) any Holder of Transfer Restricted Securities notifies
the Company prior to the 20th day following consummation of the Exchange Offer
that (a) it is prohibited by law or Commission policy from participating in the
Exchange Offer or (b) that it may not resell the Exchange Notes acquired by it
in the Exchange Offer to the public without delivering a prospectus and the
prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales or (c) that it is a broker-dealer and
owns Notes acquired directly from the Company or an affiliate of the Company,
the Company and the Guarantors will file with the Commission a Shelf
Registration Statement to cover resales of the Notes by the Holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement. For purposes of the
foregoing, "Transfer
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Restricted Securities" means each Note until (i) the date on which such Note has
been exchanged by a person other than a broker-dealer for an Exchange Note in
the Exchange Offer, (ii) following the exchange by a broker-dealer in the
Exchange Offer of a Note for an Exchange Note, the date on which such Exchange
Note is sold to a purchaser who receives from such broker-dealer on or prior to
the date of such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement, (iii) the date on which such Note has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Note is distributed to the
public pursuant to Rule 144 under the Act.
The Registration Rights Agreement provides that (i) the Company and the
Guarantors will file an Exchange Offer Registration Statement with the
Commission on or prior to 30 days after the Closing Date, (ii) the Company and
the Guarantors will use their best efforts to have the Exchange Offer
Registration Statement declared effective by the Commission on or prior to 90
days after the Closing Date, (iii) unless the Exchange Offer would not be
permitted by applicable law or Commission policy, the Company and the Guarantors
will commence the Exchange Offer and use their best efforts to issue, on or
prior to 30 business days after the date on which the Exchange Offer
Registration Statement was declared effective by the Commission, Exchange Notes
in exchange for all Notes tendered prior thereto in the Exchange Offer and (iv)
if obligated to file the Shelf Registration Statement, the Company and the
Guarantors will use their best efforts to file the Shelf Registration Statement
with the Commission on or prior to 30 days after such filing obligation arises
and to cause the Shelf Registration to be declared effective by the Commission
on or prior to 90 days after such obligation arises. If (a) the Company and the
Guarantors fail to file any of the Registration Statements required by the
Registration Rights Agreement on or before the date specified for such filing,
(b) any of such Registration Statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"), (c) the Company and the Guarantors fail to
consummate the Exchange Offer within 30 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement or (d) the
Shelf Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter ceases to be effective or usable in connection
with resales of Transfer Restricted Securities during the periods specified in
the Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then the Company will pay
Liquidated Damages to each Holder of Notes, with respect to the first 90-day
period immediately following the occurrence of the first Registration Default,
in an amount equal to $.05 per week per $1,000 principal amount of Notes held by
such Holder. The amount of the Liquidated Damages will increase by an additional
$.05 per week per $1,000 principal amount of Notes with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal
amount of Notes. All accrued Liquidated Damages will be paid by the Company on
each Damages Payment Date to the Global Note Holder by wire transfer of
immediately available funds or by federal funds check and to Holders of
Certificated Securities by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
Holders of Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Notes included in
the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
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including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback), excluding sales of services and ancillary products in the ordinary
course of business consistent with past practices (provided that the sale,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a whole will be governed
by the provisions of the Indenture described above under the caption "Change of
Control" and/or the provisions described above under the caption "Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset Sale
covenant), and (ii) the issue or sale by the Company or any of its Subsidiaries
of Equity Interests of any of the Company's Subsidiaries (other than directors'
qualifying shares or shares required by applicable law to be held by a Person
other than the Company or a Restricted Subsidiary of the Company), in the case
of either clause (i) or (ii), whether in a single transaction or a series of
related transactions (a) that have a fair market value in excess of $1.0 million
or (b) for net proceeds in excess of $1.0 million. Notwithstanding the
foregoing, the following will be deemed not to be Asset Sales: (i) a transfer of
assets by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly
Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted
Subsidiary; (ii) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary;
(iii) a Permitted Investment or Restricted Payment that is permitted by the
covenant described above under the caption "Restricted Payments; (iv) the
exchange of Rigs or terminals for other assets that are usable in the business
of the Company and its Restricted Subsidiaries to the extent that the assets
received by the Company and its Restricted Subsidiaries have a fair market value
at least equal to the fair market value of the Rigs and terminals exchanged by
the Company, in each case as determined in good faith by the Board of Directors;
(v) a disposition of Cash Equivalents solely for cash or other Cash Equivalents;
(vi) a sale-leaseback transaction involving Rigs or real estate within one year
of the acquisition of such Rigs or real estate; and (vii) the sale of accounts
receivables and related assets customarily transferred in an asset
securitization transaction involving accounts receivable to a Receivables
Subsidiary or by a Receivables Subsidiary in connection with a Qualified
Receivables Transaction.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
Eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any lender party to the New Credit
Facility or with any domestic commercial bank having capital and surplus in
excess of $500.0 million and a Keefe Bank Watch Rating of AB or better, (iv)
repurchase obligations with a term of not more
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than seven days for underlying securities of the types described in clauses (ii)
and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) commercial paper having
the highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within six months after the date of
acquisition.
"Change of Control" means, with respect to the Company or any successor
Person permitted under the covenant "Merger, Consideration, or Sale of Assets,"
the occurrences of any of the following: (a) the adoption of a plan relating to
the liquidation or dissolution of the Company; (b) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" or "group" (as such terms are used in
Section 13(d)(3) of the Exchange Act), other than the Principals, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and rule 13d-5 under
the Exchange Act), directly or indirectly, of (i) more than 35% of the voting
power of the outstanding voting stock of the Company or (ii) more of the voting
power of the outstanding voting stock of the Company than that beneficially
owned by the Principals; or (c) the first day on which more than a majority of
the members of the Board of Directors are not continuing Directors.
"Closing Date" means the date of the closing of the sale of the Notes.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus, to the extent
deducted in computing such Consolidated Net Income, (i) an amount equal to any
extraordinary loss plus any net loss realized in connection with an Asset Sale,
(ii) provision for taxes based on income or profits, (iii) Consolidated Interest
Expense, (iv) depreciation and amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and (v) nonrecurring charges relating to the
Acquisition, to the extent that such charges are set forth in "Unaudited Pro
Forma Financial Information," including the notes thereto, in each case on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization of, a Person shall be added to Consolidated Net
Income to compute Consolidated Cash Flow only to the extent (and in the same
proportion) that the Net Income of such Person was included in calculating
Consolidated Net Income.
"Consolidated Interest Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Consolidated Interest Expense of such Person and its Restricted
Subsidiaries for such period. In the event that the Company or any of its
Restricted Subsidiaries incurs, assumes, Guarantees, redeems or repays any
Indebtedness (other than revolving credit borrowings) subsequent to the
commencement of the period for which the Consolidated Interest Coverage Ratio is
being calculated but prior to the date on which the event for which the
calculation of the Consolidated Interest Coverage Ratio is made (the
"Calculation Date"), then the Consolidated Interest Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee,
redemption or repayment of Indebtedness as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, and other transactions consummated by the Company or any of its
Restricted Subsidiaries with respect to which pro forma effect may be given
pursuant to Article 11 of Regulation S-X under the Securities Act, in each case
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have occurred on the
first day of the four-quarter reference period and Consolidated Cash Flow for
such reference period shall be calculated without giving effect to clause (iv)
of the proviso set forth in the definition of Consolidated Net Income, (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded and (iii) the Consolidated Interest Expense
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations giving rise to such
Consolidated Interest Expense will not be obligations of the referent Person or
any of its Restricted Subsidiaries following the Calculation Date.
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"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), (ii) the
consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon), in each case, on a consolidated basis and in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) if the Net Income of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting is a
gain, the Net Income of such Person shall be included only to the extent of the
amount of dividends or distributions paid in cash to the referent Person or a
Wholly Owned Restricted Subsidiary thereof, (ii) if the Net Income of any Person
that is not a Restricted Subsidiary or that is accounted for by the equity
method of accounting is a loss, the Net Income of such Person shall be excluded
except to the extent that (a) the Company or any of its Restricted Subsidiaries
funds such loss by means of the provision of additional capital to such Person
or (b) the aggregate losses of such Person excluded pursuant to this clause (ii)
exceed the aggregate gains of such Person excluded pursuant to clause (i), (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded and (v)
solely for purposes of calculating Consolidated Interest Expense for purposes of
the covenant described under the caption "Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock", the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to the
Company or one of its Restricted Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (a) the consolidated equity of the common stockholders of such Person
and its consolidated Restricted Subsidiaries as of such date, plus (b) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (i) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the Closing Date in the book value of any asset
owned by such Person or a consolidated Restricted Subsidiary of such Person,
(ii) all investments as of such date in unconsolidated Subsidiaries and in
Persons that are not Restricted Subsidiaries and (iii) all unamortized debt
discount and expense and unamortized deferred charges as of such date, in each
case determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the Closing Date or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes
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mature; provided, that any Capital Stock that would constitute Disqualified
Stock solely because the holders thereof (or of any security into which it is
convertible or for which it is exchangeable) have the right to require the
issuer to repurchase such Capital Stock (or such security into which it is
convertible or for which it is exchangeable) upon the occurrence of an Asset
Sale or a Change of Control shall not constitute Disqualified Stock if such
Capital Stock (and all such securities into which it is convertible or for which
it is exchangeable) provides that the issuer thereof will not repurchase or
redeem any such Capital Stock (or any such security into which it is convertible
or for which it is exchangeable) pursuant to such provisions prior to compliance
by the Company with the provisions of the Indenture described under the caption
"Repurchase at the Option of Holders." "Change of Control" or "Asset Sales," as
the case may be.
"Domestic Restricted Subsidiary" means a Restricted Subsidiary that is not
formed, incorporated or organized in a jurisdiction outside of the United
States.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness (other than Indebtedness under
the New Credit Facility) in existence on the Closing Date, until such
Indebtedness is repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means all Domestic Restricted Subsidiaries and Canadian
Subsidiaries of the Company existing on the Closing Date (other than AH
Industries, Inc.), and all Subsidiaries of the Company created or acquired by
the Company after the Closing Date that becomes a Guarantor as set forth under
"Subsidiary Guarantees."
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap, cap or collar
agreements and (ii) other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange or interest rates.
"Indebtedness" means, with respect to any Person, (i) any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, (ii) all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and (iii) to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP,
excluding, however, trade accounts receivable and bank deposits made in the
ordinary course of business. If the Company or any Restricted Subsidiary of the
Company sells or otherwise disposes of any Equity Interests of any direct or
indirect
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Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of the covenant described above under the caption "Restricted
Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, and any option or other agreement to sell or give a Lien).
"Limited-Recourse Debt" means Indebtedness (a) as to which neither the
Company nor any of its Restricted Subsidiaries (i) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness) or is otherwise directly or indirectly liable (as a
guarantor or otherwise) or (ii) constitutes the lender, except, in the case of
clauses (i) and (ii), to the extent permitted by the covenants described under
the captions "Restricted Payments" and "Incurrence of Indebtedness and Issuance
of Preferred Stock, (b) no default with respect to which (including any rights
that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity and
(c) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries, except to the extent of any Indebtedness incurred by the Company
or any of its Restricted Subsidiaries in accordance with clause (a)(i) above.
"Make-Whole Amount" means, with respect to any Note, an amount equal to the
excess, if any, of (a) the present value of the remaining principal, premium and
interest payments that would be payable with respect to such Note if such Note
were redeemed on October 1, 2002, computed using a discount rate equal to the
Treasury Rate plus 75 basis points, over (b) the outstanding principal amount of
such Note.
"Make-Whole Average Life" means, with respect to any date of redemption of
Notes, the number of years (calculated to the nearest one-twelfth) from such
redemption date to October 1, 2002.
"Make-Whole Price" means, with respect to any Note, the greater of (a) the
sum of the principal amount of and Make-Whole Amount with respect to such Note,
and (b) the redemption price of such Note on October 1, 2002.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of (i) the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, (ii) taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements), (iii) amounts applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and (iv) any reserve for adjustment in respect of the sale price of such
asset or assets established in accordance with GAAP.
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"New Credit Facility" means that certain credit agreement, dated the date
of the Indenture, by and among the Company and BankBoston, N.A., as
administrative agent, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case, as amended, restated, modified, renewed, refunded, replaced or
refinanced in whole or in part from time to time.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Investments" means (i) any Investment in the Company or in a
Restricted Subsidiary of the Company; (ii) any Investment in Cash Equivalents;
(iii) any Investment by the Company or any Restricted Subsidiary of the Company
in a Person, if as a result of such Investment (a) such Person becomes a
Restricted Subsidiary of the Company or (b) such Person is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company; (iv) any Restricted Investment made as a result of the receipt of
non-cash consideration from (a) an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "Repurchase at
the Option of Holders." "Asset Sales" or (b) a disposition of assets that does
not constitute an Asset Sale; (v) any Investments received solely in exchange
for the issuance of Equity Interests (other than Disqualified Stock) of the
Company; (vi) loans or advances to owner-operators and employees of the Company
or its Restricted Subsidiaries made in the ordinary course of business; (vii)
Investments in an amount not to exceed $5.0 million in Haul Insurance Limited to
the extent required by applicable laws or regulations or pursuant to any
directive or request (whether or not having the force of law) of any
governmental authority having jurisdiction over Haul Insurance Limited; (viii)
Investments received in connection with the settlement of any ordinary course
obligations owed to the Company or any of its Restricted Subsidiaries; (ix)
other Investments in businesses related to the businesses operated by the
Company and its Restricted Subsidiaries in an aggregate amount not to exceed
$30.0 million, provided that the aggregate amount of such Investments shall not
exceed $15.0 million in any calendar year; and (x) investments by the Company or
a Restricted Subsidiary of the Company in a Receivables Subsidiary or any
Investment by a Receivables Subsidiary in any other Person or assets in
connection with a Qualified Receivables Transaction; provided that any
Investment in any such Person is in the form of a Purchase Money Note, an equity
interest or interests in accounts receivable generated by the Company or a
Subsidiary of the Company and transferred to any Person in connection with a
Qualified Receivables Transaction or any such Person owning such accounts
receivable.
"Permitted Liens" means (i) Liens in favor of the Company or any of its
Restricted Subsidiaries; (ii) Liens securing Obligations incurred pursuant to
clause (i) of the second paragraph of the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock;" (iii) Liens on property or Equity
Interests of a Person existing at the time such Person is merged into or
consolidated with the Company or any Restricted Subsidiary of the Company;
provided that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets or Equity Interests
other than those of the Person merged into or consolidated with the Company;
(iv) Liens on property existing at the time of acquisition thereof by the
Company or any Restricted Subsidiary of the Company, provided that such Liens
were in existence prior to the contemplation of such acquisition; (v) Liens to
secure the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature incurred in the ordinary
course of business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (v) of the second paragraph of the covenant
entitled "Incurrence of Indebtedness and Issuance of Preferred Stock" covering
only the assets acquired with such Indebtedness; (vii) Liens existing on the
Closing Date; (viii) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefore; (ix) Liens securing the
Notes or any Guarantee thereof; (x) Liens securing Permitted Refinancing
Indebtedness to the extent that the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded was permitted to be secured by a Lien;
(xi) Liens on Investments of the Company or any of its Restricted Subsidiaries
in any Person that is not a Restricted Subsidiary of the Company to secure the
Indebtedness of such Person; (xii) Liens incurred in the
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ordinary course of business of the Company or any Restricted Subsidiary of the
Company with respect to obligations that do not exceed $2.0 million at any one
time outstanding and that (a) are not incurred in connection with the borrowing
of money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Restricted Subsidiary and (xiii)
Liens on assets of a Receivables Subsidiary securing Indebtedness incurred in
connection with a Qualified Receivables Transaction, provided that such
Indebtedness was incurred in connection with such Qualified Receivables
Transaction.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (i) the principal amount (or accredit value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accredit value, if applicable), plus premium and accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness is subordinated in right of payment to
the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary that is an
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Principals" means the directors and executive officers of the Company on
the Closing Date, as set forth above under "Management," their respective
spouses and lineal descendants, and any Affiliate of any of the foregoing.
"Purchase Money Note" means a promissory note evidencing a line of credit,
which may be irrevocable, from, or evidencing other Indebtedness owed to, the
Company or any Subsidiary of the Company in connection with a Qualified
Receivables Transaction, which note shall be repaid from cash available to the
maker of such note, other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest,
principal and other amounts owing to such investors and amounts paid in
connection with the purchase of newly generated receivables.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any Subsidiary of the
Company pursuant to which the Company or any Subsidiary of the Company may sell,
convey or otherwise transfer to (i) a Receivables Subsidiary (in the case of a
transfer by the Company or any Subsidiary of the Company) and (ii) any other
person (in the case of a transfer by a Receivables Subsidiary), or may grant a
security interest in, any accounts receivable (whether now existing or arising
in the future) of the Company or any Subsidiary of the Company, and any assets
related thereto including, without limitation, all collateral securing such
accounts receivable, all contracts and all guarantees or other obligations in
respect of such accounts receivable, proceeds of such accounts receivable and
other assets which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Subsidiary of the Company
(other than a Guarantor), which engages in no activities other than in
connection with the financing of accounts receivable and which is designated by
the Board of Directors of the Company (as provided below) as a Receivables
Subsidiary (i) no portion of the Indebtedness or any other Obligations
(contingent or otherwise) of which (a) is guaranteed by the Company or any other
Subsidiary of the Company (excluding guarantees of Obligations (other than the
principal of, and interest on, Indebtedness)) pursuant to Standard
Securitization Undertakings, (b) is recourse to or obligates the Company or any
other Subsidiary of the Company in any way other than pursuant to Standard
Securitization Undertakings or (c) subjects any property or asset of the Company
or any other Subsidiary of the Company, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other
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than pursuant to Standard Securitization Undertakings, (ii) with which neither
the Company nor any other Subsidiary of the Company has any material contract,
agreement, arrangement or understanding (except in connection with a Purchase
Money Note or Qualified Receivables Transaction) other than on terms no less
favorable to the Company or such other Subsidiary of the Company than those that
might be obtained at the time from persons that are not Affiliates of the
Company, other than fees payable in the ordinary course of business in
connection with servicing accounts receivable, and (iii) to which neither the
Company nor any other Subsidiary of the Company has any obligation to maintain
or preserve such entity's financial condition or cause such entity to achieve
certain levels of operating results. Any such designation by the Board of
Directors of the Company shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the resolution of the Board of Directors of the
Company giving effect to such designation and an Officers' Certificate
certifying, to the best of such officer's knowledge and belief after consulting
with counsel, that such designation complied with the foregoing conditions.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by the Company or any Subsidiary of the
Company which are reasonably customary in an accounts receivable transaction.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Treasury Rate" means, at any time of computation, the yield to maturity at
such time (as compiled by and published in the most recent Federal Reserve
Statistical Release H.15(519), which has become publicly available at least two
business days prior to the date of the redemption notice or, if such Statistical
Release is no longer published, any publicly available source of similar market
data) of United States Treasury securities with a constant maturity most nearly
equal to the Make-Whole Average Life; provided, however, that if the Make-Whole
Average Life is not equal to the constant maturity of the United States Treasury
security for which a weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the Make-Whole Average Life is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Unrestricted Subsidiary" means any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution,
but only to the extent that such Subsidiary (a) has no Indebtedness other than
Limited-Recourse Debt, (b) is not party to any agreement, contract, arrangement
or understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
comply with the covenant set forth under "Affiliate Transactions" and (c) except
to the extent permitted by the covenant set forth under "Restricted Payments,"
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is a Person with respect to which neither the Company nor any of its Restricted
Subsidiaries has any direct or indirect obligation (i) to subscribe for
additional Equity Interests or (ii) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
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The following is a summary of important terms of certain other indebtedness
of the Company.
REVOLVING CREDIT FACILITY
The Company entered into the Revolving Credit Facility on September 30,
1997. The Revolving Credit Facility allows the Company to borrow, under a
revolving line of credit, and issue letters of credit, up to the lesser of
$230.0 million or a borrowing base amount that is determined based on a defined
percentage of the Company's accounts receivable and equipment. At June 30, 1997,
after giving pro forma effect to the Offering of the Notes and the Acquisition,
the Company would have had approximately $68.3 million of letters of credit
outstanding and undrawn availability of approximately $126.3 million. Annual
commitment fees will be due on the undrawn portion of the commitment. The
Revolving Credit Facility will mature in 2002. The interest rate for the
Revolving Credit Facility will be, at the Company's option, either (i) the
bank's Base Rate, as defined, or (ii) the bank's Eurodollar rate, as defined,
as determined at the date of each borrowing, plus an applicable margin. The
Company will have the right to repay the outstanding debt under the Revolving
Credit Facility, in whole or in part, without penalty or premium, subject to a
limitation that prepayment of Eurodollar rate loans will be subject to a
breakage penalty if prepaid other than on the last day of the applicable
interest period. The Company will be subject to mandatory prepayment with a
defined percentage of net proceeds from certain asset sales, new debt offerings
and new equity offerings. The revolving line of credit will allow the Company
to repay and reborrow so long as there is no event of default. The Revolving
Credit Facility gives the Company the ability to reduce the commitment amount
and the Company periodically reviews its borrowing needs.
Borrowings under the Revolving Credit Facility are secured by a first
priority security interest on assets of the Company and certain of its
subsidiaries, other than real estate but including a pledge of stock of certain
subsidiaries. In addition, certain subsidiaries of the Company will jointly and
severally guarantee the obligations of the Company under the Revolving Credit
Facility.
The Revolving Credit Facility sets forth a number of affirmative, negative,
and financial covenants binding on the Company. The negative covenants limit
the ability of the Company to, among other things, incur debt, incur liens,
make investments, make dividend or other distributions, or enter into any
merger or other consolidation transaction. The financial covenants will include
the maintenance of a minimum consolidated tangible net worth, compliance with a
leverage ratio and a coverage ratio, and limitations on capital expenditures.
The Revolving Credit Facility contains standard events of default including
failure to make payments on a timely basis, breach of covenants, breach of any
representation or warranty, and defaults on other indebtedness.
SENIOR SUBORDINATED NOTES
In February 1996, the Company issued the Senior Subordinated Notes through
a private placement. Proceeds from the Senior Subordinated Notes were used to
reduce borrowings under the Company's existing credit facility. Interest on the
Senior Subordinated Notes is payable semi-annually at a rate of 12% per year on
February 1 and August 1 of each year. The Senior Subordinated Notes are
prepayable at any time at 100% of the principal amount thereof, plus a
make-whole amount (the "Make-Whole Amount"), as determined by discounting the
remaining interest payments through maturity at a rate equal to the yield on the
date of redemption of the class of United States Treasury securities
corresponding to the weighted average life to maturity of the principal amount
being repaid plus 100 basis points (the "Reinvestment Rate"). The Make-Whole
Amount will be zero if the Reinvestment Rate exceeds 12%.
The indenture pursuant to which the Senior Subordinated Notes were issued
contains covenants requiring the Company to maintain or place limitations on,
among other things: (i) minimum consolidated net worth, (ii) additional
indebtedness, (iii) fixed charge coverage ratio, (iv) liens, (v) restricted
payments, (vi) asset sales, (vii) mergers and consolidations, and (viii)
transactions with affiliates.
The payment of principal, the Make-Whole Amount, if any, and interest on
the Senior Subordinated Notes is subordinated to all senior indebtedness of the
Company, including the Notes. Upon a distribution to creditors of the Company in
a bankruptcy, reorganization, liquidation or dissolution of the Company, the
holders of all senior indebtedness will be entitled to receive payment in full
before the holders of the Senior Subordinated Notes would be entitled to receive
any distributions.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ALLIED HOLDINGS, INC.
October 20, 1997 /s/ Daniel H. Popky
----------------------------------------
Daniel H. Popky, Vice President, Finance
31
